Huron Consulting Group (HURN) Q4 2006 earnings summary

Executive summary

• FY06 revenue grew 39.3% to $288.6M; operating income rose 50.4% to $47.5M and net income rose 50.2% to $26.7M.

• Growth reflected higher consultant headcount and demand, improved utilization and billing rates, plus contributions from Galt, DRCS and Aaxis acquisitions.

• Revenue-generating professionals increased to 842 at year-end from 632; year-end employee count was 1,035.

Financial highlights

• Revenue was $288.6M, up 39.3% YoY; total revenue including reimbursable expenses was $321.9M.

• Operating income increased 50.4% to $47.5M; operating margin expanded to 16.5% from 15.2%.

• Net income rose 50.2% to $26.7M; diluted EPS increased 46.7% to $1.54.

• Operating cash flow was $42.5M, up from $26.0M; investing cash use was $69.2M, including $51.1M for acquisitions.

Outlook and guidance

• FY07 direct costs and operating expenses expected to rise with hiring, promotions, acquisition integration, recruiting, and greater use of contractors.

• 2007 capital expenditures estimated at $20M, primarily for leasehold improvements and computer equipment.

• Revenue growth expected to moderate from early operating years; cash from operations plus credit-facility borrowings expected to fund growth over the next 12 months.

• Jan. 2007 Wellspring and Glass acquisitions added over 120 full-time employees; their results enter FY07 from Jan. 2.