Huron Announces Fourth Quarter and Full Year 2022 Financial Results, and Provides 2023 Guidance

Rhea-AI Summary

Huron reported strong financial results for Q4 and full year 2022, with total revenues rising by 26.3% to $313.7 million in Q4 and by 25.0% to $1.132 billion for the full year. Growth in the Digital capability was particularly notable at 37.0% and 41.4%, respectively. Net income for Q4 decreased to $17.1 million, compared to $31.1 million in Q4 2021, affected by a previous one-time gain. Adjusted EBITDA rose 33.1% to $39.0 million in Q4. The company repurchased 0.3 million shares for $23.5 million in Q4 and provided 2023 revenue guidance of $1.22 billion to $1.28 billion. Huron continues to focus on growth and profitability with a solid market position.

Positive

• Total revenues increased 26.3% to $313.7 million in Q4 2022.
• Digital capability revenues surged 37.0% to $130.1 million in Q4 2022.
• Adjusted EBITDA increased by 33.1% to $39.0 million in Q4 2022.
• Annual revenues rose 25.0% to $1.132 billion for 2022.
• Adjusted diluted EPS increased by 40.0% to $1.12 in Q4 2022.

Negative

• Net income for Q4 2022 dropped to $17.1 million, down from $31.1 million in Q4 2021.
• Diluted earnings per share decreased to $0.85 in Q4 2022 from $1.45 in Q4 2021.
• EBITDA for Q4 2022 fell to $34.5 million, down from $50.0 million in Q4 2021.

FOURTH QUARTER 2022 HIGHLIGHTS

• Total revenues increased $65.4 million, or 26.3%, to $313.7 million in Q4 2022 from $248.3 million in Q4 2021.

• Revenues within the Digital capability increased 37.0% to $130.1 million in Q4 2022 compared to $95.0 million Q4 2021.

• Net income was $17.1 million in Q4 2022 compared to $31.1 million in Q4 2021. Results for Q4 2021 include a $23.7 million gain, net of tax, from the sale of the company's Life Sciences business in the fourth quarter of 2021.

• Adjusted EBITDA⁽⁷⁾, a non-GAAP measure, increased $9.7 million, or 33.1%, to $39.0 million in Q4 2022 from $29.3 million in Q4 2021.

• Diluted earnings per share was $0.85 in Q4 2022 compared to $1.45 in Q4 2021.

• Adjusted diluted earnings per share⁽⁷⁾, a non-GAAP measure, increased $0.32, or 40.0%, to $1.12 in Q4 2022 from $0.80 in Q4 2021.

• Huron repurchased 0.3 million shares of the company's common stock for $23.5 million in Q4 2022.

• Net cash provided by operating activities was $91.2 million in Q4 2022.

• Huron refinanced its $600 million credit facility; including extending the maturity date to 2027 and transitioning to SOFR, while maintaining favorable pricing and flexibility.

FULL YEAR 2022 HIGHLIGHTS AND 2023 GUIDANCE

• Total revenues increased $226.8 million, or 25.0%, to $1.132 billion for full year 2022 compared to $905.6 million for full year 2021.

• Revenues within the Digital capability increased 41.4% to $494.5 million for full year 2022 compared to $349.7 million for full year 2021.

• Net income increased $12.6 million, or 19.9%, to $75.6 million for full year 2022 compared to $63.0 million for full year 2021. Results for full year 2022 include an unrealized gain of $19.8 million, net of tax, recognized in Q1 2022 on the company's investment in a hospital-at-home company. Results for full year 2021 include a $23.7 million gain, net of tax, from the sale of the company's Life Sciences business in the fourth quarter of 2021.

• Adjusted EBITDA⁽⁷⁾, a non-GAAP measure, increased $33.0 million, or 33.8%, to $130.8 million for full year 2022 from $97.8 million for full year 2021.

• Diluted earnings per share increased $0.75, or 26.0%, to $3.64 for full year 2022 from $2.89 for full year 2021.

• Adjusted diluted earnings per share⁽⁷⁾, a non-GAAP measure, increased $0.82, or 31.4%, to $3.43 for full year 2022 from $2.61 for full year 2021.

• Huron repurchased 2.0 million shares of the company's common stock for $121.3 million in 2022.

• Huron provides full year 2023 guidance, including revenue expectations in a range of $1.22 billion to $1.28 billion.

CHICAGO--(BUSINESS WIRE)-- Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the fourth quarter and full year ended December 31, 2022.

“We achieved record revenues in the fourth quarter and full year 2022, growing revenues 26% and 25%, respectively. Revenue growth for both the fourth quarter and the full year was strong across all three operating segments and bolstered by continued growth in our Digital capability, which increased 41% in 2022. Our full year adjusted EBITDA margins improved 80 basis points over the prior year, reflecting solid progress toward our objective of returning to mid-teen EBITDA margins by 2025,” said Mark Hussey, chief executive officer and president of Huron.

“Going forward, our business trajectory and financial strength position us to continue creating long-term shareholder value. With our leading market positions in healthcare and education, our growing presence in commercial industries, our rapidly growing Digital capability, and the ongoing market demand for our offerings, we believe we have established a solid foundation for continued growth and increased profitability in 2023,” added Hussey.

FOURTH QUARTER 2022 RESULTS

Revenues increased $65.4 million, or 26.3%, to $313.7 million for the fourth quarter of 2022, compared to $248.3 million for the fourth quarter of 2021. This revenue growth was highlighted by 37.0% growth in the Digital capability and 19.8% growth in the Consulting and Managed Services capability in the aggregate across all industries during the fourth quarter of 2022 compared to the same prior year period.

Net income was $17.1 million for the fourth quarter of 2022 compared to $31.1 million for the same quarter last year. Diluted earnings per share was $0.85 for the fourth quarter of 2022 compared to $1.45 for the fourth quarter of 2021. Results for the fourth quarter of 2021 include a $23.7 million gain, net of tax, from the sale of the company's Life Sciences business in the fourth quarter of 2021.

Fourth quarter 2022 earnings before interest, taxes, depreciation and amortization ("EBITDA")⁽⁷⁾ was $34.5 million, compared to $50.0 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):

	Three Months Ended December 31,
		2022				2021
Amortization of intangible assets	$	2,702			$	2,328
Restructuring charges	$	4,953			$	9,235
Other losses (gains)	$	(159	)		$	100
Transaction-related expenses	$	—			$	1,447
Gain on sale of business	$	—			$	(31,510	)
Tax effect of adjustments	$	(1,986	)		$	4,530
Foreign currency transaction losses (gains), net	$	(246	)		$	21

Adjusted EBITDA⁽⁷⁾ increased $9.7 million, or 33.1%, to $39.0 million, or 12.4% of revenues, in the fourth quarter of 2022, compared to $29.3 million, or 11.8% of revenues, in the same quarter last year. Adjusted net income⁽⁷⁾ increased $5.4 million, or 31.5%, to $22.6 million, or $1.12 per diluted share, for the fourth quarter of 2022, compared to $17.2 million, or $0.80 per diluted share, for the same quarter in 2021.

The number of revenue-generating professionals⁽¹⁾ increased 28.0% to 4,832 as of December 31, 2022 from 3,776 as of December 31, 2021. The utilization rate⁽⁵⁾ of the company's Consulting capability increased to 80.6% during the fourth quarter 2022, compared to 69.9% during the same period last year. The utilization rate⁽⁵⁾ for the company's Digital capability decreased to 69.4% during the fourth quarter 2022, compared to 71.2% during the same period last year.

Additionally, in the fourth quarter of 2022, Huron repurchased 331,165 shares of the company's common stock for $23.5 million.

FULL YEAR 2022 RESULTS

Revenues increased $226.8 million, or 25.0%, to $1.132 billion for full year 2022, compared to $905.6 million for full year 2021. This revenue growth was highlighted by 41.4% growth from the Digital capability in the aggregate across all industries and growth in the Education and Healthcare segments' Consulting and Managed Services capabilities of 46.4% and 11.8%, respectively, for full year 2022 compared to the same prior year period.

Net income increased $12.6 million, or 19.9%, to $75.6 million for full year 2022, compared to $63.0 million for full year 2021. Diluted earnings per share increased $0.75, or 26.0%, to $3.64 for full year 2022, compared to $2.89 for the same period last year. Results for full year 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. Results for full year 2021 include a $23.7 million gain, net of tax, from the sale of the company's Life Sciences business in the fourth quarter of 2021.

EBITDA⁽⁷⁾ for full year 2022 increased $34.2 million, or 29.8%, to $148.7 million, compared to $114.5 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):

	Twelve Months Ended December 31,
		2022				2021
Amortization of intangible assets	$	11,198			$	9,251
Restructuring charges	$	9,909			$	12,401
Other losses (gains)	$	(193	)		$	198
Transaction-related expenses	$	50			$	1,782
Unrealized gain on preferred stock investment	$	(26,964	)		$	—
Gain on sale of business	$	—			$	(31,510	)
Tax effect of adjustments	$	1,590			$	1,742
Foreign currency transaction losses (gains), net	$	(655	)		$	419

Adjusted EBITDA⁽⁷⁾ increased $33.0 million, or 33.8%, to $130.8 million, or 11.6% of revenues, for full year 2022, compared to $97.8 million, or 10.8% of revenues, for the same period last year. Adjusted net income⁽⁷⁾ increased $14.3 million, or 25.1%, to $71.1 million, or $3.43 per diluted share, for full year 2022, compared to $56.9 million, or $2.61 per diluted share, for full year 2021.

The number of revenue-generating professionals⁽¹⁾ increased 28.0% to 4,832 as of December 31, 2022 from 3,776 as of December 31, 2021. The utilization rate⁽⁵⁾ of the company's Consulting capability increased to 75.2% for full year 2022, compared to 70.6% during the same period last year. The utilization rate⁽⁵⁾ for the company's Digital capability decreased to 71.0% for full year 2022, compared to 72.5% during the same period last year.

Additionally, in 2022, Huron repurchased 2,037,752 shares of the company's common stock for $121.3 million, representing 9.3% 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 full year 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 Annual Report on Form 10-K filing for the year ended December 31, 2022.

OUTLOOK FOR 2023

Based on currently available information, the company provided guidance for full year 2023 revenues before reimbursable expenses in a range of $1.22 billion to $1.28 billion. The company 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 $3.75 to $4.25.

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

FOURTH QUARTER 2022 WEBCAST

The company will host a webcast to discuss its financial results today, February 28, 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⁽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: 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.

HURON CONSULTING GROUP INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) (In thousands, except per share amounts) (Unaudited)
	Three Months Ended December 31,								Twelve Months Ended December 31,
		2022				2021				2022				2021
Revenues and reimbursable expenses:
Revenues	$	313,711			$	248,294			$	1,132,455			$	905,640
Reimbursable expenses		7,472				12,442				26,506				21,318
Total revenues and reimbursable expenses		321,183				260,736				1,158,961				926,958
Operating expenses:
Direct costs (exclusive of depreciation and amortization included below)		216,033				173,233				785,881				636,776
Reimbursable expenses		7,422				12,136				26,671				21,369
Selling, general and administrative expenses		60,495				49,510				209,381				178,084
Restructuring charges		4,953				9,235				9,909				12,401
Depreciation and amortization		6,781				6,458				27,359				25,489
Total operating expenses		295,684				250,572				1,059,201				874,119
Operating income		25,499				10,164				99,760				52,839
Other income (expense), net:
Interest expense, net of interest income		(4,130	)			(2,185	)			(11,883	)			(8,150	)
Other income, net		2,001				33,170				20,700				35,347
Total other income (expense), net		(2,129	)			30,985				8,817				27,197
Income before taxes		23,370				41,149				108,577				80,036
Income tax expense		6,286				10,091				33,025				17,049
Net income	$	17,084			$	31,058			$	75,552			$	62,987
Earnings per share:
Net income per basic share	$	0.88			$	1.48			$	3.73			$	2.94
Net income per diluted share	$	0.85			$	1.45			$	3.64			$	2.89
Weighted average shares used in calculating earnings per share:
Basic		19,470				21,039				20,249				21,439
Diluted		20,159				21,466				20,746				21,809
Comprehensive income (loss):
Net income	$	17,084			$	31,058			$	75,552			$	62,987
Foreign currency translation adjustments, net of tax		(157	)			(1,161	)			(1,890	)			(925	)
Unrealized gain (loss) on investment, net of tax		(3,428	)			3,237				(6,146	)			1,169
Unrealized gain on cash flow hedging instruments, net of tax		257				1,579				9,315				3,535
Other comprehensive income (loss)		(3,328	)			3,655				1,279				3,779
Comprehensive income	$	13,756			$	34,713			$	76,831			$	66,766

HURON CONSULTING GROUP INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited)
	December 31, 2022				December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	11,834			$	20,781
Receivables from clients, net		147,852				122,316
Unbilled services, net		141,781				91,285
Income tax receivable		960				8,071
Prepaid expenses and other current assets		26,057				15,229
Total current assets		328,484				257,682
Property and equipment, net		26,107				31,004
Deferred income taxes, net		1,554				1,804
Long-term investments		91,194				72,584
Operating lease right-of-use assets		30,304				35,311
Other non-current assets		73,039				68,191
Intangible assets, net		23,392				31,894
Goodwill		624,966				620,879
Total assets	$	1,199,040			$	1,119,349
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	14,254			$	13,621
Accrued expenses and other current liabilities		27,268				22,519
Accrued payroll and related benefits		171,723				139,131
Current maturities of long-term debt		—				559
Current maturities of operating lease liabilities		10,530				10,142
Deferred revenues		21,909				19,212
Total current liabilities		245,684				205,184
Non-current liabilities:
Deferred compensation and other liabilities		33,614				43,458
Long-term debt, net of current portion		290,000				232,221
Operating lease liabilities, net of current portion		45,556				54,313
Deferred income taxes, net		32,146				12,273
Total non-current liabilities		401,316				342,265
Commitments and contingencies
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 22,507,159 and 24,364,814 shares issued, respectively		223				239
Treasury stock, at cost, 2,711,712 and 2,495,172 shares, respectively		(137,556	)			(135,969	)
Additional paid-in capital		318,706				413,794
Retained earnings		352,548				276,996
Accumulated other comprehensive income		18,119				16,840
Total stockholders’ equity		552,040				571,900
Total liabilities and stockholders’ equity	$	1,199,040			$	1,119,349

HURON CONSULTING GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Twelve Months Ended December 31,
		2022				2021
Cash flows from operating activities:
Net income	$	75,552			$	62,987
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization		27,359				25,978
Non-cash lease expense		6,369				6,967
Lease-related impairment charges		211				—
Share-based compensation		30,971				25,857
Amortization of debt discount and issuance costs		1,169				794
Allowances for doubtful accounts		141				13
Deferred income taxes		18,784				12,480
Gain on sale of property and equipment, excluding transaction costs		(1,111	)			(343	)
Gain on sale of business, excluding transaction costs		—				(32,824	)
Change in fair value of contingent consideration liabilities		(359	)			173
Change in fair value of preferred stock investment		(26,964	)			—
Other, net		6				(78	)
Changes in operating assets and liabilities, net of acquisitions and divestiture:
(Increase) decrease in receivables from clients, net		(25,847	)			(39,845	)
(Increase) decrease in unbilled services, net		(51,359	)			(38,820	)
(Increase) decrease in current income tax receivable / payable, net		7,673				(2,723	)
(Increase) decrease in other assets		2,532				(2,670	)
Increase (decrease) in accounts payable and other liabilities		(13,466	)			10,394
Increase (decrease) in accrued payroll and related benefits		32,770				(2,636	)
Increase (decrease) in deferred revenues		969				(7,717	)
Net cash provided by operating activities		85,400				17,987
Cash flows from investing activities:
Purchases of property and equipment		(12,547	)			(10,871	)
Investments in life insurance policies		(872	)			(1,245	)
Distributions from life insurance policies		3,377				—
Purchases of businesses, net of cash acquired		(3,448	)			(44,819	)
Capitalization of internally developed software costs		(11,752	)			(4,889	)
Proceeds from note receivable		154				—
Proceeds from sale of property and equipment		4,753				408
Divestiture of business		207				41,273
Net cash used in investing activities		(20,128	)			(20,143	)
Cash flows from financing activities:
Proceeds from exercise of stock options		1,421				804
Shares redeemed for employee tax withholdings		(7,795	)			(10,103	)
Share repurchases		(120,393	)			(64,612	)
Proceeds from bank borrowings		314,000				235,000
Repayments of bank borrowings		(256,780	)			(205,499	)
Payments for debt issuance costs		(2,686	)			—
Deferred payments on business acquisitions		(1,875	)			—
Net cash used in financing activities		(74,108	)			(44,410	)
Effect of exchange rate changes on cash		(111	)			170
Net decrease in cash and cash equivalents		(8,947	)			(46,396	)
Cash and cash equivalents at beginning of the period		20,781				67,177
Cash and cash equivalents at end of the period	$	11,834			$	20,781

HURON CONSULTING GROUP INC. SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (Unaudited)
		Three Months Ended December 31,								Percent Increase (Decrease)			Twelve Months Ended December 31,								Percent Increase (Decrease)
Segment and Consolidated Operating Results (in thousands):			2022				2021							2022				2021
Healthcare:
Revenues		$	153,330			$	129,422			18.5	%		$	534,999			$	444,767			20.3	%
Operating income		$	39,786			$	31,813			25.1	%		$	131,227			$	118,324			10.9	%
Segment operating margin			25.9	%			24.6	%						24.5	%			26.6	%
Education:
Revenues		$	96,601			$	67,313			43.5	%		$	359,835			$	242,374			48.5	%
Operating income		$	20,076			$	15,203			32.1	%		$	78,924			$	52,398			50.6	%
Segment operating margin			20.8	%			22.6	%						21.9	%			21.6	%
Commercial:
Revenues		$	63,780			$	51,559			23.7	%		$	237,621			$	218,499			8.8	%
Operating income		$	11,743			$	5,144			128.3	%		$	50,025			$	34,296			45.9	%
Segment operating margin			18.4	%			10.0	%						21.1	%			15.7	%
Total Huron:
Revenues		$	313,711			$	248,294			26.3	%		$	1,132,455			$	905,640			25.0	%
Reimbursable expenses			7,472				12,442			(39.9	)%			26,506				21,318			24.3	%
Total revenues and reimbursable expenses		$	321,183			$	260,736			23.2	%		$	1,158,961			$	926,958			25.0	%
Segment operating income		$	71,605			$	52,160			37.3	%		$	260,176			$	205,018			26.9	%
Items not allocated at the segment level:
Other operating expenses			41,006				36,911			11.1	%			140,145				131,545			6.5	%
Depreciation and amortization			5,100				5,085			0.3	%			20,271				20,634			(1.8	)%
Total operating income			25,499				10,164			150.9	%			99,760				52,839			88.8	%
Other income (expense), net			(2,129	)			30,985			(106.9	)%			8,817				27,197			(67.6	)%
Income before taxes		$	23,370			$	41,149			(43.2	)%		$	108,577			$	80,036			35.7	%
Other Operating Data:
Number of revenue-generating professionals by segment (at period end) (1)(6):
Healthcare			1,890				1,596			18.4	%			1,890				1,596			18.4	%
Education			1,579				1,050			50.4	%			1,579				1,050			50.4	%
Commercial (2)			1,363				1,130			20.6	%			1,363				1,130			20.6	%
Total			4,832				3,776			28.0	%			4,832				3,776			28.0	%
Revenue by capability:
Consulting and Managed Services (3)		$	183,638			$	153,339			19.8	%		$	637,994			$	555,915			14.8	%
Digital			130,073				94,955			37.0	%			494,461				349,725			41.4	%
Total		$	313,711			$	248,294			26.3	%		$	1,132,455			$	905,640			25.0	%
Number of revenue-generating professionals by capability (at period end)(1):
Consulting and Managed Services (4)			2,294				1,838			24.8	%			2,294				1,838			24.8	%
Digital			2,538				1,938			31.0	%			2,538				1,938			31.0	%
Total			4,832				3,776			28.0	%			4,832				3,776			28.0	%
Utilization rate by capability (5):
Consulting			80.6	%			69.9	%						75.2	%			70.6	%
Digital			69.4	%			71.2	%						71.0	%			72.5	%

(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 revenues within our Healthcare segment was $20.1 million and $12.3 million for the three months ended December 31, 2022 and 2021, respectively; and $67.6 million and $47.7 million for the year ended December 31, 2022 and 2021, respectively.
		Managed Services capability revenues within our Education segment was $4.4 million and $2.3 million for the three months ended December 31, 2022 and 2021, respectively; and $15.7 million and $9.1 million for the year ended December 31, 2022 and 2021, respectively.
(4)		The number of Managed Services revenue-generating professionals within our Healthcare segment as of December 31, 2022 and 2021 was 715 and 509, respectively.
		The number of Managed Services revenue-generating professionals within our Education segment as of December 31, 2022 and 2021 was 106 and 72, 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.

HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7) (In thousands) (Unaudited)
	Three Months Ended December 31,								Twelve Months Ended December 31,
		2022				2021				2022				2021
Revenues	$	313,711			$	248,294			$	1,132,455			$	905,640
Net income	$	17,084			$	31,058			$	75,552			$	62,987
Add back:
Income tax expense		6,286				10,091				33,025				17,049
Interest expense, net of interest income		4,130				2,185				11,883				8,150
Depreciation and amortization		6,995				6,707				28,233				26,347
Earnings before interest, taxes, depreciation and amortization (EBITDA) (7)		34,495				50,041				148,693				114,533
Add back:
Restructuring charges		4,953				9,235				9,909				12,401
Other losses (gains)		(159	)			100				(193	)			198
Transaction-related expenses		—				1,447				50				1,782
Unrealized gain on preferred stock investment		—				—				(26,964	)			—
Gain on sale of business		—				(31,510	)			—				(31,510	)
Foreign currency transaction losses (gains), net		(246	)			21				(655	)			419
Adjusted EBITDA (7)	$	39,043			$	29,334			$	130,840			$	97,823
Adjusted EBITDA as a percentage of revenues (7)		12.4	%			11.8	%			11.6	%			10.8	%

HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (7) (In thousands, except per share amounts) (Unaudited)
	Three Months Ended December 31,								Twelve Months Ended December 31,
		2022				2021				2022				2021
Net income	$	17,084			$	31,058			$	75,552			$	62,987
Weighted average shares - diluted		20,159				21,466				20,746				21,809
Diluted earnings per share	$	0.85			$	1.45			$	3.64			$	2.89
Add back:
Amortization of intangible assets		2,702				2,328				11,198				9,251
Restructuring charges		4,953				9,235				9,909				12,401
Other losses (gains)		(159	)			100				(193	)			198
Transaction-related expenses		—				1,447				50				1,782
Unrealized gain on preferred stock investment		—				—				(26,964	)			—
Gain on sale of business		—				(31,510	)			—				(31,510	)
Tax effect of adjustments		(1,986	)			4,530				1,590				1,742
Total adjustments, net of tax		5,510				(13,870	)			(4,410	)			(6,136	)
Adjusted net income (7)	$	22,594			$	17,188			$	71,142			$	56,851
Adjusted weighted average shares - diluted		20,159				21,466				20,746				21,809
Adjusted diluted earnings per share (7)	$	1.12			$	0.80			$	3.43			$	2.61

(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/20230228005453/en/

MEDIA CONTACT

Allie Bovis

abovis@hcg.com



INVESTOR CONTACT

John D. Kelly

investor@hcg.com

Source: Huron

FAQ

What were Huron's Q4 2022 revenue results?

Huron's Q4 2022 revenues increased by 26.3% to $313.7 million.

What is Huron's guidance for 2023 revenue?

Huron anticipates 2023 revenue between $1.22 billion and $1.28 billion.

How did Huron's earnings per share change in Q4 2022?

Diluted earnings per share were $0.85 in Q4 2022, down from $1.45 in Q4 2021.

What growth did Huron see in Digital capability in 2022?

Huron's Digital capability revenues grew by 41.4% to $494.5 million in 2022.

What was Huron's adjusted EBITDA for Q4 2022?

Adjusted EBITDA for Q4 2022 increased by 33.1% to $39.0 million.