Document
false0001289848 0001289848 2020-07-30 2020-07-30


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
July 30, 2020
Date of Report (Date of earliest event reported)
_____________________
Huron Consulting Group Inc.
(Exact name of registrant as specified in its charter)
Delaware
000-50976
01-0666114
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification Number)
550 West Van Buren Street
Chicago, Illinois
60607
(Address of principal executive offices)
(Zip Code)
(312) 583-8700
(Registrant’s telephone number, including area code)
_____________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
HURN
NASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


 





Item 2.02.    Results of Operations and Financial Condition.

On July 30, 2020, Huron Consulting Group Inc. (the "Company") issued a press release announcing its financial results for the quarter ended June 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished pursuant to this Item 2.02 and the attached Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d)     Exhibits
Exhibit
Number
 
Exhibit Description
99.1
 
101.INS
 
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
 
Inline XBRL Taxonomy Extension Schema Document
101.CAL
 
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
 
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
 
Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
 
Inline XBRL Taxonomy Extension Definition Linkbase Document
104
 
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
Huron Consulting Group Inc.
 
 
 
(Registrant)
 
 
 
 
Date:
July 30, 2020
 
/s/ John D. Kelly
 
 
 
John D. Kelly
 
 
 
Executive Vice President, Chief Financial Officer, and Treasurer



Exhibit

Exhibit 99.1

NEWS
 
MEDIA CONTACT
 
Allie Bovis
FOR IMMEDIATE RELEASE
 
abovis@huronconsultinggroup.com
 
 
 
 
 
INVESTOR CONTACT
 
 
John D. Kelly
 
 
investor@huronconsultinggroup.com
Huron Announces Second Quarter 2020 Financial Results and Provides 2020 Guidance
SECOND QUARTER 2020 HIGHLIGHTS
Revenues were $217.9 million in Q2 2020 compared to $220.8 million in Q2 2019.
Net income from continuing operations increased $3.0 million, or 28.4%, to $13.6 million in Q2 2020 from $10.6 million in Q2 2019.
Adjusted EBITDA(7), a non-GAAP measure, was $27.5 million in Q2 2020 compared to $29.2 million in Q2 2019.
Diluted earnings per share from continuing operations increased $0.14, or 29.8%, to $0.61 in Q2 2020 from $0.47 in Q2 2019.
Adjusted diluted earnings per share from continuing operations(7), a non-GAAP measure, was $0.68 in Q2 2020 compared to $0.76 in Q2 2019.
Huron repaid $120.0 million of outstanding borrowings on the company's revolving credit facility during Q2 2020, reflecting strong cash flows during the quarter.
YEAR-TO-DATE 2020 HIGHLIGHTS AND 2020 GUIDANCE
Revenues increased $15.3 million, or 3.6%, to $440.5 million for the first six months of 2020 from $425.2 million for the same prior year period.
Net loss from continuing operations, which includes non-cash pretax goodwill impairment charges of $59.8 million related to the company's Business Advisory segment incurred in Q1 2020, was $28.7 million for the first six months of 2020 compared to net income from continuing operations of $13.9 million for the same prior year period.
Adjusted EBITDA(7), a non-GAAP measure, was $46.5 million for the the first six months of 2020 compared to $47.2 million for the same prior year period.
Diluted loss per share from continuing operations was $1.31 for the first six months of 2020 compared to diluted earnings per share from continuing operations of $0.62 for the first six months of 2019.
Adjusted diluted earnings per share from continuing operations(7), a non-GAAP measure, was $1.11 for the first six months of 2020 compared to $1.16 for the first six months of 2019.
Huron provides full year 2020 guidance, including revenue expectations in a range of $820 million to $860 million.
CHICAGO - Jul 30, 2020 - Global professional services firm Huron (NASDAQ: HURN) today announced financial results from continuing operations for the second quarter ended June 30, 2020.



“Second quarter revenues declined 1% over the prior year period, driven by weakness in the Healthcare business that was partially offset by solid growth in the Business Advisory and Education segments,” said James H. Roth, chief executive officer of Huron. “Our second quarter results were better than we had anticipated as our teams rose to the challenge of remote delivery and developed innovative solutions to support our clients in this period of heightened disruption. We remain cautious about the second half of the year given the significant impact of the ongoing pandemic on our clients, particularly those in the healthcare and education industries.”
“Health systems and universities are faced with the need to evolve their business models to respond to the significant uncertainty stemming from this new environment. This change is dramatic, and while it causes less visibility for our business in the short term, we believe these issues will drive increased demand for our services in the long term,” added Roth.
COVID-19 IMPACT
The worldwide spread of coronavirus (COVID-19) has created significant volatility, uncertainty and disruption to the global economy. The company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its clients, employees and business partners. In the first six months of 2020, as a result of the pandemic, some clients have reprioritized and delayed some projects which negatively impacted demand for certain services, primarily in the company's Healthcare and Education segments. Conversely, the COVID-19 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.
In the second quarter of 2020, the COVID-19 pandemic negatively impacted sales and increased uncertainty in the backlog for certain services, particularly within the company's Healthcare and Education segments. Therefore, the company expects the COVID-19 pandemic to continue to have an unfavorable impact on its financial results in the second half of 2020, which is contemplated in the full year 2020 guidance provided.
SECOND QUARTER 2020 RESULTS FROM CONTINUING OPERATIONS
Revenues were $217.9 million for the second quarter of 2020, compared to $220.8 million for the second quarter of 2019.
Net income from continuing operations increased $3.0 million, or 28.4%, to $13.6 million for the second quarter of 2020 from $10.6 million for the same quarter last year. Diluted earnings per share from continuing operations increased $0.14, or 29.8%, to $0.61 for the second quarter of 2020 from $0.47 for the second quarter of 2019.
Second quarter 2020 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) increased $0.5 million, or 2.0%, to $27.4 million from $26.9 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
June 30,
 
2020
 
2019
Amortization of intangible assets
$
3,194

 
$
4,314

Restructuring and other charges
$
109

 
$
754

Litigation and other gains
$

 
$
(485
)
Non-cash interest on convertible notes
$

 
$
2,145

Transaction-related expenses
$

 
$
2,050

Tax effect of adjustments
$
(1,940
)
 
$
(2,282
)
Foreign currency transaction losses (gains), net
$
(81
)
 
$
4

Adjusted EBITDA(7) was $27.5 million, or 12.6% of revenues, in the second quarter of 2020, compared to $29.2 million, or 13.2% of revenues, in the same prior year period. Adjusted net income from continuing operations(7) was$14.9 million, or $0.68 per diluted share, for the second quarter of 2020, compared to $17.1 million, or $0.76 per diluted share, for the same prior year period.



The average number of full-time billable consultants(1) increased 9.6% to 2,588 in the second quarter of 2020 from 2,362 in the same quarter last year, primarily reflecting hiring that occurred in the second half of 2019 prior to the COVID-19 pandemic. Full-time billable consultant utilization rate(2) was 72.4% during the second quarter of 2020, compared to 77.2% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $203 for the second quarter of 2020, compared to $206 for the second quarter of 2019. The average number of full-time equivalent professionals(5) was 365 in the second quarter of 2020, compared to 327 for the same period in 2019.
YEAR-TO-DATE 2020 RESULTS FROM CONTINUING OPERATIONS
Revenues increased $15.3 million, or 3.6%, to $440.5 million for the first six months of 2020, compared to $425.2 million for the same prior year period.
Net loss from continuing operations was $28.7 million for the first six months of 2020, compared to net income from continuing operations of $13.9 million for the same prior year period. Diluted loss per share from continuing operations was $1.31 for the first six months of 2020, compared to diluted earnings per share from continuing operations of $0.62 for the first six months of 2019. Results for the first six months of 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.
Loss before interest, taxes, depreciation and amortization(7) was $16.3 million for the first six months of 2020, compared to EBITDA of $44.2 million for the first six months of 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):
 
Six Months Ended
June 30,
 
2020
 
2019
Amortization of intangible assets
$
6,403

 
$
8,831

Restructuring and other charges
$
2,567

 
$
2,029

Litigation and other gains
$
(150
)
 
$
(941
)
Goodwill impairment charges
$
59,816

 
$

Non-cash interest on convertible notes
$

 
$
4,265

Loss on sale of business
$
102

 
$

Transaction-related expenses
$

 
$
2,050

Tax effect of adjustments
$
(15,349
)
 
$
(4,235
)
Foreign currency transaction losses, net
$
439

 
$
(78
)
Adjusted EBITDA(7) was $46.5 million, or 10.6% of revenues, for the first six months of 2020, compared to $47.2 million, or 11.1% of revenues, for the first six months of 2019. Adjusted net income from continuing operations(7) was $24.7 million, or $1.11 per diluted share, for the first six months of 2020, compared to $25.9 million, or $1.16 per diluted share, for the same prior year period.
The average number of full-time billable consultants(1) increased 11.4% to 2,591 in the first six months of 2020 from 2,326 in the first six months of 2019, primarily reflecting hiring that occurred in the second half of 2019 prior to the COVID-19 pandemic. Full-time billable consultant utilization rate(2) was 72.7% during the first six months of 2020, compared to 76.6% during the same prior year period. Average billing rate per hour for full-time billable consultants(3) was $204 for the first six months of 2020, compared to $208 for the first six months of 2019. The average number of full-time equivalent professionals(5) was 361 in the first six months of 2020, compared to 297 in the same prior year period.



OPERATING SEGMENTS
Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.
The company’s year-to-date 2020 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (41%); Business Advisory (31%); and Education (28%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended June 30, 2020.
OUTLOOK FOR 2020
Based on currently available information, the company provided guidance for full year 2020 revenues before reimbursable expenses in a range of $820 million to $860 million. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 9% to 10% and non-GAAP adjusted diluted earnings per share in a range of $1.50 to $1.80.
Management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast.
SECOND QUARTER 2020 WEBCAST
The company will host a webcast to discuss its financial results today, July 30, 2020, 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, 2019, and under "Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 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
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Revenues and reimbursable expenses:
 
 
 
 
 
 
 
Revenues
$
217,857

 
$
220,754

 
$
440,476

 
$
425,199

Reimbursable expenses
2,970

 
23,534

 
22,273

 
42,151

Total revenues and reimbursable expenses
220,827

 
244,288

 
462,749

 
467,350

Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
 
 
 
 
 
 
 
Direct costs
149,514

 
141,628

 
305,762

 
279,408

Amortization of intangible assets and software development costs
1,334

 
1,171

 
2,635

 
2,288

Reimbursable expenses
2,866

 
23,657

 
22,255

 
42,326

Total direct costs and reimbursable expenses
153,714

 
166,456

 
330,652

 
324,022

Operating expenses and other losses (gains), net:
 
 
 
 
 
 
 
Selling, general and administrative expenses
44,857

 
52,537

 
88,303

 
103,286

Restructuring charges
109

 
754

 
1,718

 
2,029

Litigation and other gains

 
(485
)
 
(150
)
 
(941
)
Depreciation and amortization
6,193

 
7,151

 
12,307

 
14,323

Goodwill impairment charges

 

 
59,816

 

Total operating expenses and other losses (gains), net
51,159

 
59,957

 
161,994

 
118,697

Operating income (loss)
15,954

 
17,875

 
(29,897
)
 
24,631

Other income (expense), net:
 
 
 
 
 
 
 
Interest expense, net of interest income
(2,916
)
 
(4,524
)
 
(5,257
)
 
(8,782
)
Other income (expense), net
3,948

 
695

 
(1,348
)
 
2,912

Total other income (expense), net
1,032

 
(3,829
)
 
(6,605
)
 
(5,870
)
Income (loss) from continuing operations before taxes
16,986

 
14,046

 
(36,502
)
 
18,761

Income tax expense (benefit)
3,414

 
3,477

 
(7,801
)
 
4,842

Net income (loss) from continuing operations
13,572

 
10,569

 
(28,701
)
 
13,919

Loss from discontinued operations, net of tax
(25
)
 
(97
)
 
(60
)
 
(143
)
Net income (loss)
$
13,547

 
$
10,472

 
$
(28,761
)
 
$
13,776

Net earnings (loss) per basic share:
 
 
 
 
 
 
 
Net income (loss) from continuing operations
$
0.62

 
$
0.48

 
$
(1.31
)
 
$
0.63

Loss from discontinued operations, net of tax

 

 
(0.01
)
 

Net income (loss)
$
0.62

 
$
0.48

 
$
(1.32
)
 
$
0.63

Net earnings (loss) per diluted share:
 
 
 
 
 
 
 
Net income (loss) from continuing operations
$
0.61

 
$
0.47

 
$
(1.31
)
 
$
0.62

Loss from discontinued operations, net of tax

 

 
(0.01
)
 

Net income (loss)
$
0.61

 
$
0.47

 
$
(1.32
)
 
$
0.62

Weighted average shares used in calculating earnings (loss) per share:
 
 
 
 
 
 
 
Basic
21,869

 
21,997

 
21,848

 
21,933

Diluted
22,116

 
22,400

 
21,848

 
22,356

Comprehensive income:
 
 
 
 
 
 
 
Net income (loss)
$
13,547

 
$
10,472

 
$
(28,761
)
 
$
13,776

Foreign currency translation adjustments, net of tax
104

 
(359
)
 
(675
)
 
(43
)
Unrealized gain (loss) on investment, net of tax
(5,678
)
 
3,915

 
(5,936
)
 
6,572

Unrealized loss on cash flow hedging instruments, net of tax
(1,705
)
 
(612
)
 
(3,390
)
 
(849
)
Other comprehensive income (loss)
(7,279
)
 
2,944

 
(10,001
)
 
5,680

Comprehensive income (loss)
$
6,268

 
$
13,416

 
$
(38,762
)
 
$
19,456







HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
 
 
June 30,
2020
 
December 31,
2019
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
83,212

 
$
11,604

Receivables from clients, net
117,632

 
116,571

Unbilled services, net
82,932

 
79,937

Income tax receivable
323

 
2,376

Prepaid expenses and other current assets
13,863

 
14,248

Total current assets
297,962

 
224,736

Property and equipment, net
37,082

 
38,413

Deferred income taxes, net
12,426

 
1,145

Long-term investments
59,524

 
54,541

Operating lease right-of-use assets
52,298

 
54,954

Other non-current assets
55,083

 
52,177

Intangible assets, net
24,916

 
31,625

Goodwill
586,235

 
646,680

Total assets
$
1,125,526

 
$
1,104,271

Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
5,046

 
$
7,944

Accrued expenses and other current liabilities
23,532

 
18,554

Accrued payroll and related benefits
80,066

 
141,605

Current maturities of long-term debt
536

 
529

Current maturities of operating lease liabilities
8,559

 
7,469

Deferred revenues
35,044

 
28,443

Total current liabilities
152,783

 
204,544

Non-current liabilities:
 
 
 
Deferred compensation and other liabilities
38,557

 
28,635

Long-term debt, net of current portion
331,054

 
208,324

Operating lease liabilities, net of current portion
66,547

 
69,233

Deferred income taxes, net
571

 
8,070

Total non-current liabilities
436,729

 
314,262

Commitments and contingencies

 

Stockholders’ equity
 
 
 
Common stock; $0.01 par value; 500,000,000 shares authorized; 25,421,974 and 25,144,764 shares issued at June 30, 2020 and December 31, 2019, respectively
246

 
247

Treasury stock, at cost, 2,556,012 and 2,425,430 shares at June 30, 2020 and December 31, 2019, respectively
(128,646
)
 
(128,348
)
Additional paid-in capital
450,391

 
460,781

Retained earnings
209,088

 
237,849

Accumulated other comprehensive income
4,935

 
14,936

Total stockholders’ equity
536,014

 
585,465

Total liabilities and stockholders’ equity
$
1,125,526

 
$
1,104,271








HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited) 
 
Six Months Ended
June 30,
 
2020
 
2019
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(28,761
)
 
$
13,776

Adjustments to reconcile net income (loss) to cash flows from operating activities:
 
 
 
Depreciation and amortization
14,942

 
17,285

Non-cash lease expense
3,880

 
4,397

Lease impairment charge

 
805

Share-based compensation
14,527

 
11,483

Amortization of debt discount and issuance costs
397

 
5,264

Goodwill impairment charges
59,816

 

Allowances for doubtful accounts
512

 
170

Deferred income taxes
(15,515
)
 

Loss on sale of business
102

 

Change in fair value of contingent consideration liabilities

 
(876
)
Changes in operating assets and liabilities, net of divestiture:
 
 
 
(Increase) decrease in receivables from clients, net
(339
)
 
(6,984
)
(Increase) decrease in unbilled services, net
(3,059
)
 
(22,105
)
(Increase) decrease in current income tax receivable / payable, net
6,546

 
6,486

(Increase) decrease in other assets
(1,674
)
 
(4,743
)
Increase (decrease) in accounts payable and other liabilities
(2,787
)
 
(133
)
Increase (decrease) in accrued payroll and related benefits
(53,420
)
 
(30,462
)
Increase (decrease) in deferred revenues
6,638

 
(570
)
Net cash provided by (used in) operating activities
1,805

 
(6,207
)
Cash flows from investing activities:
 
 
 
Purchases of property and equipment, net
(4,417
)
 
(6,384
)
Purchases of investment securities
(13,000
)
 

Investment in life insurance policies
(1,540
)
 
(4,087
)
Capitalization of internally developed software costs
(5,184
)
 
(4,409
)
Net cash used in investing activities
(24,141
)
 
(14,880
)
Cash flows from financing activities:
 
 
 
Proceeds from exercise of stock options
646

 
469

Shares redeemed for employee tax withholdings
(7,217
)
 
(4,460
)
Share repurchases
(22,115
)
 

Proceeds from bank borrowings
283,000

 
87,500

Repayments of bank borrowings
(160,263
)
 
(81,756
)
Payments for contingent consideration liabilities

 
(4,674
)
Net cash provided by (used in) financing activities
94,051

 
(2,921
)
Effect of exchange rate changes on cash
(107
)
 
78

Net increase (decrease) in cash and cash equivalents
71,608

 
(23,930
)
Cash and cash equivalents at beginning of the period
11,604

 
33,107

Cash and cash equivalents at end of the period
$
83,212

 
$
9,177




HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
 
 
Three Months Ended
June 30,
 
Percent
Increase
(Decrease)
Segment and Consolidated Operating Results (in thousands):
 
2020
 
2019
 
Healthcare:
 
 
 
 
 
 
Revenues
 
$
85,356

 
$
101,939

 
(16.3
)%
Operating income
 
$
21,171

 
$
33,344

 
(36.5
)%
Segment operating income as a percentage of segment revenues
 
24.8
%
 
32.7
%
 

Business Advisory:
 
 
 
 
 
 
Revenues
 
$
70,470

 
$
62,277

 
13.2
 %
Operating income
 
$
16,684

 
$
11,474

 
45.4
 %
Segment operating income as a percentage of segment revenues
 
23.7
%
 
18.4
%
 
 
Education:
 
 
 
 
 

Revenues
 
$
62,031

 
$
56,538

 
9.7
 %
Operating income
 
$
16,128

 
$
16,204

 
(0.5
)%
Segment operating income as a percentage of segment revenues
 
26.0
%
 
28.7
%
 

Total Company:
 
 
 
 
 

Revenues
 
$
217,857

 
$
220,754

 
(1.3
)%
Reimbursable expenses
 
2,970

 
23,534

 
(87.4
)%
Total revenues and reimbursable expenses
 
$
220,827

 
$
244,288

 
(9.6
)%
Statements of Operations reconciliation:
 
 
 
 
 

Segment operating income
 
$
53,983

 
$
61,022

 
(11.5
)%
Items not allocated at the segment level:
 
 
 
 
 

Other operating expenses
 
31,638

 
36,481

 
(13.3
)%
Litigation and other gains
 

 
(485
)
 
N/M

Depreciation and amortization
 
6,391

 
7,151

 
(10.6
)%
Total operating income (loss)
 
15,954

 
17,875

 
(10.7
)%
Other income (expense), net
 
1,032

 
(3,829
)
 
N/M

Income from continuing operations before taxes
 
$
16,986

 
$
14,046

 
20.9
 %
Other Operating Data:
 
 
 
 
 

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

Healthcare
 
855

 
833

 
2.6
 %
Business Advisory
 
943

 
883

 
6.8
 %
Education
 
780

 
673

 
15.9
 %
Total
 
2,578

 
2,389

 
7.9
 %
Average number of full-time billable consultants (for the period) (1):
 
 
 
 
 
 
Healthcare
 
876

 
828

 
 
Business Advisory
 
925

 
870

 
 
Education
 
787

 
664

 
 
Total
 
2,588

 
2,362

 
 






HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
 
 
Three Months Ended June 30,
Other Operating Data (continued):
 
2020
 
2019
Full-time billable consultant utilization rate (2):
 
 
 
 
Healthcare
 
67.6
%
 
80.8
%
Business Advisory
 
75.8
%
 
73.1
%
Education
 
73.4
%
 
78.3
%
Total
 
72.4
%
 
77.2
%
Full-time billable consultant average billing rate per hour (3):
 
 
 
 
Healthcare
 
$
219

 
$
224

Business Advisory (4)
 
$
201

 
$
193

Education
 
$
191

 
$
200

Total (4)
 
$
203

 
$
206

Revenue per full-time billable consultant (in thousands):
 
 
 
 
Healthcare
 
$
66

 
$
84

Business Advisory
 
$
73

 
$
69

Education
 
$
68

 
$
74

Total
 
$
69

 
$
76

Average number of full-time equivalents (for the period) (5):
 
 
 
 
Healthcare
 
280

 
271

Business Advisory
 
25

 
13

Education
 
60

 
43

Total
 
365

 
327

Revenue per full-time equivalent (in thousands):
 
 
 
 
Healthcare
 
$
97

 
$
120

Business Advisory
 
$
128

 
$
166

Education
 
$
147

 
$
167

Total
 
$
107

 
$
128






HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
 
 
Six Months Ended
June 30,
 
Percent
Increase
(Decrease)
Segment and Consolidated Operating Results (in thousands):
 
2020
 
2019
 
Healthcare:
 
 
 
 
 
 
Revenues
 
$
180,934

 
$
195,621

 
(7.5
)%
Operating income
 
$
45,221

 
$
61,195

 
(26.1
)%
Segment operating income as a percentage of segment revenues
 
25.0
%
 
31.3
%
 
 
Business Advisory:
 
 
 
 
 
 
Revenues
 
$
135,375

 
$
121,083

 
11.8
 %
Operating income
 
$
26,526

 
$
21,055

 
26.0
 %
Segment operating income as a percentage of segment revenues
 
19.6
%
 
17.4
%
 
 
Education:
 
 
 
 
 
 
Revenues
 
$
124,167

 
$
108,495

 
14.4
 %
Operating income
 
$
29,244

 
$
28,822

 
1.5
 %
Segment operating income as a percentage of segment revenues
 
23.6
%
 
26.6
%
 
 
Total Company:
 
 
 
 
 
 
Revenues
 
$
440,476

 
$
425,199

 
3.6
 %
Reimbursable expenses
 
22,273

 
42,151

 
(47.2
)%
Total revenues and reimbursable expenses
 
$
462,749

 
$
467,350

 
(1.0
)%
Statements of Operations reconciliation:
 
 
 
 
 
 
Segment operating income
 
$
100,991

 
$
111,072

 
(9.1
)%
Items not allocated at the segment level:
 
 
 
 
 
 
Other operating expenses
 
58,784

 
73,059

 
(19.5
)%
Litigation and other gains, net
 
(150
)
 
(941
)
 
(84.1
)%
Depreciation and amortization expense
 
12,438

 
14,323

 
(13.2
)%
Goodwill impairment charges (6)
 
59,816

 

 
N/M

Total operating income (loss)
 
(29,897
)
 
24,631

 
N/M

Other expense, net
 
(6,605
)
 
(5,870
)
 
12.5
 %
Income (loss) from continuing operations before taxes
 
$
(36,502
)
 
$
18,761

 
N/M

Other Operating Data:
 
 
 
 
 
 
Number of full-time billable consultants (at period end) (1):
 
 
 
 
 
 
Healthcare
 
855

 
833

 
2.6
 %
Business Advisory
 
943

 
883

 
6.8
 %
Education
 
780

 
673

 
15.9
 %
Total
 
2,578

 
2,389

 
7.9
 %
Average number of full-time billable consultants (for the period) (1):
 
 
 
 
 
 
Healthcare
 
887

 
824

 
 
Business Advisory
 
922

 
854

 
 
Education
 
782

 
648

 
 
Total
 
2,591

 
2,326

 
 






HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
 
 
Six Months Ended
June 30,
Other Operating Data (continued):
 
2020
 
2019
Full-time billable consultant utilization rate (2):
 
 
 
 
Healthcare
 
69.6
%
 
79.7
%
Business Advisory
 
73.7
%
 
73.1
%
Education
 
74.8
%
 
77.4
%
Total
 
72.7
%
 
76.6
%
Full-time billable consultant average billing rate per hour (3):
 
 
 
 
Healthcare
 
$
224

 
$
224

Business Advisory (4)
 
$
199

 
$
196

Education
 
$
189

 
$
202

Total (4)
 
$
204

 
$
208

Revenue per full-time billable consultant (in thousands):
 
 
 
 
Healthcare
 
$
139

 
$
163

Business Advisory
 
$
140

 
$
137

Education
 
$
136

 
$
147

Total
 
$
139

 
$
149

Average number of full-time equivalents (for the period) (5):
 
 
 
 
Healthcare
 
279

 
247

Business Advisory
 
22

 
11

Education
 
60

 
39

Total
 
361

 
297

Revenue per full-time equivalent (in thousands):
 
 
 
 
Healthcare
 
$
205

 
$
248

Business Advisory
 
$
275

 
$
361

Education
 
$
292

 
$
332

Total
 
$
224

 
$
263

 
(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 $220 and $215 for the three months ended June 30, 2020 and 2019, respectively; and $222 and $219 for the six months ended June 30, 2020 and 2019, respectively.
Absent the impact of Huron Eurasia India, Huron's consolidated average billing rate per hour would have been $210 and $214 for the three months ended June 30, 2020 and 2019, respectively; and $212 and $216 for the six months ended June 30, 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
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Revenues
$
217,857

 
$
220,754

 
$
440,476

 
$
425,199

Net income (loss) from continuing operations
$
13,572

 
$
10,569

 
$
(28,701
)
 
$
13,919

Add back:
 
 
 
 
 
 
 
Income tax expense (benefit)
3,414

 
3,477

 
(7,801
)
 
4,842

Interest expense, net of interest income
2,916

 
4,524

 
5,257

 
8,782

Depreciation and amortization
7,527

 
8,322

 
14,942

 
16,611

Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) (7)
27,429

 
26,892

 
(16,303
)
 
44,154

Add back:
 
 
 
 
 
 
 
Restructuring and other charges
109

 
754

 
2,567

 
2,029

Litigation and other gains

 
(485
)
 
(150
)
 
(941
)
Goodwill impairment charges

 

 
59,816

 

Loss on sale of business

 

 
102

 

Transaction-related expenses

 
2,050

 

 
2,050

Foreign currency transaction losses (gains), net
(81
)
 
4

 
439

 
(78
)
Adjusted EBITDA (7)
$
27,457

 
$
29,215

 
$
46,471

 
$
47,214

Adjusted EBITDA as a percentage of revenues (7)
12.6
%
 
13.2
%
 
10.6
%
 
11.1
%




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
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Net income (loss) from continuing operations
$
13,572

 
$
10,569

 
$
(28,701
)
 
$
13,919

Weighted average shares - diluted
22,116

 
22,400

 
21,848

 
22,356

Diluted earnings (loss) per share from continuing operations
$
0.61

 
$
0.47

 
$
(1.31
)
 
$
0.62

Add back:
 
 
 
 
 
 
 
Amortization of intangible assets
3,194

 
4,314

 
6,403

 
8,831

Restructuring and other charges
109

 
754

 
2,567

 
2,029

Litigation and other gains

 
(485
)
 
(150
)
 
(941
)
Goodwill impairment charges

 

 
59,816

 

Non-cash interest on convertible notes

 
2,145

 

 
4,265

Loss on sale of business

 

 
102

 

Transaction-related expenses

 
2,050

 

 
2,050

Tax effect of adjustments
(1,940
)
 
(2,282
)
 
(15,349
)
 
(4,235
)
Total adjustments, net of tax
1,363

 
6,496

 
53,389

 
11,999

Adjusted net income from continuing operations (7)
$
14,935

 
$
17,065

 
$
24,688

 
$
25,918

Adjusted weighted average shares - diluted (8)
22,116

 
22,400

 
22,223

 
22,356

Adjusted diluted earnings per share from continuing operations (7)
$
0.68

 
$
0.76

 
$
1.11

 
$
1.16


(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 six months ended June 30, 2020, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. The non-GAAP adjustments described above resulted in adjusted net income from continuing operations for the first six months of 2020. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding.


v3.20.2
Document and Entity Information Document
Jul. 30, 2020
Document And Entity Information [Abstract]  
Entity Central Index Key 0001289848
Entity Emerging Growth Company false
Written Communications false
Title of 12(b) Security Common Stock, par value $0.01 per share
Entity Incorporation, State or Country Code DE
Document Type 8-K
Document Period End Date Jul. 30, 2020
Entity Registrant Name Huron Consulting Group Inc.
Entity File Number 000-50976
Entity Tax Identification Number 01-0666114
Entity Address, Address Line One 550 West Van Buren Street
Entity Address, City or Town Chicago
Entity Address, State or Province IL
Entity Address, Postal Zip Code 60607
City Area Code (312)
Local Phone Number 583-8700
Trading Symbol HURN
Security Exchange Name NASDAQ
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Amendment Flag false