Huron Announces Record Second Quarter 2023 Financial Results and Increases 2023 Guidance

Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the second quarter ended June 30, 2023.

“We continue to drive strong organic growth in each of our three operating segments while expanding our companywide operating margin, consistent with our strategy. Revenues grew 27% over the prior year quarter, reflective of continued demand for our Consulting and Managed Services and Digital capabilities,” said Mark Hussey, chief executive officer and president of Huron.

“Our updated annual guidance reflects our outlook for strong growth in 2023. We are pleased that our performance over the past six quarters has outpaced our 2022 investor day financial objectives, and we remain confident in our ability to deliver at or above those goals in the years ahead,” added Hussey.

SECOND QUARTER 2023 RESULTS

Revenues increased $73.4 million, or 26.9%, to $346.8 million for the second quarter of 2023, compared to $273.3 million for the second quarter of 2022. This revenue growth was highlighted by 33.4% growth in the Consulting and Managed Services capability and 19.2% growth in the Digital capability in the aggregate across all industries during the second quarter of 2023, compared to the same prior year period; and reflects the company's focus on accelerating growth in the healthcare and education industries and growing its presence in commercial industries.

Net income increased $10.8 million, or 78.1%, to $24.7 million for the second quarter of 2023, compared to $13.9 million for the same quarter last year. Diluted earnings per share increased $0.61, or 92.4%, to $1.27 for the second quarter of 2023, compared to $0.66 for the second quarter of 2022.

Second quarter 2023 earnings before interest, taxes, depreciation and amortization ("EBITDA")⁽⁶⁾ increased $15.9 million, or 50.9%, to $47.1 million, compared to $31.2 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):

Adjusted EBITDA⁽⁶⁾ increased $15.3 million, or 46.0%, to $48.5 million, or 14.0% of revenues, in the second quarter of 2023, compared to $33.2 million, or 12.2% of revenues, in the same quarter last year. Adjusted net income⁽⁶⁾ increased $9.5 million, or 54.2%, to $27.0 million, or $1.38 per diluted share, for the second quarter of 2023, compared to $17.5 million, or $0.83 per diluted share, for the same quarter in 2022.

The number of revenue-generating professionals⁽¹⁾ increased 21.9% to 5,174 as of June 30, 2023 from 4,243 as of June 30, 2022. The utilization rate⁽⁵⁾ of the company's Consulting capability increased to 76.0% during the second quarter 2023, compared to 73.2% during the same period last year. The utilization rate⁽⁵⁾ for the company's Digital capability increased to 74.7% during the second quarter 2023, compared to 74.3% during the same period last year.

YEAR-TO-DATE 2023 RESULTS

Revenues increased $131.3 million, or 24.6%, to $664.7 million for the first six months of 2023, compared to $533.4 million for the first six months of 2022. This revenue growth was highlighted by 25.5% growth in the Consulting and Managed Services capability and 23.5% growth in the Digital capability in the aggregate across all industries for the first six months of 2023, compared to the same period last year; and reflects the company's focus on accelerating growth in the healthcare and education industries and growing its presence in commercial industries.

Net income was $38.1 million for the first six months of 2023, compared to $40.7 million for the first six months of 2022. Diluted earnings per share increased to $1.95 for the first six months of 2023, compared to $1.94 for the same period last year. Results for the first six months of 2022 included a non-recurring, unrealized gain of $19.8 million, net of tax, related to the company's investment in a hospital-at-home company.

EBITDA⁽⁶⁾ for the first six months of 2023 was $73.8 million, compared to $78.7 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):

Adjusted EBITDA⁽⁶⁾ increased $22.7 million, or 40.9%, to $78.0 million, or 11.7% of revenues, for the first six months of 2023, compared to $55.3 million, or 10.4% of revenues, for the same period last year. Adjusted net income⁽⁶⁾ increased $16.2 million, or 58.3%, to $44.0 million, or $2.25 per diluted share, for the first six months of 2023, compared to $27.8 million, or $1.32 per diluted share, for the first six months of 2022.

The number of revenue-generating professionals⁽¹⁾ increased 21.9% to 5,174 as of June 30, 2023 from 4,243 as of June 30, 2022. The utilization rate⁽⁵⁾ of the company's Consulting capability increased to 76.1% during the first six months of 2023, compared to 72.4% during the same period last year. The utilization rate⁽⁵⁾ for the company's Digital capability was 72.8% during the first six months 2023, compared to 73.6% during the same period last year.

Additionally, in the first six months of 2023, Huron repurchased 826,542 shares of the company's common stock for $59.6 million.

OPERATING INDUSTRIES

The company’s year-to-date 2023 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (49%); Education (32%); and Commercial (19%). 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, 2023.

OUTLOOK FOR 2023

Based on currently available information, the company increased guidance for full year 2023 revenues before reimbursable expenses to a range of $1.30 billion to $1.34 billion. The company also anticipates adjusted EBITDA as a percentage of revenues in a range of 12.0% to 12.5% and non-GAAP adjusted diluted earnings per share in a range of $4.35 to $4.65.

SECOND QUARTER 2023 WEBCAST

The company will host a webcast to discuss its financial results today, July 27, 2023, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from Huron's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

USE OF NON-GAAP FINANCIAL MEASURES⁽⁶⁾

In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

ABOUT HURON

Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. Learn more at www.huronconsultinggroup.com.

Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “goals,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: failure to achieve expected utilization rates, billing rates, and the necessary number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under “Item 1A. Risk Factors” in Huron's Annual Report on Form 10-K for the year ended December 31, 2022 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.