Huron Consulting Group Inc 10-Q for FY2021 Q1

Huron Consulting Group Inc. (HURN)

10-Q 2021-05-04 For: 2021-03-31

Added on April 07, 2026

About this 10-Q

Huron Consulting Group Inc filed this 10-Q on May 4, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $205.15M; down 15.2% from $241.92M a year earlier
Net income: $5.41M; compared with a net loss of $42.31M a year earlier
Diluted EPS: $0.24; compared with -$1.94 a year earlier

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Delaware						01-0666114
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification Number)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	HURN	NASDAQ Global Select Market


		Page
Part I – Financial Information

Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations and Other Comprehensive Income	2
	Consolidated Statements of Stockholders’ Equity	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	37

Part II – Other Information

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Mine Safety Disclosures	38

Item 5.	Other Information	38

Item 6.	Exhibits	39

Signature		40


	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	21,623	$	67,177
Receivables from clients, net of allowances of $8,464 and $7,680, respectively	87,146		87,687
Unbilled services, net of allowances of $2,969 and $2,603, respectively	77,080		53,959
Income tax receivable	4,403		5,121
Prepaid expenses and other current assets	14,964		16,569
Total current assets	205,216		230,513
Property and equipment, net	29,710		29,093
Deferred income taxes, net	5,303		4,191
Long-term investments	64,703		71,030
Operating lease right-of-use assets	38,207		39,360
Other non-current assets	62,819		62,068
Intangible assets, net	21,232		20,483
Goodwill	597,552		594,237
Total assets	$	1,024,742	$	1,050,975
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	8,156	$	648
Accrued expenses and other current liabilities	16,302		14,874
Accrued payroll and related benefits	56,811		133,830
Current maturities of long-term debt	548		499
Current maturities of operating lease liabilities	9,671		8,771
Deferred revenues	18,686		28,247
Total current liabilities	110,174		186,869
Non-current liabilities:
Deferred compensation and other liabilities	43,947		45,361
Accrued contingent consideration for business acquisitions	1,812		1,770
Long-term debt, net of current portion	267,642		202,780
Operating lease liabilities, net of current portion	59,730		61,825
Deferred income taxes, net	434		428
Total non-current liabilities	373,565		312,164
Commitments and contingencies
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 25,294,954 and 25,346,916 shares issued at March 31, 2021 and December 31, 2020, respectively	247		246
Treasury stock, at cost, 2,422,227 and 2,584,119 shares at March 31, 2021 and December 31, 2020, respectively	(134,611)		(129,886)
Additional paid-in capital	445,711		454,512
Retained earnings	219,414		214,009
Accumulated other comprehensive income	10,242		13,061
Total stockholders’ equity	541,003		551,942
Total liabilities and stockholders’ equity	$	1,024,742	$	1,050,975


	Three Months Ended March 31,
		2021		2020
Revenues and reimbursable expenses:
Revenues		$	203,213	$	222,619
Reimbursable expenses		1,934		19,303
Total revenues and reimbursable expenses		205,147		241,922
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
Direct costs		148,115		156,248
Amortization of intangible assets and software development costs		925		1,301
Reimbursable expenses		2,003		19,389
Total direct costs and reimbursable expenses		151,043		176,938
Operating expenses and other losses (gains), net
Selling, general and administrative expenses		39,766		43,446
Restructuring charges		628		1,609
Litigation and other losses (gains)		42		(150)
Depreciation and amortization		5,428		6,114
Goodwill impairment charges		—		59,816
Total operating expenses and other losses (gains), net		45,864		110,835
Operating income (loss)		8,240		(45,851)
Other income (expense), net:
Interest expense, net of interest income		(1,719)		(2,341)
Other income (expense), net		420		(5,296)
Total other expense, net		(1,299)		(7,637)
Income (loss) from continuing operations before taxes		6,941		(53,488)
Income tax expense (benefit)		1,536		(11,215)
Net income (loss) from continuing operations		5,405		(42,273)
Loss from discontinued operations, net of tax		—		(35)
Net income (loss)		$	5,405	$	(42,308)
Net earnings (loss) per basic share:
Net income (loss) from continuing operations		$	0.25	$	(1.94)
Loss from discontinued operations, net of tax		—		—
Net income (loss)		$	0.25	$	(1.94)
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations		$	0.24	$	(1.94)
Loss from discontinued operations, net of tax		—		—
Net income (loss)		$	0.24	$	(1.94)
Weighted average shares used in calculating earnings (loss) per share:
Basic		21,932		21,827
Diluted		22,341		21,827
Comprehensive income (loss):
Net income (loss)		$	5,405	$	(42,308)
Foreign currency translation adjustments, net of tax		400		(779)
Unrealized loss on investment, net of tax		(4,648)		(258)
Unrealized gain (loss) on cash flow hedging instruments, net of tax		1,429		(1,685)
Other comprehensive loss		(2,819)		(2,722)
Comprehensive income (loss)		$	2,586	$	(45,030)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31, 2021
	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	24,560,855	$	246	(2,812,896)	$	(129,886)	$	454,512	$	214,009	$	13,061	$	551,942
Comprehensive income									5,405		(2,819)		2,586
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	376,731	4		90,100	3,778		(3,782)						—
Exercise of stock options	6,631	—					174						174
Share-based compensation							7,988						7,988
Shares redeemed for employee tax withholdings				(165,203)	(8,503)								(8,503)

Share repurchases	(245,718)	$	(3)				$	(13,181)					(13,184)
Balance at March 31, 2021	24,698,499	$	247	(2,887,999)	$	(134,611)	$	445,711	$	219,414	$	10,242	$	541,003


	Three Months Ended March 31, 2020
	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2019	24,603,308	$	247	(2,763,302)	$	(128,348)	$	460,781	$	237,849	$	14,936	$	585,465
Comprehensive income									(42,308)		(2,722)		(45,030)
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	250,544	2		102,467	7,115		(7,117)						—
Exercise of stock options	20,000	—					468						468
Share-based compensation							11,720						11,720
Shares redeemed for employee tax withholdings				(120,000)	(7,133)								(7,133)
Share repurchases	(313,998)	(3)					(20,878)						(20,881)
Balance at March 31, 2020	24,559,854	$	246	(2,780,835)	$	(128,366)	$	444,974	$	195,541	$	12,214	$	524,609


	Healthcare		Business Advisory		Education		Total
Balance as of December 31, 2020:
Goodwill	$	636,810	$	308,935	$	104,384	$	1,050,129
Accumulated impairment losses	(208,081)		(247,811)		—		(455,892)
Goodwill, net as of December 31, 2020	428,729		61,124		104,384		594,237
Goodwill recorded in connection with a business acquisition (1)	—		3,315		—		3,315


Goodwill, net as of March 31, 2021	$	428,729	$	64,439	$	104,384	$	597,552


		As of March 31, 2021				As of December 31, 2020
	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships	3 to 13	$	77,030	$	58,574	$	73,629	$	56,232
Trade names	6	6,000		4,406		6,130		4,287
Non-competition agreements	5	2,210		1,560		2,090		1,541
Technology and software	5	5,800		5,474		5,800		5,380
Customer contracts	2	800		594		800		526
Total		$	91,840	$	70,608	$	88,449	$	67,966


Year Ending December 31,	Estimated Amortization Expense
2021	$	9,059
2022	$	6,878
2023	$	4,231
2024	$	1,384
2025	$	566


	As of March 31,
	2021	2020
Unvested restricted stock awards	21	992
Outstanding common stock options	59	86
Warrants related to the issuance of convertible senior notes	—	3,129
Total anti-dilutive securities	80	4,207


	March 31, 2021		December 31, 2020
Senior secured credit facility	$	265,000	$	200,000
Promissory note due 2024	3,190		3,279
Total long-term debt	$	268,190	$	203,279
Current maturities of long-term debt	(548)		(499)
Long-term debt, net of current portion	$	267,642	$	202,780


	Principal Payments of Long-Term Debt
2021	$	410
2022	$	559
2023	$	575
2024	$	266,646


	Employee Costs		Office Space Reductions		Other		Total
Balance as of December 31, 2020	$	2,447	$	84	$	893	$	3,424
Additions	4		—		—		4
Payments	(2,382)		(39)		(167)		(2,588)
Adjustments	10		—		—		10
Balance as of March 31, 2021	$	79	$	45	$	726	$	850


Level 1 Inputs						Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs						Quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 Inputs						Unobservable inputs for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability.


	Three Months Ended March 31, 2021
	Healthcare		Business Advisory		Education		Total
Billing Arrangements
Fixed-fee	$	48,295	$	29,881	$	15,259	$	93,435
Time and expense	11,375		37,633		28,784		77,792
Performance-based	14,669		3,409		—		18,078
Software support, maintenance and subscriptions	5,383		1,944		6,581		13,908
Total	$	79,722	$	72,867	$	50,624	$	203,213

Employee Type (1)
Revenue generated by billable consultants	$	59,569	$	69,847	$	42,528	$	171,944
Revenue generated by full-time equivalents	20,153		3,020		8,096		31,269
Total	$	79,722	$	72,867	$	50,624	$	203,213

Timing of Revenue Recognition
Revenue recognized over time	$	78,764	$	72,867	$	50,624	$	202,255
Revenue recognized at a point in time	958		—		—		958
Total	$	79,722	$	72,867	$	50,624	$	203,213


	Three Months Ended March 31, 2020
	Healthcare		Business Advisory		Education		Total
Billing Arrangements
Fixed-fee	$	55,785	$	25,393	$	13,175	$	94,353
Time and expense	14,733		37,589		43,711		96,033
Performance-based	18,921		646		—		19,567
Software support, maintenance and subscriptions	6,139		1,277		5,250		12,666
Total	$	95,578	$	64,905	$	62,136	$	222,619

Employee Type (1)
Revenue generated by billable consultants	$	65,445	$	61,957	$	53,436	$	180,838
Revenue generated by full-time equivalents	30,133		2,948		8,700		41,781
Total	$	95,578	$	64,905	$	62,136	$	222,619

Timing of Revenue Recognition
Revenue recognized over time	$	94,459	$	64,905	$	62,022	$	221,386
Revenue recognized at a point in time	1,119		—		114		1,233
Total	$	95,578	$	64,905	$	62,136	$	222,619


	Fair Value (Derivative Asset and Liability)
Balance Sheet Location	March 31, 2021		December 31, 2020


Accrued expenses and other current liabilities	$	2,168	$	2,100
Deferred compensation and other liabilities	$	1,260	$	3,297


	Level 1		Level 2		Level 3		Total
March 31, 2021
Assets:

Convertible debt investment	$	—	$	—	$	58,036	$	58,036
Deferred compensation assets	—		34,881		—		34,881
Total assets	$	—	$	34,881	$	58,036	$	92,917
Liabilities:
Interest rate swaps	$	—	$	3,428	$	—	$	3,428
Contingent consideration for business acquisition	—		—		1,812		1,812
Total liabilities	$	—	$	3,428	$	1,812	$	5,240
December 31, 2020
Assets:

Convertible debt investment	$	—	$	—	$	64,364	$	64,364
Deferred compensation assets	—		34,056		—		34,056
Total assets	$	—	$	34,056	$	64,364	$	98,420
Liabilities:
Interest rate swaps	$	—	$	5,397	$	—	$	5,397
Contingent consideration for business acquisition	—		—		1,770		$	1,770
Total liabilities	$	—	$	5,397	$	1,770	$	7,167


	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
	Before Taxes		Tax (Expense) Benefit		Net of Taxes		Before Taxes		Tax (Expense) Benefit		Net of Taxes
Other comprehensive income (loss):
Foreign currency translation adjustments	$	400	$	—	$	400	$	(779)	$	—	$	(779)
Unrealized gain (loss) on investment	$	(6,328)	$	1,680	$	(4,648)	$	(348)	$	90	$	(258)
Unrealized gain (loss) on cash flow hedges:
Change in fair value	$	1,189	$	(337)	$	852	$	(2,272)	$	590	$	(1,682)
Reclassification adjustments into earnings	780		(203)		577		(4)		1		(3)
Net unrealized gain (loss)	$	1,969	$	(540)	$	1,429	$	(2,276)	$	591	$	(1,685)
Other comprehensive income (loss)	$	(3,959)	$	1,140	$	(2,819)	$	(3,403)	$	681	$	(2,722)


	Foreign Currency Translation		Available-for-Sale Investment		Cash Flow Hedges		Total
Balance, December 31, 2020	$	(218)	$	17,205	$	(3,926)	$	13,061
Current period change	400		(4,648)		1,429		(2,819)
Balance, March 31, 2021	$	182	$	12,557	$	(2,497)	$	10,242


Segment and Consolidated Operating Results (in thousands, except per share amounts):	Three Months Ended March 31,
		2021			2020
Healthcare:
Revenues		$	79,722		$	95,578
Operating income		$	20,484		$	24,050
Segment operating income as a percentage of segment revenues		25.7		%	25.2		%
Business Advisory:
Revenues		$	72,867		$	64,905
Operating income		$	13,077		$	9,842
Segment operating income as a percentage of segment revenues		17.9		%	15.2		%
Education:
Revenues		$	50,624		$	62,136
Operating income		$	8,653		$	13,116
Segment operating income as a percentage of segment revenues		17.1		%	21.1		%
Total Company:
Revenues		$	203,213		$	222,619
Reimbursable expenses		1,934			19,303
Total revenues and reimbursable expenses		$	205,147		$	241,922
Statements of Operations reconciliation:
Segment operating income		$	42,214		$	47,008
Items not allocated at the segment level:
Other operating expenses		28,837			27,146
Litigation and other losses (gains)		42			(150)
Depreciation and amortization		5,095			6,047
Goodwill impairment charges (1)		—			59,816
Operating income (loss)		8,240			(45,851)
Other expense, net		(1,299)			(7,637)
Income (loss) from continuing operations before taxes		6,941			(53,488)
Income tax expense (benefit)		1,536			(11,215)
Net income (loss) from continuing operations		$	5,405		$	(42,273)
Earnings (loss) per share from continuing operations:
Basic		$	0.25		$	(1.94)
Diluted		$	0.24		$	(1.94)


	Three Months Ended March 31,
Other Operating Data:		2021			2020
Number of billable consultants (at period end) (2):
Healthcare		821			892
Business Advisory		1,107			916
Education		726			791
Total		2,654			2,599
Average number of billable consultants (for the period) (2):
Healthcare		822			897
Business Advisory		1,080			920
Education		731			778
Total		2,633			2,595
Billable consultant utilization rate (3):
Healthcare		67.9		%	71.6		%
Business Advisory		68.7		%	71.5		%
Education		70.1		%	76.2		%
Total		68.8		%	72.9		%
Billable consultant average billing rate per hour (4):
Healthcare		$	236		$	228
Business Advisory (5)		$	203		$	198
Education		$	174		$	188
Total (5)		$	205		$	204
Revenue per billable consultant (in thousands):
Healthcare		$	73		$	73
Business Advisory		$	63		$	67
Education		$	59		$	69
Total		$	65		$	70
Average number of full-time equivalents (for the period) (6):
Healthcare		258			278
Business Advisory		34			20
Education		36			60
Total		328			358
Revenue per full-time equivalent (in thousands):
Healthcare		$	78		$	108
Business Advisory		$	89		$	149
Education		$	227		$	144
Total		$	95		$	117


	Three Months Ended March 31,
Cash Flows (in thousands):	2021		2020
Net cash used in operating activities	$	(82,754)	$	(56,146)
Net cash used in investing activities	(8,037)		(18,395)
Net cash provided by financing activities	45,082		214,089
Effect of exchange rate changes on cash	155		(143)
Net increase (decrease) in cash and cash equivalents	$	(45,554)	$	139,405


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that may yet be Purchased under the Plans or Programs (2)
January 1, 2021 - January 31, 2021	10,479	$	58.94	—	$	44,974,137
February 1, 2021 - February 28, 2021	95	$	58.95	—	$	44,974,137
March 1, 2021 - March 31, 2021	400,347	$	52.59	245,718	$	31,791,094
Total	410,921	$	52.76	245,718