QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated Filer | ☐ | Non-accelerated Filer | ☐ | Smaller Reporting Company | Emerging Growth Company |
Huron Consulting Group Inc. |
Page | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
June 30, 2022 | December 31, 2021 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Receivables from clients, net of allowances of $ | |||||||||||
Unbilled services, net of allowances of $ | |||||||||||
Income tax receivable | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Deferred income taxes, net | |||||||||||
Long-term investments | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other non-current assets | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other current liabilities | |||||||||||
Accrued payroll and related benefits | |||||||||||
Current maturities of long-term debt | |||||||||||
Current maturities of operating lease liabilities | |||||||||||
Deferred revenues | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities: | |||||||||||
Deferred compensation and other liabilities | |||||||||||
Long-term debt, net of current portion | |||||||||||
Operating lease liabilities, net of current portion | |||||||||||
Deferred income taxes, net | |||||||||||
Total non-current liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity | |||||||||||
Common stock; $ | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues and reimbursable expenses: | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Reimbursable expenses | |||||||||||||||||||||||
Total revenues and reimbursable expenses | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Direct costs (exclusive of depreciation and amortization included below) | |||||||||||||||||||||||
Reimbursable expenses | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Restructuring charges | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest expense, net of interest income | ( | ( | ( | ( | |||||||||||||||||||
Other income (expense), net | ( | ||||||||||||||||||||||
Total other income (expense), net | ( | ( | |||||||||||||||||||||
Income before taxes | |||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Net income per basic share | $ | $ | $ | $ | |||||||||||||||||||
Net income per diluted share | $ | $ | $ | $ | |||||||||||||||||||
Weighted average shares used in calculating earnings per share: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency translation adjustments, net of tax | ( | ( | |||||||||||||||||||||
Unrealized gain (loss) on investment, net of tax | ( | ( | |||||||||||||||||||||
Unrealized gain on cash flow hedging instruments, net of tax | |||||||||||||||||||||||
Other comprehensive income (loss) | ( | ||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with: | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock awards, net of cancellations | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | ||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
Shares redeemed for employee tax withholdings | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with: | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock awards, net of cancellations | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | ||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
Shares redeemed for employee tax withholdings | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | ( | $ | ( | $ | $ | $ | $ |
Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with: | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock awards, net of cancellations | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | ||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
Shares redeemed for employee tax withholdings | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | ( | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Comprehensive loss | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with: | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock awards, net of cancellations | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | ||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
Shares redeemed for employee tax withholdings | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | ( | $ | ( | $ | $ | $ | $ |
Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to cash flows from operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Non-cash lease expense | |||||||||||
Share-based compensation | |||||||||||
Amortization of debt discount and issuance costs | |||||||||||
Allowances for doubtful accounts | |||||||||||
Deferred income taxes | ( | ||||||||||
Gain on sale of property and equipment, excluding transaction costs | ( | ( | |||||||||
Change in fair value of contingent consideration liabilities | |||||||||||
Change in fair value of preferred stock investment | ( | ||||||||||
Other, net | ( | ||||||||||
Changes in operating assets and liabilities, net of acquisitions and divestiture: | |||||||||||
(Increase) decrease in receivables from clients, net | ( | ( | |||||||||
(Increase) decrease in unbilled services, net | ( | ( | |||||||||
(Increase) decrease in current income tax receivable / payable, net | |||||||||||
(Increase) decrease in other assets | ( | ||||||||||
Increase (decrease) in accounts payable and other liabilities | ( | ||||||||||
Increase (decrease) in accrued payroll and related benefits | ( | ( | |||||||||
Increase (decrease) in deferred revenues | ( | ( | |||||||||
Net cash used in operating activities | ( | ( | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Investment in life insurance policies | ( | ||||||||||
Purchases of business, net of cash acquired | ( | ( | |||||||||
Capitalization of internally developed software costs | ( | ( | |||||||||
Proceeds from note receivable | |||||||||||
Proceeds from sale of property and equipment | |||||||||||
Divestiture of business | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercises of stock options | |||||||||||
Shares redeemed for employee tax withholdings | ( | ( | |||||||||
Share repurchases | ( | ( | |||||||||
Proceeds from bank borrowings | |||||||||||
Repayments of bank borrowings | ( | ( | |||||||||
Deferred payments on business acquisitions | ( | ||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash | ( | ||||||||||
Net decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents at beginning of the period | |||||||||||
Cash and cash equivalents at end of the period | $ | $ | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Non-cash investing and financing activities: | |||||||||||
Property and equipment expenditures and capitalized software included in accounts payable, accrued expenses and accrued payroll and related benefits | $ | $ | |||||||||
Operating lease right-of-use asset obtained in exchange for operating lease liability | $ | $ | |||||||||
Contingent consideration related to purchase of business | $ | $ | |||||||||
Healthcare | Education | Commercial(1) | Total | ||||||||||||||||||||
Balance as of December 31, 2021: | |||||||||||||||||||||||
Goodwill | $ | $ | $ | $ | |||||||||||||||||||
Accumulated impairment losses | ( | ( | ( | ||||||||||||||||||||
Goodwill, net as of December 31, 2021 | |||||||||||||||||||||||
Goodwill reallocation(1) | ( | ( | |||||||||||||||||||||
Goodwill recorded in connection with business acquisitions (2)(3) | |||||||||||||||||||||||
Goodwill, net as of June 30, 2022 | $ | $ | $ | $ |
As of June 30, 2022 | As of December 31, 2021 | ||||||||||||||||||||||||||||
Useful Life (in years) | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||||||||||||||
Customer relationships | $ | $ | $ | $ | |||||||||||||||||||||||||
Trade names | |||||||||||||||||||||||||||||
Technology and software | |||||||||||||||||||||||||||||
Non-competition agreements | |||||||||||||||||||||||||||||
Customer contracts | |||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Year Ending December 31, | Estimated Amortization Expense | |||||||
2022 | $ | |||||||
2023 | $ | |||||||
2024 | $ | |||||||
2025 | $ | |||||||
2026 | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares outstanding – basic | |||||||||||||||||||||||
Weighted average common stock equivalents | |||||||||||||||||||||||
Weighted average common shares outstanding – diluted | |||||||||||||||||||||||
Net income per basic share | $ | $ | $ | $ | |||||||||||||||||||
Net income per diluted share | $ | $ | $ | $ |
June 30, 2022 | December 31, 2021 | ||||||||||
Senior secured credit facility | $ | $ | |||||||||
Promissory note due 2024 | |||||||||||
Total long-term debt | |||||||||||
Current maturities of long-term debt | ( | ||||||||||
Long-term debt, net of current portion | $ | $ |
Employee Costs | Other | Total | |||||||||||||||
Balance as of December 31, 2021 | $ | $ | $ | ||||||||||||||
Additions | |||||||||||||||||
Payments | ( | ( | ( | ||||||||||||||
Adjustments | |||||||||||||||||
Balance as of June 30, 2022 | $ | $ | $ |
Fair Value (Derivative Asset and Liability) | ||||||||||||||
Balance Sheet Location | June 30, 2022 | December 31, 2021 | ||||||||||||
Prepaid expenses and other current assets | $ | $ | ||||||||||||
Other non-current assets | $ | $ | ||||||||||||
Accrued expenses and other current liabilities | $ | $ | ||||||||||||
Deferred compensation and other liabilities | $ | $ |
Level 1 Inputs | Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. | |||||||
Level 2 Inputs | Quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |||||||
Level 3 Inputs | Unobservable inputs for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability. |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
Convertible debt investment | ||||||||||||||||||||||||||
Deferred compensation assets | ||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Contingent consideration for business acquisitions | $ | $ | $ | $ | ||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
December 31, 2021 | ||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Interest rate swap | $ | $ | $ | $ | ||||||||||||||||||||||
Convertible debt investment | ||||||||||||||||||||||||||
Deferred compensation assets | ||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
Contingent consideration for business acquisitions | ||||||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ |
Convertible Debt Investment | ||||||||
Balance as of December 31, 2021 | $ | |||||||
Change in fair value | ( | |||||||
Balance as of June 30, 2022 | $ |
Contingent Consideration for Business Acquisitions | ||||||||
Balance as of December 31, 2021 | $ | |||||||
Acquisition | ||||||||
Payment | ( | |||||||
Change in fair value | ||||||||
Balance as of June 30, 2022 | $ | |||||||
Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||
Before Taxes | Tax (Expense) Benefit | Net of Taxes | Before Taxes | Tax (Expense) Benefit | Net of Taxes | ||||||||||||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||
Unrealized gain (loss) on investment | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||||||||||||||||||||
Change in fair value | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Reclassification adjustments into earnings | ( | ( | |||||||||||||||||||||||||||||||||
Net unrealized gain (loss) | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Other comprehensive income (loss) | $ | $ | ( | $ | $ | $ | ( | $ |
Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||
Before Taxes | Tax (Expense) Benefit | Net of Taxes | Before Taxes | Tax (Expense) Benefit | Net of Taxes | ||||||||||||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||
Unrealized gain (loss) on investment | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||||||||||||||||||||
Change in fair value | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Reclassification adjustments into earnings | ( | ( | |||||||||||||||||||||||||||||||||
Net unrealized gain (loss) | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Other comprehensive income (loss) | $ | $ | ( | $ | $ | ( | $ | $ | ( |
Foreign Currency Translation | Available-for-Sale Investment | Cash Flow Hedges | Total | ||||||||||||||||||||
Balance, December 31, 2021 | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Current period change | ( | ( | |||||||||||||||||||||
Balance, June 30, 2022 | $ | ( | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Healthcare: | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Operating income | $ | $ | $ | $ | |||||||||||||||||||
Segment operating income as a percentage of segment revenues | % | % | % | % | |||||||||||||||||||
Education: | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Operating income | $ | $ | $ | $ | |||||||||||||||||||
Segment operating income as a percentage of segment revenues | % | % | % | % | |||||||||||||||||||
Commercial: | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Operating income | $ | $ | $ | $ | |||||||||||||||||||
Segment operating income as a percentage of segment revenues | % | % | % | % | |||||||||||||||||||
Total Huron: | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Reimbursable expenses | |||||||||||||||||||||||
Total revenues and reimbursable expenses | $ | $ | $ | $ | |||||||||||||||||||
Segment operating income | $ | $ | $ | $ | |||||||||||||||||||
Items not allocated at the segment level: | |||||||||||||||||||||||
Other operating expenses | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Other income (expense), net | ( | ( | |||||||||||||||||||||
Income before taxes | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
Revenues by Capability | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
Healthcare: | ||||||||||||||||||||||||||
Consulting and Managed Services | $ | $ | $ | $ | ||||||||||||||||||||||
Digital | ||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Education: | ||||||||||||||||||||||||||
Consulting and Managed Services | $ | $ | $ | $ | ||||||||||||||||||||||
Digital | ||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Consulting and Managed Services | $ | $ | $ | $ | ||||||||||||||||||||||
Digital | ||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Total Huron: | ||||||||||||||||||||||||||
Consulting and Managed Services | $ | $ | $ | $ | ||||||||||||||||||||||
Digital | ||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Segment and Consolidated Operating Results (in thousands, except per share amounts): | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Healthcare: | ||||||||||||||||||||||||||
Revenues | $ | 128,474 | $ | 114,750 | $ | 250,350 | $ | 210,725 | ||||||||||||||||||
Operating income | $ | 30,364 | $ | 30,527 | $ | 58,396 | $ | 54,354 | ||||||||||||||||||
Segment operating income as a percentage of segment revenues | 23.6 | % | 26.6 | % | 23.3 | % | 25.8 | % | ||||||||||||||||||
Education: | ||||||||||||||||||||||||||
Revenues | $ | 88,225 | $ | 60,475 | $ | 168,887 | $ | 111,817 | ||||||||||||||||||
Operating income | $ | 21,691 | $ | 14,142 | $ | 35,997 | $ | 22,679 | ||||||||||||||||||
Segment operating income as a percentage of segment revenues | 24.6 | % | 23.4 | % | 21.3 | % | 20.3 | % | ||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Revenues | $ | 56,626 | $ | 54,901 | $ | 114,137 | $ | 110,797 | ||||||||||||||||||
Operating income | $ | 11,915 | $ | 11,040 | $ | 24,129 | $ | 20,890 | ||||||||||||||||||
Segment operating income as a percentage of segment revenues | 21.0 | % | 20.1 | % | 21.1 | % | 18.9 | % | ||||||||||||||||||
Total Huron: | ||||||||||||||||||||||||||
Revenues | $ | 273,325 | $ | 230,126 | $ | 533,374 | $ | 433,339 | ||||||||||||||||||
Reimbursable expenses | 7,492 | 3,252 | 12,218 | 5,186 | ||||||||||||||||||||||
Total revenues and reimbursable expenses | $ | 280,817 | $ | 233,378 | $ | 545,592 | $ | 438,525 | ||||||||||||||||||
Segment operating income | $ | 63,970 | $ | 55,709 | $ | 118,522 | $ | 97,923 | ||||||||||||||||||
Items not allocated at the segment level: | ||||||||||||||||||||||||||
Other operating expenses | 29,912 | 34,325 | 63,460 | 63,134 | ||||||||||||||||||||||
Depreciation and amortization | 5,054 | 5,255 | 10,100 | 10,420 | ||||||||||||||||||||||
Operating income | 29,004 | 16,129 | 44,962 | 24,369 | ||||||||||||||||||||||
Other income (expense), net | (7,327) | 122 | 14,842 | (1,177) | ||||||||||||||||||||||
Income before taxes | 21,677 | 16,251 | 59,804 | 23,192 | ||||||||||||||||||||||
Income tax expense | 7,802 | 3,454 | 19,077 | 4,990 | ||||||||||||||||||||||
Net income | $ | 13,875 | $ | 12,797 | $ | 40,727 | $ | 18,202 | ||||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||
Basic | $ | 0.67 | $ | 0.59 | $ | 1.97 | $ | 0.84 | ||||||||||||||||||
Diluted | $ | 0.66 | $ | 0.59 | $ | 1.94 | $ | 0.82 | ||||||||||||||||||
Other Operating Data: | ||||||||||||||||||||||||||
Number of revenue-generating professionals by segment (at period end) (5): | ||||||||||||||||||||||||||
Healthcare | 1,619 | 1,443 | 1,619 | 1,443 | ||||||||||||||||||||||
Education | 1,407 | 885 | 1,407 | 885 | ||||||||||||||||||||||
Commercial (1) | 1,217 | 1,131 | 1,217 | 1,131 | ||||||||||||||||||||||
Total | 4,243 | 3,459 | 4,243 | 3,459 |
Segment and Consolidated Operating Results (in thousands, except per share amounts): | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenue by capability: | ||||||||||||||||||||||||||
Consulting and Managed Services (2) | $ | 147,871 | $ | 145,004 | $ | 298,455 | $ | 267,555 | ||||||||||||||||||
Digital | 125,454 | 85,122 | 234,919 | 165,784 | ||||||||||||||||||||||
Total | $ | 273,325 | $ | 230,126 | $ | 533,374 | $ | 433,339 | ||||||||||||||||||
Number of revenue-generating professionals by capability (at period end): | ||||||||||||||||||||||||||
Consulting and Managed Services (3) | 2,018 | 1,736 | 2,018 | 1,736 | ||||||||||||||||||||||
Digital | 2,225 | 1,723 | 2,225 | 1,723 | ||||||||||||||||||||||
Total | 4,243 | 3,459 | 4,243 | 3,459 | ||||||||||||||||||||||
Utilization rate by capability(4): | ||||||||||||||||||||||||||
Consulting | 73.2 | % | 74.6 | % | 72.4 | % | 70.5 | % | ||||||||||||||||||
Digital | 74.3 | % | 73.2 | % | 73.6 | % | 72.3 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues | $ | 273,325 | $ | 230,126 | $ | 533,374 | $ | 433,339 | |||||||||||||||
Net income | $ | 13,875 | $ | 12,797 | $ | 40,727 | $ | 18,202 | |||||||||||||||
Add back: | |||||||||||||||||||||||
Income tax expense | 7,802 | 3,454 | 19,077 | 4,990 | |||||||||||||||||||
Interest expense, net of interest income | 2,446 | 2,029 | 4,642 | 3,748 | |||||||||||||||||||
Depreciation and amortization | 7,097 | 6,555 | 14,219 | 13,106 | |||||||||||||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | 31,220 | 24,835 | 78,665 | 40,046 | |||||||||||||||||||
Add back: | |||||||||||||||||||||||
Restructuring charges | 2,069 | 861 | 3,624 | 1,489 | |||||||||||||||||||
Other losses | 21 | — | 33 | 42 | |||||||||||||||||||
Transaction-related expenses | — | (29) | 50 | 141 | |||||||||||||||||||
Unrealized gain on preferred stock investment | — | — | (26,964) | — | |||||||||||||||||||
Foreign currency transaction losses (gains), net | (100) | (48) | (81) | 355 | |||||||||||||||||||
Adjusted EBITDA | $ | 33,210 | $ | 25,619 | $ | 55,327 | $ | 42,073 | |||||||||||||||
Adjusted EBITDA as a percentage of revenues | 12.2 | % | 11.1 | % | 10.4 | % | 9.7 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 13,875 | $ | 12,797 | $ | 40,727 | $ | 18,202 | |||||||||||||||
Weighted average shares - diluted | 20,967 | 21,871 | 21,047 | 22,105 | |||||||||||||||||||
Diluted earnings per share | $ | 0.66 | $ | 0.59 | $ | 1.94 | $ | 0.82 | |||||||||||||||
Add back: | |||||||||||||||||||||||
Amortization of intangible assets | 2,818 | 2,289 | 5,678 | 4,688 | |||||||||||||||||||
Restructuring charges | 2,069 | 861 | 3,624 | 1,489 | |||||||||||||||||||
Other losses | 21 | — | 33 | 42 | |||||||||||||||||||
Transaction-related expenses | — | (29) | 50 | 141 | |||||||||||||||||||
Unrealized gain on preferred stock investment | — | — | (26,964) | — | |||||||||||||||||||
Tax effect of adjustments | (1,301) | (827) | 4,658 | (1,685) | |||||||||||||||||||
Total adjustments, net of tax | 3,607 | 2,294 | (12,921) | 4,675 | |||||||||||||||||||
Adjusted net income | $ | 17,482 | $ | 15,091 | $ | 27,806 | $ | 22,877 | |||||||||||||||
Adjusted weighted average shares - diluted | 20,967 | 21,871 | 21,047 | 22,105 | |||||||||||||||||||
Adjusted diluted earnings per share | $ | 0.83 | $ | 0.69 | $ | 1.32 | $ | 1.03 |
Revenues (in thousands) | Three Months Ended June 30, | Percent Increase (Decrease) | ||||||||||||||||||
2022 | 2021 | |||||||||||||||||||
Segment: | ||||||||||||||||||||
Healthcare | $ | 128,474 | $ | 114,750 | 12.0 | % | ||||||||||||||
Education | 88,225 | 60,475 | 45.9 | % | ||||||||||||||||
Commercial | 56,626 | 54,901 | 3.1 | % | ||||||||||||||||
Total revenues | $ | 273,325 | $ | 230,126 | 18.8 | % | ||||||||||||||
Capability: | ||||||||||||||||||||
Consulting and Managed Services | $ | 147,871 | $ | 145,004 | 2.0 | % | ||||||||||||||
Digital | 125,454 | 85,122 | 47.4 | % | ||||||||||||||||
Total revenues | $ | 273,325 | $ | 230,126 | 18.8 | % |
Operating Expenses (in thousands, except amounts as a percentage of revenues) | Three Months Ended June 30, | Increase / (Decrease) | ||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||
Direct costs | $ | 189,233 | 69.2% | $ | 161,526 | 70.2% | $ | 27,707 | ||||||||||||||||||||||||
Reimbursable expenses | 7,576 | 2.8% | 3,316 | 1.4% | 4,260 | |||||||||||||||||||||||||||
Selling, general and administrative expenses | 46,033 | 16.8% | 45,190 | 19.6% | 843 | |||||||||||||||||||||||||||
Restructuring charges | 2,069 | 0.8% | 861 | 0.4% | 1,208 | |||||||||||||||||||||||||||
Depreciation and amortization | 6,902 | 2.5% | 6,356 | 2.8% | 546 | |||||||||||||||||||||||||||
Total operating expenses | $ | 251,813 | 92.1% | $ | 217,249 | 94.4% | $ | 34,564 |
Segment Operating Income (in thousands, except operating margin percentages) | Three Months Ended June 30, | Increase / (Decrease) | ||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||
Healthcare | $ | 30,364 | 23.6% | $ | 30,527 | 26.6% | $ | (163) | ||||||||||||||||||||||||
Education | 21,691 | 24.6% | 14,142 | 23.4% | 7,549 | |||||||||||||||||||||||||||
Commercial | 11,915 | 21.0% | 11,040 | 20.1% | 875 | |||||||||||||||||||||||||||
Total segment operating income | $ | 63,970 | $ | 55,709 | $ | 8,261 |
Revenues (in thousands) | Six Months Ended June 30, | Percent Increase (Decrease) | ||||||||||||||||||
2022 | 2021 | |||||||||||||||||||
Segment: | ||||||||||||||||||||
Healthcare | $ | 250,350 | $ | 210,725 | 18.8 | % | ||||||||||||||
Education | 168,887 | 111,817 | 51.0 | % | ||||||||||||||||
Commercial | 114,137 | 110,797 | 3.0 | % | ||||||||||||||||
Total revenues | $ | 533,374 | $ | 433,339 | 23.1 | % | ||||||||||||||
Capability: | ||||||||||||||||||||
Consulting and Managed Services | $ | 298,455 | $ | 267,555 | 11.5 | % | ||||||||||||||
Digital | 234,919 | 165,784 | 41.7 | % | ||||||||||||||||
Total revenues | $ | 533,374 | $ | 433,339 | 23.1 | % |
Operating Expenses (in thousands, except amounts as a percentage of revenues) | Six Months Ended June 30, | Increase / (Decrease) | ||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||
Direct costs | $ | 376,480 | 70.6% | $ | 309,641 | 71.5% | $ | 66,839 | ||||||||||||||||||||||||
Reimbursable expenses | 12,332 | 2.3% | 5,319 | 1.2% | 7,013 | |||||||||||||||||||||||||||
Selling, general and administrative expenses | 94,428 | 17.7% | 84,998 | 19.6% | 9,430 | |||||||||||||||||||||||||||
Restructuring charges | 3,624 | 0.7% | 1,489 | 0.3% | 2,135 | |||||||||||||||||||||||||||
Depreciation and amortization | 13,766 | 2.6% | 12,709 | 2.9% | 1,057 | |||||||||||||||||||||||||||
Total operating expenses | $ | 500,630 | 93.9% | $ | 414,156 | 95.5% | $ | 86,474 |
Segment Operating Income (in thousands, except operating margin percentages) | Six Months Ended June 30, | Increase / (Decrease) | ||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||
Healthcare | $ | 58,396 | 23.3% | $ | 54,354 | 25.8% | $ | 4,042 | ||||||||||||||||||||||||
Education | 35,997 | 21.3% | 22,679 | 20.3% | 13,318 | |||||||||||||||||||||||||||
Commercial | 24,129 | 21.1% | 20,890 | 18.9% | 3,239 | |||||||||||||||||||||||||||
Total segment operating income | $ | 118,522 | $ | 97,923 | $ | 20,599 |
Six Months Ended June 30, | ||||||||||||||
Cash Flows (in thousands): | 2022 | 2021 | ||||||||||||
Net cash used in operating activities | $ | (50,236) | $ | (61,970) | ||||||||||
Net cash used in investing activities | (7,608) | (13,752) | ||||||||||||
Net cash provided by financing activities | 49,076 | 21,258 | ||||||||||||
Effect of exchange rate changes on cash | (55) | 269 | ||||||||||||
Net decrease in cash and cash equivalents | $ | (8,823) | $ | (54,195) |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
ITEM 4. | CONTROLS AND PROCEDURES. |
ITEM 1. | LEGAL PROCEEDINGS. |
ITEM 1A. | RISK FACTORS. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Dollar Value of Shares that may yet be Purchased under the Plans or Programs (2) | ||||||||||||||||||||||
April 1, 2022 - April 30, 2022 | 57,216 | $ | 47.34 | 54,889 | $ | 103,667,584 | ||||||||||||||||||||
May 1, 2022 - May 31, 2022 | 239,650 | $ | 56.94 | 239,650 | $ | 90,015,176 | ||||||||||||||||||||
June 1, 2022 - June 30, 2022 | 203,265 | $ | 59.55 | 203,008 | $ | 77,919,714 | ||||||||||||||||||||
Total | 500,131 | $ | 56.90 | 497,547 |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
ITEM 4. | MINE SAFETY DISCLOSURES. |
ITEM 5. | OTHER INFORMATION. |
ITEM 6. | EXHIBITS. |
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Filed herewith | Furnished herewith | Form | Period Ending | Exhibit | Filing Date | |||||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||||||||||||||
32.2 | X | |||||||||||||||||||||||||||||||||||||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X | ||||||||||||||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | X |
Huron Consulting Group Inc. | ||||||||||||||
(Registrant) | ||||||||||||||
Date: | July 28, 2022 | /S/ JOHN D. KELLY | ||||||||||||
John D. Kelly | ||||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer |
Date: | July 28, 2022 | By: | /s/ JAMES H. ROTH | |||||||||||||||||
James H. Roth | ||||||||||||||||||||
Chief Executive Officer |
Date: | July 28, 2022 | By: | /s/ JOHN D. KELLY | |||||||||||||||||
John D. Kelly | ||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer |
Date: | July 28, 2022 | By: | /S/ JAMES H. ROTH | |||||||||||||||||
James H. Roth | ||||||||||||||||||||
Chief Executive Officer |
Date: | July 28, 2022 | By: | /s/ JOHN D. KELLY | |||||||||||||||||
John D. Kelly | ||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss | $ 8,115 | $ 8,827 |
Unbilled services, allowance for credit losses | $ 3,493 | $ 2,637 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (shares) | 23,492,632 | 24,364,814 |
Treasury stock, shares (shares) | 2,681,730 | 2,495,172 |
Consolidated Statements of Operations and Other Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Revenues and reimbursable expenses: | ||||
Revenues | $ 273,325 | $ 230,126 | $ 533,374 | $ 433,339 |
Reimbursable expenses | 7,492 | 3,252 | 12,218 | 5,186 |
Total revenues and reimbursable expenses | 280,817 | 233,378 | 545,592 | 438,525 |
Operating expenses: | ||||
Direct costs (exclusive of depreciation and amortization included below) | 189,233 | 161,526 | 376,480 | 309,641 |
Reimbursable expenses | 7,576 | 3,316 | 12,332 | 5,319 |
Selling, general and administrative expenses | 46,033 | 45,190 | 94,428 | 84,998 |
Restructuring charges | 2,069 | 861 | 3,624 | 1,489 |
Depreciation and amortization | 6,902 | 6,356 | 13,766 | 12,709 |
Total operating expenses | 251,813 | 217,249 | 500,630 | 414,156 |
Operating income | 29,004 | 16,129 | 44,962 | 24,369 |
Other income (expense), net: | ||||
Interest expense, net of interest income | (2,446) | (2,029) | (4,642) | (3,748) |
Other income (expense), net | (4,881) | 2,151 | 19,484 | 2,571 |
Total other income (expense), net | (7,327) | 122 | 14,842 | (1,177) |
Income before taxes | 21,677 | 16,251 | 59,804 | 23,192 |
Income tax expense | 7,802 | 3,454 | 19,077 | 4,990 |
Net income | $ 13,875 | $ 12,797 | $ 40,727 | $ 18,202 |
Earnings per share: | ||||
Net income per basic share (in dollars per share) | $ 0.67 | $ 0.59 | $ 1.97 | $ 0.84 |
Net income (USD per share) | $ 0.66 | $ 0.59 | $ 1.94 | $ 0.82 |
Weighted average shares used in calculating earnings per share: | ||||
Basic (shares) | 20,582 | 21,555 | 20,715 | 21,743 |
Diluted (shares) | 20,967 | 21,871 | 21,047 | 22,105 |
Comprehensive income (loss): | ||||
Net income (loss) | $ 13,875 | $ 12,797 | $ 40,727 | $ 18,202 |
Foreign currency translation adjustments, net of tax | (656) | 82 | (699) | 482 |
Unrealized gain (loss) on investment, net of tax | 773 | 1,422 | (1,888) | (3,226) |
Unrealized gain on cash flow hedging instruments, net of tax | 971 | 218 | 5,296 | 1,647 |
Other comprehensive income (loss) | 1,088 | 1,722 | 2,709 | (1,097) |
Comprehensive income | $ 14,963 | $ 14,519 | $ 43,436 | $ 17,105 |
Description of Business |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Huron is a global professional services firm that creates innovative strategies, optimizes operations and accelerates digital transformation using an enterprise portfolio of technology, data and analytics solutions to empower clients to own their future. By collaborating with clients, embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. We provide our services and manage our business under three operating segments: Healthcare, Education and Commercial. See Note 14 “Segment Information” for a discussion of our three segments. Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth. To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following three industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. These changes create greater transparency for investors by improving visibility into the core drivers of our business.
|
Basis of Presentation and Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies The accompanying unaudited consolidated financial statements reflect the financial position, results of operations, and cash flows as of and for the three and six months ended June 30, 2022 and 2021. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. These financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the period ended March 31, 2022. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period. In order to better align with industry standards, in the first quarter of 2022, we revised the presentation of our consolidated statement of operations and other comprehensive income (loss) to present depreciation and amortization expense inclusive of amortization of intangible assets and software development costs previously presented within total direct costs and reimbursable expenses. We also aggregated immaterial line items within selling, general and administrative expenses. The change in presentation has no effect on our consolidated results, and our historical consolidated statements of operations and other comprehensive income (loss) were revised for consistent presentation. Preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and related disclosures. The business and economic uncertainty resulting from the coronavirus (COVID-19) pandemic has made such estimates and assumptions more difficult to predict. Accordingly, actual results and outcomes could differ from those estimates.
|
New Accounting Pronouncements |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, Reference Rate Reform (Topic 848): Scope. Together, these ASUs provide optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting under GAAP. This standard is optional and may be applied by entities after March 12, 2020, but no later than December 31, 2022. Our senior secured credit facility and related interest rate swaps are indexed to LIBOR; as such, we are currently evaluating the potential impact this guidance will have on our consolidated financial statements.
|
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets The table below sets forth the changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2022.
(1)The goodwill balance as of December 31, 2021 shown within the Commercial segment related to our Business Advisory segment prior to the modification of our operating model. Effective January 1, 2022, we reallocated a portion of the goodwill within our Business Advisory segment to our Healthcare and Education segments. The remaining goodwill was allocated to our new Commercial segment. (2)On January 18, 2022, we completed the acquisition of AIMDATA, LLC ("AIMDATA"), an advisory and implementation consulting services firm focused on strategy, technology and business transformation. The results of operations of AIMDATA are included within our consolidated financial statements as of the acquisition date and allocated among our three operating industries, which are our reportable segments, based on the engagements delivered by the business. The acquisition of AIMDATA is not significant to our consolidated financial statements. (3)In the first quarter of 2022, we finalized the measurement of assets acquired, including goodwill, and liabilities assumed in the acquisition of Whiteboard Communications Ltd. ("Whiteboard"), a student enrollment advisory firm that helps colleges and universities with recruitment initiatives and financial aid strategies that we acquired in December 2021. The results of operations of Whiteboard are included in our consolidated financial statements and results of operations of our Education segment from the date of acquisition. First Quarter 2022 Goodwill Reallocation Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following three industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment. The three reportable segments of Healthcare, Education and Commercial are also our reporting units for goodwill impairment testing purposes. As a result of the reorganization, we reallocated the goodwill balances of our historical reporting units to our new reporting units based on the relative estimated fair values of each component of the historical reporting units to be allocated to the new reporting units. Additionally, we performed a goodwill impairment test on the goodwill balances of each of our reporting units as of January 1, 2022 by comparing the fair value of the reporting unit to its carrying value, including the reallocated goodwill. Based on the results of the goodwill impairment test, we determined the fair values of the Healthcare, Education, and Commercial reporting units exceeded their carrying values by 37%, 199%, and 105%, respectively. As such, we concluded that there was no indication of goodwill impairment for all three reporting units as of January 1, 2022. We relied on the income approach to estimate the fair value of the reporting units for both the goodwill reallocation and the goodwill impairment test. The income approach utilized a discounted cash flow analysis, which involved estimating the expected after-tax cash flows that will be generated by each business and then discounting those cash flows to present value, reflecting the relevant risks associated with each reporting unit and the time value of money. This approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted EBITDA margins, and discount rates that reflect the risk inherent in the future cash flows. In estimating future cash flows, we relied on internally generated ten-year forecasts. Our forecasts are based on historical experience, current backlog, expected market demand, and other industry information. Intangible Assets Intangible assets as of June 30, 2022 and December 31, 2021 consisted of the following:
Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Customer relationships and customer contracts, as well as certain trade names and technology and software, are amortized on an accelerated basis to correspond to the cash flows expected to be derived from the assets. All other intangible assets with finite lives are amortized on a straight-line basis. Intangible asset amortization expense was $2.8 million and $2.3 million for the three months ended June 30, 2022 and 2021, respectively; and $5.7 million and $4.7 million for the six months ended June 30, 2022 and 2021. The table below sets forth the estimated annual amortization expense for the intangible assets recorded as of June 30, 2022.
Actual future amortization expense could differ from these estimated amounts as a result of future acquisitions, dispositions, and other factors.
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Revenues |
3 Months Ended |
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Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues For the three months ended June 30, 2022 and 2021, we recognized revenues of $273.3 million and $230.1 million, respectively. Of the $273.3 million recognized in the second quarter of 2022, we recognized revenues of $5.1 million from obligations satisfied, or partially satisfied, in prior periods, of which $3.7 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements, and $1.4 million was primarily due to the release of allowances on receivables from clients and unbilled services. Of the $230.1 million recognized in the second quarter of 2021, we recognized revenues of $15.7 million from obligations satisfied, or partially satisfied, in prior periods, of which $13.5 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements, and $2.2 million was primarily due to the release of allowances on receivables from clients and unbilled services. For the six months ended June 30, 2022 and 2021, we recognized revenues of $533.4 million and $433.3 million, respectively. Of the $533.4 million recognized in the first six months of 2022, we recognized revenues of $3.4 million from obligations satisfied, or partially satisfied, in prior periods, of which $2.1 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements, and $1.3 million was primarily due to the release of allowances on receivables from clients and unbilled services. Of the $433.3 million recognized in the first six months of 2021, we recognized revenues of $20.8 million from obligations satisfied, or partially satisfied, in prior periods, of which $13.9 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements, and $6.9 million was primarily due to the release of allowances on receivables from clients and unbilled services. As of June 30, 2022, we had $124.5 million of remaining performance obligations under engagements with original expected durations greater than one year. These remaining performance obligations exclude variable consideration which has been excluded from the total transaction price due to the constraint and performance obligations under time-and-expense engagements which are recognized in the amount invoiced. Of the $124.5 million of performance obligations, we expect to recognize approximately $39.7 million as revenue in 2022, $45.1 million in 2023, and the remaining $39.7 million thereafter. Actual revenue recognition could differ from these amounts as a result of changes in the estimated timing of work to be performed, adjustments to estimated variable consideration in performance-based arrangements, or other factors. Contract Assets and Liabilities The payment terms and conditions in our customer contracts vary. Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services or deferred revenues in the consolidated balance sheets. Unbilled services include revenues recognized for services performed but not yet billed to clients. Services performed that we are not yet entitled to bill because certain events, such as the completion of the measurement period or client approval in performance-based engagements, must occur are recorded as contract assets and included within unbilled services, net. The contract asset balance as of June 30, 2022 and December 31, 2021 was $26.8 million and $23.7 million, respectively. The $3.1 million increase primarily reflects timing differences between the completion of our performance obligations and the amounts billed or billable to clients in accordance with their contractual billing terms. Client prepayments and retainers are classified as deferred revenues and recognized over future periods in accordance with the applicable engagement agreement and our revenue recognition policy. Our deferred revenues balance as of June 30, 2022 and December 31, 2021, was $19.0 million and $19.2 million, respectively. The $0.2 million decrease primarily reflects timing differences between client payments in accordance with their contract terms and the completion of our performance obligations. For the three and six months ended June 30, 2022, $3.4 million and $16.5 million of revenues recognized were included in the deferred revenues balance as of December 31, 2021.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period, excluding unvested restricted common stock. Diluted earnings per share reflects the potential reduction in earnings per share that could occur if securities or other contracts to issue common stock were exercised or converted into common stock under the treasury stock method. Such securities or other contracts include unvested restricted stock awards, unvested restricted stock units, and outstanding common stock options, to the extent dilutive. In periods for which we report a net loss, diluted weighted average common shares outstanding excludes all potential common stock equivalents as their impact on diluted net loss per share would be anti-dilutive. Earnings per share under the basic and diluted computations are as follows:
The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above for the three and six months ended June 30, 2022 and 2021 were less than 0.1 million shares, and related to unvested restricted stock and outstanding common stock options. In November 2020, our board of directors authorized a share repurchase program permitting us to repurchase up to $50 million of our common stock through December 31, 2021. During the third quarter of 2021, our board of directors authorized an extension of the share repurchase program through December 31, 2022 and increased the authorized amount to $100 million. During the first quarter of 2022, our board of directors authorized a further extension through December 31, 2023 and increased the authorized amount to $200 million. The amount and timing of repurchases under the share repurchase program were and will continue to be determined by management and depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements. All shares repurchased and retired are reflected as a reduction to our basic weighted average shares outstanding based on the trade date of the share repurchase. In the three and six months ended June 30, 2022, we repurchased and retired 497,547 and 1,020,946 shares for $28.3 million and $52.2 million, respectively. Additionally, in the first quarter of 2022, we settled the repurchase of 3,820 shares for $0.2 million that were accrued as of December 31, 2021. In the three and six months ended June 30, 2021, we repurchased and retired 405,363 and 651,081 shares for $22.1 million and $35.2 million, respectively. As of June 30, 2022, $77.9 million remained available for share repurchases under our share repurchase program.
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Financing Arrangements |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Arrangements | Financing Arrangements A summary of the carrying amounts of our debt follows:
Senior Secured Credit Facility The Company has a $600 million senior secured revolving credit facility, subject to the terms of a Second Amended and Restated Credit Agreement dated as of March 31, 2015, as amended to date (as amended and modified the "Amended Credit Agreement"), that becomes due and payable in full upon maturity on September 27, 2024. The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount of up to $150 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $750 million. The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding under a prior credit agreement, and future borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, acquisitions of businesses, share repurchases, and general corporate purposes. Fees and interest on borrowings vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). At our option, borrowings under the Amended Credit Agreement will bear interest at one, two, three or six-month LIBOR or an alternate base rate, in each case plus the applicable margin. The applicable margin will fluctuate between 1.125% per annum and 1.875% per annum, in the case of LIBOR borrowings, or between 0.125% per annum and 0.875% per annum, in the case of base rate loans, based upon our Consolidated Leverage Ratio at such time. Amounts borrowed under the Amended Credit Agreement may be prepaid at any time without premium or penalty. We are required to prepay the amounts outstanding under the Amended Credit Agreement in certain circumstances, including upon an Event of Default (as defined in the Amended Credit Agreement). In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time. The loans and obligations under the Amended Credit Agreement are secured pursuant to a Second Amended and Restated Security Agreement and a Second Amended and Restated Pledge Agreement (the “Pledge Agreement”) with Bank of America, N.A. as collateral agent, pursuant to which the Company and the subsidiary guarantors grant Bank of America, N.A., for the ratable benefit of the lenders under the Amended Credit Agreement, a first-priority lien, subject to permitted liens, on substantially all of the personal property assets of the Company and the subsidiary guarantors, and a pledge of 100% of the stock or other equity interests in all domestic subsidiaries and 65% of the stock or other equity interests in each “material first-tier foreign subsidiary” (as defined in the Pledge Agreement). The Amended Credit Agreement contains usual and customary representations and warranties; affirmative and negative covenants, which include limitations on liens, investments, additional indebtedness, and restricted payments; and two quarterly financial covenants as follows: (i) a maximum Consolidated Leverage Ratio (defined as the ratio of debt to consolidated EBITDA) of 3.75 to 1.00; however the maximum permitted Consolidated Leverage Ratio will increase to 4.00 to 1.00 upon the occurrence of certain transactions, and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.50 to 1.00. Consolidated EBITDA for purposes of the financial covenants is calculated on a continuing operations basis and includes adjustments to add back non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, pro forma historical EBITDA for businesses acquired, and other specified items in accordance with the Amended Credit Agreement. For purposes of the Consolidated Leverage Ratio, total debt is on a gross basis and is not netted against our cash balances. At June 30, 2022, we were in compliance with these financial covenants with a Consolidated Leverage Ratio of 2.20 to 1.00 and a Consolidated Interest Coverage Ratio of 19.03 to 1.00. Borrowings outstanding under the Amended Credit Agreement at June 30, 2022 totaled $342.0 million. These borrowings carried a weighted average interest rate of 2.6%, including the effect of the interest rate swaps described in Note 9 “Derivative Instruments and Hedging Activity.” Borrowings outstanding under the Amended Credit Agreement at December 31, 2021 were $230.0 million and carried a weighted average interest rate of 2.7%, including the effect of the interest rate swaps. The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving credit facility and outstanding letters of credit. At June 30, 2022, we had outstanding letters of credit totaling $0.7 million, which are used as security deposits for our office facilities. As of June 30, 2022, the unused borrowing capacity under the revolving credit facility was $257.3 million. Promissory Note due 2024 On June 30, 2017, in conjunction with our purchase of an aircraft related to the acquisition of Innosight, we assumed from the sellers of the aircraft a promissory note with an outstanding principal balance of $5.1 million. In the first quarter of 2022, we completed the sale of the aircraft to a third-party and used a portion of the sale proceeds to pay the remaining principal and unpaid interest on the promissory note. Prior to the repayment of the promissory note, the principal balance of the promissory note was subject to scheduled monthly principal payments until the maturity date of March 1, 2024. Under the terms of the promissory note, we paid interest on the outstanding principal amount at a rate of one month LIBOR plus 1.97% per annum. At December 31, 2021, the outstanding principal amount of the promissory note was $2.8 million, and the aircraft had a carrying amount of $3.7 million. As a result of the sale, we recognized a gain of $1.0 million in the first quarter of 2022 and we no longer own any aircraft.
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Restructuring Charges |
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Restructuring Charges | Restructuring Charges Restructuring charges for the three and six months ended June 30, 2022 were $2.1 million and $3.6 million. The $2.1 million of restructuring charges recognized in the second quarter of 2022 included $1.1 million of employee-related expenses, $0.4 million of rent and related expenses, net of sublease income, for previously vacated office spaces, $0.5 million for third-party transaction expenses related to the modification of our operating model, and $0.1 million related to the divestiture of our Life Sciences business in the fourth quarter of 2021. The $3.6 million of restructuring charges incurred in the first six months of 2022 included $1.6 million of employee-related expenses, $1.0 million of rent and related expenses, net of sublease income, for previously vacated office spaces, $0.6 million for third-party transaction expenses related to the modification of our operating model, $0.3 million of accelerated amortization of capitalized software implementation costs for a cloud-computing arrangement that is no longer in use, and $0.1 million related to the divestiture of our Life Sciences business in the fourth quarter of 2021. Restructuring charges for the three and six months ended June 30, 2021 were $0.9 million and $1.5 million, respectively, and primarily related to rent and related expenses, net of sublease income, and accelerated depreciation on furniture and fixtures for vacated office spaces. The table below sets forth the changes in the carrying amount of our restructuring charge liability by restructuring type for the six months ended June 30, 2022.
All of the $1.2 million restructuring charge liability related to employee costs at June 30, 2022 is expected to be paid in the next 12 months and is included as a component of accrued payroll and related benefits in our consolidated balance sheet. All of the $0.3 million other restructuring charge liability at June 30, 2022 is expected to be paid over the next 12 months and is included as a component of accrued expenses and other current liabilities in our consolidated balance sheet.
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Derivative Instruments and Hedging Activity |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activity | Derivative Instruments and Hedging Activity On June 22, 2017, we entered into a forward interest rate swap agreement effective August 31, 2017 and ending August 31, 2022, with a notional amount of $50.0 million. We entered into this derivative instrument to hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 1.900%. On January 30, 2020, we entered into a forward interest rate swap agreement effective December 31, 2019 and ending December 31, 2024, with a notional amount of $50.0 million. We entered into this derivative instrument to further hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 1.500%. On March 16, 2020, we entered into a forward interest rate swap agreement effective February 28, 2020 and ending February 28, 2025, with a notional amount of $100.0 million. We entered into this derivative instrument to further hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month LIBOR and we pay to the counterparty a fixed rate of 0.885%. We recognize all derivative instruments as either assets or liabilities at fair value in the consolidated balance sheet. We have designated these derivative instruments as cash flow hedges. Therefore, changes in the fair value of the derivative instruments are recorded to other comprehensive income (“OCI”) to the extent effective and reclassified into interest expense, net of interest income upon settlement. As of June 30, 2022, it was anticipated that $2.2 million of the gains, net of tax, currently recorded in accumulated other comprehensive income will be reclassified into earnings within the next 12 months. The table below sets forth additional information relating to the interest rate swaps designated as a cash flow hedging instrument as of June 30, 2022 and December 31, 2021.
All of our derivative instruments are transacted under the International Swaps and Derivatives Association (ISDA) master agreements. These agreements permit the net settlement of amounts owed in the event of default and certain other termination events. Although netting is permitted, it is our policy to record all derivative assets and liabilities on a gross basis in our consolidated balance sheet. We do not use derivative instruments for trading or other speculative purposes. Refer to Note 11 “Other Comprehensive Income (Loss)” for additional information on our derivative instruments.
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial InstrumentsCertain of our assets and liabilities are measured at fair value. Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a fair value hierarchy for inputs used in measuring fair value and requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy consists of three levels based on the objectivity of the inputs as follows:
The table below sets forth our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021.
Interest rate swaps: The fair values of our interest rate swaps were derived using estimates to settle the interest rate swap agreements, which are based on the net present value of expected future cash flows on each leg of the swaps utilizing market-based inputs and a discount rate reflecting the risks involved. Refer to Note 9 “Derivative Instruments and Hedging Activity” for additional information on our interest rate swaps. Convertible debt investment: Since 2014, we have invested $40.9 million in the form of 1.69% convertible debt in Shorelight Holdings, LLC (“Shorelight”), the parent company of Shorelight, a U.S.-based company that partners with leading nonprofit universities to increase access to and retention of international students, boost institutional growth, and enhance an institution’s global footprint. The convertible notes will mature on January 17, 2024, unless converted earlier. To determine the appropriate accounting treatment for our investment, we performed a variable interest entity (“VIE”) analysis and concluded that Shorelight does not meet the definition of a VIE. We also reviewed the characteristics of our investment to confirm that the convertible notes are not in-substance common stock that would warrant equity method accounting. After we reviewed all of the terms of the investment, we concluded the appropriate accounting treatment to be that of an available-for-sale debt security. The investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income. We estimate the fair value of our investment using a scenario-based approach in the form of a hybrid analysis that consists of a Monte Carlo simulation model and an expected return analysis. The conclusion of value for our investment is based on the probability-weighted assessment of both scenarios. The hybrid analysis utilizes certain assumptions including the assumed holding period through the maturity date of January 17, 2024; the applicable waterfall distribution at the end of the expected holding period based on the rights and privileges of the various instruments; cash flow projections discounted at the risk-adjusted rate of 23.0% and 22.5% as of June 30, 2022 and December 31, 2021, respectively; and the concluded equity volatility of 37.5% and 45.0% as of June 30, 2022 and December 31, 2021, respectively, all of which are Level 3 inputs. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of the investment, which would result in different impacts to our consolidated balance sheet and comprehensive income. Actual results may differ from our estimates. The fair value of the convertible debt investment is recorded in long-term investments in our consolidated balance sheets. The table below sets forth the changes in the balance of the convertible debt investment for the six months ended June 30, 2022.
Deferred compensation assets: We have a non-qualified deferred compensation plan (the “Plan”) for the members of our board of directors and a select group of our employees. The deferred compensation liability is funded by the Plan assets, which consist of life insurance policies maintained within a trust. The cash surrender value of the life insurance policies approximates fair value and is based on third-party broker statements which provide the fair value of the life insurance policies' underlying investments, which are Level 2 inputs. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The Plan assets are included in other non-current assets in our consolidated balance sheets. Realized and unrealized gains (losses) from the deferred compensation assets are recorded to other income (expense), net in our consolidated statements of operations. Contingent consideration for business acquisitions: We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted assessment of the specific financial performance targets being measured or a Monte Carlo simulation model, as appropriate. These fair value measurements are based on significant inputs not observable in the market and thus represent Level 3 inputs. The significant unobservable inputs used in the fair value measurements of our contingent consideration are our measures of the estimated payouts based on internally generated financial projections on a probability-weighted basis and a discount rate which was 3.5% as of June 30, 2022. As of December 31, 2021, the discount rate used in the fair value measurements of our contingent consideration was in a range of 2.4% to 5.1% with a weighted average of 3.7%. The weighted average discount rate was calculated using the relative fair values of the contingent consideration liabilities as of December 31, 2021. The fair value of the contingent consideration is reassessed quarterly based on assumptions used in our latest projections and input provided by practice leaders and management. Any change in the fair value estimate is recorded in our consolidated statement of operations for that period. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of our contingent consideration liability, which would result in different impacts to our consolidated balance sheets and consolidated statements of operations. Actual results may differ from our estimates. The table below sets forth the changes in the balance of the contingent consideration for business acquisitions for the six months ended June 30, 2022.
Financial assets and liabilities not recorded at fair value on a recurring basis are as follows: Medically Home Preferred Stock Investment In the fourth quarter of 2019, we invested $5.0 million in Medically Home Group, Inc. (“Medically Home”), a hospital-at-home company. The investment was made in the form of preferred stock. To determine the appropriate accounting treatment for our preferred stock investment, we performed a VIE analysis and concluded that Medically Home does not meet the definition of a VIE. We also reviewed the characteristics of our investment to confirm that the preferred stock is not in-substance common stock that would warrant equity method accounting. After we reviewed all of the terms of the investment, we concluded the appropriate accounting treatment for our investment in Medically Home to be that of an equity security with no readily determinable fair value. We elected to apply the measurement alternative at the time of the purchase and will continue to do so until the investment does not qualify to be so measured. Under the measurement alternative, the investment is carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment in Medically Home. On a quarterly basis, we review the information available to determine whether an orderly and observable transaction for the same or similar equity instrument occurred, and remeasure to the fair value of the preferred stock using such identified transactions, with changes in the fair value recorded in our consolidated statement of operations. As of December 31, 2021, the carrying amount of our preferred stock investment was $6.7 million. During the first quarter of 2022, we recognized an unrealized gain of $27.0 million to increase the carrying amount of our preferred stock investment to $33.6 million, based on an observable price change of preferred stock issued by Medically Home with similar rights and preferences to our preferred stock investment. This observable price change is a Level 2 input. The $27.0 million unrealized gain was recorded to other income (expense), net in our consolidated statement of operations. There were no observable price changes in the second quarter of 2022. Since our initial investment, we have recognized cumulative unrealized gains of $28.6 million, and we have not identified any impairments of our investment. Senior Secured Credit Facility The carrying value of our borrowings outstanding under our senior secured credit facility is stated at cost. Our carrying value approximates fair value, using Level 2 inputs, as the senior secured credit facility bears interest at variable rates based on current market rates as set forth in the Amended Credit Agreement. Refer to Note 7 “Financing Arrangements” for additional information on our senior secured credit facility. Promissory Note due 2024 In the first quarter of 2022, we completed the sale of our aircraft to a third-party and used a portion of the sale proceeds to pay the remaining principal and unpaid interest on our promissory note due 2024. The carrying value of our promissory note due 2024 was stated at cost. The carrying value approximated fair value, using Level 2 inputs, as the promissory note bore interest at rates based on then-current market rates as set forth in the terms of the promissory note. Refer to Note 7 “Financing Arrangements” for additional information on our promissory note due 2024. Cash and Cash Equivalents and Other Financial Instruments Cash and cash equivalents are stated at cost, which approximates fair market value. The carrying values of all other financial instruments not described above reasonably approximate fair market value due to the nature of the financial instruments and the short-term maturity of these items.
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Other Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The table below sets forth the components of other comprehensive income (loss), net of tax, for the three and six months ended June 30, 2022 and 2021.
The before tax amounts reclassified from accumulated other comprehensive income related to our cash flow hedges are recorded to interest expense, net of interest income. Accumulated other comprehensive income, net of tax, includes the following components:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the three months ended June 30, 2022, our effective tax rate was 36.0% as we recognized income tax expense of $7.8 million on income of $21.7 million. The effective tax rate of 36.0% was less favorable than the statutory rate, inclusive of state income taxes, of 26.4%, primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items. For the three months ended June 30, 2021, our effective tax rate was 21.3% as we recognized income tax expense of $3.5 million on income of $16.3 million. The effective tax rate of 21.3% was more favorable than the statutory rate, inclusive of state income taxes, of 26.6%, primarily due to a discrete tax benefit related to electing the Global Intangible Low-Taxed Income (“GILTI”) high-tax exclusion retroactively for the 2018 tax year. On July 20, 2020, the U.S. Treasury issued and enacted final regulations related to GILTI that allow certain U.S. taxpayers to elect to exclude foreign income that is subject to a high effective tax rate from their GILTI inclusions. The GILTI high-tax exclusion is an annual election and is retroactively available. This favorable item was partially offset by certain nondeductible expense items. For the six months ended June 30, 2022, our effective tax rate was 31.9% as we recognized income tax expense of $19.1 million on income of $59.8 million. The effective tax rate of 31.9% was less favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items. For the six months ended June 30, 2021, our effective tax rate was 21.5% as we recognized income tax expense of $5.0 million on income of $23.2 million. The effective tax rate of 21.5% was more favorable than the statutory rate, inclusive of state income taxes, of 26.6% primarily due to the discrete tax benefit related to electing the GILTI high-tax exclusion retroactively for the 2018 tax year and a discrete tax benefit for share-based compensation awards that vested during the first quarter. These favorable items were partially offset by certain nondeductible expense items. As of June 30, 2022, we had $0.7 million of unrecognized tax benefits which would affect the effective tax rate of continuing operations if recognized. It is reasonably possible that approximately $0.1 million of the liability for unrecognized tax benefits could decrease in the next twelve months due to the expiration of statutes of limitations.
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Commitments, Contingencies and Guarantees |
6 Months Ended |
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Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Guarantees | Commitments, Contingencies and Guarantees Lease Commitments We lease office space, data centers and certain equipment under non-cancelable operating lease arrangements in the normal course of business. In the second quarter of 2022, we entered into a lease agreement for office space in Washington, D.C. that will commence in July 2022 with a term through June 2028. Among other items, this agreement provides a renewal option to extend the term of the lease for an additional 5 year period. Litigation Oaktree On November 9, 2018, Huron Consulting Services LLC, a wholly owned subsidiary of Huron, was engaged by Oaktree Medical Centre LLC, a management services organization (“Oaktree”), to perform interim management and financial advisory services. As part of the services, a Huron employee was appointed by Oaktree’s board of directors to serve as Chief Restructuring Officer of Oaktree (the “CRO”). The engagement letter through which Oaktree retained Huron’s services (the “Engagement Letter”) states that all disputes or claims arising thereunder are subject to binding arbitration, disclaims special, consequential, incidental and exemplary damages and losses and caps liability to the fees paid for the portion of the engagement giving rise to any liability. On September 19, 2019, Oaktree and certain of its affiliates filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of North Carolina, with the cases subsequently transferred to the District of South Carolina. As a result of the bankruptcy filing, a Chapter 7 trustee was appointed to oversee the bankruptcy estates, at which time Huron’s services for Oaktree concluded. In April 2021, Trustee’s counsel communicated in writing to Huron its intent to pursue various claims against Huron and the CRO, among others, on behalf of the bankruptcy estates related to the services carried out by Huron and the CRO during the engagement. On September 17, 2021, the Trustee filed a complaint in the Bankruptcy Court for the District of South Carolina against Huron and the CRO, among others (the “Complaint”), alleging breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, negligence, violations of the South Carolina Unfair Trade Practices Act, fraud, civil conspiracy, unjust enrichment, and recovery of avoided transfers under sections 547, 548 and 550 of the Bankruptcy Code. On December 7, 2021, the Trustee filed an amended version of the Complaint (the “Amended Complaint”), generally alleging the same claims asserted in the initial Complaint but (i) removing the claim for a violation of the South Carolina Unfair Trade Practices Act and (ii) adding a claim for breach of contract. In the Amended Complaint, the Trustee asserted that Huron and the CRO, among others, did not develop and implement a Chapter 11 restructuring plan on a timely basis and that their failure to do so led to significant damages. The Trustee sought an unspecified amount of monetary damages in the Amended Complaint. We believe the Trustee’s allegations with respect to Huron and the CRO are without merit. On December 21, 2021, we filed a motion to dismiss all of the claims in the Amended Complaint. On April 19, 2022, the bankruptcy court entered an order staying all of the Trustee’s claims against Huron and the CRO after (i) finding that the state law claims were subject to arbitration and (ii) exercising its discretion to stay the non-state-law claims pending the arbitration proceeding. The Trustee did not appeal the court’s order prior to the deadline of May 3, 2022. Based on the available information to date, we estimate that the potential comprehensive resolution of this matter will not result in a material loss. From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any litigation or legal proceeding or subject to any claim that, in the current opinion of management, could reasonably be expected to have a material adverse effect on our financial position or results of operations, including the matter discussed above. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results. Guarantees Guarantees in the form of letters of credit totaling $0.7 million were outstanding at both June 30, 2022 and December 31, 2021 to support certain office lease obligations. In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. As of June 30, 2022 and December 31, 2021, the total estimated fair value of our outstanding contingent consideration liability was $3.3 million and $3.7 million, respectively. To the extent permitted by law, our bylaws and articles of incorporation require that we indemnify our officers and directors against judgments, fines and amounts paid in settlement, including attorneys’ fees, incurred in connection with civil or criminal action or proceedings, as it relates to their services to us if such person acted in good faith. Although there is no limit on the amount of indemnification, we may have recourse against our insurance carrier for certain payments made.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker, who is our chief executive officer, manages the business under three operating segments, which are our reportable segments: Healthcare, Education and Commercial. Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth. To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following three industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. These changes create greater transparency for investors by improving visibility into the core drivers of our business. While our consolidated results have not been impacted, our historical segment information has been recast for consistent presentation. •Healthcare Our Healthcare segment serves acute care providers, including national and regional health systems, academic health systems, community health systems, and public, children’s and critical access hospitals, and non-acute care providers, including physician practices and medical groups, payors, and long-term care or post-acute providers. Our Healthcare professionals have a depth of expertise in business operations, including financial and operational improvement, care transformation, and revenue cycle managed services; digital solutions, spanning technology and analytic-related services and a portfolio of software products; organizational transformation; financial advisory and strategy and innovation. Most healthcare organizations are focused on establishing a sustainable long-term strategy and business model centered around optimal cost structures, reimbursement models, financial strategies, and consumer-focused digital transformation; changing the way care is delivered, particularly in light of personnel shortages, and improving access to care; and evolving their digital capabilities to more effectively manage their business. Our solutions help clients adapt to this rapidly changing healthcare environment to become a more agile, efficient and consumer-centric organization. We use our deep industry, functional and technical expertise to help clients solve a diverse set of business issues, including, but not limited to, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, and maximizing return on technology investments. •Education Our Education segment serves public and private colleges and universities, research institutes and other education-related organizations. Our Education professionals have a depth of expertise in strategy and innovation; business operations, including the research enterprise and student and alumni lifecycle; digital solutions, spanning technology and analytic-related services and a portfolio of software products; and organizational transformation. Our Education segment clients are increasingly faced with strategic, financial and/or enrollment challenges, increased competition, and a need to modernize their businesses using technology to advance their missions. We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology and analytics; strengthening research strategies and support services; evolving their organizational strategy; optimizing financial and operational performance; applying innovative enrollment strategies; and enhancing the student lifecycle. •Commercial Our Commercial segment is focused on serving industries and organizations facing significant disruption and regulatory change by helping them adapt to rapidly changing environments and accelerate business transformation. Our Commercial professionals work primarily with six primary buyers: the chief executive officer, the chief financial officer, the chief strategy officer, the chief human resources officer, the chief operating officer, and organizational advisors, including lenders and law firms. We have a deep focus on serving organizations in the financial services, energy and utilities, industrials and manufacturing industries and the public sector while opportunistically serving the commercial industries more broadly, including professional and business services, life sciences, consumer products, and nonprofit. Our Commercial professionals have deep industry, functional and technical expertise that they put forward when delivering our digital services and software products, and strategy and innovation and financial advisory (special situation advisory and corporate finance advisory) services. In today’s disruptive environment, organizations must reimagine their historical strategies and financial and operating models to sustain and advance their competitive advantage. Our experts help organizations across industries with a variety of business challenges, including, but not limited to, embedding technology and analytics throughout their internal and customer-facing operations, developing analytics and insights into the needs of tomorrow’s customers in order to evolve their enterprise and business unit strategies, bringing new products to market, managing through stressed and distressed situations to create a viable path forward for stakeholders and executing mergers and acquisitions, finance offerings and risk mitigation strategies. Segment operating income consists of the revenues generated by a segment, less operating expenses that are incurred directly by the segment. Unallocated costs include corporate costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. These administrative function costs include corporate office support costs, office facility costs, costs related to accounting and finance, human resources, legal, marketing, information technology, and company-wide business development functions, as well as costs related to overall corporate management. Our chief operating decision maker does not evaluate segments using asset information. The table below sets forth information about our operating segments for the three and six months ended June 30, 2022 and 2021, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements.
The following table illustrates the disaggregation of revenues by capability, including a reconciliation of the disaggregated revenues to revenues from our three operating segments for the three and six months ended June 30, 2022 and 2021.
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Basis of Presentation and Significant Accounting Policies (Policies) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements | Not Yet Adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, Reference Rate Reform (Topic 848): Scope. Together, these ASUs provide optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting under GAAP. This standard is optional and may be applied by entities after March 12, 2020, but no later than December 31, 2022. Our senior secured credit facility and related interest rate swaps are indexed to LIBOR; as such, we are currently evaluating the potential impact this guidance will have on our consolidated financial statements.
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Earnings Per Share | Basic earnings per share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period, excluding unvested restricted common stock. Diluted earnings per share reflects the potential reduction in earnings per share that could occur if securities or other contracts to issue common stock were exercised or converted into common stock under the treasury stock method. Such securities or other contracts include unvested restricted stock awards, unvested restricted stock units, and outstanding common stock options, to the extent dilutive. In periods for which we report a net loss, diluted weighted average common shares outstanding excludes all potential common stock equivalents as their impact on diluted net loss per share would be anti-dilutive. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activity | We recognize all derivative instruments as either assets or liabilities at fair value in the consolidated balance sheet. We have designated these derivative instruments as cash flow hedges. Therefore, changes in the fair value of the derivative instruments are recorded to other comprehensive income (“OCI”) to the extent effective and reclassified into interest expense, net of interest income upon settlement. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a fair value hierarchy for inputs used in measuring fair value and requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy consists of three levels based on the objectivity of the inputs as follows:
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Investments | The investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Securities without Readily Determinable Fair Value | We elected to apply the measurement alternative at the time of the purchase and will continue to do so until the investment does not qualify to be so measured. Under the measurement alternative, the investment is carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment in Medically Home. On a quarterly basis, we review the information available to determine whether an orderly and observable transaction for the same or similar equity instrument occurred, and remeasure to the fair value of the preferred stock using such identified transactions, with changes in the fair value recorded in our consolidated statement of operations. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker, who is our chief executive officer, manages the business under three operating segments, which are our reportable segments: Healthcare, Education and Commercial. Effective January 1, 2022, we modified our operating model to expand and more deeply integrate our industry expertise with our digital, strategic and financial advisory capabilities. The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth. To align with the new operating model, effective with reporting for periods beginning January 1, 2022, we began reporting under the following three industries, which are our reportable segments: Healthcare, Education and Commercial. The Commercial segment includes all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment includes all revenue and costs associated with engagements delivered in the respective segments' industries. The new Healthcare and Education segments include some revenue and costs historically reported in the Business Advisory segment and the Healthcare segment includes some revenue and costs historically reported in the Education segment. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. These changes create greater transparency for investors by improving visibility into the core drivers of our business. While our consolidated results have not been impacted, our historical segment information has been recast for consistent presentation.
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Goodwill and Intangible Assets (Tables) |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | The table below sets forth the changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2022.
(1)The goodwill balance as of December 31, 2021 shown within the Commercial segment related to our Business Advisory segment prior to the modification of our operating model. Effective January 1, 2022, we reallocated a portion of the goodwill within our Business Advisory segment to our Healthcare and Education segments. The remaining goodwill was allocated to our new Commercial segment. (2)On January 18, 2022, we completed the acquisition of AIMDATA, LLC ("AIMDATA"), an advisory and implementation consulting services firm focused on strategy, technology and business transformation. The results of operations of AIMDATA are included within our consolidated financial statements as of the acquisition date and allocated among our three operating industries, which are our reportable segments, based on the engagements delivered by the business. The acquisition of AIMDATA is not significant to our consolidated financial statements. (3)In the first quarter of 2022, we finalized the measurement of assets acquired, including goodwill, and liabilities assumed in the acquisition of Whiteboard Communications Ltd. ("Whiteboard"), a student enrollment advisory firm that helps colleges and universities with recruitment initiatives and financial aid strategies that we acquired in December 2021. The results of operations of Whiteboard are included in our consolidated financial statements and results of operations of our Education segment from the date of acquisition.
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Intangible Assets | Intangible assets as of June 30, 2022 and December 31, 2021 consisted of the following:
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Schedule of Future Amortization Expense | The table below sets forth the estimated annual amortization expense for the intangible assets recorded as of June 30, 2022.
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted Earnings Per Share | Earnings per share under the basic and diluted computations are as follows:
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Financing Arrangements (Tables) |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Carrying Amounts of Debt | A summary of the carrying amounts of our debt follows:
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Restructuring Charges (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The table below sets forth the changes in the carrying amount of our restructuring charge liability by restructuring type for the six months ended June 30, 2022.
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Derivative Instruments and Hedging Activity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Interest Rate Swaps Designated as Cash Flow Hedging Instruments | The table below sets forth additional information relating to the interest rate swaps designated as a cash flow hedging instrument as of June 30, 2022 and December 31, 2021.
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Fair Value of Financial Instruments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The table below sets forth our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021.
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Fair Value of Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The table below sets forth the changes in the balance of the convertible debt investment for the six months ended June 30, 2022.
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The table below sets forth the changes in the balance of the contingent consideration for business acquisitions for the six months ended June 30, 2022.
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Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Comprehensive Income (Loss), Net of Tax | The table below sets forth the components of other comprehensive income (loss), net of tax, for the three and six months ended June 30, 2022 and 2021.
The before tax amounts reclassified from accumulated other comprehensive income related to our cash flow hedges are recorded to interest expense, net of interest income.
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Components of Accumulated Other Comprehensive Income (Loss), Net of Tax | Accumulated other comprehensive income, net of tax, includes the following components:
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Segment Information | The table below sets forth information about our operating segments for the three and six months ended June 30, 2022 and 2021, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements.
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Disaggregation of Revenue | The following table illustrates the disaggregation of revenues by capability, including a reconciliation of the disaggregated revenues to revenues from our three operating segments for the three and six months ended June 30, 2022 and 2021.
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Description of Business (Details) |
6 Months Ended |
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Jun. 30, 2022
Segment
operating_industry
| |
Accounting Policies [Abstract] | |
Number of reportable segments | Segment | 3 |
Number of operating industries | operating_industry | 3 |
Goodwill and Intangible Assets - Narrative (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2022
USD ($)
|
Jun. 30, 2021
USD ($)
|
Jun. 30, 2022
USD ($)
operating_industry
Segment
Reporting_Unit
|
Jun. 30, 2021
USD ($)
|
Jan. 01, 2022 |
|
Goodwill [Line Items] | |||||
Number of operating industries | operating_industry | 3 | ||||
Number of reportable segments | Segment | 3 | ||||
Number of reporting units | Reporting_Unit | 3 | ||||
Amortization expense | $ | $ 2.8 | $ 2.3 | $ 5.7 | $ 4.7 | |
Healthcare | |||||
Goodwill [Line Items] | |||||
Percentage of fair value in excess of carrying value (as a percent) | 37.00% | ||||
Education | |||||
Goodwill [Line Items] | |||||
Percentage of fair value in excess of carrying value (as a percent) | 199.00% | ||||
Commercial: | |||||
Goodwill [Line Items] | |||||
Percentage of fair value in excess of carrying value (as a percent) | 105.00% |
Goodwill and Intangible Assets - Amortization Expense (Details) $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
2022 | $ 11,198 |
2023 | 7,904 |
2024 | 4,514 |
2025 | 3,386 |
2026 | $ 2,435 |
Revenues - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenues | $ 273,325 | $ 230,126 | $ 533,374 | $ 433,339 | |
Performance obligation satisfied in previous period | 5,100 | 15,700 | 3,400 | ||
Contract asset after allowance for credit loss | 26,800 | 26,800 | $ 23,700 | ||
Increase (decrease) in contract asset | 3,100 | ||||
Deferred revenues | 18,969 | 18,969 | $ 19,212 | ||
Increase (decrease) in performance obligation | 200 | ||||
Revenue recognized | 3,400 | 16,500 | |||
Release of allowance | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Performance obligation satisfied in previous period | 1,400 | 2,200 | 1,300 | 6,900 | |
Change in estimated variable consideration | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Performance obligation satisfied in previous period | $ 3,700 | $ 13,500 | $ 2,100 | $ 13,900 |
Earnings Per Share - Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 13,875 | $ 12,797 | $ 40,727 | $ 18,202 |
Weighted average common shares outstanding - basic (shares) | 20,582 | 21,555 | 20,715 | 21,743 |
Weighted average common stock equivalents (shares) | 385 | 316 | 332 | 362 |
Weighted average common shares outstanding - diluted (shares) | 20,967 | 21,871 | 21,047 | 22,105 |
Net income (USD per share) | $ 0.67 | $ 0.59 | $ 1.97 | $ 0.84 |
Net income (USD per share) | $ 0.66 | $ 0.59 | $ 1.94 | $ 0.82 |
Earnings Per Share - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 |
Mar. 31, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Nov. 30, 2020 |
|
Accelerated Share Repurchases [Line Items] | ||||||||
Antidilutive securities (shares) | 100,000 | 100,000 | 100,000 | 100,000 | ||||
Stock repurchased and retired | $ 28,346,000 | $ 22,059,000 | $ 52,251,000 | $ 35,243,000 | ||||
2020 Share repurchase program | ||||||||
Accelerated Share Repurchases [Line Items] | ||||||||
Share repurchase authorized amount | $ 50,000,000 | |||||||
Stock repurchased and retired (shares) | 497,547 | 405,363 | 1,020,946 | 651,081 | ||||
Stock repurchased and retired | $ 28,300,000 | $ 22,100,000 | $ 52,200,000 | $ 35,200,000 | ||||
Settlement of repurchase of shares (in shares) | 3,820 | |||||||
Share repurchases included in accounts payable | $ 200,000 | |||||||
Remaining authorized repurchase amount | $ 77,900,000 | $ 77,900,000 | ||||||
2020 Share Repurchase Program Extension Total | ||||||||
Accelerated Share Repurchases [Line Items] | ||||||||
Share repurchase authorized amount | $ 200,000,000 | $ 100,000,000 |
Financing Arrangements - Summary of Carrying Amounts of Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
Sep. 30, 2017 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Net carrying amount | $ 342,000 | $ 232,780 | |
Current maturities of long-term debt | 0 | (559) | |
Long-term debt, net of current portion | 342,000 | 232,221 | |
Senior secured credit facility | |||
Debt Instrument [Line Items] | |||
Net carrying amount | 342,000 | 230,000 | |
Promissory note due 2024 | |||
Debt Instrument [Line Items] | |||
Net carrying amount | $ 0 | $ 2,780 | $ 5,100 |
Restructuring Charges - Restructuring Liability Rollforward (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Beginning balance | $ 1,140 |
Additions | 2,167 |
Payments | (1,826) |
Adjustments | 40 |
Ending balance | 1,521 |
Employee Costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 573 |
Additions | 1,617 |
Payments | (1,016) |
Adjustments | 0 |
Ending balance | 1,174 |
Other | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 567 |
Additions | 550 |
Payments | (810) |
Adjustments | 40 |
Ending balance | $ 347 |
Derivative Instruments and Hedging Activity - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2022 |
Mar. 16, 2020 |
Jan. 30, 2020 |
Jun. 22, 2017 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Interest rate swap agreement for a notional amount | $ 100.0 | $ 50.0 | $ 50.0 | |
Percentage of fixed rate | 0.885% | 1.50% | 1.90% | |
Interest rate cash flow hedge gain (loss) to be reclassified | $ 2.2 | |||
Gain (loss) reclassification from accumulated OCI to income, estimate of time to transfer | 12 months |
Derivative Instruments and Hedging Activity - Fair Value Interest Rate Swaps Designated as Cash Flow Hedging Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Prepaid expenses and other current assets | ||
Fair Value interest rate swaps designated as cash flow hedging instruments | ||
Fair Value (Derivative Asset and Liability) | $ 3,080 | $ 0 |
Other non-current assets | ||
Fair Value interest rate swaps designated as cash flow hedging instruments | ||
Fair Value (Derivative Asset and Liability) | 3,578 | 1,210 |
Accrued expenses and other current liabilities | ||
Fair Value interest rate swaps designated as cash flow hedging instruments | ||
Fair Value (Derivative Asset and Liability) | 0 | 1,604 |
Deferred compensation and other liabilities | ||
Fair Value interest rate swaps designated as cash flow hedging instruments | ||
Fair Value (Derivative Asset and Liability) | $ 0 | $ 149 |
Fair Value of Financial Instruments - Convertible Debt Investment Reconciliation (Details) - Fair value, measurements, recurring $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Roll Forward] | |
Beginning balance | $ 105,975 |
Ending balance | 101,921 |
Convertible Debt Securities | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Roll Forward] | |
Beginning balance | 65,918 |
Change in fair value | (2,566) |
Ending balance | $ 63,352 |
Fair Value of Financial Instruments - Contingent Consideration for Business Acquisitions (Details) - Fair value, measurements, recurring $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Roll Forward] | |
Beginning balance | $ 4,913 |
Ending balance | 3,266 |
Contingent consideration for business acquisitions | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Roll Forward] | |
Beginning balance | 3,743 |
Acquisition | 869 |
Payment | (1,379) |
Change in fair value | 33 |
Ending balance | $ 3,266 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate (as a percent) | 36.00% | 21.30% | 31.90% | 21.50% |
Income tax expense | $ 7,802 | $ 3,454 | $ 19,077 | $ 4,990 |
Income from continuing operations before income tax expense | $ 21,677 | $ 16,251 | $ 59,804 | $ 23,192 |
Statutory income tax rate, inclusive of state income tax (as a percent) | 26.40% | 26.60% | 26.40% | 26.60% |
Unrecognized tax benefits | $ 700 | $ 700 | ||
Decrease in unrecognized tax benefits is reasonably possible | $ 100 | $ 100 |
Segment Information - Narrative (Details) - Segment |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Segment Reporting [Abstract] | |||||
Number of operating segments | 3 | ||||
Receivables from major customers (as a percent) | 1000.00% | 1000.00% | 1000.00% | ||
Revenue generated by major client percentage | 1000.00% | 1000.00% | 1000.00% | 1000.00% |
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