Huron Consulting Group Announces Second Quarter 2013 Financial Results

Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of business consulting services, today announced financial results for the second quarter ended June 30, 2013.

"Huron’s strong performance in the second quarter reflects solid demand for our health and education solutions," said James H. Roth, chief executive officer and president, Huron Consulting Group. "The continued market pressures on our health and education clients to increase quality and reduce costs are the fundamental drivers behind Huron’s operating performance. The pace of change and demand for our services within our core markets are likely to drive future growth, and we are pleased that the quality of our personnel and the value we deliver remain well-recognized in the marketplace.”

Second Quarter 2013 Results

The following information is reported on a “continuing operations” basis unless otherwise noted.

Revenues for the second quarter of 2013 were $170.4 million, an increase of 17.8% compared to $144.7 million for the second quarter of 2012. The Company's second quarter 2013 operating income was $30.5 million, compared to $14.7 million in the second quarter of 2012. Net income from continuing operations was $15.8 million, or $0.69 per diluted share, for the second quarter of 2013, compared to $6.3 million, or $0.28 per diluted share, for the same period last year.

Second quarter 2013 earnings before interest, taxes, depreciation and amortization ("EBITDA") (6) was $36.1 million, or 21.2% of revenues, compared to $19.9 million, or 13.8% of revenues, in the comparable quarter last year.

In addition to using EBITDA to evaluate the Company’s financial performance, management uses certain other non-GAAP financial measures, which exclude the effect of the following items (in thousands):
  Three Months EndedJune 30,
2013   2012
Amortization of intangible assets $ 1,451 $ 1,607
Restatement related expenses $ $ 212
Restructuring charges $ 596 $ 229
Litigation settlement loss $ $ 1,150
Tax effect $ (819 ) $

(1,279
)

Adjusted EBITDA (6) was $36.7 million, or 21.5% of revenues, in the second quarter of 2013, compared to $21.5 million, or 14.9% of revenues, in the comparable quarter last year. Adjusted net income (6) from continuing operations was $17.0 million, or $0.75 per diluted share, for the second quarter of 2013 compared to $8.2 million, or $0.37 per diluted share, for the comparable period in 2012.

The average number of full-time billable consultants (1) was 1,532 in the second quarter of 2013 compared to 1,349 in the same quarter last year. Full-time billable consultant utilization rate (2) was 76.9% during the second quarter of 2013 compared with 74.6% during the same period last year. Average billing rate per hour for full-time billable consultants (3) was $213 for the second quarter of 2013 compared to $208 for the second quarter of 2012. The average number of full-time equivalent professionals (4) totaled 1,087 in the second quarter of 2013 compared to 1,041 for the comparable period in 2012.

Year-to-Date Results

The following information is reported on a “continuing operations” basis unless otherwise noted.

Revenues for the first six months of 2013 were $334.4 million, an increase of 18.0% compared to $283.3 million for the first half of 2012. The Company's operating income for the first six months of 2013 was $51.9 million compared to $18.3 million in the first six months of 2012. Net income from continuing operations was $27.2 million, or $1.20 per diluted share, for the first six months of 2013 compared to $6.9 million, or $0.31 per diluted share, for the same period last year.

EBITDA (6) was $62.9 million, or 18.8% of revenues, for the first half of 2013 compared to $29.3 million, or 10.4% of revenues, for the same period in 2012.

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

Six Months EndedJune 30,
2013   2012
Amortization of intangible assets $ 2,907 $ 3,226
Restatement related expenses $ $ 1,717
Restructuring charges $ 596 $ 1,059
Litigation settlement (gain) loss $ (1,150 ) $ 1,150
Tax effect $ (941 ) $ (2,861 )

The Company recorded a $1.15 million litigation settlement gain during the first quarter of 2013. The Company had previously recorded a $1.15 million charge in the second quarter of 2012 related to settlement discussions in a lawsuit filed against Huron and others by Associates Against Outlier Fraud. In March 2013, the court granted Huron’s motion for summary judgment and dismissed the second amended complaint in its entirety with prejudice. As a result, the Company reversed the $1.15 million charge taken in 2012. The plaintiff appealed the grant of Huron’s motion for summary judgment and the Company filed a cross appeal of an earlier denial of a motion to dismiss filed by Huron.

Adjusted EBITDA (6) was $62.3 million, or 18.6% of revenues, in the first six months of 2013 compared to $33.3 million, or 11.7% of revenues, in the comparable period last year.

Adjusted net income from continuing operations (6) was $28.6 million, or $1.26 per diluted share, for the first half of 2013 compared to $11.2 million, or $0.50 per diluted share, for the comparable period in 2012.

Reconciliations of the aforementioned non-GAAP financial measures to comparable GAAP measures are provided in the financial schedules accompanying this news release.

The average number of full-time billable consultants (1) was 1,517 in the first half of 2013 compared to 1,321 in the same period last year. Full-time billable consultant utilization rate (2) was 77.4% during the first half of 2013 compared with 76.2% during the same period last year. Average billing rate per hour for full-time billable consultants (3) was $213 for the first half of 2013 compared to $205 for the first half of 2012. The average number of full-time equivalent professionals (4) was 1,135 in the first half of 2013 compared to 1,017 in the same period in 2012.

Operating Segments

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The Company’s year-to-date revenues by operating segment are as follows: Huron Healthcare (47%); Huron Legal (26%); Huron Education and Life Sciences (22%); and Huron Financial (5%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Form 10-Q filing for the quarter ended June 30, 2013.

Outlook for 2013 (7)

Based on currently available information, the Company raises guidance, which was previously announced on February 20, 2013, for full year 2013 revenues before reimbursable expenses in a range of $670.0 million to $690.0 million. The Company also anticipates EBITDA in a range of $124.5 million to $130.5 million, Adjusted EBITDA in a range of $124.0 million to $130.0 million, GAAP diluted earnings per share in a range of $2.35 to $2.50, and non-GAAP adjusted diluted earnings per share in a range of $2.55 to $2.70.

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

Second Quarter 2013 Webcast

The Company will host a webcast to discuss its financial results today, July 30, 2013, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by ThomsonReuters and can be accessed at Huron Consulting Group’s website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

About Huron Consulting Group

Huron Consulting Group helps clients in diverse industries improve performance, reduce costs, leverage technology, process and review large amounts of complex data, address regulatory changes, recover from distress and stimulate growth. Our professionals employ their expertise in administration, management, finance, operations, strategy and technology to provide our clients with specialized analyses and customized advice and solutions that are tailored to address each client's particular challenges and opportunities to deliver sustainable and measurable results. The Company provides consulting services to a wide variety of both financially sound and distressed organizations, including healthcare organizations, leading academic institutions, Fortune 500 companies, governmental entities and law firms. Huron has worked with more than 95 of the top 100 research universities, more than 400 corporate general counsel, and more than 385 hospitals and academic medical centers. Learn more at www.huronconsultinggroup.com.

Use of Non-GAAP Financial Measures (6)

In evaluating the Company’s financial performance and outlook, management uses EBITDA, Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management believes that such measures, as supplements to operating income, net income from continuing operations and diluted earnings per share from continuing operations and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of our core operating results and future prospects. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

Statements in this press release that are not historical in nature, including those concerning the Company’s current expectations about its future requirements and needs, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans” or “continues.” These forward-looking statements reflect our current expectations about our future requirements and needs, results, levels of activity, performance, or achievements, including, without limitation, current expectations with respect to, among other factors, utilization rates, billing rates, and the number of revenue-generating professionals; that we are able to expand our service offerings; that we successfully integrate the businesses we acquire; and that existing market conditions continue to trend upward. These statements involve known and unknown risks, uncertainties and other factors, including, among others, those described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

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

Three Months EndedJune 30,

Six Months EndedJune 30,
2013 2012 2013 2012
Revenues and reimbursable expenses:
Revenues $ 170,407 $ 144,671 $ 334,443 $ 283,308
Reimbursable expenses   18,123     14,554     33,459     28,350  
Total revenues and reimbursable expenses 188,530 159,225 367,902 311,658
Direct costs and reimbursable expenses (exclusive of depreciation
and amortization shown in operating expenses):
Direct costs 102,869 91,878 208,997 188,659
Amortization of intangible assets and software development costs 674 1,142 1,332 2,284
Reimbursable expenses   18,118     14,585     33,469     28,403  
Total direct costs and reimbursable expenses   121,661     107,605     243,798     219,346  
Operating expenses:
Selling, general and administrative expenses 30,847 31,275 63,110 61,342
Restructuring charges 596 229 596 1,059
Restatement related expenses - 212 - 1,717
Litigation settlement (gain) loss - 1,150 (1,150 ) 1,150
Depreciation and amortization   4,877     4,053     9,656     8,706  
Total operating expenses   36,320     36,919     72,212     73,974  
Operating income 30,549 14,701 51,892 18,338
Other income (expense), net:
Interest expense, net of interest income (1,706 ) (2,015 ) (3,569 ) (3,881 )
Other income (expense), net   (152 )   (163 )   (139 )   170  
Total other expense, net   (1,858 )   (2,178 )   (3,708 )   (3,711 )
Income from continuing operations before income tax expense 28,691 12,523 48,184 14,627
Income tax expense   12,877     6,218     21,001     7,735  
Net income from continuing operations 15,814 6,305 27,183 6,892
(Loss) income from discontinued operations, net of tax   (9 )   202     (41 )   471  
Net income $ 15,805   $ 6,507   $ 27,142   $ 7,363  
 
Net earnings per basic share:
Net income from continuing operations $ 0.71 $ 0.29 $ 1.22 $ 0.32
Income from discontinued operations, net of tax   -     0.01     -     0.02  
Net income $ 0.71   $ 0.30   $ 1.22   $ 0.34  
 
Net earnings per diluted share:
Net income from continuing operations $ 0.69 $ 0.28 $ 1.20 $ 0.31
Income from discontinued operations, net of tax   -     0.01     -     0.02  
Net income $ 0.69   $ 0.29   $ 1.20   $ 0.33  
 
Weighted average shares used in calculating earnings per share:
Basic 22,351 21,918 22,246 21,847
Diluted 22,760 22,248 22,624 22,206
HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
   
   

June 30,2013
 

December 31,2012
Assets
Current assets:
Cash and cash equivalents $ 4,608 $ 25,162
Receivables from clients, net 90,671 97,510
Unbilled services, net 77,795 47,232
Income tax receivable 2,271 192
Deferred income taxes, net 12,432 14,751
Prepaid expenses and other current assets   16,688     15,525  
Total current assets 204,465 200,372
Property and equipment, net 35,393 33,805
Other non-current assets 15,639 15,322
Intangible assets, net 15,888 18,879
Goodwill   518,941     519,522  
Total assets $ 790,326   $ 787,900  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 9,395 $ 8,461
Accrued expenses 16,242 17,692
Accrued payroll and related benefits 44,477 61,672
Bank borrowings, current portion 25,000 -
Accrued consideration for business acquisitions, current portion 5,163 5,640
Income tax payable 152 7,872
Deferred revenues   12,261     15,388  
Total current liabilities 112,690 116,725
Non-current liabilities:
Deferred compensation and other liabilities 7,076 6,973
Bank borrowings, net of current portion 156,250 192,500
Deferred lease incentives 8,373 6,936
Deferred income taxes 18,116 14,560
Accrued consideration for business acquisitions, net of current portion   5,029     4,885  
Total non-current liabilities 194,844 225,854
 
Commitments and Contingencies
 
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized;
25,215,218 and 24,793,327 shares issued at June 30, 2013
and December 31, 2012, respectively 244 240
Treasury stock, at cost, 1,957,215 and 1,880,809 shares at
June 30, 2013 and December 31, 2012, respectively (86,500 ) (83,715 )
Additional paid-in capital 434,157 420,825
Retained earnings 136,472 109,330
Accumulated other comprehensive loss   (1,581 )   (1,359 )
Total stockholders’ equity   482,792     445,321  
Total liabilities and stockholders’ equity $ 790,326   $ 787,900  
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
   

Six Months Ended June 30,
2013 2012
Cash flows from operating activities:
Net income $ 27,142 $ 7,363
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 10,988 12,644
Share-based compensation 8,832 8,591
Allowances for doubtful accounts and unbilled services 5,375 (2,488 )
Deferred income taxes 5,213 3,184
Changes in operating assets and liabilities, net of businesses acquired:
(Increase) decrease in receivables from clients 4,576 27,881
(Increase) decrease in unbilled services (33,936 ) 226
(Increase) decrease in current income tax receivable / payable, net (9,795 ) 12,167
(Increase) decrease in other assets 712 921
Increase (decrease) in accounts payable and accrued liabilities 1,700 (2,638 )
Increase (decrease) in accrued payroll and related benefits (15,849 ) (28,058 )
Increase (decrease) in deferred revenues   (3,120 )   (11,271 )
Net cash provided by operating activities   1,838     28,522  
 
Cash flows from investing activities:
Purchases of property and equipment, net (9,789 ) (11,760 )
Net investment in life insurance policies (654 ) (264 )
Purchases of businesses, net of cash acquired - (33,136 )
Capitalization of internally developed software (1,058 )

-
Proceeds from note receivable   219  

-
 
Net cash used in investing activities   (11,282 )   (45,160 )
 
Cash flows from financing activities:
Proceeds from exercise of stock options 30 29
Shares redeemed for employee tax withholdings (581 ) (3,825 )
Tax benefit from share-based compensation 1,242 1,253
Proceeds from borrowings under credit facility 66,000 138,500
Repayments on credit facility (77,250 ) (118,500 )
Payments of capital lease obligations - (6 )
Deferred acquisition payment   (481 )   -  
Net cash (used in) provided by financing activities   (11,040 )   17,451  
 
Effect of exchange rate changes on cash (70 ) (121 )
 
Net (decrease) increase in cash and cash equivalents (20,554 ) 692
Cash and cash equivalents at beginning of the period   25,162     5,080  
Cash and cash equivalents at end of the period $ 4,608   $ 5,772  

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)
   

Three Months EndedJune 30,

PercentIncrease(Decrease)
Segment and Consolidated Operating Results (in thousands):   2013   2012  
Huron Healthcare:  
Revenues $ 78,946 $ 62,707 25.9 %
Operating income $ 29,507 $ 20,072 47.0 %
Segment operating income as a percentage of segment revenues 37.4 % 32.0 %
Huron Legal:
Revenues $ 45,089 $ 45,907 (1.8 %)
Operating income $ 10,793 $ 12,499 (13.6 %)
Segment operating income as a percentage of segment revenues 23.9 % 27.2 %
Huron Education and Life Sciences:
Revenues $ 37,134 $ 31,834 16.6 %
Operating income $ 11,547 $ 9,187 25.7 %
Segment operating income as a percentage of segment revenues 31.1 % 28.9 %
Huron Financial:
Revenues $ 9,263 $ 4,283 116.3 %
Operating income (loss) $ 3,952 $ (337 ) N/M
Segment operating income (loss) as a percentage of segment revenues 42.7 % (7.9 %)
All Other:
Revenues $ (25 ) $ (60 ) (58.3 %)
Operating loss $ (244 ) $ (744 ) (67.2 %)
Segment operating loss as a percentage of segment revenues N/M N/M
Total Company:
Revenues $ 170,407 $ 144,671 17.8 %
Reimbursable expenses   18,123     14,554   24.5 %
Total revenues and reimbursable expenses $ 188,530   $ 159,225   18.4 %
 
Statement of Earnings reconciliation:
Segment operating income $ 55,555 $ 40,677 36.6 %
Charges not allocated at the segment level:
Other selling, general and administrative expenses 20,129 21,923 (8.2 %)
Depreciation and amortization expense   4,877     4,053   20.3 %
Total operating income 30,549 14,701 107.8 %
Other expense, net   1,858     2,178   (14.7 %)
Income from continuing operations before income tax expense $ 28,691   $ 12,523   129.1 %
 
Other Operating Data (excluding All Other):            
Number of full-time billable consultants (at period end) (1):
Huron Healthcare (5) 916 813 12.7 %
Huron Legal 145 129 12.4 %
Huron Education and Life Sciences 434 373 16.4 %
Huron Financial   63     69   (8.7 %)
Total (5) 1,558 1,384 12.6 %
Average number of full-time billable consultants (for the period) (1):
Huron Healthcare (5) 883 809
Huron Legal 149 123
Huron Education and Life Sciences 438 348
Huron Financial   62     69  
Total (5) 1,532 1,349
Full-time billable consultant utilization rate (2):
Huron Healthcare (5) 84.7 % 78.3 %
Huron Legal 60.0 % 68.7 %
Huron Education and Life Sciences 65.8 % 73.2 %
Huron Financial 82.9 % 49.3 %
Total (5) 76.9 % 74.6 %

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)
 
Three Months EndedJune 30,
Other Operating Data (continued):   2013   2012
Full-time billable consultant average billing rate per hour (3):  
Huron Healthcare (5) $ 199 $ 198
Huron Legal $ 221 $ 239
Huron Education and Life Sciences $ 223 $ 212
Huron Financial $ 348 $ 275
Total (5) $ 213 $ 208
Revenue per full-time billable consultant (in thousands):
Huron Healthcare (5) $ 82 $ 70
Huron Legal $ 60 $ 78
Huron Education and Life Sciences $ 70 $ 77
Huron Financial $ 140 $ 61
Total (5) $ 79 $ 72
Average number of full-time equivalents (for the period) (4):
Huron Healthcare (5) 54 56
Huron Legal 982 954
Huron Education and Life Sciences 48 30
Huron Financial   3   1
Total (5) 1,087 1,041
Revenue per full-time equivalents (in thousands):
Huron Healthcare (5) $ 116 $ 107
Huron Legal $ 37 $ 38
Huron Education and Life Sciences $ 132 $ 171
Huron Financial $ 173 $ 41
Total (5) $ 45 $ 46

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)
   
Six Months EndedJune 30,

PercentIncrease(Decrease)
Segment and Consolidated Operating Results (in thousands):   2013   2012  
Huron Healthcare:  
Revenues $ 157,691 $ 126,172 25.0 %
Operating income $ 60,668 $ 35,910 68.9 %
Segment operating income as a percentage of segment revenues 38.5 % 28.5 %
Huron Legal:
Revenues $ 86,033 $ 87,290 (1.4 %)
Operating income $ 13,731 $ 22,010 (37.6 %)
Segment operating income as a percentage of segment revenues 16.0 % 25.2 %
Huron Education and Life Sciences:
Revenues $ 72,860 $ 59,510 22.4 %
Operating income $ 20,899 $ 15,645 33.6 %
Segment operating income as a percentage of segment revenues 28.7 % 26.3 %
Huron Financial:
Revenues $ 17,845 $ 10,132 76.1 %

Operating income (loss)
$ 7,331 $ (104 ) N/M
Segment operating income (loss) as a percentage of segment revenues 41.1 % (1.0 %)
All Other:
Revenues $ 14 $ 204 (93.1 %)
Operating loss $ (416 ) $ (1,543 ) (73.0 %)
Segment operating loss as a percentage of segment revenues N/M N/M
Total Company:
Revenues $ 334,443 $ 283,308 18.0 %
Reimbursable expenses   33,459     28,350   18.0 %
Total revenues and reimbursable expenses $ 367,902   $ 311,658   18.0 %
 
Statement of Earnings reconciliation:
Segment operating income $ 102,213 $ 71,918 42.1 %
Charges not allocated at the segment level:
Other selling, general and administrative expenses 40,665 44,874 (9.4 %)
Depreciation and amortization expense   9,656     8,706   10.9 %
Total operating income 51,892 18,338 183.0 %
Other expense, net   3,708     3,711   (0.1 %)
Income from continuing operations before income tax expense $ 48,184   $ 14,627   229.4 %
 
Other Operating Data (excluding All Other):            
Number of full-time billable consultants (at period end) (1):
Huron Healthcare (5) 916 813 12.7 %
Huron Legal 145 129 12.4 %
Huron Education and Life Sciences 434 373 16.4 %
Huron Financial   63     69   (8.7 %)
Total (5) 1,558 1,384 12.6 %
Average number of full-time billable consultants (for the period) (1):
Huron Healthcare (5) 873 798
Huron Legal 148 119
Huron Education and Life Sciences 434 335
Huron Financial   62     69  
Total (5) 1,517 1,321
Full-time billable consultant utilization rate (2):
Huron Healthcare (5) 85.1 % 80.7 %
Huron Legal 56.0 % 69.7 %
Huron Education and Life Sciences 67.9 % 72.0 %
Huron Financial 83.8 % 54.5 %
Total (5) 77.4 % 76.2 %

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)
 
Six Months EndedJune 30,
Other Operating Data (continued):   2013   2012
Full-time billable consultant average billing rate per hour (3):  
Huron Healthcare (5) $ 202 $ 195
Huron Legal $ 221 $ 237
Huron Education and Life Sciences $ 215 $ 212
Huron Financial $ 339 $ 275
Total (5) $ 213 $ 205
Revenue per full-time billable consultant (in thousands):
Huron Healthcare (5) $ 167 $ 144
Huron Legal $ 113 $ 158
Huron Education and Life Sciences $ 140 $ 150
Huron Financial $ 276 $ 142
Total (5) $ 158 $ 146
Average number of full-time equivalents (for the period) (4):
Huron Healthcare (5) 55 59
Huron Legal 1,035 926
Huron Education and Life Sciences 43 30
Huron Financial   2   2
Total (5) 1,135 1,017
Revenue per full-time equivalents (in thousands):
Huron Healthcare (5) $ 219 $ 195
Huron Legal $ 67 $ 74
Huron Education and Life Sciences $ 282 $ 313
Huron Financial $ 324 $ 229
Total (5) $ 83 $ 88
(1)     Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked.
(2) Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our full-time billable consultants worked on client assignments during a period by the total available working hours for all of these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days.
(3) Average billing rate per hour for our full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period.
(4) Consists of consultants who work variable schedules as needed by our clients, as well as contract reviewers and other professionals who generate revenues primarily based on number of hours worked and units produced, such as pages reviewed and data processed. Also includes full-time employees who provide software support and maintenance services to our clients.
(5) Effective January 1, 2013, a group within the Huron Healthcare segment that provides post-implementation services that was previously classified as full-time equivalents is now classified as full-time billable consultants due to the evolving nature of the services that they offer. Prior periods have been revised to reflect this change.

N/M – Not meaningful
 

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO

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

(In thousands)

(Unaudited)
   
Three Months EndedJune 30, Six Months EndedJune 30,
2013   2012 2013   2012
Revenues $ 170,407   $ 144,671   $ 334,443   $ 283,308  
 
Net income from continuing operations $ 15,814 $ 6,305 $ 27,183 $ 6,892
Add back:
Income tax expense 12,877 6,218 21,001 7,735
Interest and other expenses 1,858 2,178 3,708 3,711
Depreciation and amortization   5,551     5,195     10,988     10,990  
Earnings before interest, taxes, depreciation and amortization (EBITDA) (6) 36,100 19,896 62,880 29,328
Add back:
Restatement related expenses 212

1,717

 
Restructuring charges 596 229 596 1,059
Litigation settlement (gain) loss       1,150     (1,150 )   1,150  
Adjusted EBITDA (6) $ 36,696   $ 21,487   $ 62,326   $ 33,254  
Adjusted EBITDA as a percentage of revenues (6)   21.5 %   14.9 %   18.6 %   11.7 %

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)

(In thousands)

(Unaudited)
       
Three Months EndedJune 30, Six Months EndedJune 30,
2013 2012 2013 2012
Net income from continuing operations $ 15,814   $ 6,305  

 
$ 27,183   $ 6,892  
Weighted average shares - diluted 22,760

22,248

 

22,624

 

22,206
Diluted earnings per share from continuing operations $ 0.69  

$

0.28
 

 

$

1.20
 

 

$

0.31
 
Add back:
Amortization of intangible assets 1,451 1,607

 
2,907 3,226
Restatement related expenses

212

 

 
1,717
Restructuring charges 596 229

 
596 1,059
Litigation settlement (gain) loss 1,150

 
(1,150 ) 1,150
Tax effect   (819 )   (1,279 )

 
  (941 )   (2,861 )
Total adjustments, net of tax   1,228     1,919  

 
  1,412     4,291  
Adjusted net income from continuing operations (6) $ 17,042   $ 8,224  

 
$ 28,595   $ 11,183  
Adjusted diluted earnings per share from continuing operations (6) $ 0.75   $ 0.37  

 
$ 1.26   $ 0.50  
(6)     In evaluating the Company’s financial performance, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Our management uses these non-GAAP financial measures to gain an understanding of our comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing our business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.
 

HURON CONSULTING GROUP INC.
 

RECONCILIATION OF NON-GAAP MEASURES FOR FULL YEAR 2013 OUTLOOK
 

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO

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

(In millions)

(Unaudited)
 
Year EndingDecember 31, 2013
Guidance Range
Low   High
Projected revenues – GAAP $ 670.0     $ 690.0  
Projected net income from continuing operations – GAAP $ 54.0   $ 57.5
Add back:
Income tax expense 40.5 43.0
Interest and other expenses 7.0 7.0
Depreciation and amortization   23.0       23.0  
Projected earnings before interest, taxes, depreciation andamortization (EBITDA) (7) 124.5 130.5
Add back:
Restructuring charges 0.7 0.7
Litigation settlement gain   (1.2 )     (1.2 )
Projected adjusted EBITDA (7) $ 124.0     $ 130.0  
Projected adjusted EBITDA as a percentage of projected revenues (7)   18.5 %     18.8 %

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (7)

(In millions)

(Unaudited)
 
Year EndingDecember 31, 2013
Guidance Range
Low   High
Projected net income from continuing operations – GAAP $ 54.0     $ 57.5  
Projected diluted earnings per share from continuing operations – GAAP $ 2.35     $ 2.50  
Add back:  
Amortization of intangible assets 6.0 6.0
Restructuring charges 0.7 0.7
Litigation settlement gain (1.2 ) (1.2 )
Tax effect   (2.0 )     (2.0 )
Total adjustments, net of tax 3.5 3.5
Projected adjusted net income from continuing operations (7) $ 57.5     $ 61.0  
Projected adjusted diluted earnings per share fromcontinuing operations (7) $ 2.55     $ 2.70  
(7)     In evaluating the Company’s outlook, management uses projected EBITDA, projected adjusted EBITDA, projected adjusted EBITDA as a percentage of revenues, projected adjusted net income from continuing operations and projected adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management believes that the use of such measures, as supplements to projected net income from continuing operations and projected diluted earnings per share from continuing operations and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of the Company’s core operating results and future prospects without the effect of non-cash or other one-time items. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

Copyright Business Wire 2010

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