Huron Consulting Group Announces Third Quarter 2012 Financial Results

Huron Consulting Group Announces Third Quarter 2012 Financial Results

• Revenues increased 5.4% to $161.9 million for Q3 2012 compared to $153.6 million in Q3 2011, and increased 11.9% from $144.7 million reported in Q2 2012.

• Diluted earnings per share from continuing operations for Q3 2012 was $0.47 compared to $0.05 in Q3 2011, reflecting non-cash, pretax goodwill impairment charges of $13.1 million ($0.35 per diluted share) and $22.0 million ($0.60 per diluted share) related to the Financial Consulting segment in Q3 2012 and Q3 2011, respectively.

• Adjusted diluted earnings per share from continuing operations⁽⁷⁾, a non-GAAP measure, rose 25.7% to $0.93 in Q3 2012 compared to $0.74 in Q3 2011.

• Average number of full-time billable consultants⁽³⁾ rose 14.7% to 1,356 for Q3 2012 compared to 1,182 for Q3 2011. Average number of full-time equivalent professionals⁽⁶⁾ was 1,229 for Q3 2012 compared to 1,179 in Q3 2011.

• Company updated full year 2012 revenue guidance to a range of $615.0 million to $625.0 million.

CHICAGO--(BUSINESS WIRE)-- Huron Consulting Group Inc. (NAS: HURN) , a leading provider of business consulting services, today announced financial results for the third quarter ended September 30, 2012.

"Huron reported its second strongest revenue quarter ever as the Company's two largest segments - Health and Education Consulting and Legal Consulting - continued to benefit from attractive market conditions," said James H. Roth, chief executive officer and president, Huron Consulting Group. "Performance-based fees in the healthcare practice nearly doubled in the third quarter compared with the second quarter, contributing to strong margins for our largest segment. Our Legal Consulting segment also performed well, despite lower than anticipated revenue from several engagements. We expect the recent launch of Huron Legal's innovative Integrated Analytics offering to enhance revenue in future quarters as it gains market acceptance."

Third Quarter 2012 Results

Revenues for the third quarter of 2012 were $161.9 million, an increase of 5.4% compared to $153.6 million for the third quarter of 2011, and increased 11.9% from $144.7 million in Q2 2012. The Company's third quarter 2012 operating income was $20.6 million, compared to $3.7 million in the third quarter of 2011. Third quarter 2012 results reflect a non-cash pretax charge of $13.1 million, or $0.35 per diluted share, to reduce the carrying value of goodwill in the Company's Financial Consulting segment. In the third quarter of 2011 the Company recorded a non-cash pretax charge of $22.0 million, or $0.60 per diluted share, in the same segment. The impairment charges are non-cash in nature and do not affect the Company's liquidity or debt covenants. Net income from continuing operations was $10.4 million, or $0.47 per diluted share, for the third quarter of 2012 compared to $1.1 million, or $0.05 per diluted share, for the same period last year. Net income was $10.5 million, or $0.47 per diluted share, for the third quarter of 2012, compared to $0.5 million, or $0.02 per diluted share, for the same period last year.

Third quarter 2012 earnings before interest, taxes, depreciation and amortization ("EBITDA")⁽⁷⁾ increased 161.8% to $26.2 million, or 16.2% of revenues, compared to $10.0 million, or 6.5% of revenues, in the comparable quarter last year.

In evaluating the Company's financial performance, management uses non-GAAP financial measures including Adjusted EBITDA⁽⁷⁾ and Adjusted net income from continuing operations⁽⁷⁾ that exclude the effect of the following items (in thousands):

Adjusted EBITDA⁽⁷⁾ rose 25.1% to $41.6 million, or 25.7% of revenues, in the third quarter of 2012, compared to $33.2 million, or 21.6% of revenues, in the comparable quarter last year. Adjusted net income from continuing operations⁽⁷⁾ rose 28.9% to $20.8 million, or $0.93 per diluted share, for the third quarter of 2012 compared to $16.2 million, or $0.74 per diluted share, for the comparable period in 2011.

Reconciliations of the aforementioned non-GAAP financial measures to comparable GAAP measures are provided in the financial schedules accompanying this news release.

The average number of full-time billable consultants⁽³⁾ rose 14.7% to 1,356 in the third quarter of 2012 compared to 1,182 in the same quarter last year. Full-time billable consultant utilization rate was 74.2% during the third quarter of 2012 compared with 76.4% during the same period last year. Average billing rate per hour for full-time billable consultants⁽⁵⁾ was $246 for the third quarter of 2012 compared to $254 for the third quarter of 2011. The average number of full-time equivalent professionals⁽⁶⁾ totaled 1,229 in the third quarter of 2012 compared to 1,179 for the comparable period in 2011.

Year-to-Date 2012 Results

Revenues for the first nine months of 2012 rose slightly to $445.2 million compared to $443.3 million for the first nine months of 2011. The Company's operating income for the first nine months of 2012 was $38.9 million, compared to $36.8 million in the first nine months of 2011. Year-to-date results in both 2012 and 2011 reflect non-cash pretax charges to reduce the carrying value of goodwill in the Company's Financial Consulting segment recorded during the third quarter of both years. In the first nine months of 2012, the charge amounted to $13.1 million, or $0.35 per diluted share; in the same period of 2011, the charge was $22.0 million, or $0.60 per diluted share. The impairment charges are non-cash in nature and do not affect the Company's liquidity or debt covenants. Net income from continuing operations was $17.3 million, or $0.78 per diluted share, for the first nine months of 2012 compared to $13.7 million, or $0.64 per diluted share, for the same period last year. Net income increased 27.2% to $17.8 million, or $0.80 per diluted share, for the first nine months of 2012 compared to $14.0 million, or $0.65 per diluted share, for the same period last year.

EBITDA⁽⁷⁾ was $55.6 million, or 12.5% of revenues, for the first nine months of 2012, compared to $54.5 million, or 12.3% of revenues, for the same period in 2011.

In evaluating the Company's financial performance, management uses non-GAAP financial measures including Adjusted EBITDA⁽⁷⁾ and Adjusted net income from continuing operations⁽⁷⁾ that exclude the effect of the following items (in thousands):

Adjusted EBITDA⁽⁷⁾ was $74.8 million, or 16.8% of revenues, in the first nine months of 2012 compared to $82.8 million, or 18.7% of revenues, in the comparable period last year. Adjusted net income from continuing operations⁽⁷⁾ was $32.0 million, or $1.44 per diluted share, for the first nine months of 2012 compared to $34.4 million, or $1.60 per diluted share, for the comparable period in 2011.

Reconciliations of the aforementioned non-GAAP financial measures to comparable GAAP measures are provided in the financial schedules accompanying this news release.

The average number of full-time billable consultants⁽³⁾ increased 13.6% to 1,303 in the first nine months of 2012 compared to 1,147 in the same period last year. Full-time billable consultant utilization rate was 75.4% during the first nine months of 2012 compared with 75.5% during the same period last year. Average billing rate per hour for full-time billable consultants⁽⁵⁾ was $221 for the first nine months of 2012 compared to $249 for the same period last year. The average number of full-time equivalent professionals⁽⁶⁾ increased slightly to 1,125 in the first nine months of 2012 from 1,101 in the comparable period of 2011.

Operating Segments

Huron's results reflect a portfolio of service offerings focused on helping clients address complex business challenges. The Company has three operating segments: Health and Education Consulting; Legal Consulting; and Financial Consulting, representing 66.2%, 30.0%, and 3.8% of year-to-date total revenues, respectively.

Financial results by segment are included in the attached schedules and in Huron's forthcoming Form 10-Q for the quarter ended September 30, 2012.

Acquisition

On July 2, 2012, Huron closed the acquisition of AdamsGrayson, a managed review and legal staffing firm based in Washington, D.C., within the Company's Legal Consulting segment.

Outlook for 2012

Based on currently available information, the Company updated its outlook for full year 2012 revenues before reimbursable expenses in a range of $615.0 million to $625.0 million. The Company also anticipates EBITDA in a range of $92.5 million to $95.5 million, Adjusted EBITDA in a range of $112.5 million to $115.5 million, GAAP diluted earnings per share in a range of $1.55 to $1.65, and non-GAAP adjusted diluted earnings per share in a range of $2.25 to $2.35. Reconciliations of the non-GAAP measures included in the Company's 2012 outlook are included in the attached schedules.

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

Third Quarter 2012 Webcast

The Company will host a webcast to discuss its financial results today, October 30, 2012, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by Thomson and can be accessed at Huron Consulting Group's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

About Huron Consulting Group

Huron Consulting Group helps clients in diverse industries improve performance, comply with complex regulations, reduce costs, recover from distress, leverage technology, and stimulate growth. The Company teams with its clients to deliver sustainable and measurable results. Huron provides services to a wide variety of both financially sound and distressed organizations, including leading academic institutions, healthcare organizations, Fortune 500 companies, medium-sized businesses, and the law firms that represent these various organizations. Learn more at www.huronconsultinggroup.com.

Use of Non-GAAP Financial Measures⁽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 believes that such measures, as supplements to operating income, net income from continuing operations and diluted earnings per share from continuing operations and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of our core operating results and future prospects without the effect of non-cash or other one-time items and the Company's ability to generate cash flows from operations that are available for taxes, capital expenditures, and to repay debt. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

Statements in this press release, including the information incorporated by reference herein, that are not historical in nature, including those concerning the Company's current expectations about its future requirements and needs, are "forward-looking" statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") 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," "meets," "could," "intends," "might," "predicts," "seeks," "would," "believes," "estimates" or "continues."These forward-looking statements reflect our current expectation about our future requirements and needs, results, levels of activity, performance, or achievements, including, without limitation, that our business continues to grow at the current expectations with respect to, among other factors, utilization rates, billing rates, and the number of revenue-generating professionals; that we are able to expand our service offerings; that we successfully integrate the businesses we acquire; and that existing market conditions continue to trend upward. These statements involve known and unknown risks, uncertainties and other factors, including, among others, those described under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2011 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements as a result of new information, future events, or any other reason.