Huron Consulting Group Inc. (HURN)

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Huron Consulting Group Inc. (HURN)

Q1 2009 Earnings Call Transcript

April 30, 2009 11:00 am ET


Gary Holdren – President and CEO

Gary Burge – VP and CFO


Tim McHugh – William Blair & Company

Paul Ginocchio – Deutsche Bank

Andrew Fones – UBS

Frank – SunTrust Robinson Humphrey

Jim Janesky – Stifel Nicolaus

Dan Leben – Robert W. Baird

David Gold – Sidoti & Company

Sean Jackson – Avondale Partners

Kevane Wong – JMP Securities

Bill Sutherland – Boenning & Scattergood



Good morning, ladies and gentlemen, and welcome to the Huron Consulting Group's webcast to discuss results for the first quarter 2009. At this time all conference lines are in a listen-only mode. Later we will conduct a question-and-answer session for conference call participants and instructions will follow at that time. As a reminder this conference call is being recorded.

And now, I would like to turn the call over to Gary Holdren, Chairman and Chief Executive Officer of Huron Consulting Group. Mr. Holdren, please go ahead.

Gary Holdren

Good morning. And thank you for joining us for today's webcast to discuss Huron Consulting Group's first quarter 2009 results.

Before we begin, I would like to point all of you to the disclosure at the end of our news release for information about any forward-looking statements that may be made or discussed on this call. We have posted a news release on our Web site. Please review that information along with our filings with the SEC for disclosure of factors that may impact subjects discussed in this morning's webcast.

Today we will be discussing one or more non-GAAP financial measures. Please look at our earnings release and on our Web site for all disclosures required by the SEC including reconciliation to the most comparable GAAP numbers.

Joining me on the earnings Call today in Chicago, are Gary Burge, our Chief Financial Officer; and Mary Sawall, our Vice President of Human Resources.

This morning, Gary Burge will start by covering our first quarter results as well as our 2009 guidance. Then I will provide some thoughts on where we are today and what the balance of the year holds for Huron.

In February, we gave you our outlook for Huron's full year performance. And Gary Burge will tell you shortly why we believe the forecast is still solid. After Gary's remarks, I'm going to give you our outlook on the demand for each of our segments. I will also tell you how we are going to manage the business, so we can deliver results that will benefit our clients, our employees and our shareholders. Gary?

Gary Burge

Thanks, Gary, and good morning, everyone. While on an overall basis, this quarter was not a strong one from a pure financial metrics point of view. We can tell you that we've seen progress being made in each of our segments over the first four months, which gives us reasons to be optimistic as we proceed through the second quarter and move into the second half of the year.

Key financial results for the quarter included the following. Revenues of $163 million were up approximately 17% compared to the first quarter of last year, while our top line results excluding Stockamp reflect an overall negative organic growth rate of approximately 6%.

Gary and I will be giving you some color on why we see our Health and Education and Corporate Consulting segments being able to continue to grow their businesses over the balance of the year and why we continue to see some recent disappointing revenue trends in Accounting and Financial Consulting and Legal Consulting beginning to reverse themselves here in the second quarter. This supports our improved outlook for both of these segments over the remainder of the year.

EBITDA increased nearly 14% to 29.3 million for the first quarter, and our adjusted EBITDA rose more than 11% to 35.9 million. Our adjusted EBITDA margin was 22% of revenues here in the first quarter of 2009 compared to approximately 23%, a year ago. Excluding severance costs for both years, adjusted EBITDA margins would have been relatively flat compared to the year ago quarter.

Operating income increased nearly 6% to 21.8 million for the quarter, up from 20.6 million last year. Our operating margin was nearly 13.5% compared to last year's nearly 15%, reflecting once again the higher severance cost of $1.1 million as well as higher amortization cost of $1.3 million.

Net income of $10.3 million in the first quarter of 2009 translated into diluted EPS of $0.51 compared to $0.56 a year ago. As we pointed out in our news release this morning, Q1 '09 EPS reflected $0.04 per share in severance charges compared to $0.01 per share in the same quarter last year.

Now for some comments on each of our businesses. The Health and Education Consulting segment, which represented 57% of total revenues for Huron during the quarter continued to be a bright spot for us, as revenues were 93.6 million for the first quarter of 2009, increasing 83% from $51.1 million in the first quarter of 2008. Organic revenue growth for this segment excluding Stockamp was approximately 21%.

We remain very pleased with the strength that the healthcare practice has displayed in the hospital market, with both Wellspring and Stockamp having performed very well during the quarter. And our higher education practice continued to perform very solidly.

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