Huron Consulting Group (HURN) Q4 2011 earnings summary

Executive summary

• FY11 revenue rose 17.6% to $606.3M; continuing-operations net income was $21.5M and diluted EPS was $0.99, versus $7.4M and $0.36 in FY10.

• Growth in Health and Education and Legal Consulting outweighed lower Financial Consulting revenue; higher performance-based fees were a major contributor to the year’s revenue increase.

• Adjusted EBITDA was $110.8M, or 18.3% of revenue; adjusted continuing-operations net income was $45.7M and adjusted diluted EPS was $2.11.

Financial highlights

• Revenue increased $90.6M YoY, with $67.4M from full-time consultants and $23.2M from full-time equivalents; performance-based revenue increased $46.7M.

• Operating income rose to $55.4M from $34.7M; reported results included a $22.0M non-cash goodwill impairment charge and $4.6M of restatement-related expenses.

• Total net income was $20.5M versus $8.5M in FY10; discontinued operations recorded a $1.0M loss versus $1.1M income.

• Operating cash flow increased to $108.6M from $50.1M; cash and cash equivalents were $5.1M at year-end, down from $6.3M.

Outlook and guidance

• Planned FY12 capital expenditures are ~$20M, mainly for IT equipment and leasehold improvements supporting document review and processing growth and corporate infrastructure.

• Financial Consulting planned 2012 initiatives include leveraging cross-practice synergies and hiring managing directors to support demand in restructuring and turnaround markets.

• Expected internally generated liquidity, revolving-credit availability and external capital access to fund growth, capital needs and debt service; expected to meet future debt covenants based on projected operating results.

• Further New York office exit costs were expected in 2012, including $2.5M of accelerated depreciation and estimated exit expense of $2.1M; actual expense could vary.