Huron Consulting(HURN) - 2025 Q2 - Quarterly Results

Financial Highlights and Business Overview This section summarizes Huron's Q2 and YTD 2025 financial performance, operational highlights, and guidance Second Quarter 2025 Financial Highlights Huron reported record Q2 2025 revenues (up 8.3% YoY), net income down due to impairment, adjusted EBITDA and EPS increased | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :------ | :------ | :----- | :------- | | Revenues before reimbursable expenses | $402.5 | $371.7 | +$30.9 | +8.3% | | Net income | $19.4 | $37.5 | -$18.1 | -48.3% | | Adjusted EBITDA (non-GAAP) | $60.6 | $55.7 | +$4.9 | +8.8% | | Diluted earnings per share | $1.09 | $2.03 | -$0.94 | -46.3% | | Adjusted diluted earnings per share (non-GAAP) | $1.89 | $1.68 | +$0.21 | +12.5% | - Q2 2025 net income and diluted EPS were unfavorably impacted by an $8.2 million non-cash impairment charge (net of tax) related to a convertible debt investment, which had a -$0.46 impact on diluted EPS[3] - Q2 2024 results included an $11.1 million litigation settlement gain (net of tax), which had a +$0.60 favorable impact on diluted EPS[3] Year-to-Date 2025 Financial Highlights For YTD 2025, revenues increased 9.7%, net income decreased, but Adjusted EBITDA and diluted EPS showed significant growth | Metric | YTD 2025 (in millions) | YTD 2024 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :------- | :------- | :----- | :------- | | Revenues before reimbursable expenses | $798.2 | $727.6 | +$70.6 | +9.7% | | Net income | $44.0 | $55.5 | -$11.5 | -20.7% | | Adjusted EBITDA (non-GAAP) | $102.1 | $89.5 | +$12.6 | +14.0% | | Diluted earnings per share | $2.42 | $2.96 | -$0.54 | -18.2% | | Adjusted diluted earnings per share (non-GAAP) | $3.57 | $2.89 | +$0.68 | +23.5% | - YTD 2025 net income and diluted EPS were unfavorably impacted by an $8.2 million non-cash impairment charge (net of tax) related to a convertible debt investment, which had a -$0.45 impact on diluted EPS[3] - YTD 2024 results included an $11.1 million litigation settlement gain (net of tax), which had a +$0.59 favorable impact on diluted EPS[3] Other Key Highlights Huron increased full-year 2025 guidance, amended its credit facility, returned $133.9 million to shareholders, and gained industry recognition - Huron increased its previous guidance for full year 2025, with revenues before reimbursable expenses expectations now in a range of $1.64 billion to $1.68 billion and adjusted diluted earnings per share expectations in a range of $7.30 to $7.70[9] - Huron returned $133.9 million to shareholders by repurchasing 0.9 million shares of common stock for the first six months of 2025, representing 5.3% of the company's common stock outstanding as of December 31, 2024[9] - Huron amended its credit facility on July 30, 2025, extending the maturity date to July 30, 2030, improving all-in pricing, and increasing total borrowing capacity to $1.1 billion[9] - Huron was named one of America's Best Mid-size Companies by Time magazine and a Best Firm to Work For in 2025 by Consulting Magazine[9] Detailed Financial Performance This section details Huron's GAAP and non-GAAP financial results for Q2 and YTD 2025, including operational metrics Second Quarter 2025 Results Huron's Q2 2025 saw revenue growth, but GAAP net income and diluted EPS declined due to non-recurring items, while adjusted metrics improved GAAP Financial Performance (Q2) This subsection details Huron's Q2 2025 GAAP financial results, highlighting revenues, net income, diluted EPS, and EBITDA | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :-------------------- | :-------------------- | :----- | :------- | | Revenues before reimbursable expenses | $402.5 | $371.7 | +$30.9 | +8.3% | | Net income | $19.4 | $37.5 | -$18.1 | -48.3% | | Diluted earnings per share | $1.09 | $2.03 | -$0.94 | -46.3% | | EBITDA | $44.3 | $66.3 | -$22.0 | -33.2% | - Q2 2025 revenue growth includes $13.1 million of incremental revenues before reimbursable expenses from the acquisition of AXIA Consulting in December 2024[6] - Net income and diluted EPS were significantly impacted by an $8.2 million non-cash impairment charge (net of tax) in Q2 2025 and an $11.1 million litigation settlement gain (net of tax) in Q2 2024[7] Non-GAAP Financial Performance and Operational Metrics (Q2) This subsection presents Huron's Q2 2025 non-GAAP financial metrics and operational data, including Adjusted EBITDA and utilization rates | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :------ | :------ | :----- | :------- | | Adjusted EBITDA | $60.6 | $55.7 | +$4.9 | +8.8% | | Adjusted EBITDA as % of RBR | 15.1% | 15.0% | +0.1% | - | | Adjusted net income | $33.7 | $30.9 | +$2.7 | +8.8% | | Adjusted diluted earnings per share | $1.89 | $1.68 | +$0.21 | +12.5% | | Operational Metric (as of June 30) | 2025 | 2024 | Change | % Change | | :--------------------------------- | :--- | :--- | :----- | :------- | | Revenue-generating professionals (excl. Managed Services) | 4,963 | 4,604 | +359 | +7.8% | | Managed Services professionals | 1,918 | 1,244 | +674 | +54.2% | | Consulting capability utilization rate | 77.0% | 73.7% | +3.3% | - | | Digital capability utilization rate | 77.8% | 75.0% | +2.8% | - | Year-to-Date 2025 Results For YTD 2025, Huron achieved solid revenue growth, GAAP net income and diluted EPS impacted by charges, but adjusted metrics showed strong performance GAAP Financial Performance (YTD) This subsection details Huron's YTD 2025 GAAP financial results, including revenues, net income, diluted EPS, and EBITDA | Metric | YTD 2025 (in millions) | YTD 2024 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :-------------------- | :-------------------- | :----- | :------- | | Revenues before reimbursable expenses | $798.2 | $727.6 | +$70.6 | +9.7% | | Net income | $44.0 | $55.5 | -$11.5 | -20.7% | | Diluted earnings per share | $2.42 | $2.96 | -$0.54 | -18.2% | | EBITDA | $78.6 | $95.2 | -$16.6 | -17.4% | - YTD 2025 revenue growth includes $24.9 million of incremental revenues before reimbursable expenses from the acquisition of AXIA Consulting in December 2024[12] - Net income and diluted EPS were significantly impacted by an $8.2 million non-cash impairment charge (net of tax) in YTD 2025 and an $11.1 million litigation settlement gain (net of tax) in YTD 2024[13] Non-GAAP Financial Performance and Operational Metrics (YTD) This subsection presents Huron's YTD 2025 non-GAAP financial metrics and operational data, including Adjusted EBITDA and utilization rates | Metric | YTD 2025 (in millions) | YTD 2024 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :------- | :------- | :----- | :------- | | Adjusted EBITDA | $102.1 | $89.5 | +$12.6 | +14.0% | | Adjusted EBITDA as % of RBR | 12.8% | 12.3% | +0.5% | - | | Adjusted net income | $64.8 | $54.2 | +$10.6 | +19.5% | | Adjusted diluted earnings per share | $3.57 | $2.89 | +$0.68 | +23.5% | | Operational Metric (as of June 30) | 2025 | 2024 | Change | % Change | | :--------------------------------- | :--- | :--- | :----- | :------- | | Revenue-generating professionals (excl. Managed Services) | 4,963 | 4,604 | +359 | +7.8% | | Managed Services professionals | 1,918 | 1,244 | +674 | +54.2% | | Consulting capability utilization rate | 75.6% | 72.0% | +3.6% | - | | Digital capability utilization rate | 78.0% | 74.6% | +3.4% | - | - Huron returned $133.9 million to shareholders in 2025 through repurchases of 938,280 shares of common stock, representing 5.3% of the company's common stock outstanding as of December 31, 2024[15] Segment Performance and Outlook This section analyzes Huron's segment performance and provides the updated financial outlook for full year 2025 Operating Industries Performance For YTD 2025, Healthcare remained the largest segment (50% of revenues), followed by Education (32%) and Commercial (18%) | Segment | YTD 2025 Revenue Contribution | | :---------- | :---------------------------- | | Healthcare | 50% | | Education | 32% | | Commercial | 18% | Outlook for Full Year 2025 Huron increased its full-year 2025 guidance, projecting higher revenues and improved adjusted diluted earnings per share | Metric | Full Year 2025 Guidance | | :------------------------------------ | :---------------------- | | Revenues before reimbursable expenses | $1.64 billion to $1.68 billion | | Adjusted EBITDA as % of RBR | 14.0% to 14.5% | | Adjusted diluted earnings per share | $7.30 to $7.70 | Supplementary Information This section provides context on non-GAAP financial measures, an overview of Huron, and disclosures regarding forward-looking statements Use of Non-GAAP Financial Measures Management uses non-GAAP measures to evaluate performance and provide outlook, believing they offer a clearer view of ongoing business; future guidance reconciliations are not provided - Management uses non-GAAP financial measures (EBITDA, adjusted EBITDA, adjusted net income, adjusted diluted EPS) to understand comparative operating performance, for financial and operating decision-making, public business outlook, internal management, and evaluating potential acquisitions and dispositions[19][37] - These non-GAAP measures are believed to reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons[19][37] - Reconciliations of non-GAAP guidance to corresponding GAAP measures are not provided due to the inability to determine the probable significance of certain reconciling items that are outside the company's control and cannot be reasonably predicted[20] - Specific adjustments include excluding the $11.7 million net litigation settlement gain from 2024 and unrealized losses on long-term investments ($11.9 million for Q2 2025, $16.1 million for YTD 2025) as these are not indicative of ongoing business performance[37] About Huron Huron is a global professional services firm partnering with clients to implement strategies, optimize operations, accelerate digital transformation, and empower businesses - Huron is a global professional services firm that partners with clients to create sound strategies, optimize operations, accelerate digital transformation, and empower businesses to own their future[21] - The firm achieves sustainable results by embracing diverse perspectives, encouraging new ideas, and challenging the status quo[21] Forward-Looking Statements This section contains forward-looking statements regarding future results, subject to risks and uncertainties, with no obligation to update - Statements concerning the company's current expectations about future results are 'forward-looking' statements, identified by words such as 'expects,' 'anticipates,' 'believes,' 'estimates,' 'plans,' and 'guidance'[22] - These statements involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, including failure to achieve expected utilization rates, inability to expand service offerings, dependence on client renewals, difficulties in integrating acquisitions, and general market downturns[22] - The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events[22] Consolidated Financial Statements This section presents Huron's consolidated financial statements, including operations, balance sheets, cash flows, and detailed segment operating results Consolidated Statements of Operations and Other Comprehensive Income (Loss) Consolidated statements show decreased net income for Q2 and YTD 2025 due to non-recurring items, while revenues increased | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues before reimbursable expenses | $402,505 | $371,654 | $798,195 | $727,615 | | Total revenues | $411,755 | $381,017 | $815,896 | $744,402 | | Operating income | $45,654 | $59,403 | $78,386 | $79,324 | | Income before taxes | $27,708 | $52,095 | $49,160 | $69,655 | | Net income | $19,430 | $37,482 | $43,966 | $55,488 | | Net income per diluted share | $1.09 | $2.03 | $2.42 | $2.96 | Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1.48 billion, driven by cash and goodwill, while liabilities rose and stockholders' equity decreased | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total current assets | $490,441 | $409,117 | | Total assets | $1,480,812 | $1,343,617 | | Total current liabilities | $246,891 | $338,820 | | Long-term debt, net of current portion | $643,165 | $342,857 | | Total non-current liabilities | $758,926 | $443,470 | | Total liabilities and stockholders' equity | $1,480,812 | $1,343,617 | | Total stockholders' equity | $474,995 | $561,327 | - Goodwill increased from $678.7 million at December 31, 2024, to $739.1 million at June 30, 2025[26] Consolidated Statements of Cash Flows For YTD 2025, net cash used in operating and investing activities increased, while financing activities provided more cash, leading to a net increase in cash | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(26,780) | $(23,503) | | Net cash used in investing activities | $(70,080) | $(39,677) | | Net cash provided by financing activities | $135,804 | $68,726 | | Net increase in cash and cash equivalents | $39,100 | $5,497 | | Cash and cash equivalents at end of period | $61,011 | $17,646 | - Purchases of businesses, net of cash acquired, accounted for $53.1 million of cash used in investing activities in YTD 2025, compared to $20.8 million in YTD 2024[28] - Proceeds from bank borrowings were $552.0 million in YTD 2025, while repayments were $251.9 million[28] Segment Operating Results and Other Operating Data This section details Huron's financial and operational performance across its segments and capabilities, including revenues, operating income, headcount, and utilization Revenues before Reimbursable Expenses by Segment | Segment | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Increase | YTD 2025 (in thousands) | YTD 2024 (in thousands) | % Increase | | :-------- | :---------------------- | :---------------------- | :--------- | :---------------------- | :---------------------- | :--------- | | Healthcare | $197,822 | $190,098 | 4.1% | $396,312 | $370,840 | 6.9% | | Education | $129,301 | $122,753 | 5.3% | $252,049 | $234,336 | 7.6% | | Commercial | $75,382 | $58,803 | 28.2% | $149,834 | $122,439 | 22.4% | | Total | $402,505 | $371,654 | 8.3% | $798,195 | $727,615 | 9.7% | Operating Income by Segment | Segment | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Increase | YTD 2025 (in thousands) | YTD 2024 (in thousands) | % Increase | | :-------- | :---------------------- | :---------------------- | :--------- | :---------------------- | :---------------------- | :--------- | | Healthcare | $59,651 | $55,246 | 8.0% | $115,967 | $97,940 | 18.4% | | Education | $32,329 | $30,792 | 5.0% | $55,389 | $52,748 | 5.0% | | Commercial | $12,507 | $9,015 | 38.7% | $23,803 | $23,054 | 3.2% | Revenue-Generating Professionals by Segment and Capability (at period end) | Category | June 30, 2025 | June 30, 2024 | % Increase | | :------------------------------------ | :------------ | :------------ | :--------- | | Healthcare | 1,329 | 1,223 | 8.7% | | Education | 1,169 | 1,115 | 4.8% | | Commercial | 2,465 | 2,266 | 8.8% | | Total (excluding Managed Services) | 4,963 | 4,604 | 7.8% | | Managed Services | 1,918 | 1,244 | 54.2% | | Total Professionals | 6,881 | 5,848 | 17.7% | | By Capability: | | | | | Consulting | 1,866 | 1,691 | 10.3% | | Digital | 3,097 | 2,913 | 6.3% | Utilization Rate by Capability | Capability | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----------- | :------ | :------ | :------- | :------- | | Consulting | 77.0% | 73.7% | 75.6% | 72.0% | | Digital | 77.8% | 75.0% | 78.0% | 74.6% | Reconciliation of Net Income to Adjusted EBITDA This section reconciles GAAP net income to non-GAAP Adjusted EBITDA for Q2 and YTD 2025/2024, detailing specific adjustments | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $19,430 | $37,482 | $43,966 | $55,488 | | EBITDA | $44,307 | $66,293 | $78,555 | $95,174 | | Adjusted EBITDA | $60,579 | $55,684 | $102,070 | $89,502 | | Adjusted EBITDA as a percentage of RBR | 15.1% | 15.0% | 12.8% | 12.3% | - Key adjustments for Q2 2025 include $11.9 million in unrealized losses on long-term investments and $3.6 million in transaction-related expenses[34] - For Q2 2024, a $(11.7) million litigation settlement gain was adjusted[34] - Key adjustments for YTD 2025 include $16.1 million in unrealized losses on long-term investments and $4.9 million in transaction-related expenses[34] - For YTD 2024, a $(11.7) million litigation settlement gain was adjusted[34] Reconciliation of Net Income to Adjusted Net Income This chapter reconciles GAAP net income to non-GAAP Adjusted Net Income and Adjusted Diluted EPS, outlining tax-effected adjustments | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $19,430 | $37,482 | $43,966 | $55,488 | | Diluted earnings per share | $1.09 | $2.03 | $2.42 | $2.96 | | Adjusted net income | $33,665 | $30,946 | $64,772 | $54,200 | | Adjusted diluted earnings per share | $1.89 | $1.68 | $3.57 | $2.89 | - Total adjustments, net of tax, for Q2 2025 were $14.2 million, primarily driven by unrealized losses on long-term investments and transaction-related expenses[36] - Total adjustments, net of tax, for YTD 2025 were $20.8 million, primarily driven by unrealized losses on long-term investments and transaction-related expenses[36]