Huron Consulting Group Inc. · NASDAQ:HURN
Huron Consulting — Investor Presentation (April 2020)
46 slides from Huron Consulting's investor presentation, Apr 30, 2020
Slide 1: Investor Presentation Q1 2020
INVESTOR PRESENTATION Q1 2020 April 30, 2020
Slide 2: Forward-looking Statements
Forward-looking Statements Statements in this presentation that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the
Slide 3: Company Overview
1 COMPANY OVERVIEW
Slide 4: Trusted Advisor For Transformative Strategic Decisions And Execution
Trusted Advisor For Transformative Strategic Decisions And Execution FORMED IN 2002 With approximately 200 More than 3,800 2019 revenue of $877 million professionals professionals with leading expertise We are a global consultancy that helps our clients drive growth, enhance performance and sustain
Slide 5: Global Client Base And Footprint
Global Client Base And Footprint Clients Served 100 of the top 100 research universities 65 of the top 100 Great Hospitals in America(1) 45+ of the Fortune 100 (1) Based on Becker’s Hospital Review ranking. 5
Slide 6: Partner With Clients To Strengthen Their Business Today And Create Future Growth
Partner With Clients To Strengthen Their Business Today And Create Future Growth For Tomorrow Improve How do I drive efficiency and improve my financial position Fundamental to make the strategic investments I need to? Performance Reinvent How do I spot, seize and scale opportunities to create new C
Slide 7: Focused Operating Segment Mix
Focused Operating Segment Mix on serving industries facing Education 28% significant Healthcare 43% disruption Business and/or Advisory regulatory 29% change… Segment percentages are based on year-to-date March 2020 revenue results. 7
Slide 8: Operating Segment Mix With a Unified Platform
…with a Operating Segment Mix unified platform that drives Education 28% 21% strategic Healthcare 43% of total year-to-date advantage Business Advisory March 2020 Business Advisory segment through 29% revenue was generated collaboration. in the healthcare and education industries Segment percentages
Slide 9: Strategic Priorities To Drive Shareholder Value
Strategic Priorities To Drive Shareholder Value ACHIEVE SUSTAINABLE DRIVE MARGIN DEPLOY CAPITAL INVEST IN OUR ORGANIC GROWTH EXPANSION STRATEGICALLY PEOPLE 9
Slide 10: Huron's 2022 Strategic Framework
Huron’s 2022 Strategic Framework VISION MISSION VALUES INTEGRITY To empower our clients, our people To enable organizations to improve fundamental COLLABORATION INCLUSION and the communities we serve to performance, reinvent their business, generate new HUMILITY IMPACT OWN THEIR FUTURE. growth platf
Slide 11: Services Overview
2 SERVICES OVERVIEW
Slide 12: Healthcare Segment Overview
Healthcare AT A GLANCE • Served more than 450 health systems, Segment Overview hospitals and physician organizations, including 65 of the top 100 Great Hospitals in America (Source: Becker’s Hospital Review) Health systems, hospitals and medical clinics are under immense pressure to • Over 1,000 spe
Slide 13: Healthcare Revenue & Operating Margin
Healthcare Revenue & Operating Margin % 37.9% Clients We Serve 34.8% 33.3% 31.5% $500 40% 29.6% $450 35% Integrated Health Systems $400 30% $350 In millions Academic Medical Centers $300 25% $250 20% Children’s Hospitals $200 15% $150 Community Hospitals 10% $100 $447 $425 $357 $365 $399 5% Public H
Slide 14: Market Trends
Market Trends SUSTAINING MARGINS WHILE TECHNOLOGY INVESTMENT TRANSFORMING 92 percent of C-Suite respondents say growing Trends indicate healthcare organizations are margins, investing in the future and restoring investing in ways to activate valuable data from dollars back into the community is a to
Slide 15: Healthcare Expertise
Healthcare Expertise Care Financial and Technology and Leadership Transformation Operational Excellence Analytics Excellence • Improved transitions of • Increased cash flow • Activated technology to • Developed accountable care • Leveraged resources create a competitive leaders • Improved quality mo
Slide 16: Business Advisory Segment Overview
AT A GLANCE Business Advisory • 2019 Small Company Transaction of the Year Award Segment Overview • Winner, Turnaround Management Association 2018 Best Innovation Strategy Consulting, ALM Intelligence Across industries worldwide, increasingly complex challenges are making • 2018 Restructuring Award
Slide 17: Business Advisory Revenue & Operating Margin
Business Advisory Industries We Serve Healthcare, Education, Financial Services, Life Sciences, Energy and Utilities, Manufacturing and Industrials, Government and Other Revenue & Operating Margin % Commercial Industries 26.7% 19.7% 22.4% Clients We Serve 21.4% $300 30% 19.4% $250 25% Fortune 500 an
Slide 18: Market Trends
Market Trends SHRINKING CORPORATE LIFESPANS TECHNOLOGY INVESTMENT The 33-year average tenure of companies on the Global IT spending is projected to total $3.9 trillion S&P 500 in 1964 narrowed to 24 years by 2016 in 2020, with software being the fastest growing and is forecast to shrink to just 12 y
Slide 19: Enterprise Solutions & Analytics Expertise
Enterprise Solutions & Analytics Expertise Advisory Customer Enterprise Performance Analytics and Managed Services Relationship Resource Management Reporting Services Management (CRM) Planning (ERP) • Developed • Increased revenues • Streamlined • Increased cash flow • Maximized return on • Improved
Slide 20: Legacy Business Advisory Expertise
Legacy Business Advisory Expertise Capital Commercial Operational Restructuring & Transaction Valuation Advisory Dispute Improvement Turnaround Advisory Advisory Services • Strengthened • Achieved most • Increased cash flow • Increased cash flow • Mitigated risk during • Assessed asset competitive f
Slide 21: Strategy & Innovation Expertise
Strategy & Innovation Expertise Create Growth Build Innovation Accelerate New Strategies Capabilities Growth Initiatives • Achieved growth ambitions in fast-moving • Developed the internal capabilities required • Identified and scaled high-potential and unpredictable environments to make innovation
Slide 22: Life Sciences Expertise
Life Sciences Expertise Strategy and Asset Pricing and Market Provider Technology and Innovation Commercialization Access Engagement Analytics • Created clear plan for • Optimized clinical • Defined product value • Increased provider • Activated technology to the future and strategy proposition and
Slide 23: Education Segment Overview
Education AT A GLANCE Segment Overview • Worked with more than 500 institutions, including all top 100 research universities Higher education institutions, academic medical centers and research • Conducted over 7,000 organizations face mounting pressures from increased public scrutiny, evolving succ
Slide 24: Education Revenue & Operating Margin
Education Revenue & Operating Margin % Clients We Serve 25.6% 24.8% 24.8% 24.0% 24.1% $250 30% $200 25% Colleges 20% In millions $150 Universities 15% $100 Academic Medical Centers 10% Children’s Hospitals $134 $150 $168 $194 $225 $50 5% Cancer Centers $- 0% 2015 2016 2017 2018 2019 Research Institu
Slide 25: Market Trends
Market Trends $1.6T 49% Student debt is $1.6 trillion and rising, driven Tuition discount rates were at an all-time Only 49% of public university chief by increasing education costs high (44.2% for all undergraduates), executives are confident in their (source: Forbes, 2020) extending the gap betwee
Slide 26: Education Expertise
Education Expertise Strategy and Student Research Financial and Technology and Leadership Innovation Success Transformation Operational Analytics Excellence Excellence • Created clear plan for • Improved retention, • Optimized funding • Increased cash flow • Activated technology • Improved the futur
Slide 27: Financial Overview
3 FINANCIAL OVERVIEW
Slide 28: Revenue trend
Revenue trend Revenues from Continuing Operations (in millions) $1,000 $900 $877 $800 $795 $700 $726 $733 $699 $600 $500 $400 $300 $200 $100 $- 2015 2016 2017 2018 2019 28
Slide 29: Adjusted EBITDA trend
Adjusted EBITDA trend Adjusted EBITDA (in millions) and Adjusted EBITDA Margins from Continuing Operations $160 $140 $139 $120 $130 $100 $105 $105 $80 $91 $60 $40 $20 19.9% 17.9% 14.3% 11.4% 12.0% $- 2015 2016 2017 2018 2019 + See accompanying appendix for a reconciliation of Adjusted EBITDA, which
Slide 30: Adjusted EPS trend
Adjusted EPS trend Adjusted Diluted Earnings per Share from Continuing Operations $3.50 $3.00 $3.21 $2.99 $2.50 $2.74 $2.00 $2.15 $2.08 $1.50 $1.00 $0.50 $- 2015 2016 2017 2018 2019 + See accompanying appendix for a reconciliation of Adjusted Diluted Earnings per Share, which is a non-GAAP measure,
Slide 31: Free Cash Flow Per Share & Free Cash Flow Yield
Free Cash Flow Per Share & Free Cash Flow Yield $7.00 30.00% $6.61 $6.00 25.00% $5.00 $5.38 $4.83 20.00% $4.00 $3.93 15.00% $3.00 $3.49 11.1% 10.00% $2.00 10.6% 8.6% 7.7% 7.0% $1.00 5.00% $- 0.00% 2015 2016 2017 2018 2019 Free cash flow is defined as cash from operations minus capital expenditures.
Slide 32: Operating Metrics From Continuing Operations
Operating Metrics From Continuing Operations 2015 2016 2017 2018 2019 Number of Full-Time Billable Consultants 1,821 1,903 2,136 2,247 2,576 Headcount Leverage(1) 15.0 14.7 15.3 15.5 17.4 Full-Time Billable Consultant Utilization Rate 76.9% 74.6% 74.5% 77.5% 76.1% Average Full-Time Equivalents 229(2
Slide 33: Appendix
4 APPENDIX
Slide 34: Q1 Supplemental Materials
Q1 SUPPLEMENTAL MATERIALS
Slide 35: Overview of Supplemental Materials
Overview of Supplemental Materials Given the continuous evolution of the global COVID-19 pandemic and the current level of volatility in the economy, we wanted to provide additional detail about how we believe these factors could impact Huron across various scenarios, understanding that the individu
Slide 36: Scenario #1 – Base Case Considerations
Scenario #1 – Base Case Considerations Base Case Assumptions The U.S. economy begins to stabilize in the third and fourth quarters of 2020, and the re-opening of the U.S. economy is slow and uneven due to sporadic resurgences of COVID-19. Anticipated Market Conditions Healthcare: Education: Across I
Slide 37: Scenario #2 – Optimistic Case Considerations
Scenario #2 – Optimistic Case Considerations Optimistic Case Assumptions The U.S. economy begins to stabilize in the second quarter of 2020 as social distancing guidelines are relaxed and new cases of COVID-19 significantly decline across the majority of the United States. Anticipated Market Conditi
Slide 38: Scenario #3 – Pessimistic Case Considerations
Scenario #3 – Pessimistic Case Considerations Pessimistic Case Assumptions The U.S. economy begins to stabilize in 2021 as the re-opening of the U.S. economy is hindered by significant resurgences of COVID-19 throughout 2020. Anticipated Market Conditions Healthcare: Education: Across Industries: •
Slide 39: Long-term growth opportunities after COVID-19 subsides
After the near-term impact of COVID-19 subsides, significant disruption facing our clients and end markets creates opportunities for long term growth Healthcare Education Strategy Technology Operations Financial pressures on U.S. The changes required for The disruption and volatility The digital tra
Slide 40: Reconciliations of Non-GAAP Measures to Comparable GAAP Measures
RECONCILIATIONS OF NON- GAAP MEASURES TO COMPARABLE GAAP MEASURES
Slide 41: Reconciliations Of Non-GAAP Measures To Comparable GAAP Measures
Reconciliations Of Non-GAAP Measures To Comparable GAAP Measures 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 shar
Slide 42: Reconciliations of non-GAAP measures
Reconciliations of non-GAAP measures Reconciliation of net income (loss) from continuing operations to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) (in millions) 2015 2016 2017 2018 2019 Revenues $ 699 $ 726 $ 733 $ 795 $ 877 Net income (loss) from continuing oper
Slide 43: Reconciliations of non-GAAP measures
Reconciliations of non-GAAP measures Reconciliation of net income (loss) from continuing operations to adjusted net income from continuing operations (in millions, except earnings per share) 2015 2016 2017 2018 2019 Net income (loss) from continuing operations $ 62 $ 40 $ (171) $ 14 $ 42 Weighted av
Slide 44: Reconciliations of non-GAAP measures
Reconciliations of non-GAAP measures Reconciliation of cash from operating activities to free cash flow (in millions) 2015 2016 2017 2018 2019 Cash from operating activities $ 168 $ 129 $ 100 $ 102 $ 132 Less: Capital expenditures (19) (14) (25) (15) (23) Free cash flow $ 149 $ 115 $ 75 $ 87 $ 109 W
Slide 45: Leadership
LEADERSHIP
Slide 46: Our Leadership
Our Leadership Jim Roth Mark Hussey John Kelly Ernie Torain President & Chief Financial Officer General Counsel & Chief Executive Officer Chief Operating Officer & Treasurer Corporate Secretary 46
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