Slide 1: Investor Presentation
INVESTOR PRESENTATION © 2016 HURON CONSULTING GROUP HURN I Q3 2016 INC.
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 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
Slide 3: Company Overview
1 COMPANY OVERVIEW
Slide 4: About Us
ABOUT US FORMED IN With approximately 200 More than 1,800 billable 2015 revenue of $699 million professionals consultants with leading expertise IN Headquartered in Chicago Huron had more than 1,000 Publicly traded on the with 15+ domestic and client engagements, NASDAQ since October international o
Slide 5: Huron Offerings
HURON OFFERINGS CAPABILITIES INDUSTRIES • Strategy • Operations • Technology • Healthcare • Higher Education • Advisory • Analytics • Life Sciences • Commercial Sectors 5
Slide 6: Operating Segments
OPERATING SEGMENTS Business Advisory 17% Education & Life Sciences Healthcare 24% 59% 6 Segment percentages are based on year-to-date 2016 revenue results.
Slide 7: Healthcare
HEALTHCARE 7
Slide 8: Healthcare
HEALTHCARE Revenue & Operating Margin % Clients We Serve 37.9% 39.5% 38.4% 38.2% 37.8% $500 45% Integrated Health Systems $450 40% $400 35% Academic Medical Centers $350 In millions 30% $300 25% Children’s Hospitals $250 20% Community Hospitals $200 $150 15% 10% Public Hospitals $100 $280 $289 $359
Slide 9: Top Trends for Not-for-Profit Health Systems from the J.P. Morgan Healthcare Conference
TOP 10 TRENDS FOR NOT-FOR-PROFIT HEALTH SYSTEMS FROM THE J.P. MORGAN HEALTHCARE CONFERENCE Trends Capabilities Changing payment structures Population health and understanding cost and margins Managing unit cost and reducing the cost of care delivery Becoming a health plan/company Outpatient shift Pe
Slide 10: Healthcare: Top Concerns Among Hospital Executives
HEALTHCARE TOP CONCERNS AMONG HOSPITAL EXECUTIVES Managing Unit Cost and Population Health and the Increasing Scale and Reducing the Cost of Care Increasing Importance of Broadening Partnerships Delivery Cost and Margin • The transition from fee-for-service to • There is an increased need to engage
Slide 11: Healthcare Areas of Expertise
HEALTHCARE AREAS OF EXPERTISE Strategic Clinical Financial and Technology Patient and Direction Setting Transformation Operational Implementation, Caregiver Excellence Optimization, and Engagement Evaluate options and set Improve quality and Strategy Work side-by-side with Set direction, reduce prio
Slide 12: Education & Life Sciences
EDUCATION & LIFE SCIENCES 12
Slide 13: Education & Life Sciences
EDUCATION & LIFE SCIENCES Revenue & Operating Margin % Clients We Serve 26.3% 29.6% 28.7% 24.8% 25.0% $180 35% Colleges and Universities $160 30% $140 Academic Medical Centers 25% In millions $120 $100 20% Research Institutions $80 15% Pharmaceutical Companies $60 10% $40 Medical Device Manufacturer
Slide 14: Higher Education
HIGHER EDUCATION 14
Slide 15: Top Concerns Among Higher Ed Administrators
HIGHER EDUCATION TOP CONCERNS AMONG HIGHER ED ADMINISTRATORS Significant Pressure Facing Financial Challenges Amidst ERP Systems Moving to the the Industry Limited Revenue Growth and Cloud Increasing Expenses • Public pressure exists to reduce the • Net tuition revenue growth is constrained • Higher
Slide 16: Higher Education Areas of Expertise
HIGHER EDUCATION AREAS OF EXPERTISE Strategy Operations Technology Research Establish vision, develop Assess, design and implement Design and implement Leverage deep experience strategies, and set priorities organizational changes to drive integrated solutions and to improve support for the research
Slide 17: Life Sciences
LIFE SCIENCES 17
Slide 18: Top Concerns Among Life Sciences' Executives
LIFE SCIENCES TOP CONCERNS AMONG LIFE SCIENCES’ EXECUTIVES Challenges to Innovation Changing Market Increasing Global Regulations and Commercialization Dynamics to Ensure Patient Safety and Cost Management • Higher R&D, regulatory expenses and • Decreasing market access driven by • Increasing govern
Slide 19: Life Sciences Areas of Expertise
LIFE SCIENCES AREAS OF EXPERTISE Strategy Operations Compliance Ensure that corporate vision results in Deliver operational support to meet the Reduce risks associated with regulatory and achievable solutions by applying R&D best growing challenges of a complex payer government scrutiny to meet evol
Slide 20: Business Advisory
BUSINESS ADVISORY 20
Slide 21: Business Advisory
BUSINESS ADVISORY Revenue & Operating Margin % Clients We Serve 28.4% 23.2% Large and Middle Market 22.3% Corporations 20.8% $90 30% $80 25% Hospitals & Health Systems $70 In millions $60 20% Colleges & Universities $50 15% Law Firms 8.6% $40 $30 10% Investment Banks $20 5% Lenders & Private Equity
Slide 22: Legacy Business Advisory
yO o LEGACY BUSINESS _ADVISORY
Slide 23: Legacy Business Advisory Industry Drivers
LEGACY BUSINESS ADVISORY INDUSTRY DRIVERS Challenging Economic Significant Pressures in Optimistic M&A and Environment Critical Industry Sectors Replacement Financing Outlook • Concerns regarding • Slow growth economy and low interest • Consolidation is expected to take place • A slowing global econ
Slide 24: Legacy Business Advisory Areas of Expertise
LEGACY BUSINESS ADVISORY AREAS OF EXPERTISE Capital Commercial Operational Restructuring & Transaction Valuation Advisory Dispute Advisory Improvement Turnaround Advisory Assess opportunities Bring unique insights Enhance operations to Stabilize finance and Services Assess enterprise and execute and
Slide 25: Enterprise Performance Management & Analytics (EPM&A)
ENTERPRISE PERFORMANCE MANAGEMENT & ANALYTICS (EPM&A) 25
Slide 26: EPM&A Industry Drivers
EPM&A INDUSTRY DRIVERS Transition to the Cloud Significant Salesforce Improved Business Growth Intelligence & Analytics Solutions • Client adoption is rapidly transforming • Salesforce.com has a 5-year • Clients are transitioning to easy-to- the ERP, EPM and Business Intelligence revenue CAGR of 34%
Slide 27: EPM&A Areas of Expertise
EPM&A AREAS OF EXPERTISE Enterprise Resource Planning Business Intelligence & Salesforce.com & Performance Management Analytics Deliver creative, collaborative and Enabling organizations to effectively manage Improve an institution’s ability to cost-effective solutions utilizing and optimize their f
Slide 28: Financial Overview
2 FINANCIAL OVERVIEW
Slide 29: Growth Track Record: Revenues
GROWTH TRACK RECORD REVENUES FROM CONTINUING OPERATIONS (IN MILLIONS) $1,000 $900 $800 $730 - $740 $700 $699 $600 $628 $500 $538 $400 $434 $441 $300 $200 $100 $0 2011 2012 2013 2014 2015 2016 Guidance 29
Slide 30: Growth Track Record: Adjusted EBITDA
GROWTH TRACK RECORD ADJUSTED EBITDA (IN MILLIONS) AND ADJUSTED EBITDA MARGINS FROM CONTINUING OPERATIONS $200 $180 $160 $137 - $141 $140 $139 $120 $100 $111 $98 $80 $60 $69 $72 $40 $20 15.9% 16.4% 18.2% 17.6% 19.9% 18.8% - 19.0% $0 8.5% 2011 2012 2013 2014 2015 2016 Guidance 30 See accompanying appe
Slide 31: Growth Track Record: Adjusted Diluted EPS
GROWTH TRACK RECORD ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $5.00 $4.50 $4.00 $3.50 $3.25 - $3.35 $3.00 $2.99 $2.50 $2.45 $2.00 $2.22 $1.50 $1.41 $1.00 $1.12 $0.50 $0.00 2011 2012 2013 2014 2015 2016 Guidance 31 See accompanying appendix for a reconciliation of Adjusted Dilute
Slide 32: Free Cash Flow per Share & Free Cash Flow Yield
FREE CASH FLOW PER SHARE & FREE CASH FLOW YIELD $7.00 40.0% $6.00 $6.45 $5.00 30.0% $5.26 $4.00 $4.37 $4.17 20.0% $3.00 $3.81 $2.00 10.0% $1.00 11.3% 11.3% 10.9% 6.7% 7.7% $0.00 0.0% 2011 2012 2013 2014 2015 Free Cash Flow Per Share Free Cash Flow Yield Free cash flow is defined as cash from operati
Slide 33: Operating Metrics
OPERATING METRICS FROM CONTINUING OPERATIONS 2011 2012 2013 2014 2015 Number of Full-Time Billable Consultants 1,143 1,331 1,534 1,738 1,821 Headcount Leverage(1) 12.3 15.0 15.3 15.6 15.0 Full-Time Billable Consultant Utilization Rate 77.5% 76.4% 77.4% 75.4% 76.9% Average Full-Time Equivalents 118 9
Slide 34: Appendices
3 APPENDICES
Slide 35: 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 36: Reconciliations of Non-GAAP Measures: Adjusted EBITDA
RECONCILIATIONS OF NON-GAAP MEASURES RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) (IN MILLIONS) 2016 Guidance 2011 2012 2013 2014 2015 Low High Revenues $ 434 $ 441 $ 538 $ 628 $ 699 $ 730 $ 740 Net income
Slide 37: Reconciliations of Non-GAAP Measures: Adjusted Net Income
RECONCILIATIONS OF NON-GAAP MEASURES RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (IN MILLIONS, EXCEPT EARNINGS PER SHARE) 2016 Guidance 2011 2012 2013 2014 2015 Low High Net income from continuing operations $ 1 $ 17 $ 52 $ 47 $ 62 $ 43 $
Slide 38: Reconciliations of Non-GAAP Measures: Free Cash Flow
RECONCILIATIONS OF NON-GAAP MEASURES RECONCILIATION OF CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW (IN MILLIONS) 2011 2012 2013 2014 2015 Cash from Operating Activities $ 110 $ 102 $ 115 $ 147 $ 164 Less Capital Expenditures (15) (17) (20) (26) (18) Free Cash Flow $ 95 $ 85 $ 95 $ 121 $ 146 Dil
Slide 39: Convertible Bond Dilution Illustration
CONVERTIBLE BOND DILUTION ILLUSTRATION In Q3 of 2014, Huron issued $250mm of convertible bonds with a coupon of 1.25% and a conversion premium of 27.5%, or $79.89. Concurrently, Assumptions Huron entered into hedging transactions and repurchased $25mm of HURN Shares Outstanding 23,000,000 shares tha
Slide 40: About Us
ABOUT US Huron is a global professional services firm committed to achieving sustainable results in partnership with its clients. The company brings depth of expertise in strategy, technology, operations, advisory services and analytics to drive lasting and measurable results in the healthcare, high
Slide 41: Recognitions
RECOGNITIONS Forbes America’s Best Consulting 2016 Vault Consulting 2016 Forbes’ Best Management Employers 2016 Consulting Firms 2016 2016 Corporate Equality Index/ Modern Healthcare 2015 University Business 2015 The M&A Advisor 2016 Human Rights Campaign Foundation Platinum Partner Workday Salesfor
Slide 42: Leadership
LEADERSHIP Jim Roth Mark Hussey Diane Ratekin Chief Executive Officer, EVP, Chief Operating Officer EVP, General Counsel & President & Director & Chief Financial Officer Corporate Secretary 42
Slide 43: Huron
© HURON