Huron Consulting Group Inc. · NASDAQ:HURN
Huron Consulting — Q4 2021 Earnings Presentation
55 slides from Huron Consulting's earnings presentation, Feb 24, 2022
Slide 1: Huron Consulting Group Inc. Investor Day
HURON I 1 Huron Consulting Group Inc. Investor Day MARCH 29, 2022 huronconsultinggroup.com © 2022 Huron Consulting Group Inc. and affiliates.
Slide 2: Forward-Looking Statements
HURON I 2 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 amende
Slide 3: Agenda
Agenda HURON I 3 Presentation Begins at 9:00 AM ET Welcome Elizabeth Entinghe, CVP Corporate Development and Chief of Staff Positioning the Company for Accelerated Growth and Jim Roth, Chief Executive Officer Improved Profitability Integrating our Industry and Capability Expertise to Mark Hussey, Pr
Slide 4: Positioning the Company for Accelerated Growth and Improved Profitability
HURON I 4 Positioning the Company for Accelerated Growth and Improved Profitability Jim Roth Chief Executive Officer © 2022 Huron Consulting Group Inc. and affiliates.
Slide 5: Focused execution on our growth strategy
HURON I 5 Focused execution on our growth strategy 1 Healthcare and Education Leading Market Positions In Two Critical revenues represented Industries 75% Commitment to Focus: Accelerating growth in Healthcare and Education of total company revenues in 2021 Delivering: ------------------------------
Slide 6: Driving our vision through five key ESG commitments
HURON I 6 Driving our vision through five key ESG commitments Illustrative Actions Taken in 2021 ADVANCING OUR We serve clients in industries that have a Established Huron Social Alliance to help address the need for broader CLIENTS’ significant impact on the health and well-being, educational acces
Slide 7: Furthering our commitment to our people
HURON I 7 Furthering our commitment to our people Employee engagement 77% score in 2021 Above the Glint global benchmark of 74% Years in a row recognized as a Best 11 Firm to Work For by Consulting magazine Of all senior leadership promotions made at the 68% end of 2021 were women Executive coaching
Slide 8: Integrating our Industry and Capability Expertise to Drive More Consistent Growth
HURON I 8 Integrating our Industry and Capability Expertise to Drive More Consistent Growth Mark Hussey President and Chief Operating Officer © 2022 Huron Consulting Group Inc. and affiliates.
Slide 9: Operating in a large, growing professional services industry
HURON I 9 Operating in a large, growing professional services industry with core end markets facing significant disruption and/or regulatory change Healthcare Education Expected Healthcare consulting and Total addressable market for $26B managed services $10B+ Huron’s Education ERP and addressable m
Slide 10: Focused execution on our growth strategy
HURON I 10 Focused execution on our growth strategy 1 Leading Market Positions In Two Critical Industries Focus: Accelerating growth in Healthcare and Education 2 Growing Presence in Commercial Industries Focus: Expanding our growing credentials in commercial end markets 3 Rapidly Growing Global Dig
Slide 11: Building on our primary revenue drivers, including recurring revenue
HURON I 11 Building on our primary revenue drivers, including our foundation of recurring revenue, to drive consistent growth DEEP CLIENT MULTI-YEAR MANAGED SERVICES PRODUCTS AND ADDITIONAL RELATIONSHIPS TRANSFORMATIONS ACCELERATORS RECURRING REVENUE Multi-year managed MODELS Sticky client relations
Slide 12: New operating model integrates industry expertise with capabilities
HURON I 12 New operating model expands and more deeply integrates Huron’s industry expertise with its digital, strategic and financial advisory capabilities OPPORTUNITY TO UNLOCK MEANINGFUL FROM TO SHAREHOLDER VALUE Historical Operating Model New Operating Model Strengthens our go-to-market Matrixed
Slide 13: Operating model is matrixed on industry expertise and capability
HURON I 13 Operating model is matrixed on industry expertise and capability and built on a rapidly growing global platform Commercial Financial Energy & Other Healthcare Education Services Utilities Commercial Industry Industry Industry Industry Industries Industry Aligning under a common go-to- Cre
Slide 14: Integrates digital-related capabilities into a unified global platform
HURON I 14 Integrates our digital-related capabilities into a unified global platform and provides improved visibility into our growing offerings Consulting and Managed Services Capabilities Mix includes all management consulting services, managed services 2021 Revenue (excluding technology) and out
Slide 15: Rapidly growing global delivery platform
HURON I 15 Rapidly growing global delivery platform enables Huron to accelerate growth and expand margins India Headcount Growth 5-Year CAGR 840+ 40% 550+ 410+ 300+ 220+ 2017 2018 2019 2020 2021 India Headcount Managed Services 16% Corporate 2021 Digital 18% 66% © 2022 Huron Consulting Group Inc. an
Slide 16: Accelerating Growth in the Healthcare Industry
HURON I 16 Accelerating Growth in the Healthcare Industry Jim Gallas Healthcare Industry Leader © 2022 Huron © 2022 Consulting Huron Group Consulting GroupInc. Inc.and andaffiliates. affiliates.
Slide 17: Healthcare industry segment returned to growth in 2021
HURON I 17 Healthcare industry segment returned to growth in 2021 and is well-positioned to accelerate growth in 2022 and beyond Healthcare Industry Revenue The leading trusted advisor to the healthcare industry ($ in millions) • Served over 95% of the largest hospitals and health 5-Year CAGR system
Slide 18: Primary revenue drivers in Healthcare
HURON I 18 Building on our primary revenue drivers in Healthcare, including our foundation of recurring revenue, to drive consistent growth DEEP CLIENT MULTI-YEAR MANAGED PRODUCTS AND ADDITIONAL RELATIONSHIPS TRANSFORMATIONS SERVICES ACCELERATORS RECURRING REVENUE MODELS Sticky client relationships
Slide 19: Unifying our offerings and go-to-market strategy for healthcare
HURON I 19 Accelerating growth by unifying our offerings and our go- to-market strategy to better serve the healthcare industry Revenue by Capability More deeply integrating Huron’s industry 2021 expertise with the full breadth of its Digital (1) capabilities 26% Performance Improvement 47% Consulti
Slide 20: Healthcare pressures create growth opportunities for Huron
HURON I 20 Healthcare faces significant strategic and operational pressures, creating a growth opportunities for Huron Opportunities For Huron’s Offerings Culture Perform. Financial Managed Top Issues Confronting Hospitals(1) Strategy Improve. and Org. Advisory Services Digital Excellence Financial
Slide 21: Investing to deliver future growth in Healthcare
HURON I 21 Investing to deliver future growth in Healthcare OPPORTUNITIES THAT LIE AHEAD STRONG MOMENTUM TO DATE INNOVATING TO STRENGTHEN OUR BROADENING OUR CAPABILITIES AND LEADING MARKET POSITION SERVICE OFFERINGS • Expanded our client • Accelerating growth in revenue cycle • Further developing an
Slide 22: Accelerating Growth in the Education Industry
HURON I 22 Accelerating Growth in the Education Industry Peter Eschenbach Education Industry Leader © 2022 Huron Consulting Group Inc. and affiliates.
Slide 23: Record revenues for the Education industry segment in 2021
HURON I 23 Achieved record revenues for the Education industry segment in 2021, setting the stage for continued strong growth The leading trusted advisor to the U.S. education industry Education Industry Revenue ($ in millions) • 20+ clients generated revenues greater than $2.5M in 2021 5-Year CAGR
Slide 24: Primary revenue drivers in Education
HURON I 24 Building on our primary revenue drivers in Education, including our foundation of recurring revenue, to drive consistent growth DEEP CLIENT MULTI-YEAR MANAGED SERVICES PRODUCTS AND ADDITIONAL RELATIONSHIPS TRANSFORMATIONS ACCELERATORS RECURRING REVENUE Multi-year managed services MODELS S
Slide 25: Unifying our offerings and go-to-market strategy for education
HURON I 25 Accelerating growth by unifying our offerings and our go- to-market strategy to better serve the Education industry More deeply integrating Huron’s industry Revenue by Capability expertise with its digital, strategic and 2021 financial capabilities • 6 out of the top 10 Education industry
Slide 26: Following the pandemic, 77% of higher education institutions seek change
HURON I 26 Which of the following outcomes most closely reflect your view of how your institution will respond to the COVID-19 pandemic Following the and economic recession?(1) pandemic, 77% of higher education 44% 33% TRANSFORM INSTITUTION RESET FOR GROWTH institutions are My institution should use
Slide 27: Education industry faces evolving complexities and challenges
HURON I 27 The education industry continues to face evolving complexities and significant challenges Opportunities Created For Huron’s Offerings Strategy & Student Managed Industry Trends Operations Research Strategy Digital Services Increased governmental scrutiny, including attention to conflicts
Slide 28: Investing to deliver future growth in Education
HURON I 28 Investing to deliver future growth in Education OPPORTUNITIES THAT LIE AHEAD STRONG MOMENTUM EXPANDING TO DATE STRENGTHENING OUR EXTENDING OUR CAPABILITIES IN LEADING MARKET LEADERSHIP POSITION STUDENT TO GROW POSITION IN RESEARCH IN DIGITAL MARKET SHARE • Significant growth in • Accelera
Slide 29: Expanding Our Growing Credentials in Commercial Industries
H UH RUOR NOI N2 9I 2 9 Expanding Our Growing Credentials in Commercial Industries Mark Hussey President and Chief Operating Officer © 2022 Huron Consulting Group Inc. and affiliates.
Slide 30: Commercial industries drive new avenues for growth and diversification
HURON I 30 Commercial industries create a platform to drive new avenues for growth while increasing diversification in our portfolio and end markets Focused on Industries Facing Significant Commercial Industry Disruption and/or Regulatory Change Revenue (1) ($ in millions) 5-Year CAGR $214 $218 Fina
Slide 31: Primary revenue drivers in Commercial
HURON I 31 Building on our primary revenue drivers in Commercial, including our foundation of recurring revenue, to drive consistent growth DEEP CLIENT MULTI-YEAR MANAGED SERVICES PRODUCTS AND RELATIONSHIPS TRANSFORMATIONS ACCELERATORS Multi-year managed services and/or Sticky client relationships l
Slide 32: Fireside Chat: Advancing Our Global Digital Platform
HURON I 32 Fireside Chat: Advancing Our Global Digital Platform Mario Desiderio Jim Roth, Moderator Digital Capability Chief Executive Leader Officer © 2022 Huron Consulting Group Inc. and affiliates.
Slide 33: Built a $350M Digital platform since 2010
HURON I 33 Built a $350M Digital platform since 2010 through modest organic investments and $200M in deployed capital Expect to generate revenues in excess of $400M in 2022 1 Enterprise Resource Planning (ERP) Workday Innovation Specific to our Workday ERP business, grew our initial organic Partner
Slide 34: Growth through the pandemic demonstrates demand for digital offerings
HURON I 34 Growth through the pandemic, despite strong headwinds in our largest end markets, demonstrates the continued demand for our digital offerings Digital Capability A rapidly growing digital provider Revenue • Dedicated industry focus drives Professional Other 12% ($ in millions) differentiat
Slide 35: Market tailwinds create growth opportunity for digital offerings
HURON I 35 Market tailwinds persist, creating a meaningful growth opportunity for Huron’s digital offerings Demand Drivers Investing to Deliver Future Growth • Continuing to grow market share for our core digital service offerings (i.e., ERP, EPM, CRM, etc.) • Expanding our digital offerings with a
Slide 36: Fireside Chat: Broadening Our Strategy and Financial Advisory Capabilities
H UHRUORNO IN3I6 3 6 Fireside Chat: Broadening Our Strategy and Financial Advisory Capabilities Flint Besecker John DiDonato Corporate Finance Business Advisory Capability Leader Capability Leader Andy Waldeck Ernie Torain, Moderator Innosight Capability Leader General Counsel © 2022 Huron Consultin
Slide 37: Strong growth in 2021 and opportunities for 2022 and beyond (Innosight)
HURON I 37 Strong year-over-year growth in 2021 and continued macro challenges create meaningful opportunities for 2022 and beyond Demand Drivers • A leading global strategy boutique that • Acceleration of disruptive forces competes and wins against larger competitors • Digital transformation and em
Slide 38: Broadening financial advisory capabilities
HURON I 38 Broadening our financial advisory capabilities with expanded capital market and industry advisory services to accelerate growth A growing set of core competencies Demand Drivers that: • Active middle market M&A market • Align closely with Huron’s core end markets • Bank regulatory environ
Slide 39: A recognized special situations leader
HURON I 39 A recognized special situations leader whose offerings provide added capabilities to our core industries A preeminent financial and operational Demand Drivers advisory firm that is a recognized special • Disruptive events, including situations advisor to the middle market that geopolitica
Slide 40: Executing Our Financial Strategy
HH UU RO RO N NI 4 I 0 40 Executing Our Financial Strategy John Kelly Chief Financial Officer © 2022 Huron Consulting Group Inc. and affiliates.
Slide 41: Q4 and FY 2021 results demonstrate strong momentum
HURON I 41 Q4 and FY 2021 results demonstrate strong momentum Q4 2021 HIGHLIGHTS 25% ~320 bps 78% Adjusted EBITDA Adjusted EPS growth Revenue growth margin expansion Q4 2021 over Q4 2020 Q4 2021 over Q4 2020 Q4 2021 over Q4 2020 FY 2021 HIGHLIGHTS 7% ~50 bps 21% Adjusted EBITDA Revenue growth Adjust
Slide 42: Driving sustainable revenue growth and improved profitability
HURON I 42 Driving sustainable revenue growth and improved profitability Revenue from Continuing Adjusted EBITDA Margin % Operations ($ in millions) 150 bps 9% CAGR since improvement pandemic since pandemic $1,000 $877 $906 12.0% 11.8% $844 11.4% $795 10.3% 10.8% 2018 2019 2020 2021 2022 2018 2019 2
Slide 43: Building on primary revenue drivers for consistent revenue growth
HURON I 43 Building on our primary revenue drivers to achieve more consistent revenue growth Organic revenue expected to drive low Revenue double-digit annual growth from 2022 to ($ in millions) 2025 Low double-digit annual growth • Strong market tailwinds create growth opportunities in each of our
Slide 44: Adjusted EBITDA margin on trajectory to mid-teen % in 2025
HURON I 44 Adjusted EBITDA margin % is on a trajectory to achieve mid-teen % in 2025 Committed to annual expansion while Adjusted EBITDA Margin % maintaining flexibility to optimally Mid-teen manage the business % • Operating income margin 11.8% expansion driven by improved 10.3% 10.8% utilization a
Slide 45: Healthy balance sheet and strong cash flows create flexibility
HURON I 45 Healthy balance sheet and strong cash flows create flexibility to return capital to shareholders and drive future growth Free Cash Flow Strategic capital deployment framework Free Cash Flow Yield $120 20% balances growth, flexibility and $120 $109 $ in millions $87 $80 15% return of capit
Slide 46: Disciplined approach to M&A
HURON I 46 Disciplined approach to M&A will continue to provide opportunities to accelerate growth in adjacencies to our core business Recent Acquisition Criteria used to evaluate strategic tuck-ins: History • Aligns with our business strategy ($ in millions) $9 $45 • Expands our capabilities into a
Slide 47: Focused execution on our growth strategy
HURON I 47 Focused execution on our growth strategy 1 Healthcare and Education Leading Market Positions In Two Critical revenues represented Industries 75% Commitment to Focus: Accelerating growth in Healthcare and Education of total company revenues in 2021 Delivering: -----------------------------
Slide 48: Q&A Session
H UHRU ORNOIN4I8 4 8 Q&A Session Jim Roth Mark Hussey Chief Executive President and Officer Chief Operating Officer John Kelly Ernie Torain Chief Financial General Counsel Officer © 2022 Huron Consulting Group Inc. and affiliates.
Slide 49: A clear and compelling investment thesis
HURON I 49 A clear and compelling investment thesis A PREEMINENT MEANINGFUL EXPANSION OF MATERIAL GLOBAL GROWTH STRONG CASH FLOW INDUSTRY EXPERTISE MARGIN EXPANSION CONSULTANCY AND OPPORTUNITY IN OUR AND BALANCE SHEET AND CAPABILITIES OPPORTUNITY DIGITAL PARTNER CORE INDUSTRIES Leading global Operat
Slide 50: Investor Day
HURON I 50 Investor Day March 29, 2022 © 2022 Huron Consulting Group Inc. and affiliates.
Slide 51: Appendix
HURON I 51 Appendix © 2022 Huron Consulting Group Inc. and affiliates.
Slide 52: Use of Non-GAAP Financial Measures
HURON I 52 Use of Non-GAAP Financial 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, adjusted diluted earnings per share from continuing opera
Slide 53: Reconciliations of non-GAAP measures
HURON I 53 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) 2017 2018 2019 2020 2021 Revenues $ 733 $ 795 $ 877 $ 844 $ 906 Net income (loss) from cont
Slide 54: Reconciliations of non-GAAP measures
HURON I 54 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) 2017 2018 2019 2020 2021 Net income (loss) from continuing operations $ (170) $ 14 $ 42 $ (24) $ 6
Slide 55: Reconciliations of non-GAAP measures
HURON I 55 Reconciliations of non-GAAP measures Reconciliation of cash from operating activities to free cash flow (in millions) 2022 2018 2019 2020 2021 Guidance(2) Cash from operating activities $ 102 $ 132 $ 137 $ 18 $ 90 to 110 Less: Capital expenditures (15) (23) (17) (16) $ 20 to 25 Free cash
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