Huron Consulting Group (HURN) Q4 2010 earnings summary

Executive summary

• FY2010 revenue was $553.0M, down 1.2% YoY; operating income rebounded to $43.0M from a $13.0M loss, and net income from continuing operations was $12.4M versus a $20.5M loss.

• Legal Consulting growth and stronger operating income in Legal and Financial Consulting were offset by lower Health and Education Consulting revenue and profit.

Financial highlights

• Revenue was $553.0M versus $559.5M in 2009; total revenue and reimbursable expenses were $604.6M versus $607.1M.

• Operating income was $43.0M versus an operating loss of $13.0M; operating margin was 7.8% versus (2.3)%, with 2009 burdened by a $67.0M goodwill impairment charge.

• Net income from continuing operations was $12.4M versus a $20.5M loss; diluted continuing-operations EPS was $0.60 versus a $1.02 loss.

• Adjusted EBITDA was $95.7M, 17.3% of revenue, versus $105.7M, 18.9%, in 2009; adjusted diluted continuing-operations EPS was $1.70 versus $2.08.

• Cash from operations was $50.1M versus $113.9M; year-end cash was $6.3M, and DSO increased to 62 days from 60 days in 2009.

Outlook and guidance

• Planned 2011 capital expenditures were $15.0M, primarily for IT equipment, software and leasehold improvements; further investment in document review and processing was expected.

• Refinancing discussions were underway for the credit facility maturing in February 2012; initial indications suggested timely completion, but financing was not assured.

• Management expected internal liquidity, available revolver capacity and external capital access to support growth, earn-outs, commitments and debt service, subject to profitability and credit-market conditions.

• The revenue multiple-deliverable accounting guidance taking effect January 1, 2011 was not expected to have a significant financial-statement impact.