Huron Consulting Group (HURN) Q4 2009 earnings summary

Executive summary

• FY09 revenue from continuing operations rose 9.6% YoY to $628.7M, while a $106.0M non-cash goodwill impairment and $17.5M of restatement costs contributed to a $32.9M net loss.

• Health and Education Consulting drove growth; Accounting and Financial Consulting and Legal Consulting revenue declined, amid lower demand and weaker utilization or billing rates in several practices.

Financial highlights

• Revenue from continuing operations was $628.7M, up 9.6% YoY; operating loss was $2.6M versus operating income of $49.8M in 2008.

• Net loss was $32.9M versus net income of $10.1M; continuing-operations net loss was $14.5M versus income of $5.5M.

• Diluted loss per share was $1.63 versus diluted earnings per share of $0.53; discontinued operations contributed a net loss of $18.4M.

• Operating results included a $106.0M non-cash goodwill impairment charge, of which $67.0M was in continuing operations, and $17.5M in restatement-related expenses.

• Operating cash flow was $120.1M; investing cash use was $64.6M and financing cash use was $62.7M.

Outlook and guidance

• A cost-reduction program launched in Q3 2009 was estimated to lower annualized expenses by $30M, primarily through labor-related savings.

• 2010 capital expenditures were estimated at $15M, primarily for computer equipment, with further investment expected in document review and processing.

• Expected cash compensation tied to prior acquisition-payment arrangements was capped at $4M in each of 2010 and 2011; retention and legal costs were also expected to increase.

• Internally generated liquidity and available revolver capacity were expected to support long-term growth and obligations, subject to profitability, receivables quality, leverage, and credit-market conditions.