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8-K - FORM 8-K - Huron Consulting Group Inc. | c63177e8vk.htm |
Exhibit
99.1
FOR IMMEDIATE RELEASE
February 21, 2011
February 21, 2011
Huron Consulting Group Announces
Fourth Quarter and Full Year 2010 Financial Results
Fourth Quarter and Full Year 2010 Financial Results
Fourth Quarter Highlights and 2011 Guidance
| Revenues of $144.2 million for Q4 2010 increased from $141.9 million in Q4 2009. | ||
| Net loss from continuing operations for Q4 2010, which was negatively impacted by a previously announced litigation settlement, was $4.9 million, or $0.23 per share(7), compared to income of $9.5 million, or $0.47 per diluted share(7), for Q4 2009. Non-GAAP Adjusted Net Income(6) was $8.4 million, or $0.40 per diluted share, for Q4 2010 compared to $13.6 million, or $0.67 per diluted share, for Q4 2009. | ||
| Full-time billable consultant utilization rate(3) was 78.8% during Q4 2010 compared to 69.0% in Q4 2009. | ||
| Average number of full-time billable consultants(2) was 1,101 for Q4 2010 compared to 1,085 for the same period last year. The average number of full-time equivalent professionals(5) increased 10.0% to 1,120 for Q4 2010 compared to 1,018 for the same period last year. | ||
| Company anticipates full year 2011 revenues will be in a range of $580 million to $620 million. |
CHICAGO February 21, 2011 Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of
business consulting services, today announced its financial results for the fourth quarter and full
year ended December 31, 2010.
Hurons results for the quarter reflect solid performance in our Legal Consulting segment and in
our Healthcare practice, said James H. Roth, chief executive officer, Huron Consulting Group. As
our clients navigate the ongoing uncertainties in their businesses, they continue to rely on Huron
expertise to help them achieve their market objectives. The strength of our client base and their
continued reliance on Huron expertise is recognition of the competency of our personnel and our
ability to provide value.
We have entered 2011 with optimism about the opportunities across all of our businesses. While the
year is still young, we see encouraging signs in the marketplace. Within our Healthcare practice,
our hospital clients continue to face challenges stemming from declining margins and uncertain
implications associated with evolving healthcare reform. Within our Higher Education and Life
Sciences practices, many institutions are facing similar financial pressures due to state and
federal cutbacks. Following historical patterns, financial pressures and industry reform typically
create opportunities for consulting firms. Our Legal Consulting practice, which had a very strong
second half of 2010, is continuing to meet the demands of its global client base, added Roth.
Fourth Quarter 2010 Results
The following information is reported on a continuing operations basis unless otherwise noted.
Results also reflect the previously announced proposed settlement of the purported class action
lawsuit, which resulted in a pre-tax charge of $12.6 million, or $0.36 per diluted share, in the
fourth quarter of 2010.
Revenues for the fourth quarter of 2010 were $144.2 million compared to $141.9 million for the
fourth quarter of 2009. The Companys fourth quarter 2010 operating income was $1.3 million
compared to $16.2 million in the fourth quarter of 2009. Net income from continuing operations was
a loss of $4.9 million, or a loss of $0.23 per share, for the fourth quarter of 2010 compared to
income of $9.5 million, or $0.47 per diluted share, for the same period last year. Net income,
including discontinued
operations, was a loss of $3.8 million, or a loss of $0.18 per share, for the fourth quarter of
2010 compared to income of $14.4 million, or $0.71 per diluted share, for the same period last
year.
Fourth quarter 2010 earnings before interest, taxes, depreciation and amortization
(EBITDA)(6) was $7.3 million, compared to $22.6 million in the comparable quarter last
year.
In evaluating the Companys financial performance, management uses non-GAAP financial measures,
which exclude the effect of the following items (in thousands):
Three Months Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Amortization of intangible assets |
$ | 2,520 | $ | 2,303 | ||||
Restatement related expenses |
$ | 4,423 | $ | 4,063 | ||||
Restructuring charges |
$ | 2,603 | $ | 591 | ||||
Litigation settlement, net |
$ | 12,552 | $ | |
Adjusted EBITDA(6) was $26.9 million, or 18.7% of revenues, in the fourth quarter of
2010, compared to $27.2 million, or 19.2% of revenues, in the comparable quarter last year.
Non-GAAP Adjusted Net Income(6) was $8.4 million, or $0.40 per diluted share, for the
fourth quarter of 2010 compared to $13.6 million, or $0.67 per diluted share, for the comparable
period in 2009.
The average number of full-time billable consultants(2) was 1,101 in the fourth quarter
of 2010 compared to 1,085 in the same quarter last year. Full-time billable consultant utilization
rate(3) was 78.8% during the fourth quarter of 2010 compared with 69.0% during the same
period last year. Average billing rate per hour for full-time billable consultants(4)
was $239 for the fourth quarter of 2010 compared to $285 for the fourth quarter of 2009. The
average number of full-time equivalent professionals(5) increased 10.0% to 1,120 in the
fourth quarter of 2010 from 1,018 in the comparable period in 2009.
Full Year 2010 Results
The following information is reported on a continuing operations basis unless otherwise noted.
Results also reflect the previously announced proposed settlement of the purported class action
lawsuit, which resulted in a pre-tax charge of $12.6 million, or $0.36 per diluted share, for the
full year 2010.
Revenues were $553.0 million for the full year 2010 compared to $559.5 million for the full year
2009. The Companys operating income for the full year 2010 was $43.0 million compared to a loss of
$13.0 million for the full year 2009. Net income from continuing operations was $12.4 million, or
$0.60 per diluted share, for the full year 2010 compared to a loss of $20.5 million, or a loss
$1.02 per share, for the same period last year. Net income, including discontinued operations, was
$8.5 million, or $0.41 per diluted share, for the full year 2010 compared to a loss of $32.9
million, or a loss $1.63 per share, for the same period last year.
EBITDA(6) was $65.7 million for the full year 2010, compared to $13.8 million for the
same period in 2009.
In evaluating the Companys financial performance, management uses non-GAAP financial measures,
which exclude the effect of the following items (in thousands):
Twelve Months | ||||||||
Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Amortization of intangible assets |
$ | 8,123 | $ | 9,903 | ||||
Non-cash compensation(1) |
$ | | $ | 7,500 | ||||
Restatement related expenses |
$ | 8,666 | $ | 17,490 | ||||
Restructuring charges |
$ | 4,063 | $ | 2,533 | ||||
Impairment charge on goodwill |
$ | | $ | 67,034 | ||||
Litigation settlements, net |
$ | 17,316 | $ | | ||||
Other gain |
$ | | $ | (2,687 | ) |
Adjusted EBITDA(6) was $95.7 million, or 17.3% of revenues, for the full year 2010
compared to $105.7 million, or 18.9% of revenues, in the comparable period last year.
Non-GAAP Adjusted Net Income(6) was $35.3 million, or $1.70 per diluted share, for
the full year 2010 compared to $42.6 million, or $2.08 per diluted share, for the comparable
period in 2009.
The average number of full-time billable consultants(2) was 1,068 for the full year 2010
compared to 1,113 in the same period last year. Full-time billable consultant utilization
rate(3) was 73.9% for the full year 2010 compared with 72.3% during the same period last
year. Average billing rate per hour for full-time billable consultants(4) was $242 for
the full year 2010 compared to $270 for the full year 2009. The average number of full-time
equivalent professionals(5) increased 19.5% to 1,025 for the full year 2010 from 858 in
the comparable period of 2009.
Operating Segments
Hurons results reflect a portfolio of service offerings focused on helping clients address complex
business challenges. The Company has three operating segments as follows: Health and Education
Consulting, Legal Consulting, and Financial Consulting, representing 61%, 26% and 13% of full year
2010 total revenues, respectively.
Financial results by segment are included in the attached schedules and in Hurons Form 10-K filing
for the year ended December 31, 2010.
Discontinued Operations
As previously disclosed, the Company divested its Strategy business effective December 31, 2009 and
wound down its Japan operations effective June 30, 2010. The Company also exited the Utilities
consulting practice in the third quarter of 2010. Additionally, the Company divested its Disputes &
Investigations practice, a part of its Financial Consulting segment, effective September 30, 2010.
The results for the above mentioned Financial Consulting segment businesses are reported as
discontinued operations for the periods presented.
Acquisitions
In November 2010, the Company acquired Click Commerce, Inc. and TRILANTIC International Limited in
the Health and Education Consulting and Legal Consulting segments, respectively.
Click Commerce, Inc. is a provider of software-based solutions and professional services for the
business of research to leading academic medical centers and research institutions. TRILANTIC is an
e-discovery business providing technology solutions to clients in Europe and the Middle East.
Outlook for 2011
Based on currently available information, the Company provided guidance for full year 2011 revenues
before reimbursable expenses in a range of $580.0 million to $620.0 million. The Company also
anticipates EBITDA(8,10) in a range of $94.5 million to $104.5 million, Adjusted
EBITDA(8,10) in a range
of $101.5 million to $111.5 million, GAAP diluted earnings per share in a range of $1.45 to $1.70,
and non-GAAP adjusted diluted earnings per share(8,10) in a range of $1.85 to $2.10.
Management will provide a more detailed discussion of its outlook during the Companys earnings
conference call webcast.
Fourth Quarter and Full Year 2010 Webcast
The Company will host a webcast to discuss its financial results tomorrow, February 22, 2011, at
9:00 a.m. Eastern Time (8:00 a.m. Central Time). The conference call is being webcast by Thomson
and can be accessed at Huron Consulting Groups 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, comply with complex
regulations, reduce costs, recover from distress, leverage technology, and stimulate growth. The
Company teams with its clients to deliver sustainable and measurable results. Huron provides
services to a wide variety of both financially sound and distressed organizations, including
leading academic institutions, healthcare organizations, Fortune 500 companies, medium-sized
businesses, and the law firms that represent these various organizations. Learn more at
www.huronconsultinggroup.com.
Use of Non-GAAP Financial Measures(6,10)
In evaluating the Companys 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 (loss), net income
(loss) from continuing operations and diluted earnings (loss) 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 without
the effect of non-cash or other one-time items and the Companys ability to generate cash flows
from operations that are available for taxes, capital expenditures, and to repay debt. 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, including the information incorporated by reference herein,
that are not historical in nature, including those concerning the Companys current expectations
about its future results, 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, plans, anticipates, assumes, can, considers, could, intends,
might, predicts, seeks, would, believes, estimates or continues. Risks, uncertainties
and assumptions that could impact the Companys forward-looking statements relate, among other
things, to (i) the restatement, (ii) the Securities and Exchange Commission investigation with
respect to the restatement and the related purported private shareholder class action lawsuit and
derivative lawsuits, (iii) the request by the
United States Attorneys Office for the Northern
District of Illinois for certain documents, (iv) final approval of the proposed settlement of the
purported class action lawsuit related to the restatement, and (v) the share price of the shares of
our common stock included as a portion of the settlement consideration at the time of issuance. In
addition, these forward-looking statements reflect our current expectation about our future
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;
that existing market conditions continue to trend upward; that we will receive final approval of
the proposed settlement of the purported class action lawsuit related to the restatement; and the
share price of the shares of our common stock included as a portion of the settlement consideration
at the time of issuance. These statements involve known and unknown risks, uncertainties and
other factors, including, among others, those described under Item 1A. Risk Factors in our
forthcoming 2010 Annual Report on Form 10-K for the full year ended December 31, 2010 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.
Media Contact:
Jennifer Frost Hennagir
312-880-3260
jfrost-hennagir@huronconsultinggroup.com
Jennifer Frost Hennagir
312-880-3260
jfrost-hennagir@huronconsultinggroup.com
Investor Contact:
James K. Rojas, Chief Financial Officer
or
Ellen Wong
312-583-8722
investor@huronconsultinggroup.com
James K. Rojas, Chief Financial Officer
or
Ellen Wong
312-583-8722
investor@huronconsultinggroup.com
###
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues and reimbursable expenses: |
||||||||||||||||
Revenues |
$ | 144,169 | $ | 141,884 | $ | 553,007 | $ | 559,458 | ||||||||
Reimbursable expenses |
14,744 | 10,740 | 51,593 | 47,632 | ||||||||||||
Total revenues and reimbursable expenses |
158,913 | 152,624 | 604,600 | 607,090 | ||||||||||||
Direct costs and reimbursable expenses (exclusive of
depreciation
and amortization shown in operating expenses): |
||||||||||||||||
Direct costs |
88,424 | 85,149 | 343,618 | 342,816 | ||||||||||||
Intangible assets amortization |
1,466 | 961 | 4,125 | 4,695 | ||||||||||||
Reimbursable expenses |
14,551 | 10,750 | 51,466 | 47,646 | ||||||||||||
Total direct costs and reimbursable expenses |
104,441 | 96,860 | 399,209 | 395,157 | ||||||||||||
Operating expenses: |
||||||||||||||||
Selling, general and administrative |
29,036 | 29,481 | 113,786 | 118,424 | ||||||||||||
Restructuring charges |
2,603 | 591 | 4,063 | 2,533 | ||||||||||||
Restatement related expenses |
4,423 | 4,063 | 8,666 | 17,490 | ||||||||||||
Litigation settlements, net |
12,552 | | 17,316 | | ||||||||||||
Depreciation and amortization |
4,531 | 5,443 | 18,605 | 22,116 | ||||||||||||
Impairment charge on goodwill |
| | | 67,034 | ||||||||||||
Total operating expenses |
53,145 | 39,578 | 162,436 | 227,597 | ||||||||||||
Other gain |
| | | 2,687 | ||||||||||||
Operating income (loss) |
1,327 | 16,186 | 42,955 | (12,977 | ) | |||||||||||
Other income (expense): |
||||||||||||||||
Interest expense, net of interest income |
(3,854 | ) | (3,246 | ) | (14,402 | ) | (12,256 | ) | ||||||||
Other income |
219 | 693 | 262 | 1,883 | ||||||||||||
Total other expense |
(3,635 | ) | (2,553 | ) | (14,140 | ) | (10,373 | ) | ||||||||
(Loss) income from continuing operations before income
tax expense |
(2,308 | ) | 13,633 | 28,815 | (23,350 | ) | ||||||||||
Income tax expense (benefit) |
2,559 | 4,126 | 16,434 | (2,839 | ) | |||||||||||
Net (loss) income from continuing operations |
(4,867 | ) | 9,507 | 12,381 | (20,511 | ) | ||||||||||
Income (loss) from discontinued operations (including
gain on disposal
of $1.2 million during the twelve months ended
December 31, 2010 and
loss on disposal of $0.4 million during the three and
twelve months
ended December 31, 2009), net of tax |
1,053 | 4,892 | (3,856 | ) | (12,362 | ) | ||||||||||
Net (loss) income |
$ | (3,814 | ) | $ | 14,399 | $ | 8,525 | $ | (32,873 | ) | ||||||
Net earnings (loss) per basic share: |
||||||||||||||||
(Loss) income from continuing operations |
$ | (0.23 | ) | $ | 0.47 | $ | 0.60 | $ | (1.02 | ) | ||||||
Income (loss) from discontinued operations, net of tax |
$ | 0.05 | $ | 0.24 | $ | (0.19 | ) | $ | (0.61 | ) | ||||||
Net (loss) income |
$ | (0.18 | ) | $ | 0.71 | $ | 0.41 | $ | (1.63 | ) | ||||||
Net earnings (loss) per diluted share: |
||||||||||||||||
(Loss) income from continuing operations |
$ | (0.23 | ) | $ | 0.47 | $ | 0.60 | $ | (1.02 | ) | ||||||
Income (loss) from discontinued operations, net of tax |
$ | 0.05 | $ | 0.24 | $ | (0.19 | ) | $ | (0.61 | ) | ||||||
Net (loss) income |
$ | (0.18 | ) | $ | 0.71 | $ | 0.41 | $ | (1.63 | ) | ||||||
Weighted average shares used in calculating earnings
(loss) per share: |
||||||||||||||||
Basic |
20,728 | 20,271 | 20,546 | 20,114 | ||||||||||||
Diluted |
20,728 | 20,419 | 20,774 | 20,114 |
HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
December 31, | ||||||||
2010 | 2009 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 6,271 | $ | 5,715 | ||||
Receivables from clients, net |
91,389 | 75,845 | ||||||
Unbilled services, net |
33,076 | 34,441 | ||||||
Income tax receivable |
4,896 | 18,911 | ||||||
Deferred income taxes |
19,853 | 16,338 | ||||||
Insurance recovery receivable |
27,000 | | ||||||
Prepaid expenses and other current assets |
15,653 | 19,078 | ||||||
Current assets of discontinued operations |
2,476 | 22,455 | ||||||
Total current assets |
200,614 | 192,783 | ||||||
Property and equipment, net |
32,935 | 39,133 | ||||||
Deferred income taxes |
12,440 | 21,298 | ||||||
Other non-current assets |
10,575 | 14,134 | ||||||
Intangible assets, net |
26,205 | 22,406 | ||||||
Goodwill |
506,214 | 464,169 | ||||||
Non-current assets of discontinued operations |
| 292 | ||||||
Total assets |
$ | 788,983 | $ | 754,215 | ||||
Liabilities and stockholders equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 8,310 | $ | 7,150 | ||||
Accrued expenses |
28,849 | 29,185 | ||||||
Accrued payroll and related benefits |
45,184 | 69,758 | ||||||
Accrued consideration for business acquisitions, current portion |
25,013 | 63,188 | ||||||
Accrued litigation settlement |
39,552 | | ||||||
Income tax payable |
451 | 874 | ||||||
Deferred revenues |
18,069 | 13,155 | ||||||
Current portion of capital lease obligations |
32 | 278 | ||||||
Current liabilities of discontinued operations |
699 | 9,405 | ||||||
Total current liabilities |
166,159 | 192,993 | ||||||
Non-current liabilities: |
||||||||
Deferred compensation and other liabilities |
6,282 | 6,131 | ||||||
Accrued consideration for business acquisitions, net of current portion |
3,847 | | ||||||
Capital lease obligations, net of current portion |
| 5 | ||||||
Bank borrowings |
257,000 | 219,000 | ||||||
Deferred lease incentives |
7,323 | 8,681 | ||||||
Non-current liabilities of discontinued operations |
| 416 | ||||||
Total non-current liabilities |
274,452 | 234,233 | ||||||
Stockholders equity |
||||||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 23,221,287 and
22,624,515 shares issued at December 31, 2010 and 2009, respectively |
222 | 213 | ||||||
Treasury stock, at cost, 1,343,201 and 995,409 shares at December 31, 2010
and 2009,
respectively |
(65,675 | ) | (51,561 | ) | ||||
Additional paid-in capital |
363,402 | 335,272 | ||||||
Retained earnings |
52,383 | 43,858 | ||||||
Accumulated other comprehensive loss |
(1,960 | ) | (793 | ) | ||||
Total stockholders equity |
348,372 | 326,989 | ||||||
Total liabilities and stockholders equity |
$ | 788,983 | $ | 754,215 | ||||
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | 8,525 | $ | (32,873 | ) | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
22,861 | 28,333 | ||||||
Share-based compensation |
20,682 | 19,904 | ||||||
Non-cash compensation |
| 8,333 | ||||||
Allowances for doubtful accounts and unbilled services |
350 | 1,993 | ||||||
Deferred income taxes |
(863 | ) | (27,892 | ) | ||||
Loss on disposal of property and equipment |
208 | | ||||||
Gain on sale of business |
(1,232 | ) | | |||||
Non-cash portion of litigation settlement |
12,552 | |||||||
Impairment charge on goodwill |
| 106,000 | ||||||
Write-down of goodwill and intangibles related to sale of business |
| 3,425 | ||||||
Other gains |
| (3,286 | ) | |||||
Changes in operating assets and liabilities, net of businesses acquired: |
||||||||
(Increase) decrease in receivables from clients |
(554 | ) | (2,597 | ) | ||||
Decrease (increase) in unbilled services |
6,210 | 2,503 | ||||||
Decrease (increase) in current income tax receivable / payable, net |
13,106 | (15,957 | ) | |||||
Decrease (increase) in other assets |
2,274 | (622 | ) | |||||
(Decrease) increase in accounts payable and accrued liabilities |
(3,665 | ) | 6,928 | |||||
(Decrease) increase in accrued payroll and related benefits |
(33,439 | ) | 28,335 | |||||
Increase (decrease) in deferred revenues |
3,036 | (8,601 | ) | |||||
Net cash provided by operating activities |
50,051 | 113,926 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment, net |
(8,500 | ) | (12,616 | ) | ||||
Net surrender of (investment in) life insurance policies |
687 | (395 | ) | |||||
Purchases of businesses, net of cash acquired |
(87,946 | ) | (51,550 | ) | ||||
Sales of businesses |
7,942 | | ||||||
Net cash used in investing activities |
(87,817 | ) | (64,561 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from exercise of stock options |
73 | 162 | ||||||
Shares redeemed for employee tax withholdings |
(1,550 | ) | (3,304 | ) | ||||
Tax benefit from share-based compensation |
1,291 | 7,952 | ||||||
Proceeds from borrowings under credit facility |
363,500 | 246,000 | ||||||
Repayments on credit facility |
(325,500 | ) | (307,000 | ) | ||||
Principal payments of notes payable and capital lease obligations |
(257 | ) | (370 | ) | ||||
Net cash provided by (used in) financing activities |
37,557 | (56,560 | ) | |||||
Effect of exchange rate changes on cash |
97 | (452 | ) | |||||
Net (decrease) increase in cash and cash equivalents |
(112 | ) | (7,647 | ) | ||||
Cash and cash equivalents at beginning of the period |
6,459 | 14,106 | ||||||
Cash and cash equivalents at end of the period (*) |
$ | 6,347 | $ | 6,459 | ||||
(*) | Cash and cash equivalents presented herein includes $0.1 million and $0.7 million of cash and cash equivalents classified as discontinued operations as of December 31, 2010 and 2009, respectively. |
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
Three Months Ended | Percent | |||||||||||
December 31, | Increase | |||||||||||
Segment and Consolidated Operating Results (in thousands): | 2010 | 2009 | (Decrease) | |||||||||
Health and Education Consulting: |
||||||||||||
Revenues |
$ | 88,541 | $ | 90,676 | (2.4 | %) | ||||||
Operating income |
$ | 30,472 | $ | 34,549 | (11.8 | %) | ||||||
Segment operating income as a percent of segment revenues |
34.4 | % | 38.1 | % | ||||||||
Legal Consulting: |
||||||||||||
Revenues |
$ | 39,789 | $ | 31,401 | 26.7 | % | ||||||
Operating income |
$ | 10,836 | $ | 5,719 | 89.5 | % | ||||||
Segment operating income as a percent of segment revenues |
27.2 | % | 18.2 | % | ||||||||
Financial Consulting: |
||||||||||||
Revenues |
$ | 15,839 | $ | 19,807 | (20.0 | %) | ||||||
Operating income |
$ | 5,062 | $ | 7,196 | (29.7 | %) | ||||||
Segment operating income as a percent of segment revenues |
32.0 | % | 36.3 | % | ||||||||
Total Company: |
||||||||||||
Revenues |
$ | 144,169 | $ | 141,884 | 1.6 | % | ||||||
Reimbursable expenses |
14,744 | 10,740 | 37.3 | % | ||||||||
Total revenues and reimbursable expenses |
$ | 158,913 | $ | 152,624 | 4.1 | % | ||||||
Statement of operations reconciliation: |
||||||||||||
Segment operating income |
$ | 46,370 | $ | 47,464 | (2.3 | %) | ||||||
Charges not allocated at the segment level: |
||||||||||||
Other selling, general and administrative expenses |
40,512 | 25,835 | 56.8 | % | ||||||||
Depreciation and amortization expense |
4,531 | 5,443 | (16.8 | %) | ||||||||
Total operating income |
1,327 | 16,186 | (91.8 | %) | ||||||||
Other expense, net |
3,635 | 2,553 | 42.4 | % | ||||||||
Income (loss) from continuing operations before income tax expense |
$ | (2,308 | ) | $ | 13,633 | (116.9 | %) | |||||
Other Operating Data: |
||||||||||||
Number of full-time billable consultants (at period end) (2): |
||||||||||||
Health and Education Consulting |
907 | 857 | 5.8 | % | ||||||||
Legal Consulting |
122 | 141 | (13.5 | %) | ||||||||
Financial Consulting |
86 | 87 | (1.1 | %) | ||||||||
Total |
1,115 | 1,085 | 2.8 | % | ||||||||
Average number of full-time billable consultants (for the period)
(2): |
||||||||||||
Health and Education Consulting |
890 | 854 | ||||||||||
Legal Consulting |
123 | 140 | ||||||||||
Financial Consulting |
88 | 91 | ||||||||||
Total |
1,101 | 1,085 | ||||||||||
Full-time billable consultant utilization rate (3): |
||||||||||||
Health and Education Consulting |
80.3 | % | 72.4 | % | ||||||||
Legal Consulting |
65.2 | % | 54.6 | % | ||||||||
Financial Consulting |
82.4 | % | 58.6 | % | ||||||||
Total |
78.8 | % | 69.0 | % |
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
Three Months Ended | ||||||||
December 31, | ||||||||
Other Operating Data: | 2010 | 2009 | ||||||
Full-time billable consultant average billing rate per hour (4): |
||||||||
Health and Education Consulting |
$ | 234 | $ | 287 | ||||
Legal Consulting |
$ | 212 | $ | 192 | ||||
Financial Consulting |
$ | 312 | $ | 375 | ||||
Total |
$ | 239 | $ | 285 | ||||
Revenue per full-time billable consultant (in thousands): |
||||||||
Health and Education Consulting |
$ | 84 | $ | 94 | ||||
Legal Consulting |
$ | 55 | $ | 45 | ||||
Financial Consulting |
$ | 118 | $ | 118 | ||||
Total |
$ | 83 | $ | 90 | ||||
Average number of full-time equivalents (for the period) (5): |
||||||||
Health and Education Consulting |
154 | 132 | ||||||
Legal Consulting |
881 | 750 | ||||||
Financial Consulting |
85 | 136 | ||||||
Total |
1,120 | 1,018 | ||||||
Revenue per full-time equivalents (in thousands): |
||||||||
Health and Education Consulting |
$ | 92 | $ | 76 | ||||
Legal Consulting |
$ | 37 | $ | 34 | ||||
Financial Consulting |
$ | 64 | $ | 67 | ||||
Total |
$ | 47 | $ | 43 |
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
Twelve Months Ended | Percent | |||||||||||
December 31, | Increase | |||||||||||
Segment and Consolidated Operating Results (in thousands): | 2010 | 2009 | (Decrease) | |||||||||
Health and Education Consulting: |
||||||||||||
Revenues |
$ | 338,288 | $ | 373,881 | (9.5 | %) | ||||||
Operating income (1) |
$ | 112,339 | $ | 141,295 | (20.5 | %) | ||||||
Segment operating income as a percent of segment revenues |
33.2 | % | 37.8 | % | ||||||||
Legal Consulting: |
||||||||||||
Revenues |
$ | 144,730 | $ | 114,824 | 26.0 | % | ||||||
Operating income |
$ | 39,254 | $ | 22,035 | 78.1 | % | ||||||
Segment operating income as a percent of segment revenues |
27.1 | % | 19.2 | % | ||||||||
Financial Consulting: |
||||||||||||
Revenues |
$ | 69,989 | $ | 70,753 | (1.1 | %) | ||||||
Operating income (1) |
$ | 20,323 | $ | 17,205 | 18.1 | % | ||||||
Segment operating income as a percent of segment revenues |
29.0 | % | 24.3 | % | ||||||||
Total Company: |
||||||||||||
Revenues |
$ | 553,007 | $ | 559,458 | (1.2 | %) | ||||||
Reimbursable expenses |
51,593 | 47,632 | 8.3 | % | ||||||||
Total revenues and reimbursable expenses |
$ | 604,600 | $ | 607,090 | (0.4 | %) | ||||||
Statement of operations reconciliation: |
||||||||||||
Segment operating income |
$ | 171,916 | $ | 180,535 | (4.8 | %) | ||||||
Charges not allocated at the segment level: |
||||||||||||
Other selling, general and administrative expenses |
110,356 | 104,362 | 5.7 | % | ||||||||
Depreciation and amortization expense |
18,605 | 22,116 | (15.9 | %) | ||||||||
Impairment charge on goodwill |
| 67,034 | (100.0 | %) | ||||||||
Total operating income (loss) |
42,955 | (12,977 | ) | N/M | ||||||||
Other expense, net |
14,140 | 10,373 | 36.3 | % | ||||||||
Income (loss) from continuing operations before income tax expense |
$ | 28,815 | $ | (23,350 | ) | N/M | ||||||
Other Operating Data: |
||||||||||||
Number of full-time billable consultants (at period end) (2): |
||||||||||||
Health and Education Consulting |
907 | 857 | 5.8 | % | ||||||||
Legal Consulting |
122 | 141 | (13.5 | %) | ||||||||
Financial Consulting |
86 | 87 | (1.1 | %) | ||||||||
Total |
1,115 | 1,085 | 2.8 | % | ||||||||
Average number of full-time billable consultants (for the period)
(2): |
||||||||||||
Health and Education Consulting |
858 | 875 | ||||||||||
Legal Consulting |
128 | 148 | ||||||||||
Financial Consulting |
82 | 90 | ||||||||||
Total |
1,068 | 1,113 | ||||||||||
Full-time billable consultant utilization rate (3): |
||||||||||||
Health and Education Consulting |
75.3 | % | 75.3 | % | ||||||||
Legal Consulting |
62.9 | % | 57.1 | % | ||||||||
Financial Consulting |
75.4 | % | 68.8 | % | ||||||||
Total |
73.9 | % | 72.3 | % |
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
Twelve Months Ended | ||||||||
December 31, | ||||||||
Other Operating Data: | 2010 | 2009 | ||||||
Full-time billable consultant average billing rate per hour (4): |
||||||||
Health and Education Consulting |
$ | 239 | $ | 272 | ||||
Legal Consulting |
$ | 206 | $ | 207 | ||||
Financial Consulting |
$ | 309 | $ | 323 | ||||
Total |
$ | 242 | $ | 270 | ||||
Revenue per full-time billable consultant (in thousands): |
||||||||
Health and Education Consulting |
$ | 333 | $ | 385 | ||||
Legal Consulting |
$ | 221 | $ | 216 | ||||
Financial Consulting |
$ | 503 | $ | 486 | ||||
Total |
$ | 332 | $ | 370 | ||||
Average number of full-time equivalents (for the period) (5): |
||||||||
Health and Education Consulting |
152 | 111 | ||||||
Legal Consulting |
765 | 644 | ||||||
Financial Consulting |
108 | 103 | ||||||
Total |
1,025 | 858 | ||||||
Revenue per full-time equivalents (in thousands): |
||||||||
Health and Education Consulting |
$ | 348 | $ | 335 | ||||
Legal Consulting |
$ | 152 | $ | 129 | ||||
Financial Consulting |
$ | 266 | $ | 262 | ||||
Total |
$ | 193 | $ | 171 |
(1) | Includes non-cash compensation expense, which represents acquisition-related payments made by the Company to selling shareholders of certain acquired businesses that were subsequently redistributed by such selling shareholders, as follows (in thousands). See the Companys Form 10-K for the year ended December 31, 2009 for additional information. |
Twelve Months Ended | ||||
December 31, 2009 | ||||
Health and Education Consulting |
$ | 5,605 | ||
Financial Consulting |
1,895 | |||
Total |
$ | 7,500 | ||
(2) | Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked. | |
(3) | Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all 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. | |
(4) | 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. | |
(5) | 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. |
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)
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (6)
(In thousands)
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues |
$ | 144,169 | $ | 141,884 | $ | 553,007 | $ | 559,458 | ||||||||
Net income (loss) from continuing operations |
$ | (4,867 | ) | $ | 9,507 | $ | 12,381 | $ | (20,511 | ) | ||||||
Add back: |
||||||||||||||||
Income tax expense (benefit) |
2,559 | 4,126 | 16,434 | (2,839 | ) | |||||||||||
Interest and other expenses |
3,635 | 2,553 | 14,140 | 10,373 | ||||||||||||
Depreciation and amortization |
5,997 | 6,404 | 22,730 | 26,811 | ||||||||||||
Earnings before interest, taxes, depreciation and
amortization (EBITDA) (6) |
7,324 | 22,590 | 65,685 | 13,834 | ||||||||||||
Add back: |
||||||||||||||||
Non-cash compensation (1) |
| | | 7,500 | ||||||||||||
Restatement related expenses |
4,423 | 4,063 | 8,666 | 17,490 | ||||||||||||
Restructuring charges |
2,603 | 591 | 4,063 | 2,533 | ||||||||||||
Impairment charge on goodwill |
| | | 67,034 | ||||||||||||
Litigation settlements, net |
12,552 | | 17,316 | | ||||||||||||
Other gain |
| | | (2,687 | ) | |||||||||||
Adjusted EBITDA (6) |
$ | 26,902 | $ | 27,244 | $ | 95,730 | $ | 105,704 | ||||||||
Adjusted EBITDA as a percentage of revenues (6) |
18.7 | % | 19.2 | % | 17.3 | % | 18.9 | % | ||||||||
HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)
(In thousands)
(Unaudited)
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)
(In thousands)
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income (loss) from continuing operations |
$ | (4,867 | ) | $ | 9,507 | $ | 12,381 | $ | (20,511 | ) | ||||||
Weighted average shares diluted (7) |
20,728 | 20,419 | 20,774 | 20,114 | ||||||||||||
Diluted earnings (loss) per share from continuing operations |
$ | (0.23 | ) | $ | 0.47 | $ | 0.60 | $ | (1.02 | ) | ||||||
Add back: |
||||||||||||||||
Amortization of intangible assets |
2,520 | 2,303 | 8,123 | 9,903 | ||||||||||||
Non-cash compensation (1) |
| | | 7,500 | ||||||||||||
Restatement related expenses |
4,423 | 4,063 | 8,666 | 17,490 | ||||||||||||
Restructuring charges |
2,603 | 591 | 4,063 | 2,533 | ||||||||||||
Impairment charge on goodwill |
| | | 67,034 | ||||||||||||
Litigation settlements, net |
12,552 | | 17,316 | | ||||||||||||
Other gain |
| | | (2,687 | ) | |||||||||||
Tax effect |
(8,839 | ) | (2,852 | ) | (15,267 | ) | (38,652 | ) | ||||||||
Total adjustments, net of tax |
13,259 | 4,105 | 22,901 | 63,121 | ||||||||||||
Adjusted net income from continuing operations (6) |
$ | 8,392 | $ | 13,612 | $ | 35,282 | $ | 42,610 | ||||||||
Weighted average shares diluted |
20,988 | 20,419 | 20,774 | 20,526 | ||||||||||||
Adjusted diluted earnings per share from continuing
operations (6) |
$ | 0.40 | $ | 0.67 | $ | 1.70 | $ | 2.08 | ||||||||
(6) | In evaluating the Companys 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 (a) in understanding and evaluating Hurons current operating performance and future prospects in the same manner as management does, if they so choose, (b) in comparing in a consistent manner Hurons current financial results with Hurons past financial results and (c) in understanding the Companys ability to generate cash flows from operations that are available for taxes, capital expenditures, and debt repayment. 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. | |
(7) | In the three month period ending December 31, 2010 and the twelve month period ending December 31, 2009, the Companys earnings from continuing operations resulted in a net loss, therefore, basic weighted average common shares outstanding is used in computing diluted loss per share. For the twelve month period ending December 31, 2010 and the three month period ending December 31, 2009, diluted weighted average common shares outstanding is used in computing diluted earnings per share. |
HURON CONSULTING GROUP INC.
RECONCILIATION OF NON-GAAP MEASURES FOR FULL YEAR 2011 OUTLOOK
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
(8) TO
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (8) (10)
(In millions)
(Unaudited)
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (8) (10)
(In millions)
(Unaudited)
Year Ending | ||||||||
December 31, 2011 | ||||||||
Guidance Range | ||||||||
Low | High | |||||||
Projected revenues GAAP |
$ | 580.0 | $ | 620.0 | ||||
Projected net income from continuing operations GAAP (8) |
$ | 32.0 | $ | 37.5 | ||||
Add back: |
||||||||
Income tax expense |
26.0 | 30.5 | ||||||
Interest and other expenses |
14.0 | 14.0 | ||||||
Depreciation and amortization |
22.5 | 22.5 | ||||||
Projected earnings before interest, taxes, depreciation and
amortization (EBITDA) (8) (10) |
94.5 | 104.5 | ||||||
Add back: |
||||||||
Restructuring and restatement related expenses (9) |
7.0 | 7.0 | ||||||
Projected adjusted EBITDA (8) (10) |
$ | 101.5 | $ | 111.5 | ||||
Projected adjusted EBITDA as a percentage of projected revenues (10) |
17.5 | % | 18.0 | % | ||||
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS (8)
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (8) (10)
(In millions)
(Unaudited)
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (8) (10)
(In millions)
(Unaudited)
Year Ending | ||||||||
December 31, 2011 | ||||||||
Guidance Range | ||||||||
Low | High | |||||||
Projected net income from continuing operations GAAP (8) |
$ | 32.0 | $ | 37.5 | ||||
Projected diluted earnings per share from continuing operations GAAP
(8) |
$ | 1.45 | $ | 1.70 | ||||
Add back: |
||||||||
Amortization of intangible assets |
8.0 | 8.0 | ||||||
Restructuring and restatement related expenses (9) |
7.0 | 7.0 | ||||||
Tax effect |
(6.0 | ) | (6.0 | ) | ||||
Total adjustments, net of tax |
9.0 | 9.0 | ||||||
Projected adjusted net income from continuing operations (8) (10) |
$ | 41.0 | $ | 46.5 | ||||
Projected adjusted diluted earnings per share from
continuing operations (8) (10) |
$ | 1.85 | $ | 2.10 | ||||
(8) | Projected net income from continuing operations GAAP, projected earnings before interest, taxes, depreciation and amortization (EBITDA), projected adjusted EBITDA, projected diluted earnings per share from continuing operations GAAP, projected adjusted net income from continuing operations, and projected adjusted diluted earnings per share from continuing operations exclude (i) potential settlement costs, penalties, damages, administrative remedies, fines or liabilities for additional amounts (Liabilities) that may be incurred in connection with (A) the SEC investigations into the restatement and the allocation of time within a certain practice group, (B) the purported private shareholder class action and derivative lawsuits in respect of the restatement, (C) the proposed settlement of the purported class action lawsuit in respect of the restatement, including any adjustments to the $12.6 million non-cash charge related to changes in the fair value at the time of issuance of the shares of our common stock included as a portion of the settlement consideration and (D) the request by the USAO for the Northern District of Illinois for certain documents, which Liabilities cannot be estimated and could be material and (ii) other unanticipated costs and |
expenses in connection with the SEC investigations, the purported private shareholder class action and derivative lawsuits, or the request by the USAO for the Northern District of Illinois for certain documents, which unanticipated costs and expenses could be material. See the Companys Form 10-K for the year ended December 31, 2009, Form 10-Q for the quarter ended March 31, 2010, Form 10-Q for the quarter ended June 30, 2010, and Form 10-Q for the quarter ended September 30, 2010, filed on February 23, 2010, April 29, 2010, July 29, 2010 and November 4, 2010, respectively, as well as the Companys Form 10-K for the year ended December 31, 2010, which the Company intends to file on February 22, 2011, for additional information about the SEC investigations, purported private shareholder class action and derivative lawsuits and the USAOs request for certain documents. | ||
(9) | Restatement related expenses reflect costs expected to be incurred in connection with the restatement, the Companys inquiries into the facts and circumstances underlying the restatement and the allocation of time within a certain practice group, the SEC investigations, the purported shareholder class action and derivative lawsuits, the proposed settlement of the purported class action lawsuit and the USAOs request for certain documents and do not include the potential Liabilities or unanticipated costs and expenses outlined in footnote (8), above. The cash portion of the proposed class action settlement consideration was funded into escrow in its entirety by our insurance carriers. As a result of this payment, we will not receive any further contributions from our insurance carriers for the reimbursement of legal fees expended on the finalization of the proposed class action settlement or any amounts (including any damages, settlement costs or legal fees) with respect to the restatement matters discussed above. | |
(10) | In evaluating the Companys 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 financial measures. Our management uses these non-GAAP financial measures to gain an understanding of the Companys prospective results as compared to the Companys historical results. These non-GAAP financial measures are used by management in their financial and operating decision-making because management believes they reflect the Companys 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 Companys historical financial results, 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 (a) in understanding and evaluating Hurons current operating performance and future prospects in the same manner as management does, if they so choose, (b) in comparing in a consistent manner Hurons prospective and current financial results with Hurons past financial results and (c) in understanding the Companys ability to generate cash flows from operations that are available for taxes, capital expenditures, and debt repayment. 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. |