Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Huron Announces Second Quarter 2022 Financial Results and Updates 2022 Guidance By: Huron via Business Wire July 28, 2022 at 16:05 PM EDT SECOND QUARTER 2022 HIGHLIGHTS Revenues increased $43.2 million, or 18.8%, to $273.3 million in Q2 2022 from $230.1 million in Q2 2021. Net income increased $1.1 million, or 8.4%, to $13.9 million in Q2 2022 from $12.8 million in Q2 2021. Adjusted EBITDA(7), a non-GAAP measure, increased $7.6 million, or 29.6%, to $33.2 million in Q2 2022 from $25.6 million in Q2 2021. Diluted earnings per share increased $0.07, or 11.9%, to $0.66 in Q2 2022 from $0.59 in Q2 2021. Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.14, or 20.3%, to $0.83 in Q2 2022 from $0.69 in Q2 2021. Huron repurchased 0.5 million shares of the company’s common stock for $28.3 million in Q2 2022. YEAR-TO-DATE 2022 HIGHLIGHTS AND 2022 GUIDANCE Revenues increased $100.0 million, or 23.1%, to $533.4 million for the first six months of 2022 from $433.3 million for the same prior year period. Net income increased $22.5 million to $40.7 million for the first six months of 2022 from $18.2 million for the same prior year period. Results for the first six months of 2022 include an unrealized gain of $19.8 million, net of tax, on the company's investment in a hospital-at-home company recognized in Q1 2022. Adjusted EBITDA(7), a non-GAAP measure, increased $13.3 million, or 31.5%, to $55.3 million for the first six months of 2022 from $42.1 million for the same prior year period. Diluted earnings per share increased $1.12 to $1.94 for the first six months of 2022 from $0.82 for the same prior year period. Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.29, or 28.2%, to $1.32 for the first six months of 2022 from $1.03 for the same prior year period. Huron repurchased 1.0 million shares of the company’s common stock for $52.2 million in the first six months of 2022. Huron updates its previous earnings guidance range for full year 2022, including increasing and narrowing revenue expectations to a range of $1.04 billion to $1.08 billion. Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the second quarter ended June 30, 2022. “Strong demand across all three operating segments enabled us to achieve 19% revenue growth over the prior year quarter. Our Digital capability, serving the healthcare, education, and commercial industries, grew 47% over the prior year quarter, reflecting ongoing strong demand for our digital transformation offerings across each segment,” said James H. Roth, chief executive officer of Huron. “Despite uncertainties in the macro environment, we are raising our revenue and earnings guidance based on our view of the demand outlook for our core offerings for the remainder of the year.” SECOND QUARTER 2022 RESULTS Revenues increased $43.2 million, or 18.8%, to $273.3 million for the second quarter of 2022, compared to $230.1 million for the second quarter of 2021. Net income increased $1.1 million, or 8.4%, to $13.9 million for the second quarter of 2022, compared to $12.8 million for the same quarter last year. Diluted earnings per share increased $0.07, or 11.9%, to $0.66 for the second quarter of 2022, compared to $0.59 for the second quarter of 2021. Second quarter 2022 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) increased $6.4 million, or 25.7%, to $31.2 million, compared to $24.8 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, 2022 2021 Amortization of intangible assets $ 2,818 $ 2,289 Restructuring charges $ 2,069 $ 861 Other losses $ 21 $ — Transaction-related expenses $ — $ (29 ) Tax effect of adjustments $ (1,301 ) $ (827 ) Foreign currency transaction gains, net $ (100 ) $ (48 ) Adjusted EBITDA(7) increased $7.6 million, or 29.6%, to $33.2 million, or 12.2% of revenues, in the second quarter of 2022, compared to $25.6 million, or 11.1% of revenues, in the same quarter last year. Adjusted net income(7) increased $2.4 million to $17.5 million, or $0.83 per diluted share, for the second quarter of 2022, compared to $15.1 million, or $0.69 per diluted share, for the same quarter in 2021. The number of revenue-generating professionals(1) increased 22.7% to 4,243 as of June 30, 2022 from 3,459 as of June 30, 2021. The utilization rate(5) of the company's Consulting capability decreased to 73.2% during the second quarter 2022, compared to 74.6% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 74.3% during the second quarter 2022, compared to 73.2% during the same period last year. Additionally, in the second quarter of 2022, Huron repurchased 497,547 shares of the company’s common stock for $28.3 million. YEAR-TO-DATE 2022 RESULTS Revenues increased $100.0 million, or 23.1%, to $533.4 million for the first six months of 2022, compared to $433.3 million for the first six months of 2021. Net income increased $22.5 million to $40.7 million for the first six months of 2022, compared to $18.2 million for the first six months of 2021. Diluted earnings per share increased $1.12 to $1.94 for the second quarter of 2022, compared to $0.82 for the same period last year. Results for the first six months of 2022 include an unrealized gain of $19.8 million, net of tax, related to the increase in fair value of the company's investment in a hospital-at-home company. EBITDA(7) for the first six months of 2022 increased $38.6 million, or 96.4%, to $78.7 million, compared to $40.0 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): Six Months Ended June 30, 2022 2021 Amortization of intangible assets $ 5,678 $ 4,688 Restructuring charges $ 3,624 $ 1,489 Other losses $ 33 $ 42 Transaction-related expenses $ 50 $ 141 Unrealized gain on preferred stock investment $ (26,964 ) $ — Tax effect of adjustments $ 4,658 $ (1,685 ) Foreign currency transaction losses (gains), net $ (81 ) $ 355 Adjusted EBITDA(7) increased $13.3 million, or 31.5%, to $55.3 million, or 10.4% of revenues, for the first six months of 2022, compared to $42.1 million, or 9.7% of revenues, for the same period last year. Adjusted net income(7) increased $4.9 million, or 21.5%, to $27.8 million, or $1.32 per diluted share, for the first six months of 2022, compared to $22.9 million, or $1.03 per diluted share, for the first six months of 2021. The number of revenue-generating professionals(1) increased 22.7% to 4,243 as of June 30, 2022 from 3,459 as of June 30, 2021. The utilization rate(5) of the company's Consulting capability increased to 72.4% during the first six months of 2022, compared to 70.5% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 73.6% during the first six months 2022, compared to 72.3% during the same period last year. Additionally, in the first six months of 2022, Huron repurchased 1,020,946 shares of the company’s common stock for $52.2 million, representing 4.7% of the common stock outstanding as of December 31, 2021. OPERATING INDUSTRIES Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges. The company’s year-to-date 2022 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (47%); Education (32%); and Commercial (21%). Financial results by operating industry are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended June 30, 2022. OUTLOOK FOR 2022 Based on currently available information, the company increased and narrowed guidance for full year 2022 revenues before reimbursable expenses to a range of $1.04 billion to $1.08 billion. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 11.5% to 12.0% and non-GAAP adjusted diluted earnings per share in a range of $3.15 to $3.45. Management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast. SECOND QUARTER 2022 WEBCAST The company will host a webcast to discuss its financial results today, July 28, 2022, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from Huron's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter. USE OF NON-GAAP FINANCIAL MEASURES(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, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort. ABOUT HURON Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. Learn more at www.huronconsultinggroup.com. Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “goals,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: 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, 2021 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, 2022 2021 2022 2021 Revenues and reimbursable expenses: Revenues $ 273,325 $ 230,126 $ 533,374 $ 433,339 Reimbursable expenses 7,492 3,252 12,218 5,186 Total revenues and reimbursable expenses 280,817 233,378 545,592 438,525 Operating expenses: Direct costs (exclusive of depreciation and amortization included below) 189,233 161,526 376,480 309,641 Reimbursable expenses 7,576 3,316 12,332 5,319 Selling, general and administrative expenses 46,033 45,190 94,428 84,998 Restructuring charges 2,069 861 3,624 1,489 Depreciation and amortization 6,902 6,356 13,766 12,709 Total operating expenses 251,813 217,249 500,630 414,156 Operating income 29,004 16,129 44,962 24,369 Other income (expense), net: Interest expense, net of interest income (2,446 ) (2,029 ) (4,642 ) (3,748 ) Other income (expense), net (4,881 ) 2,151 19,484 2,571 Total other income (expense), net (7,327 ) 122 14,842 (1,177 ) Income before taxes 21,677 16,251 59,804 23,192 Income tax expense 7,802 3,454 19,077 4,990 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Earnings per share: Net income per basic share $ 0.67 $ 0.59 $ 1.97 $ 0.84 Net income per diluted share $ 0.66 $ 0.59 $ 1.94 $ 0.82 Weighted average shares used in calculating earnings per share: Basic 20,582 21,555 20,715 21,743 Diluted 20,967 21,871 21,047 22,105 Comprehensive income (loss): Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Foreign currency translation adjustments, net of tax (656 ) 82 (699 ) 482 Unrealized gain (loss) on investment, net of tax 773 1,422 (1,888 ) (3,226 ) Unrealized gain on cash flow hedging instruments, net of tax 971 218 5,296 1,647 Other comprehensive income (loss) 1,088 1,722 2,709 (1,097 ) Comprehensive income $ 14,963 $ 14,519 $ 43,436 $ 17,105 HURON CONSULTING GROUP INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 11,958 $ 20,781 Receivables from clients, net 150,973 122,316 Unbilled services, net 118,825 91,285 Income tax receivable 677 8,071 Prepaid expenses and other current assets 21,279 15,229 Total current assets 303,712 257,682 Property and equipment, net 27,214 31,004 Deferred income taxes, net 1,775 1,804 Long-term investments 96,982 72,584 Operating lease right-of-use assets 32,018 35,311 Other non-current assets 64,096 68,191 Intangible assets, net 28,271 31,894 Goodwill 623,841 620,879 Total assets $ 1,177,909 $ 1,119,349 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 10,983 $ 13,621 Accrued expenses and other current liabilities 25,549 22,519 Accrued payroll and related benefits 92,738 139,131 Current maturities of long-term debt — 559 Current maturities of operating lease liabilities 10,241 10,142 Deferred revenues 18,969 19,212 Total current liabilities 158,480 205,184 Non-current liabilities: Deferred compensation and other liabilities 32,370 43,458 Long-term debt, net of current portion 342,000 232,221 Operating lease liabilities, net of current portion 49,093 54,313 Deferred income taxes, net 20,607 12,273 Total non-current liabilities 444,070 342,265 Commitments and contingencies Stockholders’ equity Common stock; $0.01 par value; 500,000,000 shares authorized; 23,492,632 and 24,364,814 shares issued, respectively 232 239 Treasury stock, at cost, 2,681,730 and 2,495,172 shares, respectively (136,425 ) (135,969 ) Additional paid-in capital 374,280 413,794 Retained earnings 317,723 276,996 Accumulated other comprehensive income 19,549 16,840 Total stockholders’ equity 575,359 571,900 Total liabilities and stockholders’ equity $ 1,177,909 $ 1,119,349 HURON CONSULTING GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2022 2021 Cash flows from operating activities: Net income $ 40,727 $ 18,202 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 13,766 12,923 Non-cash lease expense 3,174 3,301 Share-based compensation 15,166 11,566 Amortization of debt discount and issuance costs 397 397 Allowances for doubtful accounts 47 — Deferred income taxes 7,089 (48 ) Gain on sale of property and equipment, excluding transaction costs (1,117 ) (158 ) Change in fair value of contingent consideration liabilities 33 42 Change in fair value of preferred stock investment (26,964 ) — Other, net — (78 ) Changes in operating assets and liabilities, net of acquisitions and divestiture: (Increase) decrease in receivables from clients, net (28,825 ) (27,749 ) (Increase) decrease in unbilled services, net (28,329 ) (36,088 ) (Increase) decrease in current income tax receivable / payable, net 9,394 3,366 (Increase) decrease in other assets 3,984 (1,117 ) Increase (decrease) in accounts payable and other liabilities (13,524 ) 5,038 Increase (decrease) in accrued payroll and related benefits (43,420 ) (42,487 ) Increase (decrease) in deferred revenues (1,834 ) (9,080 ) Net cash used in operating activities (50,236 ) (61,970 ) Cash flows from investing activities: Purchases of property and equipment (6,800 ) (5,439 ) Investment in life insurance policies — (77 ) Purchases of businesses, net of cash acquired (1,948 ) (5,886 ) Capitalization of internally developed software costs (3,974 ) (2,508 ) Proceeds from note receivable 157 — Proceeds from sale of property and equipment 4,750 158 Divestiture of business 207 — Net cash used in investing activities (7,608 ) (13,752 ) Cash flows from financing activities: Proceeds from exercise of stock options 1,185 422 Shares redeemed for employee tax withholdings (7,011 ) (8,651 ) Share repurchases (52,443 ) (35,243 ) Proceeds from bank borrowings 224,000 139,000 Repayments of bank borrowings (114,780 ) (74,270 ) Deferred payment on business acquisition (1,875 ) — Net cash used in financing activities 49,076 21,258 Effect of exchange rate changes on cash (55 ) 269 Net decrease in cash and cash equivalents (8,823 ) (54,195 ) Cash and cash equivalents at beginning of the period 20,781 67,177 Cash and cash equivalents at end of the period $ 11,958 $ 12,982 HURON CONSULTING GROUP INC. SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (Unaudited) Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease) Segment and Consolidated Operating Results (in thousands): 2022 2021 2022 2021 Healthcare: Revenues $ 128,474 $ 114,750 12.0 % $ 250,350 $ 210,725 18.8 % Operating income $ 30,364 $ 30,527 (0.5 )% $ 58,396 $ 54,354 7.4 % Segment operating margin 23.6 % 26.6 % 23.3 % 25.8 % Education: Revenues $ 88,225 $ 60,475 45.9 % $ 168,887 $ 111,817 51.0 % Operating income $ 21,691 $ 14,142 53.4 % $ 35,997 $ 22,679 58.7 % Segment operating margin 24.6 % 23.4 % 21.3 % 20.3 % Commercial: Revenues $ 56,626 $ 54,901 3.1 % $ 114,137 $ 110,797 3.0 % Operating income $ 11,915 $ 11,040 7.9 % $ 24,129 $ 20,890 15.5 % Segment operating margin 21.0 % 20.1 % 21.1 % 18.9 % Total Huron: Revenues $ 273,325 $ 230,126 18.8 % $ 533,374 $ 433,339 23.1 % Reimbursable expenses 7,492 3,252 130.4 % 12,218 5,186 135.6 % Total revenues and reimbursable expenses $ 280,817 $ 233,378 20.3 % $ 545,592 $ 438,525 24.4 % Segment operating income $ 63,970 $ 55,709 14.8 % $ 118,522 $ 97,923 21.0 % Items not allocated at the segment level: Other operating expenses 29,912 34,325 (12.9 )% 63,460 63,134 0.5 % Depreciation and amortization 5,054 5,255 (3.8 )% 10,100 10,420 (3.1 )% Total operating income 29,004 16,129 79.8 % 44,962 24,369 84.5 % Other income (expense), net (7,327 ) 122 N/M 14,842 (1,177 ) N/M Income before taxes $ 21,677 $ 16,251 33.4 % $ 59,804 $ 23,192 157.9 % Other Operating Data: Number of revenue-generating professionals by segment (at period end)(1)(6): Healthcare 1,619 1,443 12.2 % 1,619 1,443 12.2 % Education 1,407 885 59.0 % 1,407 885 59.0 % Commercial (2) 1,217 1,131 7.6 % 1,217 1,131 7.6 % Total 4,243 3,459 22.7 % 4,243 3,459 22.7 % Revenue by capability: Consulting and Managed Services (3) $ 147,871 $ 145,004 2.0 % $ 298,455 $ 267,555 11.5 % Digital 125,454 85,122 47.4 % 234,919 165,784 41.7 % Total $ 273,325 $ 230,126 18.8 % $ 533,374 $ 433,339 23.1 % Number of revenue-generating professionals by capability (at period end)(1): Consulting and Managed Services (4) 2,018 1,736 16.2 % 2,018 1,736 16.2 % Digital 2,225 1,723 29.1 % 2,225 1,723 29.1 % Total 4,243 3,459 22.7 % 4,243 3,459 22.7 % Utilization rate by capability(5): Consulting 73.2 % 74.6 % 72.4 % 70.5 % Digital 74.3 % 73.2 % 73.6 % 72.3 % (1) Consists of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the Culture and Organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare Managed Services employees who provide revenue cycle billing, collections insurance verification and change integrity services to clients. (2) The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education. (3) Managed Services capability revenue within our Healthcare segment was $16.1 million and $14.0 million for the three months ended June 30, 2022 and 2021, respectively; and $29.9 million and $21.6 million for the six months ended June 30, 2022 and 2021, respectively. Managed Services capability revenue within our Education segment was $3.9 million and $2.3 million for the three months ended June 30, 2022 and 2021, respectively; and $7.3 million and $4.5 million for the six months ended June 30, 2022 and 2021, respectively. (4) The number of Managed Services revenue-generating professionals within our Healthcare segment as of June 30, 2022 and June 30, 2021 was 504 and 448, respectively. The number of Managed Services revenue-generating professionals within our Education segment as of June 30, 2022 and June 30, 2021 was 96 and 51, respectively. (5) Utilization rate is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We have not presented utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis. (6) During the first quarter of 2022, we reclassified certain Digital revenue-generating professionals within our Healthcare and Education segments to our Commercial segment as these professionals can provide services across all of our industries. This reclassification did not impact the total headcount within our Digital capability for any period. The prior period headcount has been revised for consistent presentation. N/M - Not Meaningful HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7) (In thousands) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 273,325 $ 230,126 $ 533,374 $ 433,339 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Add back: Income tax expense 7,802 3,454 19,077 4,990 Interest expense, net of interest income 2,446 2,029 4,642 3,748 Depreciation and amortization 7,097 6,555 14,219 13,106 Earnings before interest, taxes, depreciation and amortization (EBITDA) (7) 31,220 24,835 78,665 40,046 Add back: Restructuring charges 2,069 861 3,624 1,489 Other losses 21 — 33 42 Transaction-related expenses — (29 ) 50 141 Unrealized gain on preferred stock investment — — (26,964 ) — Foreign currency transaction losses (gains), net (100 ) (48 ) (81 ) 355 Adjusted EBITDA (7) $ 33,210 $ 25,619 $ 55,327 $ 42,073 Adjusted EBITDA as a percentage of revenues (7) 12.2 % 11.1 % 10.4 % 9.7 % HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (7) (In thousands, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Weighted average shares - diluted 20,967 21,871 21,047 22,105 Diluted earnings per share $ 0.66 $ 0.59 $ 1.94 $ 0.82 Add back: Amortization of intangible assets 2,818 2,289 5,678 4,688 Restructuring charges 2,069 861 3,624 1,489 Other losses 21 — 33 42 Transaction-related expenses — (29 ) 50 141 Unrealized gain on preferred stock investment — — (26,964 ) — Tax effect of adjustments (1,301 ) (827 ) 4,658 (1,685 ) Total adjustments, net of tax 3,607 2,294 (12,921 ) 4,675 Adjusted net income (7) $ 17,482 $ 15,091 $ 27,806 $ 22,877 Adjusted weighted average shares - diluted 20,967 21,871 21,047 22,105 Adjusted diluted earnings per share (7) $ 0.83 $ 0.69 $ 1.32 $ 1.03 (7) In evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing the company's business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005192/en/Contacts MEDIA CONTACT Allie Bovis abovis@hcg.com INVESTOR CONTACT John D. 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Huron Announces Second Quarter 2022 Financial Results and Updates 2022 Guidance By: Huron via Business Wire July 28, 2022 at 16:05 PM EDT SECOND QUARTER 2022 HIGHLIGHTS Revenues increased $43.2 million, or 18.8%, to $273.3 million in Q2 2022 from $230.1 million in Q2 2021. Net income increased $1.1 million, or 8.4%, to $13.9 million in Q2 2022 from $12.8 million in Q2 2021. Adjusted EBITDA(7), a non-GAAP measure, increased $7.6 million, or 29.6%, to $33.2 million in Q2 2022 from $25.6 million in Q2 2021. Diluted earnings per share increased $0.07, or 11.9%, to $0.66 in Q2 2022 from $0.59 in Q2 2021. Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.14, or 20.3%, to $0.83 in Q2 2022 from $0.69 in Q2 2021. Huron repurchased 0.5 million shares of the company’s common stock for $28.3 million in Q2 2022. YEAR-TO-DATE 2022 HIGHLIGHTS AND 2022 GUIDANCE Revenues increased $100.0 million, or 23.1%, to $533.4 million for the first six months of 2022 from $433.3 million for the same prior year period. Net income increased $22.5 million to $40.7 million for the first six months of 2022 from $18.2 million for the same prior year period. Results for the first six months of 2022 include an unrealized gain of $19.8 million, net of tax, on the company's investment in a hospital-at-home company recognized in Q1 2022. Adjusted EBITDA(7), a non-GAAP measure, increased $13.3 million, or 31.5%, to $55.3 million for the first six months of 2022 from $42.1 million for the same prior year period. Diluted earnings per share increased $1.12 to $1.94 for the first six months of 2022 from $0.82 for the same prior year period. Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.29, or 28.2%, to $1.32 for the first six months of 2022 from $1.03 for the same prior year period. Huron repurchased 1.0 million shares of the company’s common stock for $52.2 million in the first six months of 2022. Huron updates its previous earnings guidance range for full year 2022, including increasing and narrowing revenue expectations to a range of $1.04 billion to $1.08 billion. Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the second quarter ended June 30, 2022. “Strong demand across all three operating segments enabled us to achieve 19% revenue growth over the prior year quarter. Our Digital capability, serving the healthcare, education, and commercial industries, grew 47% over the prior year quarter, reflecting ongoing strong demand for our digital transformation offerings across each segment,” said James H. Roth, chief executive officer of Huron. “Despite uncertainties in the macro environment, we are raising our revenue and earnings guidance based on our view of the demand outlook for our core offerings for the remainder of the year.” SECOND QUARTER 2022 RESULTS Revenues increased $43.2 million, or 18.8%, to $273.3 million for the second quarter of 2022, compared to $230.1 million for the second quarter of 2021. Net income increased $1.1 million, or 8.4%, to $13.9 million for the second quarter of 2022, compared to $12.8 million for the same quarter last year. Diluted earnings per share increased $0.07, or 11.9%, to $0.66 for the second quarter of 2022, compared to $0.59 for the second quarter of 2021. Second quarter 2022 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) increased $6.4 million, or 25.7%, to $31.2 million, compared to $24.8 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, 2022 2021 Amortization of intangible assets $ 2,818 $ 2,289 Restructuring charges $ 2,069 $ 861 Other losses $ 21 $ — Transaction-related expenses $ — $ (29 ) Tax effect of adjustments $ (1,301 ) $ (827 ) Foreign currency transaction gains, net $ (100 ) $ (48 ) Adjusted EBITDA(7) increased $7.6 million, or 29.6%, to $33.2 million, or 12.2% of revenues, in the second quarter of 2022, compared to $25.6 million, or 11.1% of revenues, in the same quarter last year. Adjusted net income(7) increased $2.4 million to $17.5 million, or $0.83 per diluted share, for the second quarter of 2022, compared to $15.1 million, or $0.69 per diluted share, for the same quarter in 2021. The number of revenue-generating professionals(1) increased 22.7% to 4,243 as of June 30, 2022 from 3,459 as of June 30, 2021. The utilization rate(5) of the company's Consulting capability decreased to 73.2% during the second quarter 2022, compared to 74.6% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 74.3% during the second quarter 2022, compared to 73.2% during the same period last year. Additionally, in the second quarter of 2022, Huron repurchased 497,547 shares of the company’s common stock for $28.3 million. YEAR-TO-DATE 2022 RESULTS Revenues increased $100.0 million, or 23.1%, to $533.4 million for the first six months of 2022, compared to $433.3 million for the first six months of 2021. Net income increased $22.5 million to $40.7 million for the first six months of 2022, compared to $18.2 million for the first six months of 2021. Diluted earnings per share increased $1.12 to $1.94 for the second quarter of 2022, compared to $0.82 for the same period last year. Results for the first six months of 2022 include an unrealized gain of $19.8 million, net of tax, related to the increase in fair value of the company's investment in a hospital-at-home company. EBITDA(7) for the first six months of 2022 increased $38.6 million, or 96.4%, to $78.7 million, compared to $40.0 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): Six Months Ended June 30, 2022 2021 Amortization of intangible assets $ 5,678 $ 4,688 Restructuring charges $ 3,624 $ 1,489 Other losses $ 33 $ 42 Transaction-related expenses $ 50 $ 141 Unrealized gain on preferred stock investment $ (26,964 ) $ — Tax effect of adjustments $ 4,658 $ (1,685 ) Foreign currency transaction losses (gains), net $ (81 ) $ 355 Adjusted EBITDA(7) increased $13.3 million, or 31.5%, to $55.3 million, or 10.4% of revenues, for the first six months of 2022, compared to $42.1 million, or 9.7% of revenues, for the same period last year. Adjusted net income(7) increased $4.9 million, or 21.5%, to $27.8 million, or $1.32 per diluted share, for the first six months of 2022, compared to $22.9 million, or $1.03 per diluted share, for the first six months of 2021. The number of revenue-generating professionals(1) increased 22.7% to 4,243 as of June 30, 2022 from 3,459 as of June 30, 2021. The utilization rate(5) of the company's Consulting capability increased to 72.4% during the first six months of 2022, compared to 70.5% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 73.6% during the first six months 2022, compared to 72.3% during the same period last year. Additionally, in the first six months of 2022, Huron repurchased 1,020,946 shares of the company’s common stock for $52.2 million, representing 4.7% of the common stock outstanding as of December 31, 2021. OPERATING INDUSTRIES Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges. The company’s year-to-date 2022 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (47%); Education (32%); and Commercial (21%). Financial results by operating industry are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended June 30, 2022. OUTLOOK FOR 2022 Based on currently available information, the company increased and narrowed guidance for full year 2022 revenues before reimbursable expenses to a range of $1.04 billion to $1.08 billion. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 11.5% to 12.0% and non-GAAP adjusted diluted earnings per share in a range of $3.15 to $3.45. Management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast. SECOND QUARTER 2022 WEBCAST The company will host a webcast to discuss its financial results today, July 28, 2022, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from Huron's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter. USE OF NON-GAAP FINANCIAL MEASURES(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, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort. ABOUT HURON Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. Learn more at www.huronconsultinggroup.com. Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “goals,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: 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, 2021 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, 2022 2021 2022 2021 Revenues and reimbursable expenses: Revenues $ 273,325 $ 230,126 $ 533,374 $ 433,339 Reimbursable expenses 7,492 3,252 12,218 5,186 Total revenues and reimbursable expenses 280,817 233,378 545,592 438,525 Operating expenses: Direct costs (exclusive of depreciation and amortization included below) 189,233 161,526 376,480 309,641 Reimbursable expenses 7,576 3,316 12,332 5,319 Selling, general and administrative expenses 46,033 45,190 94,428 84,998 Restructuring charges 2,069 861 3,624 1,489 Depreciation and amortization 6,902 6,356 13,766 12,709 Total operating expenses 251,813 217,249 500,630 414,156 Operating income 29,004 16,129 44,962 24,369 Other income (expense), net: Interest expense, net of interest income (2,446 ) (2,029 ) (4,642 ) (3,748 ) Other income (expense), net (4,881 ) 2,151 19,484 2,571 Total other income (expense), net (7,327 ) 122 14,842 (1,177 ) Income before taxes 21,677 16,251 59,804 23,192 Income tax expense 7,802 3,454 19,077 4,990 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Earnings per share: Net income per basic share $ 0.67 $ 0.59 $ 1.97 $ 0.84 Net income per diluted share $ 0.66 $ 0.59 $ 1.94 $ 0.82 Weighted average shares used in calculating earnings per share: Basic 20,582 21,555 20,715 21,743 Diluted 20,967 21,871 21,047 22,105 Comprehensive income (loss): Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Foreign currency translation adjustments, net of tax (656 ) 82 (699 ) 482 Unrealized gain (loss) on investment, net of tax 773 1,422 (1,888 ) (3,226 ) Unrealized gain on cash flow hedging instruments, net of tax 971 218 5,296 1,647 Other comprehensive income (loss) 1,088 1,722 2,709 (1,097 ) Comprehensive income $ 14,963 $ 14,519 $ 43,436 $ 17,105 HURON CONSULTING GROUP INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 11,958 $ 20,781 Receivables from clients, net 150,973 122,316 Unbilled services, net 118,825 91,285 Income tax receivable 677 8,071 Prepaid expenses and other current assets 21,279 15,229 Total current assets 303,712 257,682 Property and equipment, net 27,214 31,004 Deferred income taxes, net 1,775 1,804 Long-term investments 96,982 72,584 Operating lease right-of-use assets 32,018 35,311 Other non-current assets 64,096 68,191 Intangible assets, net 28,271 31,894 Goodwill 623,841 620,879 Total assets $ 1,177,909 $ 1,119,349 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 10,983 $ 13,621 Accrued expenses and other current liabilities 25,549 22,519 Accrued payroll and related benefits 92,738 139,131 Current maturities of long-term debt — 559 Current maturities of operating lease liabilities 10,241 10,142 Deferred revenues 18,969 19,212 Total current liabilities 158,480 205,184 Non-current liabilities: Deferred compensation and other liabilities 32,370 43,458 Long-term debt, net of current portion 342,000 232,221 Operating lease liabilities, net of current portion 49,093 54,313 Deferred income taxes, net 20,607 12,273 Total non-current liabilities 444,070 342,265 Commitments and contingencies Stockholders’ equity Common stock; $0.01 par value; 500,000,000 shares authorized; 23,492,632 and 24,364,814 shares issued, respectively 232 239 Treasury stock, at cost, 2,681,730 and 2,495,172 shares, respectively (136,425 ) (135,969 ) Additional paid-in capital 374,280 413,794 Retained earnings 317,723 276,996 Accumulated other comprehensive income 19,549 16,840 Total stockholders’ equity 575,359 571,900 Total liabilities and stockholders’ equity $ 1,177,909 $ 1,119,349 HURON CONSULTING GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2022 2021 Cash flows from operating activities: Net income $ 40,727 $ 18,202 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 13,766 12,923 Non-cash lease expense 3,174 3,301 Share-based compensation 15,166 11,566 Amortization of debt discount and issuance costs 397 397 Allowances for doubtful accounts 47 — Deferred income taxes 7,089 (48 ) Gain on sale of property and equipment, excluding transaction costs (1,117 ) (158 ) Change in fair value of contingent consideration liabilities 33 42 Change in fair value of preferred stock investment (26,964 ) — Other, net — (78 ) Changes in operating assets and liabilities, net of acquisitions and divestiture: (Increase) decrease in receivables from clients, net (28,825 ) (27,749 ) (Increase) decrease in unbilled services, net (28,329 ) (36,088 ) (Increase) decrease in current income tax receivable / payable, net 9,394 3,366 (Increase) decrease in other assets 3,984 (1,117 ) Increase (decrease) in accounts payable and other liabilities (13,524 ) 5,038 Increase (decrease) in accrued payroll and related benefits (43,420 ) (42,487 ) Increase (decrease) in deferred revenues (1,834 ) (9,080 ) Net cash used in operating activities (50,236 ) (61,970 ) Cash flows from investing activities: Purchases of property and equipment (6,800 ) (5,439 ) Investment in life insurance policies — (77 ) Purchases of businesses, net of cash acquired (1,948 ) (5,886 ) Capitalization of internally developed software costs (3,974 ) (2,508 ) Proceeds from note receivable 157 — Proceeds from sale of property and equipment 4,750 158 Divestiture of business 207 — Net cash used in investing activities (7,608 ) (13,752 ) Cash flows from financing activities: Proceeds from exercise of stock options 1,185 422 Shares redeemed for employee tax withholdings (7,011 ) (8,651 ) Share repurchases (52,443 ) (35,243 ) Proceeds from bank borrowings 224,000 139,000 Repayments of bank borrowings (114,780 ) (74,270 ) Deferred payment on business acquisition (1,875 ) — Net cash used in financing activities 49,076 21,258 Effect of exchange rate changes on cash (55 ) 269 Net decrease in cash and cash equivalents (8,823 ) (54,195 ) Cash and cash equivalents at beginning of the period 20,781 67,177 Cash and cash equivalents at end of the period $ 11,958 $ 12,982 HURON CONSULTING GROUP INC. SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (Unaudited) Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease) Segment and Consolidated Operating Results (in thousands): 2022 2021 2022 2021 Healthcare: Revenues $ 128,474 $ 114,750 12.0 % $ 250,350 $ 210,725 18.8 % Operating income $ 30,364 $ 30,527 (0.5 )% $ 58,396 $ 54,354 7.4 % Segment operating margin 23.6 % 26.6 % 23.3 % 25.8 % Education: Revenues $ 88,225 $ 60,475 45.9 % $ 168,887 $ 111,817 51.0 % Operating income $ 21,691 $ 14,142 53.4 % $ 35,997 $ 22,679 58.7 % Segment operating margin 24.6 % 23.4 % 21.3 % 20.3 % Commercial: Revenues $ 56,626 $ 54,901 3.1 % $ 114,137 $ 110,797 3.0 % Operating income $ 11,915 $ 11,040 7.9 % $ 24,129 $ 20,890 15.5 % Segment operating margin 21.0 % 20.1 % 21.1 % 18.9 % Total Huron: Revenues $ 273,325 $ 230,126 18.8 % $ 533,374 $ 433,339 23.1 % Reimbursable expenses 7,492 3,252 130.4 % 12,218 5,186 135.6 % Total revenues and reimbursable expenses $ 280,817 $ 233,378 20.3 % $ 545,592 $ 438,525 24.4 % Segment operating income $ 63,970 $ 55,709 14.8 % $ 118,522 $ 97,923 21.0 % Items not allocated at the segment level: Other operating expenses 29,912 34,325 (12.9 )% 63,460 63,134 0.5 % Depreciation and amortization 5,054 5,255 (3.8 )% 10,100 10,420 (3.1 )% Total operating income 29,004 16,129 79.8 % 44,962 24,369 84.5 % Other income (expense), net (7,327 ) 122 N/M 14,842 (1,177 ) N/M Income before taxes $ 21,677 $ 16,251 33.4 % $ 59,804 $ 23,192 157.9 % Other Operating Data: Number of revenue-generating professionals by segment (at period end)(1)(6): Healthcare 1,619 1,443 12.2 % 1,619 1,443 12.2 % Education 1,407 885 59.0 % 1,407 885 59.0 % Commercial (2) 1,217 1,131 7.6 % 1,217 1,131 7.6 % Total 4,243 3,459 22.7 % 4,243 3,459 22.7 % Revenue by capability: Consulting and Managed Services (3) $ 147,871 $ 145,004 2.0 % $ 298,455 $ 267,555 11.5 % Digital 125,454 85,122 47.4 % 234,919 165,784 41.7 % Total $ 273,325 $ 230,126 18.8 % $ 533,374 $ 433,339 23.1 % Number of revenue-generating professionals by capability (at period end)(1): Consulting and Managed Services (4) 2,018 1,736 16.2 % 2,018 1,736 16.2 % Digital 2,225 1,723 29.1 % 2,225 1,723 29.1 % Total 4,243 3,459 22.7 % 4,243 3,459 22.7 % Utilization rate by capability(5): Consulting 73.2 % 74.6 % 72.4 % 70.5 % Digital 74.3 % 73.2 % 73.6 % 72.3 % (1) Consists of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the Culture and Organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare Managed Services employees who provide revenue cycle billing, collections insurance verification and change integrity services to clients. (2) The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education. (3) Managed Services capability revenue within our Healthcare segment was $16.1 million and $14.0 million for the three months ended June 30, 2022 and 2021, respectively; and $29.9 million and $21.6 million for the six months ended June 30, 2022 and 2021, respectively. Managed Services capability revenue within our Education segment was $3.9 million and $2.3 million for the three months ended June 30, 2022 and 2021, respectively; and $7.3 million and $4.5 million for the six months ended June 30, 2022 and 2021, respectively. (4) The number of Managed Services revenue-generating professionals within our Healthcare segment as of June 30, 2022 and June 30, 2021 was 504 and 448, respectively. The number of Managed Services revenue-generating professionals within our Education segment as of June 30, 2022 and June 30, 2021 was 96 and 51, respectively. (5) Utilization rate is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We have not presented utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis. (6) During the first quarter of 2022, we reclassified certain Digital revenue-generating professionals within our Healthcare and Education segments to our Commercial segment as these professionals can provide services across all of our industries. This reclassification did not impact the total headcount within our Digital capability for any period. The prior period headcount has been revised for consistent presentation. N/M - Not Meaningful HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7) (In thousands) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 273,325 $ 230,126 $ 533,374 $ 433,339 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Add back: Income tax expense 7,802 3,454 19,077 4,990 Interest expense, net of interest income 2,446 2,029 4,642 3,748 Depreciation and amortization 7,097 6,555 14,219 13,106 Earnings before interest, taxes, depreciation and amortization (EBITDA) (7) 31,220 24,835 78,665 40,046 Add back: Restructuring charges 2,069 861 3,624 1,489 Other losses 21 — 33 42 Transaction-related expenses — (29 ) 50 141 Unrealized gain on preferred stock investment — — (26,964 ) — Foreign currency transaction losses (gains), net (100 ) (48 ) (81 ) 355 Adjusted EBITDA (7) $ 33,210 $ 25,619 $ 55,327 $ 42,073 Adjusted EBITDA as a percentage of revenues (7) 12.2 % 11.1 % 10.4 % 9.7 % HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (7) (In thousands, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Weighted average shares - diluted 20,967 21,871 21,047 22,105 Diluted earnings per share $ 0.66 $ 0.59 $ 1.94 $ 0.82 Add back: Amortization of intangible assets 2,818 2,289 5,678 4,688 Restructuring charges 2,069 861 3,624 1,489 Other losses 21 — 33 42 Transaction-related expenses — (29 ) 50 141 Unrealized gain on preferred stock investment — — (26,964 ) — Tax effect of adjustments (1,301 ) (827 ) 4,658 (1,685 ) Total adjustments, net of tax 3,607 2,294 (12,921 ) 4,675 Adjusted net income (7) $ 17,482 $ 15,091 $ 27,806 $ 22,877 Adjusted weighted average shares - diluted 20,967 21,871 21,047 22,105 Adjusted diluted earnings per share (7) $ 0.83 $ 0.69 $ 1.32 $ 1.03 (7) In evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing the company's business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005192/en/Contacts MEDIA CONTACT Allie Bovis abovis@hcg.com INVESTOR CONTACT John D. Kelly investor@hcg.com
SECOND QUARTER 2022 HIGHLIGHTS Revenues increased $43.2 million, or 18.8%, to $273.3 million in Q2 2022 from $230.1 million in Q2 2021. Net income increased $1.1 million, or 8.4%, to $13.9 million in Q2 2022 from $12.8 million in Q2 2021. Adjusted EBITDA(7), a non-GAAP measure, increased $7.6 million, or 29.6%, to $33.2 million in Q2 2022 from $25.6 million in Q2 2021. Diluted earnings per share increased $0.07, or 11.9%, to $0.66 in Q2 2022 from $0.59 in Q2 2021. Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.14, or 20.3%, to $0.83 in Q2 2022 from $0.69 in Q2 2021. Huron repurchased 0.5 million shares of the company’s common stock for $28.3 million in Q2 2022. YEAR-TO-DATE 2022 HIGHLIGHTS AND 2022 GUIDANCE Revenues increased $100.0 million, or 23.1%, to $533.4 million for the first six months of 2022 from $433.3 million for the same prior year period. Net income increased $22.5 million to $40.7 million for the first six months of 2022 from $18.2 million for the same prior year period. Results for the first six months of 2022 include an unrealized gain of $19.8 million, net of tax, on the company's investment in a hospital-at-home company recognized in Q1 2022. Adjusted EBITDA(7), a non-GAAP measure, increased $13.3 million, or 31.5%, to $55.3 million for the first six months of 2022 from $42.1 million for the same prior year period. Diluted earnings per share increased $1.12 to $1.94 for the first six months of 2022 from $0.82 for the same prior year period. Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.29, or 28.2%, to $1.32 for the first six months of 2022 from $1.03 for the same prior year period. Huron repurchased 1.0 million shares of the company’s common stock for $52.2 million in the first six months of 2022. Huron updates its previous earnings guidance range for full year 2022, including increasing and narrowing revenue expectations to a range of $1.04 billion to $1.08 billion.
Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the second quarter ended June 30, 2022. “Strong demand across all three operating segments enabled us to achieve 19% revenue growth over the prior year quarter. Our Digital capability, serving the healthcare, education, and commercial industries, grew 47% over the prior year quarter, reflecting ongoing strong demand for our digital transformation offerings across each segment,” said James H. Roth, chief executive officer of Huron. “Despite uncertainties in the macro environment, we are raising our revenue and earnings guidance based on our view of the demand outlook for our core offerings for the remainder of the year.” SECOND QUARTER 2022 RESULTS Revenues increased $43.2 million, or 18.8%, to $273.3 million for the second quarter of 2022, compared to $230.1 million for the second quarter of 2021. Net income increased $1.1 million, or 8.4%, to $13.9 million for the second quarter of 2022, compared to $12.8 million for the same quarter last year. Diluted earnings per share increased $0.07, or 11.9%, to $0.66 for the second quarter of 2022, compared to $0.59 for the second quarter of 2021. Second quarter 2022 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) increased $6.4 million, or 25.7%, to $31.2 million, compared to $24.8 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, 2022 2021 Amortization of intangible assets $ 2,818 $ 2,289 Restructuring charges $ 2,069 $ 861 Other losses $ 21 $ — Transaction-related expenses $ — $ (29 ) Tax effect of adjustments $ (1,301 ) $ (827 ) Foreign currency transaction gains, net $ (100 ) $ (48 ) Adjusted EBITDA(7) increased $7.6 million, or 29.6%, to $33.2 million, or 12.2% of revenues, in the second quarter of 2022, compared to $25.6 million, or 11.1% of revenues, in the same quarter last year. Adjusted net income(7) increased $2.4 million to $17.5 million, or $0.83 per diluted share, for the second quarter of 2022, compared to $15.1 million, or $0.69 per diluted share, for the same quarter in 2021. The number of revenue-generating professionals(1) increased 22.7% to 4,243 as of June 30, 2022 from 3,459 as of June 30, 2021. The utilization rate(5) of the company's Consulting capability decreased to 73.2% during the second quarter 2022, compared to 74.6% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 74.3% during the second quarter 2022, compared to 73.2% during the same period last year. Additionally, in the second quarter of 2022, Huron repurchased 497,547 shares of the company’s common stock for $28.3 million. YEAR-TO-DATE 2022 RESULTS Revenues increased $100.0 million, or 23.1%, to $533.4 million for the first six months of 2022, compared to $433.3 million for the first six months of 2021. Net income increased $22.5 million to $40.7 million for the first six months of 2022, compared to $18.2 million for the first six months of 2021. Diluted earnings per share increased $1.12 to $1.94 for the second quarter of 2022, compared to $0.82 for the same period last year. Results for the first six months of 2022 include an unrealized gain of $19.8 million, net of tax, related to the increase in fair value of the company's investment in a hospital-at-home company. EBITDA(7) for the first six months of 2022 increased $38.6 million, or 96.4%, to $78.7 million, compared to $40.0 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): Six Months Ended June 30, 2022 2021 Amortization of intangible assets $ 5,678 $ 4,688 Restructuring charges $ 3,624 $ 1,489 Other losses $ 33 $ 42 Transaction-related expenses $ 50 $ 141 Unrealized gain on preferred stock investment $ (26,964 ) $ — Tax effect of adjustments $ 4,658 $ (1,685 ) Foreign currency transaction losses (gains), net $ (81 ) $ 355 Adjusted EBITDA(7) increased $13.3 million, or 31.5%, to $55.3 million, or 10.4% of revenues, for the first six months of 2022, compared to $42.1 million, or 9.7% of revenues, for the same period last year. Adjusted net income(7) increased $4.9 million, or 21.5%, to $27.8 million, or $1.32 per diluted share, for the first six months of 2022, compared to $22.9 million, or $1.03 per diluted share, for the first six months of 2021. The number of revenue-generating professionals(1) increased 22.7% to 4,243 as of June 30, 2022 from 3,459 as of June 30, 2021. The utilization rate(5) of the company's Consulting capability increased to 72.4% during the first six months of 2022, compared to 70.5% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 73.6% during the first six months 2022, compared to 72.3% during the same period last year. Additionally, in the first six months of 2022, Huron repurchased 1,020,946 shares of the company’s common stock for $52.2 million, representing 4.7% of the common stock outstanding as of December 31, 2021. OPERATING INDUSTRIES Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges. The company’s year-to-date 2022 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (47%); Education (32%); and Commercial (21%). Financial results by operating industry are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended June 30, 2022. OUTLOOK FOR 2022 Based on currently available information, the company increased and narrowed guidance for full year 2022 revenues before reimbursable expenses to a range of $1.04 billion to $1.08 billion. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 11.5% to 12.0% and non-GAAP adjusted diluted earnings per share in a range of $3.15 to $3.45. Management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast. SECOND QUARTER 2022 WEBCAST The company will host a webcast to discuss its financial results today, July 28, 2022, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from Huron's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter. USE OF NON-GAAP FINANCIAL MEASURES(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, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort. ABOUT HURON Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. Learn more at www.huronconsultinggroup.com. Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “goals,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: 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, 2021 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, 2022 2021 2022 2021 Revenues and reimbursable expenses: Revenues $ 273,325 $ 230,126 $ 533,374 $ 433,339 Reimbursable expenses 7,492 3,252 12,218 5,186 Total revenues and reimbursable expenses 280,817 233,378 545,592 438,525 Operating expenses: Direct costs (exclusive of depreciation and amortization included below) 189,233 161,526 376,480 309,641 Reimbursable expenses 7,576 3,316 12,332 5,319 Selling, general and administrative expenses 46,033 45,190 94,428 84,998 Restructuring charges 2,069 861 3,624 1,489 Depreciation and amortization 6,902 6,356 13,766 12,709 Total operating expenses 251,813 217,249 500,630 414,156 Operating income 29,004 16,129 44,962 24,369 Other income (expense), net: Interest expense, net of interest income (2,446 ) (2,029 ) (4,642 ) (3,748 ) Other income (expense), net (4,881 ) 2,151 19,484 2,571 Total other income (expense), net (7,327 ) 122 14,842 (1,177 ) Income before taxes 21,677 16,251 59,804 23,192 Income tax expense 7,802 3,454 19,077 4,990 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Earnings per share: Net income per basic share $ 0.67 $ 0.59 $ 1.97 $ 0.84 Net income per diluted share $ 0.66 $ 0.59 $ 1.94 $ 0.82 Weighted average shares used in calculating earnings per share: Basic 20,582 21,555 20,715 21,743 Diluted 20,967 21,871 21,047 22,105 Comprehensive income (loss): Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Foreign currency translation adjustments, net of tax (656 ) 82 (699 ) 482 Unrealized gain (loss) on investment, net of tax 773 1,422 (1,888 ) (3,226 ) Unrealized gain on cash flow hedging instruments, net of tax 971 218 5,296 1,647 Other comprehensive income (loss) 1,088 1,722 2,709 (1,097 ) Comprehensive income $ 14,963 $ 14,519 $ 43,436 $ 17,105 HURON CONSULTING GROUP INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 11,958 $ 20,781 Receivables from clients, net 150,973 122,316 Unbilled services, net 118,825 91,285 Income tax receivable 677 8,071 Prepaid expenses and other current assets 21,279 15,229 Total current assets 303,712 257,682 Property and equipment, net 27,214 31,004 Deferred income taxes, net 1,775 1,804 Long-term investments 96,982 72,584 Operating lease right-of-use assets 32,018 35,311 Other non-current assets 64,096 68,191 Intangible assets, net 28,271 31,894 Goodwill 623,841 620,879 Total assets $ 1,177,909 $ 1,119,349 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 10,983 $ 13,621 Accrued expenses and other current liabilities 25,549 22,519 Accrued payroll and related benefits 92,738 139,131 Current maturities of long-term debt — 559 Current maturities of operating lease liabilities 10,241 10,142 Deferred revenues 18,969 19,212 Total current liabilities 158,480 205,184 Non-current liabilities: Deferred compensation and other liabilities 32,370 43,458 Long-term debt, net of current portion 342,000 232,221 Operating lease liabilities, net of current portion 49,093 54,313 Deferred income taxes, net 20,607 12,273 Total non-current liabilities 444,070 342,265 Commitments and contingencies Stockholders’ equity Common stock; $0.01 par value; 500,000,000 shares authorized; 23,492,632 and 24,364,814 shares issued, respectively 232 239 Treasury stock, at cost, 2,681,730 and 2,495,172 shares, respectively (136,425 ) (135,969 ) Additional paid-in capital 374,280 413,794 Retained earnings 317,723 276,996 Accumulated other comprehensive income 19,549 16,840 Total stockholders’ equity 575,359 571,900 Total liabilities and stockholders’ equity $ 1,177,909 $ 1,119,349 HURON CONSULTING GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2022 2021 Cash flows from operating activities: Net income $ 40,727 $ 18,202 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 13,766 12,923 Non-cash lease expense 3,174 3,301 Share-based compensation 15,166 11,566 Amortization of debt discount and issuance costs 397 397 Allowances for doubtful accounts 47 — Deferred income taxes 7,089 (48 ) Gain on sale of property and equipment, excluding transaction costs (1,117 ) (158 ) Change in fair value of contingent consideration liabilities 33 42 Change in fair value of preferred stock investment (26,964 ) — Other, net — (78 ) Changes in operating assets and liabilities, net of acquisitions and divestiture: (Increase) decrease in receivables from clients, net (28,825 ) (27,749 ) (Increase) decrease in unbilled services, net (28,329 ) (36,088 ) (Increase) decrease in current income tax receivable / payable, net 9,394 3,366 (Increase) decrease in other assets 3,984 (1,117 ) Increase (decrease) in accounts payable and other liabilities (13,524 ) 5,038 Increase (decrease) in accrued payroll and related benefits (43,420 ) (42,487 ) Increase (decrease) in deferred revenues (1,834 ) (9,080 ) Net cash used in operating activities (50,236 ) (61,970 ) Cash flows from investing activities: Purchases of property and equipment (6,800 ) (5,439 ) Investment in life insurance policies — (77 ) Purchases of businesses, net of cash acquired (1,948 ) (5,886 ) Capitalization of internally developed software costs (3,974 ) (2,508 ) Proceeds from note receivable 157 — Proceeds from sale of property and equipment 4,750 158 Divestiture of business 207 — Net cash used in investing activities (7,608 ) (13,752 ) Cash flows from financing activities: Proceeds from exercise of stock options 1,185 422 Shares redeemed for employee tax withholdings (7,011 ) (8,651 ) Share repurchases (52,443 ) (35,243 ) Proceeds from bank borrowings 224,000 139,000 Repayments of bank borrowings (114,780 ) (74,270 ) Deferred payment on business acquisition (1,875 ) — Net cash used in financing activities 49,076 21,258 Effect of exchange rate changes on cash (55 ) 269 Net decrease in cash and cash equivalents (8,823 ) (54,195 ) Cash and cash equivalents at beginning of the period 20,781 67,177 Cash and cash equivalents at end of the period $ 11,958 $ 12,982 HURON CONSULTING GROUP INC. SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (Unaudited) Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease) Segment and Consolidated Operating Results (in thousands): 2022 2021 2022 2021 Healthcare: Revenues $ 128,474 $ 114,750 12.0 % $ 250,350 $ 210,725 18.8 % Operating income $ 30,364 $ 30,527 (0.5 )% $ 58,396 $ 54,354 7.4 % Segment operating margin 23.6 % 26.6 % 23.3 % 25.8 % Education: Revenues $ 88,225 $ 60,475 45.9 % $ 168,887 $ 111,817 51.0 % Operating income $ 21,691 $ 14,142 53.4 % $ 35,997 $ 22,679 58.7 % Segment operating margin 24.6 % 23.4 % 21.3 % 20.3 % Commercial: Revenues $ 56,626 $ 54,901 3.1 % $ 114,137 $ 110,797 3.0 % Operating income $ 11,915 $ 11,040 7.9 % $ 24,129 $ 20,890 15.5 % Segment operating margin 21.0 % 20.1 % 21.1 % 18.9 % Total Huron: Revenues $ 273,325 $ 230,126 18.8 % $ 533,374 $ 433,339 23.1 % Reimbursable expenses 7,492 3,252 130.4 % 12,218 5,186 135.6 % Total revenues and reimbursable expenses $ 280,817 $ 233,378 20.3 % $ 545,592 $ 438,525 24.4 % Segment operating income $ 63,970 $ 55,709 14.8 % $ 118,522 $ 97,923 21.0 % Items not allocated at the segment level: Other operating expenses 29,912 34,325 (12.9 )% 63,460 63,134 0.5 % Depreciation and amortization 5,054 5,255 (3.8 )% 10,100 10,420 (3.1 )% Total operating income 29,004 16,129 79.8 % 44,962 24,369 84.5 % Other income (expense), net (7,327 ) 122 N/M 14,842 (1,177 ) N/M Income before taxes $ 21,677 $ 16,251 33.4 % $ 59,804 $ 23,192 157.9 % Other Operating Data: Number of revenue-generating professionals by segment (at period end)(1)(6): Healthcare 1,619 1,443 12.2 % 1,619 1,443 12.2 % Education 1,407 885 59.0 % 1,407 885 59.0 % Commercial (2) 1,217 1,131 7.6 % 1,217 1,131 7.6 % Total 4,243 3,459 22.7 % 4,243 3,459 22.7 % Revenue by capability: Consulting and Managed Services (3) $ 147,871 $ 145,004 2.0 % $ 298,455 $ 267,555 11.5 % Digital 125,454 85,122 47.4 % 234,919 165,784 41.7 % Total $ 273,325 $ 230,126 18.8 % $ 533,374 $ 433,339 23.1 % Number of revenue-generating professionals by capability (at period end)(1): Consulting and Managed Services (4) 2,018 1,736 16.2 % 2,018 1,736 16.2 % Digital 2,225 1,723 29.1 % 2,225 1,723 29.1 % Total 4,243 3,459 22.7 % 4,243 3,459 22.7 % Utilization rate by capability(5): Consulting 73.2 % 74.6 % 72.4 % 70.5 % Digital 74.3 % 73.2 % 73.6 % 72.3 % (1) Consists of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the Culture and Organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare Managed Services employees who provide revenue cycle billing, collections insurance verification and change integrity services to clients. (2) The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education. (3) Managed Services capability revenue within our Healthcare segment was $16.1 million and $14.0 million for the three months ended June 30, 2022 and 2021, respectively; and $29.9 million and $21.6 million for the six months ended June 30, 2022 and 2021, respectively. Managed Services capability revenue within our Education segment was $3.9 million and $2.3 million for the three months ended June 30, 2022 and 2021, respectively; and $7.3 million and $4.5 million for the six months ended June 30, 2022 and 2021, respectively. (4) The number of Managed Services revenue-generating professionals within our Healthcare segment as of June 30, 2022 and June 30, 2021 was 504 and 448, respectively. The number of Managed Services revenue-generating professionals within our Education segment as of June 30, 2022 and June 30, 2021 was 96 and 51, respectively. (5) Utilization rate is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We have not presented utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis. (6) During the first quarter of 2022, we reclassified certain Digital revenue-generating professionals within our Healthcare and Education segments to our Commercial segment as these professionals can provide services across all of our industries. This reclassification did not impact the total headcount within our Digital capability for any period. The prior period headcount has been revised for consistent presentation. N/M - Not Meaningful HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7) (In thousands) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 273,325 $ 230,126 $ 533,374 $ 433,339 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Add back: Income tax expense 7,802 3,454 19,077 4,990 Interest expense, net of interest income 2,446 2,029 4,642 3,748 Depreciation and amortization 7,097 6,555 14,219 13,106 Earnings before interest, taxes, depreciation and amortization (EBITDA) (7) 31,220 24,835 78,665 40,046 Add back: Restructuring charges 2,069 861 3,624 1,489 Other losses 21 — 33 42 Transaction-related expenses — (29 ) 50 141 Unrealized gain on preferred stock investment — — (26,964 ) — Foreign currency transaction losses (gains), net (100 ) (48 ) (81 ) 355 Adjusted EBITDA (7) $ 33,210 $ 25,619 $ 55,327 $ 42,073 Adjusted EBITDA as a percentage of revenues (7) 12.2 % 11.1 % 10.4 % 9.7 % HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (7) (In thousands, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income $ 13,875 $ 12,797 $ 40,727 $ 18,202 Weighted average shares - diluted 20,967 21,871 21,047 22,105 Diluted earnings per share $ 0.66 $ 0.59 $ 1.94 $ 0.82 Add back: Amortization of intangible assets 2,818 2,289 5,678 4,688 Restructuring charges 2,069 861 3,624 1,489 Other losses 21 — 33 42 Transaction-related expenses — (29 ) 50 141 Unrealized gain on preferred stock investment — — (26,964 ) — Tax effect of adjustments (1,301 ) (827 ) 4,658 (1,685 ) Total adjustments, net of tax 3,607 2,294 (12,921 ) 4,675 Adjusted net income (7) $ 17,482 $ 15,091 $ 27,806 $ 22,877 Adjusted weighted average shares - diluted 20,967 21,871 21,047 22,105 Adjusted diluted earnings per share (7) $ 0.83 $ 0.69 $ 1.32 $ 1.03 (7) In evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing the company's business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005192/en/