Huron Consulting Group Announces Third Quarter 2014 Financial Results

Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of business consulting services, today announced financial results for the third quarter ended September 30, 2014.

“Our third-quarter results were consistent with our expectations and reflect the continued value that Huron brings to the markets we serve,” said James H. Roth, chief executive officer and president, Huron Consulting Group. “In our Huron Healthcare segment, which accounts for nearly 50% of revenues, we have continued to see strong demand across our performance improvement, revenue cycle, and clinical solutions. We expect the pressure to reduce costs and enhance the quality of clinical outcomes to continue to be a major contributor to our future growth prospects, particularly as our hospital clients expand their focus on population health. Our Huron Legal, Huron Education and Life Sciences, and Huron Business Advisory segments have also benefited from solid demand in their respective markets.”

“Reflecting our expectations for future performance, we have narrowed our 2014 revenue guidance to the high end of the range and have increased our earnings guidance. Companywide, we believe that we have established a foundation for solid growth in 2015,” added Roth.

Third Quarter 2014 Results

Revenues for the third quarter of 2014 were $198.0 million, an increase of 13.3%, compared to $174.7 million for the third quarter of 2013. The Company's third quarter 2014 operating income was $21.3 million, compared to $31.1 million in the third quarter of 2013. Net income from continuing operations was $12.2 million, or $0.53 per diluted share, for the third quarter of 2014 compared to $17.2 million, or $0.75 per diluted share, for the same period last year.

Third quarter 2014 earnings before interest, taxes, depreciation and amortization ("EBITDA")⁽⁶⁾ was $28.8 million, or 14.6% of revenues, compared to $36.8 million, or 21.0% of revenues, in the comparable quarter last year.

In evaluating the Company’s financial performance, management uses non-GAAP financial measures including Adjusted EBITDA⁽⁶⁾ and Adjusted net income from continuing operations⁽⁶⁾ that exclude the effect of the following items (in thousands):

		Three Months Ended September 30,
		2014				2013
Amortization of intangible assets		$	2,835			$	1,440
Restructuring charges		$	233			$	—
Litigation and other gains		$	(150	)		$	(5,300	)
Non-cash interest on convertible notes		$	406			$	—
Tax effect		$	(1,330	)		$	1,544

During the third quarter of 2013, the Company reached a settlement agreement to resolve a lawsuit brought by Huron, resulting in a gain of $5.3 million being recorded.

Adjusted EBITDA⁽⁶⁾ was $28.9 million, or 14.6% of revenues, in the third quarter of 2014, compared to $31.5 million, or 18.0% of revenues, in the comparable quarter last year. Adjusted net income from continuing operations⁽⁶⁾ was $14.2 million, or $0.62 per diluted share, for the third quarter of 2014 compared to $14.8 million, or $0.65 per diluted share, for the comparable period in 2013.

Reconciliations of the aforementioned non-GAAP financial measures to comparable GAAP measures are provided in the financial schedules accompanying this news release.

The average number of full-time billable consultants⁽¹⁾ rose 17.2% to 1,827 in the third quarter of 2014 compared to 1,559 in the same quarter last year. Full-time billable consultant utilization rate⁽²⁾ was 71.8% during the third quarter of 2014 compared with 73.9% during the same period last year. Average billing rate per hour for full-time billable consultants⁽³⁾ was $234 for the third quarter of 2014 compared to $231 for the third quarter of 2013. The average number of full-time equivalent professionals⁽⁴⁾ totaled 1,127 in the third quarter of 2014 compared to 1,066 for the comparable period in 2013.

Year-to-Date 2014 Results

Revenues for the first nine months of 2014 rose 21.4% to $618.2 million compared to $509.2 million for the first nine months of 2013. The Company's operating income for the first nine months of 2014 rose 17.0% to $97.1 million compared to $83.0 million in the first nine months of 2013. Net income from continuing operations rose 49.4% to $66.3 million, or $2.87 per diluted share, for the first nine months of 2014 compared to $44.3 million, or $1.95 per diluted share, for the same period last year.

EBITDA⁽⁶⁾ was $119.4 million, or 19.3% of revenues, for the first nine months of 2014, compared to $99.6 million, or 19.6% of revenues, for the same period in 2013.

In evaluating the Company’s financial performance, management uses non-GAAP financial measures including Adjusted EBITDA⁽⁶⁾ and Adjusted net income from continuing operations⁽⁶⁾ that exclude the effect of the following items (in thousands):

		Nine Months Ended September 30,
		2014				2013
Amortization of intangible assets		$	8,265			$	4,347
Restructuring charges		$	1,396			$	596
Litigation and other gains		$	(590	)		$	(6,450	)
Non-cash interest on convertible notes		$	406			$	—
Tax effect		$	(3,791	)		$	603
Net tax benefit related to “check-the-box” election		$	(10,244	)		$	—

Adjusted EBITDA⁽⁶⁾ was $120.2 million, or 19.4% of revenues, in the first nine months of 2014 compared to $93.8 million, or 18.4% of revenues, in the comparable period last year. Adjusted net income from continuing operations⁽⁶⁾ was $61.7 million, or $2.68 per diluted share, for the first nine months of 2014 compared to $43.4 million, or $1.91 per diluted share, for the comparable period in 2013.

Reconciliations of the aforementioned non-GAAP financial measures to comparable GAAP measures are provided in the financial schedules accompanying this news release.

The average number of full-time billable consultants⁽¹⁾ increased 16.1% to 1,776 in the first nine months of 2014 compared to 1,530 in the same period last year. Full-time billable consultant utilization rate⁽²⁾ was 74.6% during the first nine months of 2014 compared with 76.2% during the same period last year. Average billing rate per hour for full-time billable consultants⁽³⁾ was $238 for the first nine months of 2014 compared to $219 for the same period last year. The average number of full-time equivalent professionals⁽⁴⁾ increased 13.7% to 1,264 in the first nine months of 2014 from 1,112 in the comparable period of 2013.

Operating Segments

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The Company’s year-to-date revenues by operating segment are as follows: Huron Healthcare (50%); Huron Legal (25%); Huron Education and Life Sciences (17%); and Huron Business Advisory (8%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Form 10-Q filing for the quarter ended September 30, 2014.

Convertible Notes Issuance

During the third quarter of 2014, the Company issued $250 million aggregate principal amount of 1.25% convertible senior notes due 2019 (the "Convertible Notes"). The Convertible Notes were offered in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act").

Acquisition

On October 1, 2014, Huron completed its acquisition of Threshold Consulting, Inc., a provider of cloud-based Software as a Service (SaaS) applications, data warehousing and business intelligence (BI) solutions, as well as customer relationship management (CRM) consulting capabilities.

Share Repurchase Program

On October 15, 2014, the Company completed its $50 million share repurchase program, buying back 805,392 shares of its common stock at an average price of $62.08. The Board of Directors has authorized another share repurchase program pursuant to which the Company may, from time to time, repurchase up to an additional $50 million of its common stock through October 31, 2015. The amount and timing of the repurchases are determined by management and depend on a variety of factors, including the trading price of the Company's common stock, general market and business conditions, and applicable legal requirements.

Outlook for 2014⁽⁷⁾

Based on currently available information, the Company narrows guidance for full year 2014 revenues before reimbursable expenses in a range of $815.0 million to $825.0 million. The Company also expects EBITDA in a range of $150.5 million to $155.0 million, Adjusted EBITDA in a range of $154.0 million to $158.5 million, GAAP diluted earnings per share in a range of $3.35 to $3.45, and non-GAAP adjusted diluted earnings per share also in a range of $3.35 to $3.45.

Management will provide a more detailed discussion of its outlook during the Company’s earnings conference call webcast.

Third Quarter 2014 Webcast

The Company will host a webcast to discuss its financial results today, October 28, 2014, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by NASDAQ OMX and can be accessed at Huron Consulting Group’s website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

Use of Non-GAAP Financial Measures⁽⁶⁾

In evaluating the Company’s financial performance and outlook, management uses EBITDA, Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, Adjusted net income from continuing operations and Adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management believes that such measures, as supplements to operating income, net income from continuing operations and diluted earnings per share from continuing operations and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of our core operating results and future prospects. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

About Huron Consulting Group

Huron Consulting Group helps clients in diverse industries improve performance, transform the enterprise, reduce costs, leverage technology, process and review large amounts of complex data, address regulatory changes, recover from distress and stimulate growth. Our professionals employ their expertise in finance, operations, strategy and technology to provide our clients with specialized analyses and customized advice and solutions that are tailored to address each client's particular challenges and opportunities to deliver sustainable and measurable results. The Company provides consulting services to a wide variety of both financially sound and distressed organizations, including healthcare organizations, leading academic institutions, Fortune 500 companies, governmental entities and law firms. Huron has worked with more than 425 health systems, hospitals, and academic medical centers; more than 400 corporate general counsel; and more than 350 universities and research institutions. Learn more at www.huronconsultinggroup.com.

Statements in this press release that are not historical in nature, including those concerning the Company’s current expectations about its future requirements and needs, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans” or “continues.” These forward-looking statements reflect our current expectations about our future requirements and needs, results, levels of activity, performance, or achievements, including, without limitation, current expectations with respect to, among other factors, utilization rates, billing rates, and the number of revenue-generating professionals; that we are able to expand our service offerings; that we successfully integrate the businesses we acquire; and that existing market conditions continue to trend upward. These statements involve known and unknown risks, uncertainties and other factors, including, among others, those described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, and under “Item 1A. Risk Factors” in our forthcoming Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
Revenues and reimbursable expenses:
Revenues		$	198,049			$	174,735			$	618,185			$	509,178
Reimbursable expenses			18,679				17,542				58,923				51,001
Total revenues and reimbursable expenses			216,728				192,277				677,108				560,179
Direct costs and reimbursable expenses (exclusive of depreciation
and amortization shown in operating expenses):
Direct costs			129,899				106,087				377,798				315,084
Amortization of intangible assets and software development costs			1,227				675				3,618				2,007
Reimbursable expenses			18,651				17,531				58,981				51,000
Total direct costs and reimbursable expenses			149,777				124,293				440,397				368,091
Operating expenses and other operating gains:
Selling, general and administrative expenses			39,276				37,197				120,148				100,307
Restructuring charges			233				-				1,396				596
Litigation and other gains			(150	)			(5,300	)			(590	)			(6,450	)
Depreciation and amortization			6,315				4,968				18,638				14,624
Total operating expenses and other operating gains			45,674				36,865				139,592				109,077
Operating income			21,277				31,119				97,119				83,011
Other income (expense), net:
Interest expense, net of interest income			(1,878	)			(1,531	)			(4,843	)			(5,100	)
Other income (expense), net			(54	)			104				291				(35	)
Total other expense, net			(1,932	)			(1,427	)			(4,552	)			(5,135	)
Income from continuing operations before income tax expense			19,345				29,692				92,567				77,876
Income tax expense			7,126				12,531				26,309				33,532
Net income from continuing operations			12,219				17,161				66,258				44,344
Income (loss) from discontinued operations, net of tax			-				10				-				(31	)
Net income		$	12,219			$	17,171			$	66,258			$	44,313
Net earnings per basic share:
Net income from continuing operations		$	0.54			$	0.77			$	2.94			$	1.99
Income (loss) from discontinued operations, net of tax			-				-				-				-
Net income		$	0.54			$	0.77			$	2.94			$	1.99
Net earnings per diluted share:
Net income from continuing operations		$	0.53			$	0.75			$	2.87			$	1.95
Income (loss) from discontinued operations, net of tax			-				-				-				-
Net income		$	0.53			$	0.75			$	2.87			$	1.95
Weighted average shares used in calculating earnings per share:
Basic			22,488				22,386				22,573				22,293
Diluted			22,975				22,873				23,052				22,712

HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
		September 30,				December 31,
		2014				2013
Assets
Current assets:
Cash and cash equivalents		$	225,913			$	58,131
Receivables from clients, net			102,354				123,750
Unbilled services, net			93,901				55,125
Income tax receivable			7,044				270
Deferred income taxes, net			18,509				15,498
Prepaid expenses and other current assets			15,731				19,740
Total current assets			463,452				272,514
Property and equipment, net			40,059				38,742
Long-term investment			12,750				-
Other non-current assets			21,096				16,485
Intangible assets, net			26,908				21,222
Goodwill			566,297				536,637
Total assets		$	1,130,562			$	885,600
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	9,884			$	8,185
Accrued expenses			20,808				19,180
Accrued payroll and related benefits			87,069				97,677
Current maturities of long-term debt			27,500				25,000
Accrued consideration for business acquisitions			-				5,177
Income tax payable			-				2,917
Deferred revenues			13,015				15,248
Total current liabilities			158,276				173,384
Non-current liabilities:
Deferred compensation and other liabilities			9,823				5,360
Long-term debt, net of current portion			333,619				143,750
Deferred lease incentives			13,867				12,355
Deferred income taxes, net			24,362				20,487
Total non-current liabilities			381,671				181,952
Commitments and Contingencies
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized;
25,033,760 and 25,246,565 shares issued at September 30, 2014
and December 31, 2013, respectively			242				245
Treasury stock, at cost, 2,077,798 and 1,993,769 shares at
September 30, 2014 and December 31, 2013, respectively			(93,043	)			(88,091	)
Additional paid-in capital			442,651				443,144
Retained earnings			242,021				175,763
Accumulated other comprehensive loss			(1,256	)			(797	)
Total stockholders’ equity			590,615				530,264
Total liabilities and stockholders’ equity		$	1,130,562			$	885,600

HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Nine Months Ended
		September 30,
		2014				2013
Cash flows from operating activities:
Net income		$	66,258			$	44,313
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			22,636				16,631
Share-based compensation			15,504				12,692
Amortization of debt discount and issuance costs			1,482				1,014
Allowances for doubtful accounts and unbilled services			8,829				3,153
Deferred income taxes			1,817				7,062
Changes in operating assets and liabilities, net of acquisitions:
(Increase) decrease in receivables from clients			26,807				13,200
(Increase) decrease in unbilled services			(44,020	)			(36,083	)
(Increase) decrease in current income tax receivable / payable, net			(9,690	)			(10,218	)
(Increase) decrease in other assets			3,258				(2,318	)
Increase (decrease) in accounts payable and accrued liabilities			11,466				453
Increase (decrease) in accrued payroll and related benefits			(9,565	)			891
Increase (decrease) in deferred revenues			(2,661	)			(3,028	)
Net cash provided by operating activities			92,121				47,762
Cash flows from investing activities:
Purchases of property and equipment, net			(16,683	)			(16,383	)
Net investment in life insurance policies			(1,151	)			(842	)
Purchases of businesses			(51,694	)			(297	)
Purchase of convertible debt investment			(12,500	)			-
Capitalization of internally developed software			-				(1,207	)
Proceeds from note receivable			328				438
Net cash used in investing activities			(81,700	)			(18,291	)
Cash flows from financing activities:
Proceeds from exercise of stock options			848				39
Shares redeemed for employee tax withholdings			(3,461	)			(760	)
Tax benefit from share-based compensation			4,962				1,374
Share repurchases			(45,092	)			-
Proceeds from borrowings under credit facility			129,000				83,500
Repayments on credit facility			(147,750	)			(101,000	)
Proceeds from convertible senior notes issuance			250,000				-
Proceeds from sale of warrants			23,625				-
Payments for convertible senior note hedges			(42,125	)			-
Payments for debt issuance costs			(7,346	)			(1,155	)
Payments for capital lease obligations			(63	)			-
Deferred payments for purchase of property and equipment			(471	)			(471	)
Deferred acquisition payments			(4,745	)			(5,356	)
Net cash provided by (used in) financing activities			157,382				(23,829	)
Effect of exchange rate changes on cash			(21	)			(23	)
Net increase in cash and cash equivalents			167,782				5,619
Cash and cash equivalents at beginning of the period			58,131				25,162
Cash and cash equivalents at end of the period		$	225,913			$	30,781

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
		Three Months Ended September 30,								Percent Increase (Decrease)
Segment and Consolidated Operating Results (in thousands):		2014				2013
Huron Healthcare:
Revenues		$	97,812			$	86,957			12.5	%
Operating income		$	27,727			$	30,772			(9.9	)%
Segment operating income as a percentage of segment revenues			28.3	%			35.4	%
Huron Legal:
Revenues		$	46,146			$	45,263			2.0	%
Operating income		$	10,949			$	15,138			(27.7	)%
Segment operating income as a percentage of segment revenues			23.7	%			33.4	%
Huron Education and Life Sciences:
Revenues		$	36,523			$	34,806			4.9	%
Operating income		$	9,459			$	7,773			21.7	%
Segment operating income as a percentage of segment revenues			25.9	%			22.3	%
Huron Business Advisory:
Revenues		$	17,142			$	7,223			137.3	%
Operating income		$	4,397			$	664			N/M
Segment operating income as a percentage of segment revenues			25.7	%			9.2	%
All Other:
Revenues		$	426			$	486			(12.3	)%
Operating loss		$	(655	)		$	(285	)		129.8	%
Segment operating loss as a percentage of segment revenues			N/M				N/M
Total Company:
Revenues		$	198,049			$	174,735			13.3	%
Reimbursable expenses			18,679				17,542			6.5	%
Total revenues and reimbursable expenses		$	216,728			$	192,277			12.7	%
Statement of Earnings reconciliation:
Segment operating income		$	51,877			$	54,062			(4.0	)%
Items not allocated at the segment level:
Other operating expenses and gains			24,285				17,975			35.1	%
Depreciation and amortization expense			6,315				4,968			27.1	%
Total operating income			21,277				31,119			(31.6	)%
Other expense, net			1,932				1,427			35.4	%
Income from continuing operations before income tax expense		$	19,345			$	29,692			(34.8	)%
Other Operating Data (excluding All Other):
Number of full-time billable consultants (at period end) (1):
Huron Healthcare			1,109				942			17.7	%
Huron Legal			127				143			(11.2	)%
Huron Education and Life Sciences			413				425			(2.8	)%
Huron Business Advisory			197				62			217.7	%
Total			1,846				1,572			17.4	%
Average number of full-time billable consultants (for the period) (1):
Huron Healthcare			1,114				926
Huron Legal			126				146
Huron Education and Life Sciences			403				425
Huron Business Advisory			184				62
Total			1,827				1,559

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
		Three Months Ended
		September 30,
Other Operating Data (excluding All Other):		2014			2013
Full-time billable consultant utilization rate (2):
Huron Healthcare			74.0%			80.2%
Huron Legal			63.5%			62.3%
Huron Education and Life Sciences			71.3%			64.4%
Huron Business Advisory			65.4%			73.6%
Total			71.8%			73.9%
Full-time billable consultant average billing rate per hour (3):
Huron Healthcare		$	230		$	230
Huron Legal (5)		$	243		$	235
Huron Education and Life Sciences		$	225		$	215
Huron Business Advisory		$	277		$	331
Total (5)		$	234		$	231
Revenue per full-time billable consultant (in thousands):
Huron Healthcare		$	81		$	87
Huron Legal (5)		$	72		$	67
Huron Education and Life Sciences		$	76		$	64
Huron Business Advisory		$	88		$	112
Total (5)		$	80		$	80
Average number of full-time equivalents (for the period) (4):
Huron Healthcare			64			53
Huron Legal			1,009			963
Huron Education and Life Sciences			45			47
Huron Business Advisory			9			3
Total			1,127			1,066
Revenue per full-time equivalent (in thousands):
Huron Healthcare		$	115		$	123
Huron Legal (5)		$	37		$	37
Huron Education and Life Sciences		$	129		$	159
Huron Business Advisory		$	106		$	106
Total (5)		$	45		$	47

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
		Nine Months Ended September 30,								Percent Increase (Decrease)
Segment and Consolidated Operating Results (in thousands):		2014				2013
Huron Healthcare:
Revenues		$	306,327			$	244,648			25.2	%
Operating income		$	117,422			$	91,440			28.4	%
Segment operating income as a percentage of segment revenues			38.3	%			37.4	%
Huron Legal:
Revenues		$	154,417			$	131,296			17.6	%
Operating income		$	39,227			$	28,869			35.9	%
Segment operating income as a percentage of segment revenues			25.4	%			22.0	%
Huron Education and Life Sciences:
Revenues		$	107,846			$	107,666			0.2	%
Operating income		$	27,539			$	28,672			(4.0	)%
Segment operating income as a percentage of segment revenues			25.5	%			26.6	%
Huron Business Advisory:
Revenues		$	47,098			$	25,068			87.9	%
Operating income		$	12,081			$	7,995			51.1	%
Segment operating income as a percentage of segment revenues			25.7	%			31.9	%
All Other:
Revenues		$	2,497			$	500			N/M
Operating loss		$	(1,633	)		$	(701	)		133.0	%
Segment operating loss as a percentage of segment revenues			N/M				N/M
Total Company:
Revenues		$	618,185			$	509,178			21.4	%
Reimbursable expenses			58,923				51,001			15.5	%
Total revenues and reimbursable expenses		$	677,108			$	560,179			20.9	%
Statement of Earnings reconciliation:
Segment operating income		$	194,636			$	156,275			24.5	%
Items not allocated at the segment level:
Other operating expenses and gains			78,879				58,640			34.5	%
Depreciation and amortization expense			18,638				14,624			27.4	%
Total operating income			97,119				83,011			17.0	%
Other expense, net			4,552				5,135			(11.4	)%
Income from continuing operations before income tax expense		$	92,567			$	77,876			18.9	%
Other Operating Data (excluding All Other):
Number of full-time billable consultants (at period end) (1):
Huron Healthcare			1,109				942			17.7	%
Huron Legal			127				143			(11.2	)%
Huron Education and Life Sciences			413				425			(2.8	)%
Huron Business Advisory			197				62			217.7	%
Total			1,846				1,572			17.4	%
Average number of full-time billable consultants (for the period) (1):
Huron Healthcare			1,057				891
Huron Legal			131				146
Huron Education and Life Sciences			417				431
Huron Business Advisory			171				62
Total			1,776				1,530

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
		Nine Months Ended
		September 30,
Other Operating Data (excluding All Other):		2014			2013
Full-time billable consultant utilization rate (2):
Huron Healthcare			78.2%			83.5%
Huron Legal			65.3%			58.1%
Huron Education and Life Sciences			70.4%			66.7%
Huron Business Advisory			69.7%			80.5%
Total			74.6%			76.2%
Full-time billable consultant average billing rate per hour (3):
Huron Healthcare		$	243		$	211
Huron Legal (5)		$	242		$	226
Huron Education and Life Sciences		$	217		$	215
Huron Business Advisory		$	258		$	337
Total (5)		$	238		$	219
Revenue per full-time billable consultant (in thousands):
Huron Healthcare		$	270		$	254
Huron Legal (5)		$	218		$	180
Huron Education and Life Sciences		$	216		$	204
Huron Business Advisory		$	261		$	388
Total (5)		$	253		$	238
Average number of full-time equivalents (for the period) (4):
Huron Healthcare			58			54
Huron Legal			1,155			1,011
Huron Education and Life Sciences			43			44
Huron Business Advisory			8			3
Total			1,264			1,112
Revenue per full-time equivalent (in thousands):
Huron Healthcare		$	357		$	342
Huron Legal (5)		$	109		$	104
Huron Education and Life Sciences		$	413		$	442
Huron Business Advisory		$	294		$	429
Total (5)		$	132		$	130

(1) Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked.

(2) Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our full-time billable consultants worked on client assignments during a period by the total available working hours for all of these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days.

(3) Average billing rate per hour for our full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period.

(4) Consists of consultants who work variable schedules as needed by our clients, as well as contract reviewers and other professionals who generate revenues primarily based on number of hours worked and units produced, such as pages reviewed and data processed. Also includes full-time employees who provide software support and maintenance services to our clients.

(5) During the second quarter of 2014, we revised the methodology we use to allocate revenue between our billable consultants and our full-time equivalents in our Huron Legal segment to better reflect the nature of the work being provided. Operating data for the three and nine months ended September 30, 2014 and 2013, as presented above, reflects this change.

N/M – Not meaningful

HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (6)
(In thousands)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
Revenues		$	198,049			$	174,735			$	618,185			$	509,178
Net income from continuing operations		$	12,219			$	17,161			$	66,258			$	44,344
Add back:
Income tax expense			7,126				12,531				26,309				33,532
Interest and other expenses			1,932				1,427				4,552				5,135
Depreciation and amortization			7,542				5,643				22,256				16,631
Earnings before interest, taxes, depreciation and
amortization (EBITDA) (6)			28,819				36,762				119,375				99,642
Add back:
Restructuring charges			233				—				1,396				596
Litigation and other gains			(150	)			(5,300	)			(590	)			(6,450	)
Adjusted EBITDA (6)		$	28,902			$	31,462			$	120,181			$	93,788
Adjusted EBITDA as a percentage of revenues (6)			14.6	%			18.0	%			19.4	%			18.4	%

HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)
(In thousands)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
Net income from continuing operations		$	12,219			$	17,161			$	66,258			$	44,344
Weighted average shares - diluted			22,975				22,873				23,052				22,712
Diluted earnings per share from continuing operations		$	0.53			$	0.75			$	2.87			$	1.95
Add back:
Amortization of intangible assets			2,835				1,440				8,265				4,347
Restructuring charges			233				—				1,396				596
Litigation and other gains			(150	)			(5,300	)			(590	)			(6,450	)
Non-cash interest on convertible notes			406				—				406				—
Tax effect			(1,330	)			1,544				(3,791	)			603
Net tax benefit related to “check-the-box” election			—				—				(10,244	)			—
Total adjustments, net of tax			1,994				(2,316	)			(4,558	)			(904	)
Adjusted net income from continuing operations (6)		$	14,213			$	14,845			$	61,700			$	43,440
Adjusted diluted earnings per share from continuing operations (6)		$	0.62			$	0.65			$	2.68			$	1.91

(6) In evaluating the Company’s financial performance, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, Adjusted net income from continuing operations, and Adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Our management uses these non-GAAP financial measures to gain an understanding of our comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing our business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

HURON CONSULTING GROUP INC.
RECONCILIATION OF NON-GAAP MEASURES FOR FULL YEAR 2014 OUTLOOK
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7)
(In millions)
(Unaudited)
		Year Ending
		December 31, 2014
		Guidance Range
		Low				High
Projected revenues – GAAP		$	815.0			$	825.0
Projected net income from continuing operations – GAAP		$	77.0			$	79.5
Add back:
Income tax expense			34.5				36.5
Interest and other expenses			9.0				9.0
Depreciation and amortization			30.0				30.0
Projected earnings before interest, taxes, depreciation and
amortization (EBITDA) (7)			150.5				155.0
Add back:
Restructuring charges			4.1				4.1
Other gain			(0.6	)			(0.6	)
Projected adjusted EBITDA (7)		$	154.0			$	158.5
Projected adjusted EBITDA as a percentage of projected revenues (7)			18.9	%			19.2	%

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (7)
(In millions)
(Unaudited)
		Year Ending
		December 31, 2014
		Guidance Range
		Low				High
Projected net income from continuing operations – GAAP		$	77.0			$	79.5
Projected diluted earnings per share from continuing operations – GAAP		$	3.35			$	3.45
Add back:
Amortization of intangible assets			11.0				11.0
Restructuring charges			4.1				4.1
Other gain			(0.6	)			(0.6	)
Non-cash interest on convertible notes			2.2				2.2
Tax effect			(6.7	)			(6.7	)
Net tax benefit related to “check-the-box” election			(10.2	)			(10.2	)
Total adjustments, net of tax			(0.2	)			(0.2	)
Projected adjusted net income from continuing operations (7)		$	76.8			$	79.3
Projected adjusted diluted earnings per share from
continuing operations (7)		$	3.35			$	3.45

(7) In evaluating the Company’s outlook, management uses Projected EBITDA, Projected adjusted EBITDA, Projected adjusted EBITDA as a percentage of revenues, Projected adjusted net income from continuing operations, and Projected adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management believes that the use of such measures, as supplements to Projected net income from continuing operations and Projected diluted earnings per share from continuing operations and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of the Company’s core operating results and future prospects without the effect of non-cash or other one-time items. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.