Huron Consulting Group Announces Third Quarter 2016 Financial Results

Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of business consulting services, today announced financial results from continuing operations for the third quarter ended September 30, 2016.

"Our Education and Life Sciences and Business Advisory segments continued to perform well in the third quarter, while our Healthcare segment remained challenged, reflecting the cautious approach that many healthcare providers are taking as they contemplate their approach to change amidst ongoing transformation in the industry," said James H. Roth, chief executive officer and president, Huron Consulting Group. "Looking ahead, we continue to focus on expanding the array of services that we offer to our industry-focused and commercial clients in order to position Huron for growth in an environment of uncertainty within our core markets."

Third Quarter 2016 Results from Continuing Operations

Revenues for the third quarter of 2016 increased 4.5% to $183.4 million from $175.5 million for the third quarter of 2015. Third quarter 2016 revenues included $17.1 million from the acquisitions of Cloud62, Inc., My Rounding Solutions, LLC, ADI Strategies, Inc., and Healthcare Services Management, Inc., all of which were completed subsequent to the third quarter of 2015. Net income from continuing operations was $12.3 million, or $0.57 per diluted share, for the third quarter of 2016 compared to $14.3 million, or $0.63 per diluted share, for the same period last year.

Third quarter 2016 earnings before interest, taxes, depreciation and amortization ("EBITDA") (6) was $35.4 million, or 19.3% of revenues, compared to $41.3 million, or 23.6% of revenues, in the comparable quarter last year.

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,
2016   2015
Amortization of intangible assets $ 8,771 $ 7,913
Restructuring charges $ 1,049 $ 320
Other losses $ 494 $
Non-cash interest on convertible notes $ 1,883 $ 1,795
Tax effect $ (4,794 ) $ (3,951 )
 

Adjusted EBITDA (6) was $36.9 million, or 20.1% of revenues, in the third quarter of 2016, compared to $41.7 million, or 23.7% of revenues, in the comparable quarter last year. Adjusted net income from continuing operations (6) was $19.7 million, or $0.92 per diluted share, for the third quarter of 2016, compared to $20.4 million, or $0.90 per diluted share, for the comparable period in 2015.

The average number of full-time billable consultants (1) increased 10.0% to 1,961 in the third quarter of 2016 compared to 1,783 in the same quarter last year. Full-time billable consultant utilization rate (2) was 73.9% during the third quarter of 2016 compared to 79.4% during the same period last year. Average billing rate per hour for full-time billable consultants (3) was $207 for the third quarter of 2016 compared to $209 for the third quarter of 2015. The average number of full-time equivalent professionals (5) was 269 in the third quarter of 2016 compared to 255 for the comparable period in 2015.

Year-to-Date 2016 Results from Continuing Operations

Revenues for the first nine months of 2016 increased 6.7% to $548.1 million from $513.9 million for the first nine months of 2015. Revenues for the first nine months of 2016 included $28.1 million of revenues from the acquisitions of Cloud62, Inc., My Rounding Solutions, LLC, ADI Strategies, Inc., and Healthcare Services Management, Inc., all of which were completed subsequent to the third quarter of 2015, and $11.2 million of incremental revenues due to the full period impact of the acquisitions of Studer Holdings, Inc., which was completed mid-first quarter 2015, and Rittman Mead Consulting Private Limited, which was completed at the start of the third quarter of 2015. Net income from continuing operations increased 20.1% to $35.3 million, or $1.65 per diluted share, for the first nine months of 2016 compared to $29.4 million, or $1.30 per diluted share, for the same period last year.

EBITDA (6) was $100.2 million, or 18.3% of revenues, for the first nine months of 2016, compared to $97.2 million, or 18.9% of revenues, for the same period in 2015.

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,
2016   2015
Amortization of intangible assets $ 24,369 $ 20,685
Restructuring charges $ 4,129 $ 1,577
Other losses, net $ 494 $ 524
Non-cash interest on convertible notes $ 5,582 $ 5,324
Tax effect $ (13,588 ) $ (11,075 )
 

Adjusted EBITDA (6) was $104.8 million, or 19.1% of revenues, in the first nine months of 2016 compared to $99.3 million, or 19.3% of revenues, in the comparable period last year. Adjusted net income from continuing operations (6) increased 21.2% to $56.3 million, or $2.63 per diluted share, for the first nine months of 2016 compared to $46.4 million, or $2.05 per diluted share, for the comparable period in 2015.

The average number of full-time billable consultants (1) increased 8.5% to 1,895 in the first nine months of 2016 compared to 1,747 in the same period last year. Full-time billable consultant utilization rate (2) was 75.3% during the first nine months of 2016 compared to 76.1% during the same period last year. Average billing rate per hour for full-time billable consultants (3) was $212 for the first nine months of 2016 compared to $221 for the first nine months of 2015. The average number of full-time equivalent professionals (5) was 257 in the first nine months of 2016 compared to 219 for the comparable period in 2015.

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 2016 revenues by operating segment as a percentage of total Company revenues are as follows: Huron Healthcare (59%); Huron Education and Life Sciences (24%); and Huron Business Advisory (17%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended September 30, 2016.

Acquisitions

On August 1, 2016, Huron completed its acquisition of Healthcare Services Management, Inc. ("HSM"), a firm specializing in healthcare information technology and management consulting. The results of operations of HSM are included within the Huron Healthcare segment from the date of acquisition.

The Company is also in the process of acquiring the international assets of ADI Strategies, Inc. in Dubai and India, for which it currently expects to sign and close later in the fourth quarter of 2016 or early in 2017.

Share Repurchase Program

The Company's board of directors authorized an extension through October 31, 2017 of its existing $125 million share repurchase program. There is currently $35.1 million remaining for share repurchases. The amount and timing of the repurchases are determined by management and depend on a variety of factors, including the trading price of the Company's common stock, general market and business conditions, and applicable legal requirements.

Outlook for 2016 (7)

Based on currently available information, the Company updates guidance for full year 2016 revenues before reimbursable expenses to a range of $730.0 million to $740.0 million. The Company also updates its full year 2016 earnings guidance and now expects net income from continuing operations in a range of $43.0 million to $45.0 million, EBITDA in a range of $132.0 million to $135.5 million, and adjusted EBITDA in a range of $137.0 million to $140.5 million. GAAP diluted earnings per share from continuing operations is expected in a range of $2.00 to $2.10, and non-GAAP adjusted diluted earnings per share from continuing operations is expected in a range of $3.25 to $3.35.

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

Third Quarter 2016 Webcast

The Company will host a webcast to discuss its financial results today, November 1, 2016, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by NASDAQ OMX 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.

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. 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.

About Huron

Huron is a global professional services firm committed to achieving sustainable results in partnership with its clients. The company brings depth of expertise in strategy, technology, operations, advisory services and analytics to drive lasting and measurable results in the healthcare, higher education, life sciences and commercial sectors. Through focus, passion and collaboration, Huron provides guidance to support organizations as they contend with the change transforming their industries and businesses. 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 requirements and needs, 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," or "outlook" or similar expressions. These forward-looking statements reflect our current expectations about our 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 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 our Annual Report on Form 10-K for the year ended December 31, 2015, 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 AND OTHER COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)
       
 

 
Three Months Ended September 30, Nine Months Ended September 30,
2016   2015 2016   2015
Revenues and reimbursable expenses:
Revenues $ 183,400 $ 175,465 $ 548,148 $ 513,910
Reimbursable expenses 19,093   16,091   54,636   53,266  
Total revenues and reimbursable expenses 202,493 191,556 602,784 567,176
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
Direct costs 108,354 94,821 323,310 297,448
Amortization of intangible assets and software development costs 4,052 4,738 11,278 12,102
Reimbursable expenses 18,956   15,837   54,747   53,194  
Total direct costs and reimbursable expenses 131,362   115,396   389,335   362,744  
Operating expenses and other losses, net:
Selling, general and administrative expenses 38,256 39,246 119,937 117,256
Restructuring charges 1,049 320 4,129 1,577
Other losses, net 494 494 524
Depreciation and amortization 8,092   6,538   23,064   18,286  
Total operating expenses and other losses, net 47,891   46,104   147,624   137,643  
Operating income 23,240 30,056 65,825 66,789
Other income (expense), net:
Interest expense, net of interest income (4,176 ) (4,638 ) (12,270 ) (13,794 )
Other income (expense), net 489   (1,400 ) 1,236   (1,982 )
Total other expense, net (3,687 ) (6,038 ) (11,034 ) (15,776 )
Income from continuing operations before income tax expense 19,553 24,018 54,791 51,013
Income tax expense 7,265   9,741   19,498   21,620  
Net income from continuing operations 12,288 14,277 35,293 29,393
Income (loss) from discontinued operations, net of tax 4   5,097   (1,830 ) 10,316  
Net income $ 12,292   $ 19,374   $ 33,463   $ 39,709  
Net earnings per basic share:
Net income from continuing operations $ 0.58 $ 0.65 $ 1.67 $ 1.33
Income (loss) from discontinued operations, net of tax   0.23   (0.08 ) 0.46  
Net income $ 0.58   $ 0.88   $ 1.59   $ 1.79  
Net earnings per diluted share:
Net income from continuing operations $ 0.57 $ 0.63 $ 1.65 $ 1.30
Income (loss) from discontinued operations, net of tax   0.23   (0.09 ) 0.46  
Net income $ 0.57   $ 0.86   $ 1.56   $ 1.76  
Weighted average shares used in calculating earnings per share:
Basic 21,076 22,107 21,084 22,151
Diluted 21,445 22,592 21,427 22,616
Comprehensive income:
Net income $ 12,292 $ 19,374 $ 33,463 $ 39,709
Foreign currency translation adjustments, net of tax 50 (615 ) 52 (201 )
Unrealized gain (loss) on investment, net of tax (2,038 ) (1,163 ) 4,135
Unrealized gain (loss) on cash flow hedging instruments, net of tax 121   (91 ) (27 ) (252 )
Other comprehensive income (loss) (1,867 ) (706 ) (1,138 ) 3,682  
Comprehensive income $ 10,425   $ 18,668   $ 32,325   $ 43,391  
 
 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)
         
 
September 30, 2016 December 31, 2015
Assets
Current assets:
Cash and cash equivalents $ 9,103 $ 58,437
Receivables from clients, net 88,387 85,297
Unbilled services, net 71,594 56,527
Income tax receivable 2,711 406
Prepaid expenses and other current assets 12,772   27,720  
Total current assets 184,567 228,387
Property and equipment, net 30,099 28,888
Long-term investment 32,932 34,831
Other non-current assets 23,448 21,045
Intangible assets, net 90,090 94,992
Goodwill 799,958   751,400  
Total assets $ 1,161,094   $ 1,159,543  
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,696 $ 7,220
Accrued expenses 23,013 24,276
Accrued payroll and related benefits 62,341 80,839
Deferred revenues 22,158   19,086  
Total current liabilities 114,208 131,421
Non-current liabilities:
Deferred compensation and other liabilities 33,511 23,768
Long-term debt 325,858 307,376
Deferred lease incentives 9,838 9,965
Deferred income taxes, net 38,659   34,688  
Total non-current liabilities 407,866 375,797
Commitments and contingencies
Stockholders' equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 24,120,541 and 24,775,823 shares issued at September 30, 2016 and December 31, 2015, respectively 235 241
Treasury stock, at cost, 2,395,473 and 2,249,630 shares at September 30, 2016 and December 31, 2015, respectively (112,329 ) (103,734 )
Additional paid-in capital 401,338 438,367
Retained earnings 347,329 313,866
Accumulated other comprehensive income 2,447   3,585  
Total stockholders' equity 639,020   652,325  
Total liabilities and stockholders' equity $ 1,161,094   $ 1,159,543  
 
 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
       
 
Nine Months Ended September 30,
2016   2015
Cash flows from operating activities:
Net income $ 33,463 $ 39,709
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 34,344 38,220
Share-based compensation 13,145 15,288
Amortization of debt discount and issuance costs 7,171 6,985
Allowances for doubtful accounts and unbilled services 7,107 (1,605 )
Deferred income taxes 4,045 13,407
Changes in operating assets and liabilities, net of acquisitions:
(Increase) decrease in receivables from clients 9,442 (14,725 )
(Increase) decrease in unbilled services (21,492 ) 15,179
(Increase) decrease in current income tax receivable / payable, net (3,039 ) 3,704
(Increase) decrease in other assets 12,669 (5,381 )
Increase (decrease) in accounts payable and accrued liabilities (2,366 ) 8,459
Increase (decrease) in accrued payroll and related benefits (17,707 ) (43,510 )
Increase (decrease) in deferred revenues 2,028   7,507  
Net cash provided by operating activities 78,810   83,237  
Cash flows from investing activities:
Purchases of property and equipment, net (9,372 ) (15,040 )
Investment in life insurance policies (1,890 ) (4,823 )
Purchases of businesses, net of cash acquired (69,133 ) (332,766 )
Purchase of convertible debt investment (15,138 )
Capitalization of internally developed software costs (838 ) (735 )
Net cash used in investing activities (81,233 ) (368,502 )
Cash flows from financing activities:
Proceeds from exercise of stock options 123
Shares redeemed for employee tax withholdings (4,837 ) (5,194 )
Tax benefit from share-based compensation 935 3,117
Share repurchases (55,265 ) (13,498 )
Proceeds from borrowings under credit facility 168,000 272,000
Repayments on credit facility (156,000 ) (214,500 )
Payments for capital lease obligations   (48 )
Net cash provided by (used in) financing activities (47,044 ) 41,877  
Effect of exchange rate changes on cash 133 (22 )
Net decrease in cash and cash equivalents (49,334 ) (243,410 )
Cash and cash equivalents at beginning of the period 58,437   256,872  
Cash and cash equivalents at end of the period $ 9,103   $ 13,462  
 
 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)
         
 
Three Months Ended September 30, Percent

Increase

(Decrease)
Segment and Consolidated Operating Results (in thousands): 2016   2015
Huron Healthcare:
Revenues $ 103,425 $ 112,114 (7.8 )%
Operating income $ 38,824 $ 47,609 (18.5 )%
Segment operating income as a percentage of segment revenues 37.5 % 42.5 %
Huron Education and Life Sciences:
Revenues $ 45,696 $ 42,056 8.7 %
Operating income $ 12,124 $ 10,473 15.8 %
Segment operating income as a percentage of segment revenues 26.5 % 24.9 %
Huron Business Advisory:
Revenues $ 34,279 $ 21,249 61.3 %
Operating income $ 7,380 $ 5,231 41.1 %
Segment operating income as a percentage of segment revenues 21.5 % 24.6 %
All Other:
Revenues $ $ 46 (100.0 )%
Operating loss $ $ (132 ) (100.0 )%
Segment operating loss as a percentage of segment revenues N/M N/M
Total Company:
Revenues $ 183,400 $ 175,465 4.5 %
Reimbursable expenses 19,093   16,091   18.7 %
Total revenues and reimbursable expenses $ 202,493   $ 191,556   5.7 %
Statements of Earnings reconciliation:
Segment operating income $ 58,328 $ 63,181 (7.7 )%
Items not allocated at the segment level:
Other operating expenses and losses, net 26,996 26,587 1.5 %
Depreciation and amortization expense 8,092   6,538   23.8 %
Total operating income 23,240 30,056 (22.7 )%
Other expense, net 3,687   6,038   (38.9 )%
Income from continuing operations before income tax expense $ 19,553   $ 24,018   (18.6 )%
Other Operating Data (excluding All Other):
Number of full-time billable consultants (at period end) (1) :
Huron Healthcare 1,010 1,084 (6.8 )%
Huron Education and Life Sciences 539 458 17.7 %
Huron Business Advisory 472   279   69.2 %
Total 2,021 1,821 11.0 %
Average number of full-time billable consultants (for the period) (1) :
Huron Healthcare 984 1,078
Huron Education and Life Sciences 523 444
Huron Business Advisory 454   261  
Total 1,961 1,783
 
 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)
       
 
Three Months Ended
September 30,
Other Operating Data (continued): 2016   2015
Full-time billable consultant utilization rate (2) :
Huron Healthcare 77.0 % 81.1 %
Huron Education and Life Sciences 67.6 % 75.2 %
Huron Business Advisory 74.8 % 79.4 %
Total 73.9 % 79.4 %
Full-time billable consultant average billing rate per hour (3) :
Huron Healthcare $ 203 $ 204
Huron Education and Life Sciences $ 231 $ 227
Huron Business Advisory $ 190 $ 196
Total $ 207 $ 209
Revenue per full-time billable consultant (in thousands):
Huron Healthcare $ 73 $ 77
Huron Education and Life Sciences $ 75 $ 80
Huron Business Advisory $ 69 $ 77
Total $ 72 $ 78
Average number of full-time equivalents (for the period) (5) :
Huron Healthcare 204 196
Huron Education and Life Sciences 42 49
Huron Business Advisory 23   10  
Total 269 255
Revenue per full-time equivalent (in thousands):
Huron Healthcare $ 156 $ 148
Huron Education and Life Sciences $ 156 $ 133
Huron Business Advisory $ 126 $ 112
Total $ 154 $ 144
 
 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)
         
 

Nine Months Ended September 30,
Percent

Increase

(Decrease)
Segment and Consolidated Operating Results (in thousands): 2016   2015
Huron Healthcare:
Revenues $ 323,531 $ 328,624 (1.5 )%
Operating income $ 119,229 $ 122,120 (2.4 )%
Segment operating income as a percentage of segment revenues 36.9 % 37.2 %
Huron Education and Life Sciences:
Revenues $ 134,050 $ 124,892 7.3 %
Operating income $ 35,407 $ 35,427 (0.1 )%
Segment operating income as a percentage of segment revenues 26.4 % 28.4 %
Huron Business Advisory:
Revenues $ 90,567 $ 59,173 53.1 %
Operating income $ 19,342 $ 13,514 43.1 %
Segment operating income as a percentage of segment revenues 21.4 % 22.8 %
All Other:
Revenues $ $ 1,221 (100.0 )%
Operating loss $ $ (1,654 ) (100.0 )%
Segment operating loss as a percentage of segment revenues N/M N/M
Total Company:
Revenues $ 548,148 $ 513,910 6.7 %
Reimbursable expenses 54,636   53,266   2.6 %
Total revenues and reimbursable expenses $ 602,784   $ 567,176   6.3 %
Statements of Earnings reconciliation:
Segment operating income $ 173,978 $ 169,407 2.7 %
Items not allocated at the segment level:
Other operating expenses and losses, net 85,089 84,332 0.9 %
Depreciation and amortization expense 23,064   18,286   26.1 %
Total operating income 65,825 66,789 (1.4 )%
Other expense, net 11,034   15,776   (30.1 )%
Income from continuing operations before income tax expense $ 54,791   $ 51,013   7.4 %
Other Operating Data (excluding All Other):
Number of full-time billable consultants (at period end) (1) :
Huron Healthcare 1,010 1,084 (6.8 )%
Huron Education and Life Sciences 539 458 17.7 %
Huron Business Advisory 472   279   69.2 %
Total 2,021 1,821 11.0 %
Average number of full-time billable consultants (for the period) (1) :
Huron Healthcare 1,005 1,092
Huron Education and Life Sciences 503 431
Huron Business Advisory 387   224  
Total 1,895 1,747
 
 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)
       
 

Nine Months Ended September 30,
Other Operating Data (continued): 2016   2015
Full-time billable consultant utilization rate (2) :
Huron Healthcare 78.6 % 76.4 %
Huron Education and Life Sciences 70.1 % 75.9 %
Huron Business Advisory 74.0 % 75.2 %
Total 75.3 % 76.1 %
Full-time billable consultant average billing rate per hour (3) :
Huron Healthcare $ 209 $ 215
Huron Education and Life Sciences $ 229 $ 230
Huron Business Advisory (4) $ 201 $ 234
Total $ 212 $ 221
Revenue per full-time billable consultant (in thousands):
Huron Healthcare $ 231 $ 230
Huron Education and Life Sciences $ 233 $ 248
Huron Business Advisory $ 220 $ 254
Total $ 229 $ 238
Average number of full-time equivalents (for the period) (5) :
Huron Healthcare 201 171
Huron Education and Life Sciences 40 40
Huron Business Advisory 16   8  
Total 257 219
Revenue per full-time equivalent (in thousands):
Huron Healthcare $ 456 $ 449
Huron Education and Life Sciences $ 428 $ 455
Huron Business Advisory $ 339 $ 301
Total $ 444 $ 445

_________________
    (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) The Huron Business Advisory segment includes our India EPM&A practice, formerly known as Rittman Mead Consulting Private Limited, a business that we acquired in July 2015. Absent the impact of our India EPM&A practice, the average billing rate per hour for Huron Business Advisory for the nine months ended September 30, 2016 and 2015 would have been $234 and $255, respectively.
(5) Consists of cultural transformation consultants within our Studer Group solution, which include coaches and their support staff, consultants who work variable schedules as needed by our clients, and full-time employees who provide software support and maintenance services to our clients.
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 Ended September 30, Nine Months Ended September 30,
2016   2015 2016   2015
Revenues $ 183,400   $ 175,465   $ 548,148   $ 513,910  
Net income from continuing operations $ 12,288 $ 14,277 $ 35,293 $ 29,393
Add back:
Income tax expense 7,265 9,741 19,498 21,620
Interest and other expenses 3,687 6,038 11,034 15,776
Depreciation and amortization 12,144   11,276   34,342   30,388  
Earnings before interest, taxes, depreciation and amortization (EBITDA) (6) 35,384 41,332 100,167 97,177
Add back:
Restructuring charges 1,049 320 4,129 1,577
Other losses, net 494     494   524  
Adjusted EBITDA (6) $ 36,927   $ 41,652   $ 104,790   $ 99,278  
Adjusted EBITDA as a percentage of revenues (6) 20.1 % 23.7 % 19.1 % 19.3 %
 
 

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)

(In thousands, except per share amounts)

(Unaudited)
         
 
Three Months Ended September 30, Nine Months Ended September 30,
2016   2015 2016   2015
Net income from continuing operations $ 12,288   $ 14,277   $ 35,293   $ 29,393  
Weighted average shares - diluted 21,445 22,592 21,427 22,616
Diluted earnings per share from continuing operations $ 0.57   $ 0.63   $ 1.65   $ 1.30  
Add back:
Amortization of intangible assets 8,771 7,913 24,369 20,685
Restructuring charges 1,049 320 4,129 1,577
Other losses, net 494 494 524
Non-cash interest on convertible notes 1,883 1,795 5,582 5,324
Tax effect (4,794 ) (3,951 ) (13,588 ) (11,075 )
Total adjustments, net of tax 7,403   6,077   20,986   17,035  
Adjusted net income from continuing operations (6) $ 19,691   $ 20,354   $ 56,279   $ 46,428  
Adjusted diluted earnings per share from continuing operations (6) $ 0.92   $ 0.90   $ 2.63   $ 2.05  

__________________
(6)   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 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 2016 OUTLOOK

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

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

(In millions)

(Unaudited)
       
 
Year Ending
December 31, 2016
Guidance Range
Low   High
Projected revenues - GAAP $ 730.0   $ 740.0  
Projected net income from continuing operations - GAAP $ 43.0 $ 45.0
Add back:
Income tax expense 26.0 27.5
Interest and other expenses 16.0 16.0
Depreciation and amortization 47.0   47.0  
Projected earnings before interest, taxes, depreciation and amortization (EBITDA) (7) 132.0 135.5
Add back:
Restructuring charges 4.5 4.5
Other losses, net 0.5   0.5  
Projected adjusted EBITDA (7) $ 137.0   $ 140.5  
Projected adjusted EBITDA as a percentage of projected revenues (7) 18.8 % 19.0 %
 
 

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (7)

(In millions, except per share amounts)

(Unaudited)
           
 
Year Ending
December 31, 2016
Guidance Range
Low   High
Projected net income from continuing operations - GAAP $ 43.0   $ 45.0  
Projected diluted earnings per share from continuing operations - GAAP $ 2.00   $ 2.10  
Add back:
Amortization of intangible assets 33.0 33.0
Restructuring charges 4.5 4.5
Other losses, net 0.5 0.5
Non-cash interest on convertible notes 7.5 7.5
Tax effect (18.5 ) (18.5 )
Total adjustments, net of tax 27.0 27.0
Projected adjusted net income from continuing operations (7) $ 70.0   $ 72.0  
Projected adjusted diluted earnings per share from continuing operations (7) $ 3.25   $ 3.35  

________________________
(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.

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