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HC

Huron Consulting Group Inc. (HURN)·Q4 2024 Earnings Summary

Executive Summary

  • Record Q4 2024 performance: revenues before reimbursable expenses (RBR) rose 14.5% to $388.4M, adjusted EBITDA margin expanded to 14.6%, and diluted EPS reached $1.84, with strong contributions from Healthcare and Education segments .
  • 2025 guidance introduced: RBR $1.58–$1.66B, adjusted EBITDA margin 14.0–14.5%, adjusted diluted EPS $6.80–$7.60; CFO also guided to cash from operations $195–$235M, capex $35–$45M, and FCF $160–$190M .
  • Balance sheet and cash: FY 2024 cash from operations hit a record $201.3M; year-end net debt was $335.8M (total debt $357.7M, cash $21.9M), leverage 1.4x adjusted EBITDA; Q4 DSO improved to 76 days .
  • Estimate comparison unavailable: Wall Street consensus from S&P Global could not be retrieved due to API limits; beats/misses vs estimates are not included (see Estimates Context) [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

  • Record RBR and margin expansion: “The fourth quarter of 2024 produced record revenues before reimbursable expenses… We also drove strong margin expansion over the prior year period.” — CEO Mark Hussey .
  • Healthcare/Education strength: Healthcare RBR +17.6% YoY (segment margin 30.3%); Education RBR +14.5% YoY (segment margin 22.4%) in Q4, reflecting broad demand across offerings .
  • Strategic execution and cash returns: FY adjusted EBITDA margin rose to 13.5% (+120 bps YoY), adjusted EPS hit a record $6.47, and Huron repurchased 1.2M shares ($122.2M) in 2024 .

What Went Wrong

  • Commercial margin compression: Commercial segment margin fell to 17.8% in Q4 (22.4% a year ago) and 20.0% for FY 2024 (21.0% in 2023), reflecting higher compensation/contractor expense .
  • Regulatory headwinds: Management highlighted a “highly disruptive” higher education environment (potential reductions in federal research funding, caps on indirect cost rates), and healthcare pressures (340B reimbursement, tariffs impacting supply costs) .
  • Digital utilization vs prior year: Digital capability utilization was 77.7% in Q4, down from 80.5% in Q4 2023, even as overall demand remained robust .

Financial Results

Core P&L Trends (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Revenues before reimbursable expenses ($M)$371.7 $370.0 $388.4
Total revenues ($M)$381.0 $378.1 $399.3
Diluted EPS ($)$2.03 $1.47 $1.84
Adjusted diluted EPS ($)$1.68 $1.68 $1.90
Adjusted EBITDA ($M)$55.7 $54.9 $56.8
Adjusted EBITDA Margin (%)15.0% 14.8% 14.6%

Year-over-Year Comparison (Q4)

MetricQ4 2023Q4 2024
Revenues before reimbursable expenses ($M)$339.2 $388.4
Total revenues ($M)$350.0 $399.3
Net income ($M)$2.8 $34.0
Diluted EPS ($)$0.15 $1.84
EBITDA ($M)$12.7 $58.9
Adjusted EBITDA ($M)$41.4 $56.8
Adjusted diluted EPS ($)$1.29 $1.90
Net cash from operations ($M)$80.4 $139.6

Segment Breakdown (Q4 2024)

SegmentRBR ($M)YoY GrowthOperating Income ($M)Segment Margin
Healthcare$202.3 +17.6% $61.3 30.3%
Education$118.8 +14.5% $26.6 22.4%
Commercial$67.3 +6.1% $12.0 17.8%
Total$388.4 +14.5% $47.1 (company OI) n/a

KPIs and Operational Metrics

KPIQ2 2024Q3 2024Q4 2024
Consulting utilization (%)73.7 73.6 77.2
Digital utilization (%)75.0 77.2 77.7
Revenue-generating professionals (total, period-end)5,848 5,896 6,224
Managed Services professionals (period-end)1,116 (HC), 128 (Edu) 1,223 (HC), 122 (Edu) 1,420 (HC), 110 (Edu)
DSO (days)n/a86 (Q3) 76 (Q4)
Total debt ($M)n/an/a$357.7
Cash ($M)n/an/a$21.9
Net debt ($M)n/an/a$335.8
Leverage ratio (Bank, x adj. EBITDA)n/an/a1.4x
Q4 share repurchases ($M; shares)n/an/a$18.2; ~151k
Weighted avg diluted shares (Q4)n/an/a18.522M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RBR ($B)FY 2024$1.46–$1.50 (Q2) ; $1.47–$1.49 (Q3) Actual: $1.486 Narrowed then delivered midpoint
Adjusted EBITDA Margin (%)FY 202413.0–13.5 (Q2/Q3) Actual: 13.5 Achieved upper end
Adjusted diluted EPS ($)FY 2024$5.85–$6.15 (Q2) ; $6.00–$6.20 (Q3) Actual: $6.47 Exceeded high end
RBR ($B)FY 2025—$1.58–$1.66 Introduced
Adjusted EBITDA Margin (%)FY 2025—14.0–14.5 Introduced
Adjusted diluted EPS ($)FY 2025—$6.80–$7.60 Introduced
Cash from operations ($M)FY 2025—$195–$235 Introduced
Capex ($M)FY 2025—$35–$45 Introduced
Free cash flow ($M)FY 2025—$160–$190 Introduced
Effective tax rate (%)FY 2025—28–30 Introduced
Weighted diluted shares (M)FY 2025—18.0–18.5 Introduced
Segment growth/marginsFY 2025—HC: mid-single-digit rev; 26–28% margin. Edu: mid–upper single-digit; 23–25%. Commercial: low-20% (incl. AXIA); 21–23% Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
AI/automation for efficiencyEmphasis on expanding Digital capabilities; margin initiatives (Q2/Q3) CFO: initiatives to “use our automation, analytics, AI tools to help us operate more efficiently” Increasing focus on AI-enabled operations
Supply chain resilience & tariffsAXIA acquisition (12/3/24) enhances Oracle SCM and Microsoft capabilities CEO flagged tariff impacts on supply cost/supply chains; AXIA strengthens change mgmt and supply chain offerings Building capabilities, positioned for macro pressures
Regulatory/legal (Higher Ed)2024 guidance raises amid strong results (no deep regulatory focus) Anticipated reductions in federal research funding and indirect cost caps; broad disruption to Higher Ed models Regulatory risk rising; consulting demand likely
Utilization trajectoryQ2/Q3 consulting utilization ~73–74% Q4 utilization >77% in consulting and digital; expected to strengthen into Q1 2025 Improving sequentially
Commercial demandQ2: weaker Digital demand; Q3: strong sequential growth Q4 cautious optimism; 2025 Commercial growth guided low 20% incl. AXIA; margin 21–23% Stabilizing/backlog improving

Management Commentary

  • “The fourth quarter of 2024 produced record revenues before reimbursable expenses… We also drove strong margin expansion over the prior year period” — CEO Mark Hussey .
  • “Our integrated growth strategy… leveraging leading market positions in healthcare and education, expanding commercial presence, and growing digital capabilities” — CEO .
  • “Adjusted EBITDA margin… mid-teen level… on track… fueled by ongoing pricing and efficiency initiatives” — CEO .
  • “We expect cash flows from operations to be in a range of $195M to $235M… capex $35M to $45M… free cash flows $160M to $190M” — CFO John D. Kelly .
  • “Effectively use our automation, analytics, AI tools to help us operate more efficiently” — CFO .

Q&A Highlights

  • Pipeline vs regulatory uncertainty: “We have not to date seen… reprioritized spending… backlog/pipeline remain very strong” — CEO/CFO .
  • Headcount growth: mid-single-digit ex-managed services reflects AXIA inclusion and strong sales conversion; adding resources in Healthcare performance improvement, revenue cycle managed services, and select Digital areas — CFO .
  • Higher Ed research funding pressure: fewer grants and potential lower indirect reimbursement rates reduce institutional revenue, prompting operational/strategic changes — CEO .
  • Utilization outlook: Q4 >77% for consulting/digital; expected YoY improvement in 1H25 with normalized attrition — CFO .
  • AXIA contribution: ~$35–$40M 2025 revenue; ~$3M in Q4 2024; net ~$20–$25M inorganic growth baked into guide (offsetting Studer Education divestiture) — CFO .

Estimates Context

  • S&P Global (Capital IQ) consensus for Q4 2024 EPS and revenue was not retrievable at time of analysis due to daily request limit exceeded, so estimates-based beat/miss comparisons are not included [GetEstimates error].
  • Investors should cross-check with their data terminals; company-reported outperformance vs prior year and sequential trends are documented above .

Key Takeaways for Investors

  • Strength in core verticals: Healthcare and Education drove Q4 records, with segment margins expanding; Commercial should benefit from AXIA integration and a robust financial advisory pipeline in 2025 .
  • Margin trajectory intact: adjusted EBITDA margin rose for a fourth straight year; 2025 guide implies ~75 bps improvement vs 2024, supported by pricing, utilization, and AI/automation initiatives .
  • Cash generation and capital returns: record FY 2024 cash from operations ($201.3M) and ongoing buybacks ($122.2M in 2024) support sustained shareholder value creation; leverage at 1.4x adj. EBITDA adds flexibility .
  • Regulatory catalyst: disruption in Higher Ed funding and healthcare reimbursement/tariffs likely drive consulting demand; Huron’s breadth positions it as a beneficiary of complex transitions .
  • Near-term seasonality: management expects ~15–20% of full-year adjusted EBITDA/EPS in Q1; monitor cadence and utilization trends as the year progresses for trading setups .
  • Watch Commercial margin recovery: Q4 margin compression warrants attention; AXIA and Digital backlog indicate potential normalization into 2025 .
  • Upcoming catalyst: Investor Day on March 25, 2025 should provide deeper strategic and financial detail; potential stock reaction to clarified mid-term margin/FCF targets .