Huron Consulting Group (HURN) Q4 2005 earnings summary

Executive summary

• FY05 revenue grew 29.9% to $207.2M; organic revenue growth was 23.7%, utilization rose to 76.5%, and diluted EPS increased 45.8% to $1.05.

• Billable consultants reached 632 at year-end, up nearly 31% YoY; growth reflected demand across both consulting segments and the Speltz & Weis acquisition.

Financial highlights

• Revenue was $207.2M, operating income $31.6M, operating margin 15.2%, and net income attributable to common stockholders $17.8M in FY05.

• Revenue increased $47.6M YoY: $27.4M from consultant and contractor growth, $10.8M from higher utilization, and $9.4M from higher average billing rates.

• Operating income rose 60.4% YoY; diluted EPS increased to $1.05 from $0.72, with Speltz & Weis operations reducing FY05 diluted EPS by $0.10.

• Operating cash flow was $26.0M; cash and equivalents ended FY05 at $31.8M, versus $28.1M a year earlier.

Outlook and guidance

• FY06 direct costs and operating expenses were expected to rise with continued hiring, expanded infrastructure, new office leases, and business growth.

• Q1 2006 operating margin was expected below Q1 2005's 17.6%; margins were expected to improve during the rest of 2006 as new hires were integrated and office investments leveraged.

• Future annual revenue growth was expected to moderate from the 2003–05 pace; expected FY06 capital expenditures were ~$12M, primarily for leasehold improvements.

• Growth over the next 12 months was expected to be funded by operating cash flow, remaining IPO proceeds, and credit-facility capacity as needed.