Huron Consulting(US:HURN)2021-11-03 03:35Financial Data and Key Metrics Changes - Revenues for Q3 2021 were $224 million, up 9.1% from $205.3 million in Q3 2020, driven by growth across all three operating segments [17] - Net income increased to $13.7 million or $0.64 per diluted share in Q3 2021, compared to $11.1 million or $0.50 per diluted share in Q3 2020 [17] - Adjusted EBITDA was $26.4 million in Q3 2021, representing 11.8% of revenues, compared to $23.6 million or 11.5% of revenues in Q3 2020 [17] Business Line Data and Key Metrics Changes - Healthcare Segment: Revenues grew 6.2% to $92.8 million, accounting for 42% of total company revenues [18][19] - Business Advisory Segment: Revenues increased by 5.9% to $70 million, representing 31% of total revenues, with growth driven by strategy and digital technology offerings [19] - Education Segment: Revenues rose 18% to $61.2 million, making up 27% of total revenues, driven by strong demand for student research and strategy offerings [21] Market Data and Key Metrics Changes - The company noted a robust pipeline in the healthcare and education sectors, with expectations for continued growth as pandemic-related challenges wane [5][12] - The tightening labor market is impacting hiring and wage pressures, but the company remains optimistic about its ability to attract talent due to its strong culture [42][43] Company Strategy and Development Direction - The company is focusing on core industry verticals such as healthcare, education, financial services, and energy, leveraging its technology capabilities to drive growth [46] - A strategic decision was made to divest the Life Sciences practice to concentrate resources on areas with better growth opportunities [11][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current industry challenges and anticipates strong demand for services as the pandemic recedes [8][15] - The company narrowed its annual revenue guidance to $885 million to $905 million, with an adjusted EBITDA guidance range of 10.8% to 11.3% of revenues [27] Other Important Information - The company expects to finish the year with a leverage ratio below 2x adjusted EBITDA, with cash flow generated from operations in Q3 2021 amounting to $33.8 million [25][26] - DSO increased to 76 days in Q3 2021, up from 62 days in Q3 2020, but is expected to normalize to around 65 days [24] Q&A Session Summary Question: Sales conversion in Healthcare and Education - Management noted improved sales conversion in education and healthcare, with expectations for continued solid conversion of backlog [32][33] Question: Headcount growth drivers - The headcount growth was attributed to a mix of organic hiring, including new graduates and experienced hires across all segments [34][35] Question: Utilization rates and practices affecting them - Management indicated that lower utilization rates were due to excess capacity held in anticipation of market demand, which is now picking up [36][38] Question: Impact of tightening labor market on hiring - Management acknowledged the tightening labor market and wage pressures but stated it is manageable and not significantly affecting financial results [41][43] Question: Margin expansion outlook - Management expects a gradual return to pre-pandemic margin levels, with opportunities for margin enhancement through scale and efficiency improvements [51] Question: Travel expenses and their impact - Travel expenses are expected to ramp up as business activities increase, but most travel costs are billable to clients [52] Question: Impact of delayed project startups - The impact from delayed project startups due to the Delta variant was low-single digit millions, with expectations for recovery in Q4 [53] Question: Life Sciences divestiture proceeds - While specific sale price details were not disclosed, management indicated that the valuation was accretive based on revenue metrics [55]