Huron Announces Fourth Quarter and Full Year 2020 Financial Results, and Provides 2021 Guidance

Nachrichtenquelle: Business Wire (engl.)
23.02.2021, 22:05  |  101   |   |   

Global professional services firm Huron (NASDAQ: HURN) today announced financial results from continuing operations for the fourth quarter and full year ended December 31, 2020.

“While we didn’t achieve our growth objectives set prior to the pandemic, Huron’s response during the pandemic was strengthened by our collective resiliency and market relevancy amidst the incredible challenges that faced our client base. Our people were proactive, innovative and nimble in helping our clients quickly respond to new challenges brought on by the pandemic. Our ability to rapidly bring to market creative solutions to these new challenges enabled us to generate over $30 million in revenue from these services in 2020,” said James H. Roth, chief executive officer of Huron. “Our Business Advisory segment achieved record revenues in 2020, driven by increased demand for our digital, technology and analytics and distressed advisory offerings as organizations transform their businesses to compete in more disruptive environments. Our strategic investments in the Business Advisory segment are accelerating our growth in commercial markets, enabling a balanced portfolio across our services and end markets.”

“As organizations evaluate changes to their own businesses stemming from the impacts of the pandemic, we believe we are well positioned to help our clients accelerate operational, digital and cultural transformation to achieve successful and sustainable results in the coming years,” added Roth.

COVID-19 IMPACT

The worldwide spread of the coronavirus (COVID-19) has created significant volatility, uncertainty and disruption to the global economy. The company continues to closely monitor the impact of the pandemic on all aspects of its business, including how it will impact its clients, employees and business partners. In 2020, some clients reprioritized and delayed projects as a result of the pandemic. This negatively impacted demand for certain services, primarily in the company's Healthcare and Education segments. Conversely, the pandemic strengthened demand for cloud-based technology and analytics solutions and certain services provided to organizations in transition within the company's Business Advisory segment.

During the second half of 2020, the pandemic continued to negatively impact sales and elongate the sales cycle for new opportunities for certain services, particularly within the company's Healthcare and Education segments. Given the uncertainties around the duration of the COVID-19 pandemic, the company continues to remain cautious about revenue growth for the first half of 2021, which is contemplated in the 2021 guidance provided.

FOURTH QUARTER 2020 RESTRUCTURING PLAN

On October 29, 2020, the company announced a restructuring plan to reduce operating costs to address the impact of the COVID-19 pandemic on its business. The restructuring plan, which was substantially complete in the fourth quarter of 2020, provided for a reduction in workforce and leased office space. The company does not anticipate a material revenue impact related to the restructuring actions.

The reduction in workforce impacted approximately 125 employees across all segments and corporate operations. The company incurred a $4.8 million restructuring charge related to cash payments for employee severance and benefits. As a result of the reduction in workforce, the company expects to realize annualized savings of approximately $21.0 million related to employee salaries and related benefits. Additional cost avoidance measures, including limiting annual salary increases, are expected to result in additional annualized savings.

The reduction in leased office space resulted in non-cash lease impairment charges of $13.9 million. The company does not expect to incur additional, significant lease impairment charges in 2021 related to the plan; however, any significant decline in the estimated amount or delayed timing of sublease income could result in additional non-cash lease impairment charges through the end of the lease terms. Future cash expenditures related to the leased office space are expected to continue through 2029. As a result of the reduction in leased office space, the company expects to realize annualized savings of approximately $1.0 million in lease-related expense, and expects approximately $2.5 million of ongoing lease-related costs to be reflected as restructuring charges in 2021.

The company believes these measures will better align delivery capacity with anticipated demand and strengthen the company’s financial position amidst the ongoing disruption, creating a foundation from which it can grow.

FOURTH QUARTER 2020 RESULTS FROM CONTINUING OPERATIONS

Revenues were $198.3 million for the fourth quarter of 2020, compared to $232.3 million for the fourth quarter of 2019.

Net loss from continuing operations was $6.1 million for the fourth quarter of 2020 compared to net income from continuing operations of $14.4 million for the same quarter last year. Diluted loss per share from continuing operations was $0.28 for the fourth quarter of 2020 compared to diluted earnings per share from continuing operations of $0.63 for the fourth quarter of 2019. Results for the fourth quarter of 2020 reflect $18.7 million of restructuring charges related to the fourth quarter 2020 restructuring plan discussed above.

Fourth quarter 2020 loss before interest, taxes, depreciation and amortization(7) was $1.9 million compared to earnings before interest, taxes, depreciation and amortization of $29.1 million in the same prior year period.

In addition to using earnings (loss) before interest, taxes, depreciation and amortization ("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
December 31,

 

2020

 

2019

Amortization of intangible assets

$

3,138

 

 

$

4,757

 

Restructuring and other charges (gains)

$

18,748

 

 

$

(301

)

Litigation and other losses

$

 

 

$

375

 

Transaction-related expenses

$

695

 

 

$

67

 

Unrealized gain on preferred stock investment

$

(1,667

)

 

$

 

Loss on sale of business

$

1,501

 

 

$

 

Tax effect of adjustments

$

(6,158

)

 

$

(1,291

)

Foreign currency transaction losses (gains), net

$

(276

)

 

$

124

 

Adjusted EBITDA(7) was $17.1 million, or 8.6% of revenues, in the fourth quarter of 2020, compared to $29.4 million, or 12.6% of revenues, in the same prior year period. Adjusted net income from continuing operations(7) was $10.2 million, or $0.45 per diluted share, for the fourth quarter of 2020, compared to $18.0 million, or $0.79 per diluted share, for the same prior year period.

The average number of full-time billable consultants(1) increased 1.7% to 2,626 in the fourth quarter of 2020 from 2,582 in the same quarter last year. Full-time billable consultant utilization rate(2) was 68.0% during the fourth quarter of 2020 compared to 75.0% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $217 for the fourth quarter of 2020 compared to $223 for the same prior year period. The average number of full-time equivalent professionals(5) was 355 in the fourth quarter of 2020 compared to 337 for the same period in 2019.

FULL YEAR 2020 RESULTS FROM CONTINUING OPERATIONS

Revenues were $844.1 million for full year 2020 compared to $876.8 million for full year 2019.

Net loss from continuing operations was $23.7 million for full year 2020, compared to net income from continuing operations of $42.0 million for full year 2019. Diluted loss per share from continuing operations was $1.08 for full year 2020, compared to diluted earnings per share from continuing operations of $1.87 for full year 2019. Results for full year 2020 reflect non-cash pretax charges totaling $59.8 million to reduce the carrying value of goodwill in the company's Strategy and Innovation and Life Sciences reporting units within the Business Advisory segment. The impairment charges are non-cash in nature and do not affect the company's liquidity or debt covenants. Additionally, in the fourth quarter of 2020, the company recognized $18.7 million of restructuring charges related to the fourth quarter 2020 restructuring plan discussed above.

EBITDA(7) was $5.1 million for full year 2020, compared to EBITDA of $101.9 million for full year 2019.

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):

 

Twelve Months Ended
December 31,

 

2020

 

2019

Amortization of intangible assets

$

12,696

 

 

$

17,793

 

Restructuring and other charges

$

21,374

 

 

$

1,855

 

Litigation and other gains, net

$

(150

)

 

$

(1,196

)

Transaction-related expenses

$

1,132

 

 

$

2,680

 

Goodwill impairment charges

$

59,816

 

 

$

 

Non-cash interest on convertible notes

$

 

 

$

6,436

 

Unrealized gain on preferred stock investment

$

(1,667

)

 

$

 

Losses on sales of businesses

$

1,603

 

 

$

 

Tax effect of adjustments

$

(23,199

)

 

$

(7,200

)

Tax benefit related to "check-the-box" election

$

 

 

$

(736

)

Foreign currency transaction losses (gains), net

$

(31

)

 

$

160

 

Adjusted EBITDA(7) was $87.1 million, or 10.3% of revenues, for full year 2020 compared to $105.4 million, or 12.0% of revenues, for full year 2019. Adjusted net income from continuing operations(7) was $47.9 million, or $2.15 per diluted share, for full year 2020 compared to $61.6 million, or $2.74 per diluted share, for full year 2019.

The average number of full-time billable consultants(1) increased 7.1% to 2,600 for full year 2020 from 2,427 for full year 2019, primarily related to hiring that occurred prior to the COVID-19 pandemic. Full-time billable consultant utilization rate(2) was 70.7% during 2020 compared to 76.1% during 2019. Average billing rate per hour for full-time billable consultants(3) was $208 for full year 2020 compared to $211 for full year 2019. The average number of full-time equivalent professionals(5) was 360 for full year 2020 compared to 305 for full year 2019.

OPERATING SEGMENTS

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

The company’s full year 2020 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (42%); Business Advisory (32%); and Education (26%). Financial results by segment are included in the attached schedules and in Huron's Annual Report on Form 10-K filing for the year ended December 31, 2020.

OUTLOOK FOR 2021

Based on currently available information, the company provided guidance for full year 2021 revenues before reimbursable expenses in a range of $830.0 million to $890.0 million. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 10.8% to 11.8% and non-GAAP adjusted diluted earnings per share in a range of $2.25 to $2.75.

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

FOURTH QUARTER 2020 WEBCAST

The company will host a webcast to discuss its financial results today, February 23, 2021, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by NASDAQ 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(7)

In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management 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 non-GAAP 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 are not provided. Management is unable to provide guidance for these reconciling items because we 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 consultancy that collaborates with clients to drive strategic growth, ignite innovation and navigate constant change. Through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need 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,” “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: the impact of the COVID-19 pandemic on the economy, our clients and client demand for our services, and our ability to sell and provide services, including the measures taken by governmental authorities and businesses in response to the pandemic, which may cause or contribute to other risks and uncertainties that we face; 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 Huron's Annual Report on Form 10-K for the year ended December 31, 2020, 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
December 31,

 

Twelve Months Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

198,347

 

 

$

232,269

 

 

$

844,127

 

 

$

876,757

 

Reimbursable expenses

1,754

 

 

22,930

 

 

26,887

 

 

88,717

 

Total revenues and reimbursable expenses

200,101

 

 

255,199

 

 

871,014

 

 

965,474

 

Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):

 

 

 

 

 

 

 

Direct costs

141,207

 

 

153,160

 

 

592,428

 

 

575,602

 

Amortization of intangible assets and software development costs

1,361

 

 

1,925

 

 

5,366

 

 

5,375

 

Reimbursable expenses

1,823

 

 

22,799

 

 

26,918

 

 

88,696

 

Total direct costs and reimbursable expenses

144,391

 

 

177,884

 

 

624,712

 

 

669,673

 

Operating expenses and other losses (gains), net:

 

 

 

 

 

 

 

Selling, general and administrative expenses

43,822

 

 

51,662

 

 

170,686

 

 

203,071

 

Restructuring charges (gains)

18,748

 

 

(301

)

 

20,525

 

 

1,855

 

Litigation and other losses (gains), net

 

 

375

 

 

(150

)

 

(1,196

)

Depreciation and amortization

5,794

 

 

7,080

 

 

24,277

 

 

28,365

 

Goodwill impairment charges

 

 

 

 

59,816

 

 

 

Total operating expenses and other losses (gains), net

68,364

 

 

58,816

 

 

275,154

 

 

232,095

 

Operating income (loss)

(12,654

)

 

18,499

 

 

(28,852

)

 

63,706

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

(1,776

)

 

(2,492

)

 

(9,292

)

 

(15,648

)

Other income, net

3,584

 

 

1,603

 

 

4,271

 

 

4,433

 

Total other income (expense), net

1,808

 

 

(889

)

 

(5,021

)

 

(11,215

)

Income (loss) from continuing operations before taxes

(10,846

)

 

17,610

 

 

(33,873

)

 

52,491

 

Income tax expense (benefit)

(4,742

)

 

3,256

 

 

(10,155

)

 

10,512

 

Net income (loss) from continuing operations

(6,104

)

 

14,354

 

 

(23,718

)

 

41,979

 

Loss from discontinued operations, net of tax

(33

)

 

(41

)

 

(122

)

 

(236

)

Net income (loss)

$

(6,137

)

 

$

14,313

 

 

$

(23,840

)

 

$

41,743

 

Net earnings (loss) per basic share:

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

(0.28

)

 

$

0.65

 

 

$

(1.08

)

 

$

1.91

 

Loss from discontinued operations, net of tax

 

 

 

 

(0.01

)

 

(0.01

)

Net income (loss)

$

(0.28

)

 

$

0.65

 

 

$

(1.09

)

 

$

1.90

 

Net earnings (loss) per diluted share:

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

(0.28

)

 

$

0.63

 

 

$

(1.08

)

 

$

1.87

 

Loss from discontinued operations, net of tax

 

 

 

 

(0.01

)

 

(0.02

)

Net income (loss)

$

(0.28

)

 

$

0.63

 

 

$

(1.09

)

 

$

1.85

 

Weighted average shares used in calculating earnings (loss) per share:

 

 

 

 

 

 

 

Basic

21,903

 

 

22,051

 

 

21,882

 

 

21,993

 

Diluted

21,903

 

 

22,676

 

 

21,882

 

 

22,507

 

Comprehensive income:

 

 

 

 

 

 

 

Net income (loss)

$

(6,137

)

 

$

14,313

 

 

$

(23,840

)

 

$

41,743

 

Foreign currency translation adjustments, net of tax

642

 

 

772

 

 

348

 

 

99

 

Unrealized gain (loss) on investment, net of tax

2,374

 

 

(8,442

)

 

1,323

 

 

(702

)

Unrealized gain (loss) on cash flow hedging instruments, net of tax

87

 

 

42

 

 

(3,546

)

 

(956

)

Other comprehensive income (loss)

3,103

 

 

(7,628

)

 

(1,875

)

 

(1,559

)

Comprehensive income (loss)

$

(3,034

)

 

$

6,685

 

 

$

(25,715

)

 

$

40,184

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

December 31,
2020

 

December 31,
2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

67,177

 

 

$

11,604

 

Receivables from clients, net

86,966

 

 

116,571

 

Unbilled services, net

61,181

 

 

79,937

 

Income tax receivable

5,121

 

 

2,376

 

Prepaid expenses and other current assets

16,569

 

 

14,248

 

Total current assets

237,014

 

 

224,736

 

Property and equipment, net

29,093

 

 

38,413

 

Deferred income taxes, net

4,191

 

 

1,145

 

Long-term investments

71,030

 

 

54,541

 

Operating lease right-of-use assets

39,360

 

 

54,954

 

Other non-current assets

62,068

 

 

52,177

 

Intangible assets, net

20,483

 

 

31,625

 

Goodwill

594,237

 

 

646,680

 

Total assets

$

1,057,476

 

 

$

1,104,271

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

648

 

 

$

7,944

 

Accrued expenses and other current liabilities

14,874

 

 

18,554

 

Accrued payroll and related benefits

133,830

 

 

141,605

 

Current maturities of long-term debt

499

 

 

529

 

Current maturities of operating lease liabilities

8,771

 

 

7,469

 

Deferred revenues

34,748

 

 

28,443

 

Total current liabilities

193,370

 

 

204,544

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

45,361

 

 

28,635

 

Accrued contingent consideration for business acquisitions

1,770

 

 

 

Long-term debt, net of current portion

202,780

 

 

208,324

 

Operating lease liabilities, net of current portion

61,825

 

 

69,233

 

Deferred income taxes, net

428

 

 

8,070

 

Total non-current liabilities

312,164

 

 

314,262

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 25,346,916 and 25,144,764 shares issued at December 31, 2020 and December 31, 2019, respectively

246

 

 

247

 

Treasury stock, at cost, 2,584,119 and 2,425,430 shares at December 31, 2020 and December 31, 2019, respectively

(129,886

)

 

(128,348

)

Additional paid-in capital

454,512

 

 

460,781

 

Retained earnings

214,009

 

 

237,849

 

Accumulated other comprehensive income

13,061

 

 

14,936

 

Total stockholders’ equity

551,942

 

 

585,465

 

Total liabilities and stockholders’ equity

$

1,057,476

 

 

$

1,104,271

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Twelve Months Ended
December 31,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income (loss)

$

(23,840

)

 

$

41,743

 

Adjustments to reconcile net income (loss) to cash flows from operating activities:

 

 

 

Depreciation and amortization

30,222

 

 

34,405

 

Non-cash lease expense

7,763

 

 

8,397

 

Lease impairment charges

13,217

 

 

805

 

Share-based compensation

24,081

 

 

24,213

 

Amortization of debt discount and issuance costs

793

 

 

8,264

 

Goodwill impairment charges

59,816

 

 

 

Allowances for doubtful accounts

1,050

 

 

250

 

Deferred income taxes

(9,859

)

 

8,795

 

Loss on sale of business

1,603

 

 

 

Change in fair value of contingent consideration liabilities

 

 

(1,506

)

Change in fair value of preferred stock investment

(1,667

)

 

 

Other, net

(25

)

 

(789

)

Changes in operating assets and liabilities, net of acquisitions and divestiture:

 

 

 

(Increase) decrease in receivables from clients, net

33,051

 

 

(10,123

)

(Increase) decrease in unbilled services, net

18,876

 

 

(10,269

)

(Increase) decrease in current income tax receivable / payable, net

(3,662

)

 

4,442

 

(Increase) decrease in other assets

(11,972

)

 

(144

)

Increase (decrease) in accounts payable and other liabilities

(7,786

)

 

(6,884

)

Increase (decrease) in accrued payroll and related benefits

(1,169

)

 

30,339

 

Increase (decrease) in deferred revenues

6,246

 

 

282

 

Net cash provided by operating activities

136,738

 

 

132,220

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment, net

(8,125

)

 

(13,240

)

Investment in life insurance policies

(2,462

)

 

(4,703

)

Purchases of businesses

(8,701

)

 

(2,500

)

Purchases of investment securities

(13,000

)

 

(5,000

)

Capitalization of internally developed software costs

(8,272

)

 

(10,312

)

Proceeds from sale of property and equipment

25

 

 

753

 

Divestiture of business

(1,499

)

 

 

Net cash used in investing activities

(42,034

)

 

(35,002

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

1,003

 

 

1,244

 

Shares redeemed for employee tax withholdings

(7,903

)

 

(5,382

)

Share repurchases

(27,141

)

 

(12,985

)

Proceeds from bank borrowings

283,000

 

 

347,000

 

Repayments of bank borrowings

(288,574

)

 

(192,515

)

Repayment of convertible notes

 

 

(250,000

)

Payment of debt issuance costs

 

 

(1,524

)

Payments for contingent consideration liabilities

 

 

(4,674

)

Net cash used in financing activities

(39,615

)

 

(118,836

)

Effect of exchange rate changes on cash

484

 

 

115

 

Net increase (decrease) in cash and cash equivalents

55,573

 

 

(21,503

)

Cash and cash equivalents at beginning of the period

11,604

 

 

33,107

 

Cash and cash equivalents at end of the period

$

67,177

$

11,604

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

 

Three Months Ended
December 31,

 

Percent
Increase
(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2020

 

2019

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

85,097

 

 

 

$

103,600

 

 

 

(17.9

)

%

Operating income

 

$

24,094

 

 

 

$

31,666

 

 

 

(23.9

)

%

Segment operating income as a percentage of segment revenues

 

28.3

 

%

 

30.6

 

%

 

 

Business Advisory:

 

 

 

 

 

 

Revenues

 

$

65,938

 

 

 

$

68,906

 

 

 

(4.3

)

%

Operating income

 

$

10,740

 

 

 

$

16,698

 

 

 

(35.7

)

%

Segment operating income as a percentage of segment revenues

 

16.3

 

%

 

24.2

 

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

47,312

 

 

 

$

59,763

 

 

 

(20.8

)

%

Operating income

 

$

5,711

 

 

 

$

12,506

 

 

 

(54.3

)

%

Segment operating income as a percentage of segment revenues

 

12.1

 

%

 

20.9

 

%

 

 

Total Company:

 

 

 

 

 

 

Revenues

 

$

198,347

 

 

 

$

232,269

 

 

 

(14.6

)

%

Reimbursable expenses

 

1,754

 

 

 

22,930

 

 

 

(92.4

)

%

Total revenues and reimbursable expenses

 

$

200,101

 

 

 

$

255,199

 

 

 

(21.6

)

%

Statements of Operations reconciliation:

 

 

 

 

 

 

Segment operating income

 

$

40,545

 

 

 

$

60,870

 

 

 

(33.4

)

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

47,429

 

 

 

34,916

 

 

 

35.8

 

%

Litigation and other losses

 

 

 

 

375

 

 

 

N/M

Depreciation and amortization

 

5,770

 

 

 

7,080

 

 

 

(18.5

)

%

Total operating income (loss)

 

(12,654

)

 

 

18,499

 

 

 

N/M

Other income (expense), net

 

1,808

 

 

 

(889

)

 

 

N/M

Income (loss) from continuing operations before taxes

 

$

(10,846

)

 

 

$

17,610

 

 

 

N/M

Other Operating Data:

 

 

 

 

 

 

Number of full-time billable consultants (at period end) (1):

 

 

 

 

 

 

Healthcare

 

820

 

 

 

890

 

 

 

(7.9

)

%

Business Advisory

 

1,051

 

 

 

930

 

 

 

13.0

 

%

Education

 

737

 

 

 

756

 

 

 

(2.5

)

%

Total

 

2,608

 

 

 

2,576

 

 

 

1.2

 

%

Average number of full-time billable consultants (for the period) (1):

 

 

 

 

 

 

Healthcare

 

834

 

 

 

889

 

 

 

 

Business Advisory

 

1,028

 

 

 

941

 

 

 

 

Education

 

764

 

 

 

752

 

 

 

 

Total

 

2,626

 

 

 

2,582

 

 

 

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

Three Months Ended
December 31,

Other Operating Data (continued):

 

2020

 

2019

Full-time billable consultant utilization rate (2):

 

 

 

 

Healthcare

 

65.1

%

 

76.5

%

Business Advisory

 

71.6

%

 

71.9

%

Education

 

66.1

%

 

77.1

%

Total

 

68.0

%

 

75.0

%

Full-time billable consultant average billing rate per hour (3):

 

 

 

 

Healthcare

 

$

297

 

 

$

251

 

Business Advisory (4)

 

$

189

 

 

$

218

 

Education

 

$

179

 

 

$

197

 

Total (4)

 

$

217

 

 

$

223

 

Revenue per full-time billable consultant (in thousands):

 

 

 

 

Healthcare

 

$

79

 

 

$

84

 

Business Advisory

 

$

60

 

 

$

70

 

Education

 

$

53

 

 

$

69

 

Total

 

$

64

 

 

$

74

 

Average number of full-time equivalents (for the period) (5):

 

 

 

 

Healthcare

 

275

 

 

263

 

Business Advisory

 

40

 

 

15

 

Education

 

40

 

 

59

 

Total

 

355

 

 

337

 

Revenue per full-time equivalent (in thousands):

 

 

 

 

Healthcare

 

$

70

 

 

$

111

 

Business Advisory

 

$

94

 

 

$

187

 

Education

 

$

170

 

 

$

141

 

Total

 

$

84

 

 

$

120

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

Twelve Months Ended
December 31,

 

Percent
Increase
(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2020

 

2019

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

353,437

 

 

 

$

399,221

 

 

 

(11.5

)

%

Operating income

 

$

94,925

 

 

 

$

125,724

 

 

 

(24.5

)

%

Segment operating income as a percentage of segment revenues

 

26.9

 

%

 

31.5

 

%

 

 

Business Advisory:

 

 

 

 

 

 

Revenues

 

$

267,361

 

 

 

$

252,508

 

 

 

5.9

 

%

Operating income

 

$

48,046

 

 

 

$

49,695

 

 

 

(3.3

)

%

Segment operating income as a percentage of segment revenues

 

18.0

 

%

 

19.7

 

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

223,329

 

 

 

$

225,028

 

 

 

(0.8

)

%

Operating income

 

$

47,503

 

 

 

$

55,741

 

 

 

(14.8

)

%

Segment operating income as a percentage of segment revenues

 

21.3

 

%

 

24.8

 

%

 

 

Total Company:

 

 

 

 

 

 

Revenues

 

$

844,127

 

 

 

$

876,757

 

 

 

(3.7

)

%

Reimbursable expenses

 

26,887

 

 

 

88,717

 

 

 

(69.7

)

%

Total revenues and reimbursable expenses

 

$

871,014

 

 

 

$

965,474

 

 

 

(9.8

)

%

Statements of Operations reconciliation:

 

 

 

 

 

 

Segment operating income

 

$

190,474

 

 

 

$

231,160

 

 

 

(17.6

)

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

135,255

 

 

 

140,285

 

 

 

(3.6

)

%

Litigation and other gains

 

(150

)

 

 

(1,196

)

 

 

(87.5

)

%

Depreciation and amortization

 

24,405

 

 

 

28,365

 

 

 

(14.0

)

%

Goodwill impairment charges (6)

 

59,816

 

 

 

 

 

 

N/M

Total operating income (loss)

 

(28,852

)

 

 

63,706

 

 

 

N/M

Other expense, net

 

(5,021

)

 

 

(11,215

)

 

 

(55.2

)

%

Income (loss) from continuing operations before taxes

 

$

(33,873

)

 

 

$

52,491

 

 

 

N/M

Other Operating Data:

 

 

 

 

 

 

Number of full-time billable consultants (at period end) (1):

 

 

 

 

 

 

Healthcare

 

820

 

 

 

890

 

 

 

(7.9

)

%

Business Advisory

 

1,051

 

 

 

930

 

 

 

13.0

 

%

Education

 

737

 

 

 

756

 

 

 

(2.5

)

%

Total

 

2,608

 

 

 

2,576

 

 

 

1.2

 

%

Average number of full-time billable consultants (for the period) (1):

 

 

 

 

 

 

Healthcare

 

863

 

 

 

849

 

 

 

 

Business Advisory

 

962

 

 

 

892

 

 

 

 

Education

 

775

 

 

 

686

 

 

 

 

Total

 

2,600

 

 

 

2,427

 

 

 

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

Twelve Months Ended
December 31,

Other Operating Data (continued):

 

2020

 

2019

Full-time billable consultant utilization rate (2):

 

 

 

 

Healthcare

 

69.0

%

 

79.4

%

Business Advisory

 

72.4

%

 

72.5

%

Education

 

70.3

%

 

76.8

%

Total

 

70.7

%

 

76.1

%

Full-time billable consultant average billing rate per hour (3):

 

 

 

 

Healthcare

 

$

246

 

 

$

231

 

Business Advisory (4)

 

$

195

 

 

$

201

 

Education

 

$

187

 

 

$

199

 

Total (4)

 

$

208

 

 

$

211

 

Revenue per full-time billable consultant (in thousands):

 

 

 

 

Healthcare

 

$

295

 

 

$

331

 

Business Advisory

 

$

264

 

 

$

273

 

Education

 

$

247

 

 

$

285

 

Total

 

$

269

 

 

$

297

 

Average number of full-time equivalents (for the period) (5):

 

 

 

 

Healthcare

 

278

 

 

244

 

Business Advisory

 

30

 

 

14

 

Education

 

52

 

 

47

 

Total

 

360

 

 

305

 

Revenue per full-time equivalent (in thousands):

 

 

 

 

Healthcare

 

$

356

 

 

$

485

 

Business Advisory

 

$

455

 

 

$

655

 

Education

 

$

618

 

 

$

617

 

Total

 

$

402

 

 

$

513

 

(1)

Consists of full-time professionals who provide consulting services and generate revenues based on the number of hours worked.

(2)

Utilization rate for full-time billable consultants is calculated by dividing the number of hours full-time billable consultants worked on client assignments during a period by the total available working hours for 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 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 Business Advisory segment includes operations of Huron Eurasia India. Absent the impact of Huron Eurasia India, the average billing rate per hour for the Business Advisory segment would have been $203 and $254 for the three months ended December 31, 2020 and 2019, respectively; and $213 and $228 for the year ended December 31, 2020 and 2019, respectively.
Absent the impact of Huron Eurasia India, Huron's consolidated average billing rate per hour would have been $223 and $235 for the three months ended December 31, 2020 and 2019, respectively; and $215 and $220 for the year ended December 31, 2020 and 2019, respectively.

(5)

Consists of coaches and their support staff within the Culture and Organizational Excellence solution, consultants who work variable schedules as needed by clients, employees who provide managed services in our Healthcare segment, and full-time employees who provide software support and maintenance services to clients.

(6)

The non-cash goodwill impairment charges are not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments. We do not include the impact of goodwill impairment charges in our evaluation of segment performance.

N/M - Not Meaningful

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS

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

(In thousands)

(Unaudited)

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Revenues

$

198,347

 

 

 

$

232,269

 

 

 

$

844,127

 

 

 

$

876,757

 

 

Net income (loss) from continuing operations

$

(6,104

)

 

 

$

14,354

 

 

 

$

(23,718

)

 

 

$

41,979

 

 

Add back:

 

 

 

 

 

 

 

Income tax expense (benefit)

(4,742

)

 

 

3,256

 

 

 

(10,155

)

 

 

10,512

 

 

Interest expense, net of interest income

1,776

 

 

 

2,492

 

 

 

9,292

 

 

 

15,648

 

 

Depreciation and amortization

7,156

 

 

 

9,005

 

 

 

29,644

 

 

 

33,740

 

 

Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) (7)

(1,914

)

 

 

29,107

 

 

 

5,063

 

 

 

101,879

 

 

Add back:

 

 

 

 

 

 

 

Restructuring and other charges (gains)

18,748

 

 

 

(301

)

 

 

21,374

 

 

 

1,855

 

 

Litigation and other losses (gains), net

 

 

 

375

 

 

 

(150

)

 

 

(1,196

)

 

Transaction-related expenses

695

 

 

 

67

 

 

 

1,132

 

 

 

2,680

 

 

Goodwill impairment charges

 

 

 

 

 

 

59,816

 

 

 

 

 

Unrealized gain on preferred stock investment

(1,667

)

 

 

 

 

 

(1,667

)

 

 

 

 

Losses on sales of businesses

1,501

 

 

 

 

 

 

1,603

 

 

 

 

 

Foreign currency transaction losses (gains), net

(276

)

 

 

124

 

 

 

(31

)

 

 

160

 

 

Adjusted EBITDA (7)

$

17,087

 

 

 

$

29,372

 

 

 

$

87,140

 

 

 

$

105,378

 

 

Adjusted EBITDA as a percentage of revenues (7)

8.6

 

%

 

12.6

 

%

 

10.3

 

%

 

12.0

 

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (7)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Net income (loss) from continuing operations

$

(6,104

)

 

$

14,354

 

 

$

(23,718

)

 

$

41,979

 

Weighted average shares - diluted

21,903

 

 

22,676

 

 

21,882

 

 

22,507

 

Diluted earnings (loss) per share from continuing operations

$

(0.28

)

 

$

0.63

 

 

$

(1.08

)

 

$

1.87

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

3,138

 

 

4,757

 

 

12,696

 

 

17,793

 

Restructuring and other charges (gains)

18,748

 

 

(301

)

 

21,374

 

 

1,855

 

Litigation and other losses (gains), net

 

 

375

 

 

(150

)

 

(1,196

)

Transaction-related expenses

695

 

 

67

 

 

1,132

 

 

2,680

 

Goodwill impairment charges

 

 

 

 

59,816

 

 

 

Non-cash interest on convertible notes

 

 

 

 

 

 

6,436

 

Unrealized gain on preferred stock investment

(1,667

)

 

 

 

(1,667

)

 

 

Losses on sales of businesses

1,501

 

 

 

 

1,603

 

 

 

Tax effect of adjustments

(6,158

)

 

(1,291

)

 

(23,199

)

 

(7,200

)

Tax benefit related to "check-the-box" election

 

 

 

 

 

 

(736

)

Total adjustments, net of tax

16,257

 

 

3,607

 

 

71,605

 

 

19,632

 

Adjusted net income from continuing operations (7)

$

10,153

 

 

$

17,961

 

 

$

47,887

 

 

$

61,611

 

Adjusted weighted average shares - diluted (8)

22,323

 

 

22,676

 

 

22,299

 

 

22,507

 

Adjusted diluted earnings per share from continuing operations (7)

$

0.45

 

 

$

0.79

 

 

$

2.15

 

 

$

2.74

 

(7)

In evaluating the company’s financial performance and outlook, management uses earnings (loss) 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. 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.

(8)

As the company reported a net loss for the three and twelve months ended December 31, 2020, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. The non-GAAP adjustments resulted in adjusted net income from continuing operations for the three and twelve months ended December 31, 2020. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding.

 



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Disclaimer

Huron Announces Fourth Quarter and Full Year 2020 Financial Results, and Provides 2021 Guidance Global professional services firm Huron (NASDAQ: HURN) today announced financial results from continuing operations for the fourth quarter and full year ended December 31, 2020. “While we didn’t achieve our growth objectives set prior to the …

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