FIRST QUARTER 2023 FINANCIAL HIGHLIGHTS
- Total revenues increased $57.8 million, or 22.2%, to $317.9
million in Q1 2023 from $260.0 million in Q1 2022.
- Revenues within the Digital capability increased 28.5% to
$140.7 million in Q1 2023, compared to $109.5 million in Q1
2022.
- Net income was $13.4 million in Q1 2023, compared to $26.9
million in Q1 2022. Results for Q1 2022 included a non-recurring,
unrealized gain of $19.8 million, net of tax, related to the
company's investment in a hospital-at-home company.
- Adjusted EBITDA(6), a non-GAAP measure, increased $7.4 million,
or 33.4%, to $29.5 million in Q1 2023 from $22.1 million in Q1
2022.
- Diluted earnings per share was $0.68 in Q1 2023, compared to
$1.27 in Q1 2022 which included the non-recurring, unrealized gain
related to the company's investment in a hospital-at-home
company.
- Adjusted diluted earnings per share(6), a non-GAAP measure,
increased $0.38, or 77.6%, to $0.87 in Q1 2023 from $0.49 in Q1
2022.
- Huron returned $44.3 million to shareholders by repurchasing
0.6 million shares of the company's common stock in Q1 2023.
- Huron affirms its previous earnings guidance range for full
year 2023, including revenue expectations in a range of $1.22
billion to $1.28 billion.
OTHER HIGHLIGHTS
- Huron released its 2022 Environmental, Social and Governance
(ESG) Report, which reiterates the company's commitment to shaping
a more sustainable future.
- Huron amended its credit facility to include ESG-related
measures that align the company's financing and people-focused
goals.
- Huron introduced its 2023 Investor Presentation, which provides
insight into the company and its commitment to achieving its
strategic and financial objectives.
Global professional services firm Huron (NASDAQ: HURN) today
announced financial results for the first quarter ended March 31,
2023.
“Our first quarter results reflect our steady progress toward
achieving the medium-term financial objectives we set forth in 2022
for double-digit revenue growth, expanded adjusted EBITDA margins,
and accelerated adjusted EPS growth,” said Mark Hussey, chief
executive officer and president of Huron. “Driven by strong growth
across all three operating segments and in our Digital capability,
revenues grew 22% over the prior year quarter, reflecting continued
demand across our portfolio of end markets. Consistent with our
goal to expand our profitability, adjusted EBITDA margins increased
80 basis points over the prior year quarter.”
“Our clients face significant strategic, financial and
operational challenges in their markets, exacerbated by an
increasingly uncertain macro environment. We believe these
challenges will continue to drive solid demand for our business as
we further innovate and build upon our deep, collaborative
relationships with our clients,” added Hussey.
FIRST QUARTER 2023 RESULTS
Revenues increased $57.8 million, or 22.2%, to $317.9 million
for the first quarter of 2023, compared to $260.0 million for the
first quarter of 2022. This revenue growth was highlighted by 28.5%
growth from the Digital capability in the aggregate across all
segments and growth in the Healthcare and Education segments'
Consulting and Managed Services capability of 21.5% and 20.5%,
respectively, during the first quarter of 2023, compared to the
same prior year period, which reflects the company's focus on
accelerating growth in the healthcare and education industries.
Net income was $13.4 million for the first quarter of 2023,
compared to $26.9 million for the same quarter last year. Diluted
earnings per share was $0.68 for the first quarter of 2023,
compared to $1.27 for the first quarter of 2022. Results for the
first quarter of 2022 included a non-recurring, unrealized gain of
$19.8 million, net of tax, related to the increase in fair value of
the company's investment in a hospital-at-home company.
First quarter 2023 earnings before interest, taxes, depreciation
and amortization ("EBITDA")(6) was $26.7 million, compared to $47.4
million in the same prior year period.
In addition to using EBITDA to evaluate the company’s financial
performance, management uses other non-GAAP financial measures,
which exclude the effect of the following items (in thousands):
Three Months Ended
March 31,
2023
2022
Amortization of intangible assets
$
2,231
$
2,860
Restructuring charges
$
2,284
$
1,555
Other losses
$
435
$
12
Transaction-related expenses
$
—
$
50
Unrealized gain on preferred stock
investment
$
—
$
(26,964
)
Tax effect of adjustments
$
(1,312
)
$
5,959
Foreign currency transaction losses,
net
$
80
$
19
Adjusted EBITDA(6) increased $7.4 million, or 33.4%, to $29.5
million, or 9.3% of revenues, in the first quarter of 2023,
compared to $22.1 million, or 8.5% of revenues, in the same quarter
last year. Adjusted net income(6) increased $6.7 million, or 65.2%,
to $17.1 million, or $0.87 per diluted share, for the first quarter
of 2023, compared to $10.3 million, or $0.49 per diluted share, for
the same quarter in 2022.
The number of revenue-generating professionals(1) increased
24.6% to 5,013 as of March 31, 2023 from 4,023 as of March 31,
2022. The utilization rate(5) of the company's Consulting
capability increased to 76.3% during the first quarter 2023,
compared to 71.4% during the same period last year. The utilization
rate(5) for the company's Digital capability decreased to 71.0%
during the first quarter 2023, compared to 72.4% during the same
period last year.
Additionally, in the first quarter of 2023, Huron repurchased
632,894 shares of the company's common stock for $44.3 million.
OPERATING INDUSTRIES
Huron’s results reflect a portfolio of service offerings focused
on helping clients address complex business challenges.
The company’s first quarter 2023 revenues by operating segment
as a percentage of total company revenues are as follows:
Healthcare (47%); Education (33%); and Commercial (20%). Financial
results by operating industry are included in the attached
schedules and in Huron's forthcoming Quarterly Report on Form 10-Q
filing for the quarter ended March 31, 2023.
OUTLOOK FOR 2023
Based on currently available information, the company is
affirming guidance for full year 2023 revenues before reimbursable
expenses in a range of $1.22 billion to $1.28 billion. The company
also anticipates adjusted EBITDA as a percentage of revenues in a
range of 12.0% to 12.5% and non-GAAP adjusted diluted earnings per
share in a range of $3.75 to $4.25.
FIRST QUARTER 2023 WEBCAST
The company will host a webcast to discuss its financial results
today, May 2, 2023, at 5:00 p.m. Eastern Time, 4:00 p.m. Central
Time. The conference call is being webcast by Notified and can be
accessed from Huron's website at
http://ir.huronconsultinggroup.com. A replay will be available
approximately two hours after the conclusion of the webcast and for
90 days thereafter.
USE OF NON-GAAP FINANCIAL MEASURES(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, and adjusted diluted
earnings per share, which are non-GAAP measures. Management uses
these non-GAAP financial measures to gain an understanding of the
company's comparative operating performance (when comparing such
results with previous periods or forecasts). These non-GAAP
financial measures are used by management in their financial and
operating decision making because management believes they reflect
the company's ongoing business in a manner that allows for
meaningful period-to-period comparisons. Management also uses these
non-GAAP financial measures when publicly providing their business
outlook, for internal management purposes, and as a basis for
evaluating potential acquisitions and dispositions. Management
believes that these non-GAAP financial measures provide useful
information to investors and others in understanding and evaluating
Huron’s current operating performance and future prospects in the
same manner as management does, if they so choose, and in comparing
in a consistent manner Huron’s current financial results with
Huron’s past financial results. Investors should recognize that
these non-GAAP measures might not be comparable to similarly titled
measures of other companies. These measures should be considered in
addition to, and not as a substitute for or superior to, any
measure of performance, cash flows or liquidity prepared in
accordance with accounting principles generally accepted in the
United States.
Management has provided its outlook regarding adjusted EBITDA
and adjusted diluted earnings per share, both of which are non-GAAP
financial measures and exclude certain charges. Management has not
reconciled these non-GAAP financial measures to the corresponding
GAAP financial measures because guidance for the various
reconciling items is not provided. Management is unable to provide
guidance for these reconciling items because they cannot determine
their probable significance, as certain items are outside of the
company's control and cannot be reasonably predicted since these
items could vary significantly from period to period. Accordingly,
reconciliations to the corresponding GAAP financial measures are
not available without unreasonable effort.
ABOUT HURON
Huron is a global professional services firm that collaborates
with clients to put possible into practice by creating sound
strategies, optimizing operations, accelerating digital
transformation, and empowering businesses and their people to own
their future. By embracing diverse perspectives, encouraging new
ideas and challenging the status quo, we create sustainable results
for the organizations we serve. Learn more at
www.huronconsultinggroup.com.
Statements in this press release that are not historical in
nature, including those concerning the company’s current
expectations about its future results, are “forward-looking”
statements as defined in Section 21E of the Securities Exchange Act
of 1934, as amended, and the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are identified by words
such as “may,” “should,” “expects,” “provides,” “anticipates,”
“assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,”
“might,” “predicts,” “seeks,” “would,” “believes,” “estimates,”
“plans,” “continues,” “goals,” “guidance,” or “outlook” or similar
expressions. These forward-looking statements reflect the company's
current expectations about future requirements and needs, results,
levels of activity, performance, or achievements. Some of the
factors that could cause actual results to differ materially from
the forward-looking statements contained herein include, without
limitation: failure to achieve expected utilization rates, billing
rates, and the necessary number of revenue-generating
professionals; inability to expand or adjust our service offerings
in response to market demands; our dependence on renewal of
client-based services; dependence on new business and retention of
current clients and qualified personnel; failure to maintain
third-party provider relationships and strategic alliances;
inability to license technology to and from third parties; the
impairment of goodwill; various factors related to income and other
taxes; difficulties in successfully integrating the businesses we
acquire and achieving expected benefits from such acquisitions;
risks relating to privacy, information security, and related laws
and standards; and a general downturn in market conditions. These
forward-looking statements involve known and unknown risks,
uncertainties, and other factors, including, among others, those
described under “Item 1A. Risk Factors” in Huron's Annual Report on
Form 10-K for the year ended December 31, 2022 that may cause
actual results, levels of activity, performance or achievements to
be materially different from any anticipated results, levels of
activity, performance, or achievements expressed or implied by
these forward-looking statements. The company disclaims any
obligation to update or revise any forward-looking statements as a
result of new information or future events, or for any other
reason.
HURON CONSULTING GROUP
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenues and reimbursable
expenses:
Revenues
$
317,895
$
260,049
Reimbursable expenses
8,490
4,726
Total revenues and reimbursable
expenses
326,385
264,775
Operating expenses:
Direct costs (exclusive of depreciation
and amortization included below)
228,383
187,247
Reimbursable expenses
8,624
4,756
Selling, general and administrative
expenses
62,289
48,395
Restructuring charges
2,284
1,555
Depreciation and amortization
6,374
6,864
Total operating expenses
307,954
248,817
Operating income
18,431
15,958
Other income (expense), net:
Interest expense, net of interest
income
(4,303
)
(2,196
)
Other income, net
1,719
24,365
Total other income (expense), net
(2,584
)
22,169
Income before taxes
15,847
38,127
Income tax expense
2,428
11,275
Net income
$
13,419
$
26,852
Earnings per share:
Net income per basic share
$
0.70
$
1.29
Net income per diluted share
$
0.68
$
1.27
Weighted average shares used in
calculating earnings per share:
Basic
19,119
20,850
Diluted
19,699
21,167
Comprehensive income (loss):
Net income
$
13,419
$
26,852
Foreign currency translation adjustments,
net of tax
52
(43
)
Unrealized gain (loss) on investment, net
of tax
3,873
(2,661
)
Unrealized gain (loss) on cash flow
hedging instruments, net of tax
(2,329
)
4,325
Other comprehensive income
1,596
1,621
Comprehensive income
$
15,015
$
28,473
HURON CONSULTING GROUP
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share amounts)
(Unaudited)
March 31, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
12,026
$
11,834
Receivables from clients, net
147,037
147,852
Unbilled services, net
173,454
141,781
Income tax receivable
275
960
Prepaid expenses and other current
assets
28,718
26,057
Total current assets
361,510
328,484
Property and equipment, net
24,179
26,107
Deferred income taxes, net
1,410
1,554
Long-term investments
96,473
91,194
Operating lease right-of-use assets
28,692
30,304
Other non-current assets
80,154
73,039
Intangible assets, net
21,161
23,392
Goodwill
624,966
624,966
Total assets
$
1,238,545
$
1,199,040
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
9,556
$
14,254
Accrued expenses and other current
liabilities
28,938
27,268
Accrued payroll and related benefits
78,354
171,723
Current maturities of operating lease
liabilities
10,825
10,530
Deferred revenues
20,542
21,909
Total current liabilities
148,215
245,684
Non-current liabilities:
Deferred compensation and other
liabilities
38,404
33,614
Long-term debt
447,000
290,000
Operating lease liabilities, net of
current portion
43,393
45,556
Deferred income taxes, net
32,564
32,146
Total non-current liabilities
561,361
401,316
Commitments and contingencies
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000
shares authorized; 22,047,299 and 22,507,159 shares issued,
respectively
220
223
Treasury stock, at cost, 2,842,144 and
2,711,712 shares, respectively
(141,353
)
(137,556
)
Additional paid-in capital
284,420
318,706
Retained earnings
365,967
352,548
Accumulated other comprehensive income
19,715
18,119
Total stockholders’ equity
528,969
552,040
Total liabilities and stockholders’
equity
$
1,238,545
$
1,199,040
HURON CONSULTING GROUP
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Cash flows from operating
activities:
Net income
$
13,419
$
26,852
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation and amortization
6,407
6,864
Non-cash lease expense
1,644
1,640
Lease-related impairment charge
1,870
—
Share-based compensation
11,562
7,935
Amortization of debt discount and issuance
costs
191
198
Allowances for doubtful accounts
3
28
Deferred income taxes
—
7,129
(Gain) loss on sale of property and
equipment, excluding transaction costs
1
(1,067
)
Change in fair value of contingent
consideration liabilities
435
12
Change in fair value of preferred stock
investment
—
(26,964
)
Changes in operating assets and
liabilities, net of acquisitions and divestiture:
(Increase) decrease in receivables from
clients, net
827
5,791
(Increase) decrease in unbilled services,
net
(31,669
)
(35,239
)
(Increase) decrease in current income tax
receivable / payable, net
1,487
3,266
(Increase) decrease in other assets
(5,205
)
1,361
Increase (decrease) in accounts payable
and other liabilities
(1,881
)
(7,044
)
Increase (decrease) in accrued payroll and
related benefits
(89,843
)
(70,689
)
Increase (decrease) in deferred
revenues
(1,349
)
828
Net cash used in operating activities
(92,101
)
(79,099
)
Cash flows from investing
activities:
Purchases of property and equipment
(1,956
)
(3,924
)
Investment in life insurance policies
(1,833
)
—
Purchases of businesses
38
(2,289
)
Capitalization of internally developed
software costs
(6,575
)
(2,060
)
Proceeds from note receivable
154
—
Proceeds from sale of property and
equipment
—
4,750
Divestiture of business
—
207
Net cash used in investing activities
(10,172
)
(3,316
)
Cash flows from financing
activities:
Proceeds from exercise of stock
options
627
648
Shares redeemed for employee tax
withholdings
(9,529
)
(6,884
)
Share repurchases
(45,133
)
(24,097
)
Proceeds from bank borrowings
201,000
150,000
Repayments of bank borrowings
(44,000
)
(47,780
)
Payments for debt issuance costs
(16
)
—
Deferred payments on business
acquisition
(500
)
(500
)
Net cash provided by financing
activities
102,449
71,387
Effect of exchange rate changes on
cash
16
(5
)
Net increase (decrease) in cash and cash
equivalents
192
(11,033
)
Cash and cash equivalents at beginning of
the period
11,834
20,781
Cash and cash equivalents at end of the
period
$
12,026
$
9,748
HURON CONSULTING GROUP
INC.
SEGMENT OPERATING RESULTS AND
OTHER OPERATING DATA
(Unaudited)
Three Months Ended
March 31,
Percent
Increase
(Decrease)
Segment and Consolidated Operating
Results (in thousands):
2023
2022
Healthcare:
Revenues
$
149,049
$
121,876
22.3
%
Operating income
$
32,255
$
28,032
15.1
%
Segment operating margin
21.6
%
23.0
%
Education:
Revenues
$
104,147
$
80,662
29.1
%
Operating income
$
23,165
$
14,306
61.9
%
Segment operating margin
22.2
%
17.7
%
Commercial:
Revenues
$
64,699
$
57,511
12.5
%
Operating income
$
14,067
$
12,214
15.2
%
Segment operating margin
21.7
%
21.2
%
Total Huron:
Revenues
$
317,895
$
260,049
22.2
%
Reimbursable expenses
8,490
4,726
79.6
%
Total revenues and reimbursable
expenses
$
326,385
$
264,775
23.3
%
Segment operating income
$
69,487
$
54,552
27.4
%
Items not allocated at the segment
level:
Other operating expenses
46,340
33,548
38.1
%
Depreciation and amortization
4,716
5,046
(6.5
) %
Total operating income
18,431
15,958
15.5
%
Other income (expense), net
(2,584
)
22,169
(111.7
) %
Income before taxes
$
15,847
$
38,127
(58.4
) %
Other Operating Data:
Number of revenue-generating
professionals by segment (at period end) (1):
Healthcare
1,985
1,647
20.5
%
Education
1,633
1,231
32.7
%
Commercial (2)
1,395
1,145
21.8
%
Total
5,013
4,023
24.6
%
Revenue by capability:
Consulting and Managed Services (3)
$
177,194
$
150,584
17.7
%
Digital
140,701
109,465
28.5
%
Total
$
317,895
$
260,049
22.2
%
Number of revenue-generating
professionals by capability (at period end)(1):
Consulting and Managed Services (4)
2,360
2,003
17.8
%
Digital
2,653
2,020
31.3
%
Total
5,013
4,023
24.6
%
Utilization rate by capability
(5):
Consulting
76.3
%
71.4
%
Digital
71.0
%
72.4
%
(1)
Consists of our full-time consultants who
generate revenues based on the number of hours worked; full-time
equivalents, which consists of coaches and their support staff
within the Culture and Organizational excellence solution,
consultants who work variable schedules as needed by clients, and
full-time employees who provide software support and maintenance
services to clients; and our Healthcare Managed Services employees
who provide revenue cycle billing, collections insurance
verification and change integrity services to clients.
(2)
The majority of our revenue-generating
professionals within our Commercial segment can provide services
across all of our industries, including healthcare and
education.
(3)
Managed Services capability revenues
within our Healthcare segment was $19.8 million and $13.8 million
for the three months ended March 31, 2023 and 2022,
respectively.
Managed Services capability revenues
within our Education segment was $4.6 million and $3.4 million for
the three months ended March 31, 2023 and 2022, respectively.
(4)
The number of Managed Services
revenue-generating professionals within our Healthcare segment as
of March 31, 2023 and 2022 was 726 and 543, respectively.
The number of Managed Services
revenue-generating professionals within our Education segment as of
March 31, 2023 and 2022 was 101 and 92, respectively.
(5)
Utilization rate is calculated by dividing
the number of hours our billable consultants worked on client
assignments during a period by the total available working hours
for these billable consultants during the same period. Available
hours are determined by the standard hours worked by each billable
consultant, adjusted for part-time hours, and U.S. standard work
weeks. Available working hours exclude local country holidays and
vacation days. Utilization rates are presented for our
revenue-generating professionals who primarily bill on an hourly
basis. We have not presented utilization rates for our Managed
Services professionals as most of the revenues generated by these
employees are not billed on an hourly basis.
HURON CONSULTING GROUP
INC.
RECONCILIATION OF NET
INCOME
TO ADJUSTED EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (6)
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenues
$
317,895
$
260,049
Net income
$
13,419
$
26,852
Add back:
Income tax expense
2,428
11,275
Interest expense, net of interest
income
4,303
2,196
Depreciation and amortization
6,553
7,122
Earnings before interest, taxes,
depreciation and amortization (EBITDA) (6)
26,703
47,445
Add back:
Restructuring charges
2,284
1,555
Other losses
435
12
Transaction-related expenses
—
50
Unrealized gain on preferred stock
investment
—
(26,964
)
Foreign currency transaction losses,
net
80
19
Adjusted EBITDA (6)
$
29,502
$
22,117
Adjusted EBITDA as a percentage of
revenues (6)
9.3
%
8.5
%
HURON CONSULTING GROUP
INC.
RECONCILIATION OF NET INCOME
TO ADJUSTED NET INCOME (6)
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Net income
$
13,419
$
26,852
Weighted average shares -
diluted
19,699
21,167
Diluted earnings per share
$
0.68
$
1.27
Add back:
Amortization of intangible assets
2,231
2,860
Restructuring charges
2,284
1,555
Other losses
435
12
Transaction-related expenses
—
50
Unrealized gain on preferred stock
investment
—
(26,964
)
Tax effect of adjustments
(1,312
)
5,959
Total adjustments, net of tax
3,638
(16,528
)
Adjusted net income (6)
$
17,057
$
10,324
Adjusted weighted average shares -
diluted
19,699
21,167
Adjusted diluted earnings per share
(6)
$
0.87
$
0.49
(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,
and adjusted diluted earnings per share, which are non-GAAP
measures. Management uses these non-GAAP financial measures to gain
an understanding of the company's comparative operating performance
(when comparing such results with previous periods or forecasts).
These non-GAAP financial measures are used by management in their
financial and operating decision making because management believes
they reflect the company's ongoing business in a manner that allows
for meaningful period-to-period comparisons. Management also uses
these non-GAAP financial measures when publicly providing the
company's business outlook, for internal management purposes, and
as a basis for evaluating potential acquisitions and dispositions.
Management believes that these non-GAAP financial measures provide
useful information to investors and others in understanding and
evaluating Huron’s current operating performance and future
prospects in the same manner as management does, if they so choose,
and in comparing in a consistent manner Huron’s current financial
results with Huron’s past financial results. Investors should
recognize that these non-GAAP measures might not be comparable to
similarly titled measures of other companies. These measures should
be considered in addition to, and not as a substitute for or
superior to, any measure of performance, cash flows or liquidity
prepared in accordance with accounting principles generally
accepted in the United States.
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version on businesswire.com: https://www.businesswire.com/news/home/20230502005454/en/
MEDIA CONTACT Allie Bovis abovis@hcg.com INVESTOR
CONTACT John D. Kelly investor@hcg.com
Huron Consulting (NASDAQ:HURN)
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