Huron Consulting(HURN) - 2025 Q1 - Quarterly Results

Executive Summary & Highlights First Quarter 2025 Financial Highlights Huron achieved strong Q1 2025 financial growth, with significant increases across key metrics including revenue, net income, adjusted EBITDA, and diluted EPS Key Financial Metrics for Q1 2025 | Metric | Q1 2025 | Q1 2024 | Year-over-Year Growth | | :----------------------------------- | :--------------- | :--------------- | :-------------------- | | Revenue, net of reimbursable expenses | $395.7 million | $356.0 million | 11.2% | | Net Income | $24.5 million | $18.0 million | 36.3% | | Adjusted EBITDA | $41.5 million | $33.8 million | 22.7% | | Diluted Earnings Per Share | $1.33 | $0.95 | 40.0% | | Adjusted Diluted Earnings Per Share | $1.68 | $1.23 | 36.6% | - CEO and President Mark Hussey stated that revenue growth was driven by strong performance across all three operating segments, coupled with continued margin expansion[2] Other Highlights Huron returned capital to shareholders, reaffirmed full-year guidance, received 'Great Place To Work' certifications, and unveiled a new growth strategy in Q1 2025 - Huron returned $72.9 million to shareholders in Q1 2025 by repurchasing 0.5 million shares of common stock, representing 2.9% of the company's outstanding common stock as of December 31, 2024[4] - The company reaffirmed its full-year 2025 guidance, projecting revenue, net of reimbursable expenses, between $1.58 billion and $1.66 billion[4] - Huron recently achieved Great Place To Work® certification in the U.S., Canada, India, Singapore, and the U.K[4] - The company published its Investor Day presentation on its investor relations website, outlining updated growth strategies and financial targets through 2029[4] First Quarter 2025 Financial Results Consolidated Financial Performance Huron's Q1 2025 revenue, net of reimbursable expenses, grew 11.2% to $395.7 million, driven by strong demand and an acquisition, boosting net income and adjusted profitability - Revenue, net of reimbursable expenses, increased by 11.2% to $395.7 million, primarily driven by strong demand for consulting and managed services in the healthcare and education segments, and increased demand for digital capabilities in the commercial and education segments, including $11.9 million in incremental revenue from the AXIA Consulting acquisition[5] Q1 2025 Profitability Metrics | Metric | Q1 2025 | Q1 2024 | Year-over-Year Growth | | :--------------------------------------------------- | :--------------- | :--------------- | :-------------------- | | Net Income | $24.5 million | $18.0 million | 36.3% | | Net Income as a % of Total Revenue | 6.1% | 5.0% | 1.1 percentage points | | Diluted Earnings Per Share | $1.33 | $0.95 | 40.0% | | EBITDA | $34.2 million | $28.9 million | 18.6% | | Adjusted EBITDA | $41.5 million | $33.8 million | 22.7% | | Adjusted EBITDA as a % of Revenue, net of reimbursable expenses | 10.5% | 9.5% | 1.0 percentage point | | Adjusted Net Income | $31.1 million | $23.3 million | 33.8% | | Adjusted Diluted Earnings Per Share | $1.68 | $1.23 | 36.6% | Segment Operating Results Huron's Q1 2025 saw healthcare and education segments grow revenue by ~10%, with healthcare's operating income up significantly, while commercial revenue grew 17.0% but operating income declined - In Q1 2025, revenue, net of reimbursable expenses, by operating segment was: Healthcare (50%), Education (31%), and Commercial (19%)[9] Q1 2025 Revenue, Net of Reimbursable Expenses, and Operating Income by Segment | Segment | Q1 2025 Revenue (million USD) | Q1 2024 Revenue (million USD) | Revenue YoY Growth | Q1 2025 Operating Income (million USD) | Q1 2024 Operating Income (million USD) | Operating Income YoY Growth | | :--------- | :-------------------------- | :-------------------------- | :----------- | :------------------------------ | :------------------------------ | :--------------- | | Healthcare | $198.49 | $180.74 | 9.8% | $56.32 | $42.69 | 31.9% | | Education | $122.75 | $111.58 | 10.0% | $23.06 | $21.96 | 5.0% | | Commercial | $74.45 | $63.64 | 17.0% | $11.30 | $14.04 | (19.5)% | Operational Metrics Huron increased revenue-generating professionals in Q1 2025, especially in managed services, with improved utilization rates for consulting and digital capabilities, indicating enhanced operational efficiency - As of March 31, 2025, the number of revenue-generating professionals, excluding managed services professionals, increased by 3.1% to 4,726[8] - As of March 31, 2025, the number of managed services professionals increased by 37.7% to 1,679[8] Q1 2025 Capability Utilization Rates | Capability | Q1 2025 Utilization Rate | Q1 2024 Utilization Rate | | :------- | :----------------------- | :----------------------- | | Consulting | 74.1% | 70.2% | | Digital | 78.2% | 74.3% | Outlook for 2025 Huron reaffirmed its full-year 2025 financial guidance, expecting revenue, adjusted EBITDA percentage, and adjusted diluted EPS to remain within anticipated ranges Full-Year 2025 Financial Guidance | Metric | Full-Year 2025 Guidance Range | | :----------------------------------- | :-------------------------- | | Revenue, net of reimbursable expenses | $1.58 billion - $1.66 billion | | Adjusted EBITDA as a % of Revenue, net of reimbursable expenses | 14.0% - 14.5% | | Adjusted Diluted Earnings Per Share | $6.80 - $7.60 | Company Information & Disclosures Webcast Information The company will host a webcast to discuss its Q1 2025 financial results, with replay services available - The company will host a webcast to discuss its financial results on April 29, 2025, at 5:00 p.m. ET (4:00 p.m. CT)[11] - The webcast will be accessible via Huron's website at http://ir.huronconsultinggroup.com, with a replay available approximately two hours after the webcast concludes and for 90 days thereafter[11] Use of Non-GAAP Financial Measures Management uses non-GAAP metrics like EBITDA and Adjusted Net Income to evaluate performance and provide outlook, believing these reflect ongoing operations, but cautions they may not be comparable or replace GAAP measures - Management utilizes non-GAAP measures including EBITDA, Adjusted EBITDA, Adjusted EBITDA as a % of Revenue, net of reimbursable expenses, Adjusted Net Income, and Adjusted Diluted Earnings Per Share to assess the company's financial performance and outlook[12] - Management believes these non-GAAP measures aid in understanding the company's comparative operating performance and are used for financial and operational decision-making, business outlook, and evaluating potential acquisitions and dispositions[12] - The company does not reconcile non-GAAP financial measures to their corresponding GAAP financial measures because the potential significance of certain reconciling items, which may vary from period to period and are outside the company's control, cannot be reasonably predicted[13] About Huron Huron is a global professional services firm that helps clients achieve goals and create sustainable outcomes through strategy, operational optimization, digital transformation, and business enablement - Huron is a global professional services firm that partners with clients to make the future a reality by crafting sound strategies, optimizing operations, accelerating digital transformation, and enabling businesses to take control of their future[14] Forward-Looking Statements This press release contains forward-looking statements reflecting current expectations, but actual results may differ materially due to various known and unknown risks and uncertainties, with no obligation to update or revise - 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,' 'targets,' 'guidance,' or 'outlook,' or similar expressions[15] - Factors that could cause actual results to differ materially from those in the forward-looking statements include: failure to achieve expected utilization rates, billing rates, and the number of revenue-generating professionals required; inability to expand or adjust service offerings in response to market demands; reliance on client service renewals; reliance on new business and retention of existing clients and qualified personnel; failure to maintain third-party vendor relationships and strategic alliances; inability to license technology to or from third parties; goodwill impairment; various factors related to income and other taxes; difficulties in successfully integrating acquired businesses and achieving anticipated benefits; risks related to privacy, information security, and related laws and standards; and general downturns or fluctuations in market conditions[15] Financial Statements Consolidated Statements of Operations and Other Comprehensive Income (Loss) This section presents Huron's unaudited consolidated statements of operations and other comprehensive income (loss) for Q1 2025 and 2024, detailing key financial data such as revenue, operating expenses, and net income Consolidated Statements of Operations and Other Comprehensive Income (Loss) (Unaudited, in thousands of USD, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue, net of reimbursable expenses | $395,690 | $355,961 | | Total revenue | $404,141 | $363,385 | | Total operating expenses | $371,409 | $343,464 | | Operating income | $32,732 | $19,921 | | Net income | $24,536 | $18,006 | | Net income per diluted share | $1.33 | $0.95 | | Comprehensive income | $12,321 | $16,910 | Consolidated Balance Sheets This section presents Huron's unaudited consolidated balance sheets as of March 31, 2025, and December 31, 2024, showing the company's assets, liabilities, and stockholders' equity Consolidated Balance Sheets (Unaudited, in thousands of USD, except share and per share amounts) | Metric | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :------------- | | Total current assets | $439,974 | $409,117 | | Total assets | $1,363,566 | $1,343,617 | | Total current liabilities | $211,493 | $338,820 | | Long-term debt, net of current portion | $561,511 | $342,857 | | Total liabilities and stockholders' equity | $1,363,566 | $1,343,617 | Consolidated Statements of Cash Flows This section presents Huron's unaudited consolidated statements of cash flows for Q1 2025 and 2024, detailing cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows (Unaudited, in thousands of USD) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(106,827) | $(130,724) | | Net cash used in investing activities | $(15,287) | $(30,599) | | Net cash provided by financing activities | $123,562 | $167,859 | | Net increase in cash and cash equivalents | $1,467 | $6,493 | | Cash and cash equivalents at end of period | $23,378 | $18,642 | Supplemental Financial Data Segment Operating Results and Other Operating Data (Detailed) This section provides detailed financial performance for Huron's operating segments, including revenue, operating income, and margins, along with revenue-generating professionals and utilization rates by segment and capability Segment Operating Results (Unaudited, in thousands of USD) | Segment | 2025 Revenue (thousands of USD) | 2024 Revenue (thousands of USD) | Revenue Growth | 2025 Operating Income (thousands of USD) | 2024 Operating Income (thousands of USD) | Operating Income Growth | 2025 Margin | 2024 Margin | | :--------- | :------------------------------ | :------------------------------ | :------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | :----------- | :----------- | | Healthcare | $198,490 | $180,742 | 9.8% | $56,316 | $42,694 | 31.9% | 28.4% | 23.6% | | Education | $122,748 | $111,583 | 10.0% | $23,060 | $21,956 | 5.0% | 18.8% | 19.7% | | Commercial | $74,452 | $63,636 | 17.0% | $11,296 | $14,039 | (19.5)% | 15.2% | 22.1% | | Huron Total | $395,690 | $355,961 | 11.2% | $32,732 | $19,921 | 64.3% | N/A | N/A | Revenue-Generating Professionals by Segment (End of Period) | Segment | March 31, 2025 | March 31, 2024 | Growth | | :------------------------- | :------------- | :------------- | :----- | | Healthcare | 1,209 | 1,192 | 1.4% | | Education | 1,167 | 1,099 | 6.2% | | Commercial | 2,350 | 2,293 | 2.5% | | Total (excluding managed services) | 4,726 | 4,584 | 3.1% | | Managed services | 1,679 | 1,219 | 37.7% | | Total | 6,405 | 5,803 | 10.4% | Revenue, Net of Reimbursable Expenses, by Capability | Capability | Q1 2025 (thousands of USD) | Q1 2024 (thousands of USD) | Growth | | :-------------------------- | :------------------------- | :------------------------- | :----- | | Consulting and Managed Services | $223,921 | $201,559 | 11.1% | | Digital | $171,769 | $154,402 | 11.2% | | Total | $395,690 | $355,961 | 11.2% | Utilization Rates by Capability | Capability | Q1 2025 | Q1 2024 | | :------- | :------ | :------ | | Consulting | 74.1% | 70.2% | | Digital | 78.2% | 74.3% | Reconciliation of Non-GAAP Financial Measures Reconciliation of Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization This section provides a detailed reconciliation from GAAP net income to non-GAAP Adjusted EBITDA, listing adjustments and their impact on EBITDA and Adjusted EBITDA Reconciliation of Net Income to Adjusted EBITDA (Unaudited, in thousands of USD) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income | $24,536 | $18,006 | | Add back: Income tax benefit | $(3,084) | $(446) | | Add back: Interest expense, net of interest income | $5,647 | $5,140 | | Add back: Depreciation and amortization | $7,149 | $6,181 | | EBITDA | $34,248 | $28,881 | | Add back: Restructuring charges | $1,338 | $2,337 | | Add back: Other losses | $0 | $1,568 | | Add back: Transaction-related expenses | $1,296 | $1,497 | | Add back: Unrealized loss on preferred stock investment | $4,210 | $0 | | Add back: Foreign currency transaction (gain) loss, net | $399 | $(465) | | Adjusted EBITDA | $41,491 | $33,818 | | Adjusted EBITDA as a % of Revenue, net of reimbursable expenses | 10.5% | 9.5% | Reconciliation of Net Income to Adjusted Net Income This section provides a detailed reconciliation from GAAP net income to non-GAAP Adjusted Net Income and Adjusted Diluted EPS, listing adjustments and their after-tax impact Reconciliation of Net Income to Adjusted Net Income (Unaudited, in thousands of USD, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income | $24,536 | $18,006 | | Diluted Earnings Per Share | $1.33 | $0.95 | | Add back: Amortization of intangible assets | $2,036 | $1,690 | | Add back: Restructuring charges | $1,338 | $2,337 | | Add back: Other losses | $0 | $1,568 | | Add back: Transaction-related expenses | $1,296 | $1,497 | | Add back: Unrealized loss on preferred stock investment | $4,210 | $0 | | Tax impact of adjustments | $(2,309) | $(1,844) | | Total adjustments, net of tax | $6,571 | $5,248 | | Adjusted Net Income | $31,107 | $23,254 | | Adjusted Diluted Earnings Per Share | $1.68 | $1.23 |