Huron Consulting Group Inc. (HURN)

[10nisman]

Q3 Earnings just released....

*DJ Huron Consulting Group 3Q Non-GAAP EPS 59c >HURN

*DJ Huron Consulting Group Sees 2009 Rev $650M-$665M >HURN

*DJ Huron Consulting Group Sees 2009 Non-GAAP EPS $2.85-Non-GAAP EPS $3.05 >HURN

Conference call is at 9am EST...

Huron Consulting Group Announces Third Quarter 2009 Financial Results
http://finance.yahoo.com/news/Huron-Consulting-Group-bw-3674632031.html?x=0&.v=1
Press Release
Source: Huron Consulting Group Inc.
On 7:00 am EST, Thursday November 5, 2009

CHICAGO--(BUSINESS WIRE)--Huron Consulting Group Inc. (NASDAQ: HURN - News):

Revenues of $172.2 million for Q3 2009 increased 2.1% from $168.7 million in Q3 2008 and grew sequentially from $165.8 million in Q2 2009.
The Company’s previously announced goodwill impairment analysis resulted in a $106.0 million non-cash pretax goodwill impairment charge taken in Q3 2009, which is approximately 20% of the Company’s total goodwill balance of $506.5 million as of June 30, 2009.
Results for Q3 2009 also included restructuring and restatement charges totaling $15.1 million.
GAAP loss per share including the aforementioned charges was $(3.16) in Q3 2009 compared to diluted earnings per share of $0.12 in Q3 2008.
Non-GAAP adjusted diluted earnings per share was $0.59 in Q3 2009 compared to $0.86 for Q3 2008(7). This change is almost entirely due to the increase in the effective tax rate.
Average number of full-time billable consultants(2) totaled 1,430 for Q3 2009 compared to 1,488 for Q3 2008. Average number of full-time equivalent professionals(5) totaled 861 for Q3 2009 compared to 947 in the same period last year.
Company provides updated full year 2009 revenue guidance of $650 million to $665 million.

Huron Consulting Group Inc. (NASDAQ: HURN - News), a leading provider of business consulting services, today announced its financial results for the third quarter ended September 30, 2009.

“Huron’s third quarter results demonstrate the strength of our client relationships, the quality and dedication of our people, and our ability to work as a team through a challenging economic and business environment,” said James H. Roth, chief executive officer, Huron Consulting Group. “Despite some of the significant challenges following the announcement of our financial restatement, the Huron team has stayed focused on the business of serving our clients and generating new client engagements. We will remain focused on the execution of our business plan for the fourth quarter of 2009 and throughout 2010.”

In evaluating the Company’s financial performance and consistent with previous periods, the Company has adopted the use of certain non-GAAP measures for a comparison to prior periods and for guidance as described below under “Use of Non-GAAP Financial Measures.”

Third Quarter 2009 Results

Revenues of $172.2 million for the third quarter of 2009 increased 2.1% from $168.7 million for the third quarter of 2008 and grew sequentially from $165.8 million in the second quarter of 2009. The Company recorded a $106 million non-cash pretax charge for the impairment of goodwill in the third quarter of 2009, which is approximately 20% of the Company’s total goodwill balance of $506.5 million as of June 30, 2009. The impairment charge is non-cash in nature and does not affect the Company’s liquidity. Results for the third quarter 2009 also included approximately $15.1 million in restructuring and restatement related charges. GAAP net loss was $64.0 million, or a loss of $(3.16) per share, for the third quarter of 2009 compared to GAAP net income of $2.4 million, or $0.12 per diluted share, for the same period last year. Non-GAAP adjusted net income(7) was $11.9 million, or $0.59 per diluted share, for the third quarter of 2009 compared to $17.0 million, or $0.86 per diluted share, for the comparable quarter in 2008. This change is almost entirely due to an increase in the effective tax rate reflecting losses that cannot be tax benefited and an increase in the state tax liability. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) (7), which excludes share-based compensation expense, non-cash compensation expense, restructuring charges, non-recurring expenses related to the restatement, goodwill impairment charge, and an other gain, was $38.1 million, or 22.1% of revenues for the third quarter, compared to $40.8 million, or 24.2% of revenues, in the comparable quarter last year.

“We are pleased with our revenues for the third quarter and the contributions from all of our business units during these uncertain times,” said Roth. “The quarterly results were positively influenced by better than forecasted levels of contingent fees and continued strong demand in the Health and Education Consulting segment, reflecting our deep industry skills to assist hospitals, healthcare organizations and universities with their complex challenges.”

The average number of full-time billable consultants(2) was 1,430 in the third quarter of 2009 compared to 1,488 in the same quarter last year. Full-time billable consultant utilization rate was 69.8% during the third quarter of 2009 compared with 71.3% during the same period last year. The average number of full-time equivalent professionals(5) totaled 861 in the third quarter of 2009 compared to 947 for the comparable period in 2008. Average billing rate per hour for full-time billable consultants was $284 for the third quarter of 2009 compared to $250 for the third quarter of 2008.

Year-to-Date Results

Revenues of $501.1 million for the first nine months of 2009 increased 11.0% from $451.5 million for the same period last year. The GAAP net loss, which includes restructuring, restatement and goodwill impairment charges as discussed above, was $47.3 million, or a loss of $(2.36) per share, for the first nine months of 2009 compared to GAAP net income of $6.6 million, or $0.35 per diluted share, for the same period last year. Non-GAAP adjusted net income(7) was $45.6 million, or $2.22 per diluted share, for the first nine months of 2009 compared to $49.1 million, or $2.62 per diluted share, for the comparable period in 2008. Adjusted EBITDA(7), which excludes share-based compensation expense, non-cash compensation expense, restructuring charges, non-recurring expenses related to the restatement, goodwill impairment charge, and an other gain, rose 4.5% to $110.5 million, or 22.0% of revenues, compared to $105.8 million, or 23.4% of revenues, in the comparable period last year.

The average number of full-time billable consultants(2) increased 14.1% to 1,493 in the first nine months of 2009 compared to 1,308 in the same period last year. The average number of full-time equivalent professionals(5) decreased slightly to 811 in the first nine months of 2009 compared to 851 for the comparable period in 2008. Full-time billable consultant utilization rate was 69.7% during the first nine months of 2009 compared with 67.9% during the same period last year. Average billing rate per hour for full-time billable consultants was $269 for the first nine months of 2009 compared to $265 for the same period last year.

Operating Segments

Huron’s results reflect a broad portfolio of service offerings that help clients address complex business challenges. The Company’s operating segments are as follows:


Health and Education Consulting – Representing 57% of Huron’s total third quarter 2009 revenues, this segment was positively influenced by better than forecasted levels of contingent fees and continues to show solid growth as it assists healthcare organizations and universities respond to increased funding constraints and regulatory challenges. Huron’s services help the institutions it serves improve their financial and operational performance.
Legal Consulting – Representing 17% of Huron’s total third quarter 2009 revenues, this segment continues to see steady demand for document review and discovery services, and mixed demand for other consulting services. This segment continues to assist Fortune 500 general counsels manage spiraling costs in what are challenging times for the legal industry.
Accounting & Financial Consulting – Representing 16% of Huron’s total third quarter 2009 revenues, this event-driven segment continues to operate in a sluggish market and performed consistent with the slower litigation and regulatory environment. However, despite the sluggish environment, this segment delivered sequential quarterly growth for the first time in eight quarters. This segment continues to pursue opportunities in the financial services industry, provide advisory services to government entities, and implement International Financial Reporting Standards (IFRS) at large U.S.-based multinationals.
Corporate Consulting – Representing 10% of Huron’s total third quarter 2009 revenues, this segment is benefiting from solid demand for its Restructuring and Turnaround business while services being delivered in its Strategy, Utilities and Japan markets experienced soft demand.

Segment financial results are included in the attached schedules and discussed in greater detail in Huron's Form 10-Q for the quarter ended September 30, 2009.

Financial Restatement

The Company announced on July 31, 2009 that it would restate its financial statements for the fiscal years 2006, 2007 and 2008 and the first quarter of 2009. On August 17, 2009, Huron completed the restatement. The restatement pertained to the accounting for certain acquisition-related payments received by selling shareholders of four acquired businesses that were subsequently redistributed by such selling shareholders among themselves and to other select client-serving and administrative Company employees based, in part, on continuing employment with the Company or the achievement of personal performance measures.

The selling shareholders were not prohibited from redistributing such acquisition-related payments under the terms of the purchase agreements with the Company for the acquisitions of the acquired businesses. However, under GAAP, such payments were imputed to the Company, and the portion of such payments redistributed based on performance or employment was required to be reflected as non-cash compensation expense of the Company, even though the amounts received by the selling shareholders did not differ significantly from the amounts they would have received if such portion had been distributed solely in accordance with their ownership interests. The restatement was necessary because the Company did not record such portions of the acquisition-related payments as a separate non-cash compensation expense with a corresponding increase in paid-in capital.

Based on the results of the Company’s inquiry into the acquisition-related payments to date and the previously disclosed agreement amendments with the selling shareholders, earn-out payments for periods after August 1, 2009 are accounted for as additional purchase consideration and not also as non-cash compensation expense. The Company recognized $1.2 million of additional non-cash compensation expense during the third quarter of 2009 related to the redistributed acquisition-related payments for the period from July 1 to July 31, 2009.

The restatement resulted in a reduction of approximately $56 million in net income and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for all restated periods. However, the restatement had no effect on Huron’s total assets, total liabilities or total stockholders’ equity on an annual basis. Further, the Company did not expend additional cash with respect to the compensation charge, and the restatement had no effect on Huron’s cash or net cash flows from operations.

See the Company’s Form 10-Q for the quarter ended June 30, 2009, Form 10K/A filed on August 17, 2009, and Form 10Q/A filed on August 17, 2009 for additional information related to the financial restatement.

Goodwill Impairment

As a result of the significant decline in the price of the Company’s common stock following the Company’s July 31, 2009 announcement of its intention to restate its financial statements, the Company engaged in the previously announced impairment analysis with respect to the carrying value of its goodwill in connection with the preparation of the financial statements for the quarter ended September 30, 2009, and recorded a $106.0 million non-cash pretax charge for the impairment of goodwill, which was approximately 20% of the Company’s total goodwill balance of $506.5 million as of June 30, 2009. The impairment charge was recognized to reduce the carrying value of goodwill associated with the Company’s Accounting & Financial Consulting and Corporate Consulting segments. The impairment charge is non-cash in nature and does not affect the Company’s liquidity.

New Management Roles

On November 3, 2009, James H. Roth, chief executive officer, was appointed to the Company’s Board of Directors and James K. Rojas, chief financial officer, assumed the additional role of treasurer, succeeding Gary L. Burge who resigned from the position on that date.

Outlook for 2009

The Company provided guidance for full year 2009 revenues before reimbursable expenses in an updated range of $650 million to $665 million. The Company also anticipates GAAP loss per share in a range of $(2.01) to $(1.80), non-GAAP adjusted diluted earnings per share(9,11) in a range of $2.85 to $3.05, loss before interest, taxes, depreciation and amortization(9,11) in a range of $(13) million to $(8) million, and Adjusted EBITDA(9,11) in a range of $139 million to $144 million. Management will provide a more detailed discussion of its outlook during the Company’s earnings conference call webcast.

Third Quarter 2009 Webcast

The Company will host a webcast to discuss its financial results today at 9:00 a.m. Eastern Time (8:00 a.m. Central Time). The conference call is being webcast by Thomson and can be accessed at Huron Consulting Group’s website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.