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Huron Consulting Group Announces Third Quarter 2012 Financial Results

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” 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, that our business continues to grow at 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 Annual Report on Form 10-K for the year ended December 31, 2011 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, future events, or any other reason.

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

September 30,

Nine Months Ended

September 30,

        2012       2011     2012       2011  
Revenues and reimbursable expenses:
Revenues $ 161,888 $ 153,579 $ 445,196 $ 443,270
Reimbursable expenses   13,470     13,140     41,820     38,280  
Total revenues and reimbursable expenses 175,358 166,719 487,016 481,550
Direct costs and reimbursable expenses (exclusive of depreciation
and amortization shown in operating expenses):
Direct costs 89,283 92,865 277,942 272,072
Intangible assets amortization 787 1,309 3,071 4,111
Reimbursable expenses   13,405     13,005     41,808     38,386  
Total direct costs and reimbursable expenses   103,475     107,179     322,821     314,569  
Operating expenses:
Selling, general and administrative 31,095 27,617 92,437 88,256
Restructuring charges 2,194 394 3,253 1,379
Restatement related expenses 68 845 1,785 3,870
Litigation settlements, net - - 1,150 1,096
Depreciation and amortization 4,879 5,007 13,585 13,589
Goodwill impairment charge   13,083     21,973     13,083     21,973  
Total operating expenses   51,319     55,836     125,293     130,163  
Operating income 20,564 3,704 38,902 36,818
Other income (expense):
Interest expense, net of interest income (2,312 ) (2,762 ) (6,193 ) (9,869 )
Other income (expense)   136     (571 )   306     (532 )
Total other expense   (2,176 )   (3,333 )   (5,887 )   (10,401 )
Income from continuing operations before income tax expense 18,388 371 33,015 26,417
Income tax expense (benefit)   7,972     (681 )   15,707     12,727  
Net income from continuing operations 10,416 1,052 17,308 13,690
Income (loss) from discontinued operations, net of tax   47     (563 )   518     324  
Net income $ 10,463   $ 489   $ 17,826   $ 14,014  
 
Net earnings per basic share:
Net income from continuing operations $ 0.47 $ 0.05 $ 0.79 $ 0.65
Income (loss) from discontinued operations, net of tax $ 0.01   $ (0.03 ) $ 0.02   $ 0.01  
Net income $ 0.48   $ 0.02   $ 0.81   $ 0.66  
 
Net earnings per diluted share:
Net income from continuing operations $ 0.47 $ 0.05 $ 0.78 $ 0.64
Income (loss) from discontinued operations, net of tax $ -   $ (0.03 ) $ 0.02   $ 0.01  
Net income $ 0.47   $ 0.02   $ 0.80   $ 0.65  
 
Weighted average shares used in calculating earnings per share:
Basic 21,950 21,551 21,881 21,224
Diluted 22,326 21,968 22,247 21,535
 
HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
 
  September 30,

2012

  December 31,

2011

Assets
Current assets:
Cash and cash equivalents $ 3,212 $ 5,080
Receivables from clients, net 104,037 107,820
Unbilled services, net 58,866 49,056
Income tax receivable 42 19,501
Deferred income taxes, net 10,588 12,531
Prepaid expenses and other current assets 14,602 14,191
Current assets of discontinued operations   251     3,345  
Total current assets 191,598 211,524
Property and equipment, net 31,872 31,176
Other non-current assets 15,048 14,892
Intangible assets, net 20,350 16,867
Goodwill   518,472     512,185  
Total assets $ 777,340   $ 786,644  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 8,254 $ 8,084
Accrued expenses 18,641 22,505
Accrued payroll and related benefits 41,919 66,464
Accrued consideration for business acquisitions, current portion 7,581 35,062
Income tax payable 145 101
Deferred revenues 21,853 36,721
Current liabilities of discontinued operations   106     765  
Total current liabilities 98,499 169,702
Non-current liabilities:
Deferred compensation and other liabilities 7,962 7,856
Bank borrowings 222,500 193,500
Deferred lease incentives 6,533 6,670
Deferred income taxes 13,178 12,078
Accrued consideration for business acquisitions, net of current portion 4,814 -
Non-current liabilities of discontinued operations   -     49  
Total non-current liabilities 254,987 220,153
 
Commitments and Contingencies
 
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized;
24,771,866 and 24,208,549 shares issued at September 30, 2012
and December 31, 2011, respectively 238 234
Treasury stock, at cost, 1,817,546 and 1,642,018 shares at
September 30, 2012 and December 31, 2011, respectively (82,177 ) (75,735 )
Additional paid-in capital 416,252 400,597
Retained earnings 90,728 72,902
Accumulated other comprehensive loss   (1,187 )   (1,209 )
Total stockholders’ equity   423,854     396,789  
Total liabilities and stockholders’ equity $ 777,340   $ 786,644  
 
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Nine Months Ended

September 30,

    2012       2011  
Cash flows from operating activities:
Net income $ 17,826 $ 14,014
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 18,994 17,875
Share-based compensation 11,183 14,149
Allowances for doubtful accounts and unbilled services 1,723 (1,542 )
Deferred income taxes 2,458 3,802
Loss on disposal of property and equipment - 20
Goodwill impairment charge 13,083 23,900
Non-cash portion of litigation settlement - 1,096
Changes in operating assets and liabilities, net of businesses acquired:
Decrease (increase) in receivables from clients 9,532 (15,885 )
Increase in unbilled services (10,698 ) (21,148 )
Decrease in current income tax receivable, net 19,502 2,294
Decrease in other assets 256 1,374
Decrease in accounts payable and accrued liabilities (4,783 ) (937 )
(Decrease) increase in accrued payroll and related benefits (24,092 ) 1,725
(Decrease) increase in deferred revenues   (14,616 )   14,116  
Net cash provided by operating activities   40,368     54,853  
 
Cash flows from investing activities:
Purchases of property and equipment, net (14,344 ) (10,473 )
Net investment in life insurance policies (569 ) (143 )
Purchases of businesses   (53,832 )   (23,866 )
Net cash used in investing activities   (68,745 )   (34,482 )
 
Cash flows from financing activities:
Proceeds from exercise of stock options 30 219
Shares redeemed for employee tax withholdings (3,874 ) (2,626 )
Tax benefit from share-based compensation 1,325 211
Proceeds from borrowings under credit facility 244,000 230,000
Repayments on credit facility (215,000 ) (253,250 )
Payments of capital lease obligations   (8 )   (55 )
Net cash provided by (used in) financing activities   26,473     (25,501 )
 
Effect of exchange rate changes on cash 36 256
 
Net decrease in cash and cash equivalents (1,868 ) (4,874 )
Cash and cash equivalents at beginning of the period (*)   5,080     6,347  
Cash and cash equivalents at end of the period $ 3,212   $ 1,473  

___________________

(*) Cash and cash equivalents presented herein includes $0.1 million of cash and cash equivalents classified as discontinued operations as of December 31, 2010.

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

Three Months EndedSeptember 30,

 

PercentIncrease(Decrease)

Segment and Consolidated Operating Results (in thousands):

2012

 

2011

 

Health and Education Consulting (1) :

 
Revenues $ 109,046 $ 101,490 7.4%
Operating income $ 45,846 $ 35,232 30.1%
Segment operating income as a percent of segment revenues 42.0% 34.7%

Legal Consulting:

Revenues $ 46,153 $ 43,501 6.1%
Operating income $ 11,479 $ 12,779 (10.2%)
Segment operating income as a percent of segment revenues 24.9% 29.4%

Financial Consulting (1) :

Revenues $ 6,689 $ 8,588 (22.1%)
Operating income $ 1,763 $ 2,824 (37.6%)
Segment operating income as a percent of segment revenues 26.4% 32.9%

Total Company:

Revenues $ 161,888 $ 153,579 5.4%
Reimbursable expenses 13,470 13,140 2.5%

Total revenues and reimbursable expenses

$ 175,358 $ 166,719 5.2%
 

Statement of Earnings reconciliation:

Segment operating income $ 59,088 $ 50,835 16.2%
Charges not allocated at the segment level:
Other selling, general and administrative expenses 20,562 20,151 2.0%
Depreciation and amortization expense 4,879 5,007 (2.6%)
Goodwill impairment charge (2) 13,083 21,973 (40.5%)
Total operating income 20,564 3,704 455.2%
Other expense, net 2,176 3,333 (34.7%)
Income from continuing operations before income tax expense $18,388 $ 371 4,856.3%
 
Other Operating Data:          
Number of full-time billable consultants (at period end) (3) :
Health and Education Consulting (1) 1,187 1,031 15.1%
Legal Consulting 134 107 25.2%
Financial Consulting (1) 65 73 (11.0%)
Total 1,386 1,211 14.5%
Average number of full-time billable consultants (for the period) (3) :
Health and Education Consulting (1) 1,161 996
Legal Consulting 128 112
Financial Consulting (1) 67 74
Total 1,356 1,182
Full-time billable consultant utilization rate (4) :
Health and Education Consulting (1) 75.9% 78.1%
Legal Consulting 66.9% 64.1%
Financial Consulting (1) 56.9% 71.5%
Total 74.2% 76.4%
 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 
Three Months Ended September 30,
Other Operating Data: 2012   2011
Full-time billable consultant average billing rate per hour (5) :  
Health and Education Consulting (1) $ 239 $ 250
Legal Consulting $ 265 $ 236
Financial Consulting (1) $ 368 $ 327
Total $ 246 $ 254
Revenue per full-time billable consultant (in thousands):
Health and Education Consulting (1) $ 84 $ 91
Legal Consulting $ 81 $ 66
Financial Consulting (1) $ 96 $ 111
Total $ 84 $ 90
Average number of full-time equivalents (for the period) (6) :
Health and Education Consulting (1) 144 145
Legal Consulting 1,082 1,032
Financial Consulting (1)   3   2
Total 1,229 1,179
Revenue per full-time equivalents (in thousands):
Health and Education Consulting (1) $ 81 $ 73
Legal Consulting $ 33 $ 35
Financial Consulting (1) $ 77 $ 205
Total $ 39 $ 40
 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 
Nine Months Ended September 30,  

Percent Increase (Decrease)

Segment and Consolidated Operating Results (in thousands): 2012   2011  
Health and Education Consulting (1) :  
Revenues $ 294,932 $ 295,248 (0.1 %)
Operating income $ 95,858 $ 97,986 (2.2 %)
Segment operating income as a percent of segment revenues 32.5 % 33.2 %
Legal Consulting:
Revenues $ 133,443 $ 120,790 10.5 %
Operating income $ 33,489 $ 32,003 4.6 %
Segment operating income as a percent of segment revenues 25.1 % 26.5 %
Financial Consulting (1) :
Revenues $ 16,821 $ 27,232 (38.2 %)
Operating income $ 1,659 $ 8,562 (80.6 %)
Segment operating income as a percent of segment revenues 9.9 % 31.4 %
Total Company:
Revenues $ 445,196 $ 443,270 0.4 %
Reimbursable expenses   41,820     38,280   9.2 %
Total revenues and reimbursable expenses $ 487,016   $ 481,550   1.1 %
 
Statement of Earnings reconciliation:
Segment operating income $ 131,006 $ 138,551 (5.4 %)
Charges not allocated at the segment level:
Other selling, general and administrative expenses 65,436 66,171 (1.1 %)
Depreciation and amortization expense 13,585 13,589 0.0 %
Goodwill impairment charge (2)   13,083     21,973   (40.5 %)
Total operating income 38,902 36,818 5.7 %
Other expense, net   5,887     10,401   (43.4 %)
Income from continuing operations before income tax expense $ 33,015   $ 26,417   25.0 %
 
Other Operating Data:          
Number of full-time billable consultants (at period end) (3) :
Health and Education Consulting (1) 1,187 1,031 15.1 %
Legal Consulting 134 107 25.2 %
Financial Consulting (1)   65     73   (11.0 %)
Total 1,386 1,211 14.5 %
Average number of full-time billable consultants (for the period) (3) :
Health and Education Consulting (1) 1,113 955
Legal Consulting 122 117
Financial Consulting (1)   68     75  
Total 1,303 1,147
Full-time billable consultant utilization rate (4) :
Health and Education Consulting (1) 77.3 % 77.6 %
Legal Consulting 68.8 % 58.1 %
Financial Consulting (1) 55.2 % 74.3 %
Total 75.4 % 75.5 %
 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 
Nine Months Ended September 30,
Other Operating Data: 2012   2011
Full-time billable consultant average billing rate per hour (5) :  
Health and Education Consulting (1) $ 215 $ 244
Legal Consulting $ 246 $ 234
Financial Consulting (1) $ 306 $ 328
Total $ 221 $ 249
Revenue per full-time billable consultant (in thousands):
Health and Education Consulting (1) $ 233 $ 272
Legal Consulting $ 238 $ 176
Financial Consulting (1) $ 238 $ 351
Total $ 233 $ 268
Average number of full-time equivalents (for the period) (6) :
Health and Education Consulting (1) 143 144
Legal Consulting 981 955
Financial Consulting (1)   1   2
Total 1,125 1,101
Revenue per full-time equivalents (in thousands):
Health and Education Consulting (1) $ 254 $ 245
Legal Consulting $ 106 $ 105
Financial Consulting (1) $ 648 $ 462
Total $ 126 $ 124

(1) Reflects the reclassification of our healthcare valuation consulting practice from our Health and Education Consulting segment to our Financial Consulting segment in conjunction with an internal reorganization during the first quarter of 2012.

Stock quotes in this article: HURN 

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