Huron Consulting Group Inc.

Good afternoon, ladies and gentlemen, and welcome to Huron Consulting Group's webcast to discuss financial results for the fourth quarter and full year 2021. At this time, all conference call lines are in a listen-only mode. Later, we will conduct our question and answer sessions for conference call participants, and instructions will follow at that time. As a reminder, this conference call is being recorded. Before we begin... I would like to point all of you to the disclosure at the end of the company's news release for information about any forward-looking statements that may be made or discussed on this call. The news release is posted on Huron's website. Please review that information along with the filings with the SEC for disclosure of factors that may impact subjects discussed in this afternoon's webcast. The company will be discussing one or more non-GAAP financial measures. Please look at the earnings release and on Huron's website for all of the disclosures required by the SEC, including reconciliation to the most comparable GAAP numbers. And now I would like to turn the call over to Jim Roth, Chief Executive Officer of Huron Consulting Group. Mr. Roth, please go ahead.

Good afternoon and welcome to Huron Consulting Group's fourth quarter and full year 2021 earnings call. With me today are Mark Hussey, our President and Chief Operating Officer, and John Kelly, our Chief Financial Officer. Before I begin, I would like to highlight that in our earnings release issued this afternoon, we introduced our new operating model and announced corresponding changes to our segment reporting structure. We placed supplemental materials on the investor relations section of the Huron website to provide additional detail on our new reporting structure and recast financial information, including unaudited summary financial information. These supplemental materials should be reviewed in conjunction with our earnings call and not on a standalone basis. Please note these segment reporting changes apply to the reporting periods beginning January 1st, 2022, and our fourth quarter results are consistent with prior reporting practices. Before I provide additional insight into our fourth quarter and full year performance, I want to briefly discuss our new operating model. which we believe will strengthen our go to market strategy and better position Huron to integrate our deep industry expertise with our strong digital strategy and financial advisory capabilities. Today we are introducing a business realignment and related segment reporting changes that we believe will strengthen our go to market strategy and competitive advantage to accelerate growth, drive efficiencies across our business, and enhance transparency for the investment community into the core drivers of our business. This is the first material change to our operating model in nearly a decade. Our markets have changed, our clients and business needs have changed, and we are taking this important step to expand and more deeply integrate our industry focus with our digital strategy and financial advisory capabilities. For Huron, our growth strategy and our business realignment are the means through which we will achieve two critical outcomes, improved integration of our industry and capability expertise, and more deeply embedding our digital offerings into our client engagements. Mark will share more insight about our operating model in a few minutes, but I will now discuss our fourth quarter and full year 2021 performance, along with our expectations for 2022. In the fourth quarter and throughout the year, we continued delivering on our commitment to sustainable revenue growth and improved profitability. Led by organic growth across all three operating segments, annual revenues grew 7 percent and adjusted EBITDA margins improved 50 basis points over 2020. These results demonstrate that our growth strategy is delivering a solid return on our organic and inorganic investments. We managed successfully through the worst of the pandemic and have positioned the company for continued growth and profitability. On a full year basis, healthcare segment revenues increased 7% over 2021. In the fourth quarter of 2021, the healthcare segment grew 22% over the prior year quarter, reflective of the strength of demand for our performance improvement and managed services offerings. Over the last three quarters of the year, as the impact of the pandemic on our hospital and health system clients continued to wane, we experienced growing demand for our healthcare offerings despite the persistence of the Delta and Omicron variants. During the past two years, the need to reduce costs and improve quality has been one of the primary challenges for our healthcare clients. Those challenges have led to strong demand for our clinical and operational performance improvement offerings. More recently, new challenges have arisen to the top of the agenda for our healthcare client base, broadening demand for our historical services and creating opportunities for us to develop new offerings to address the changing healthcare market. For example, labor issues, including employee burnout among clinicians, are having a material impact on hospitals and health systems. Attracting and retaining employees and an increasing reliance on contract resources has added new pressure on healthcare margins. This issue, along with inefficiencies related to COVID safety protocols, are likely to remain for the foreseeable future and are causing many hospitals to reevaluate how best to strengthen their financial position amidst these expense pressures. While healthcare providers remain under immense pressure to attract and retain talent in this highly competitive labor market, many are also focused on reevaluating their strategies to position their organizations for long-term success. Personalizing patient care and evolving the care delivery model into a more geographically distributed environment is at the forefront of many health system strategies, especially as pharmacies, private equity, and other nontraditional care providers seek to achieve greater market share. Hospital systems are also focused on advancing their digital platform to meet the needs of their patients, clinicians, employees, and communities, including moving beyond the basics of telemedicine, which has become a staple of care delivery during the pandemic. Collectively, this environment has created significant demand for Huron across all of our businesses that work in the healthcare market. With our comprehensive offerings spanning strategy, operations, digital, and people transformation, Huron is uniquely positioned to help our healthcare clients develop a strong strategic, operational, and digital foundation from which to achieve their mission. We believe that the combination of our traditional offerings, new innovative digital and analytic solutions, including the acquisition of Perception Health and the broader healthcare market tailwinds, will continue to create growth opportunities for our business. Turning to the business advisory segment, on a full year basis, segment revenues grew 9% year over year. In the fourth quarter of 2021, business advisory segment revenues grew 18% over the prior year quarter, primarily attributable to strong demand for our financial advisory, strategy, and digital offerings. Our digital and analytics offerings have been a solid driver of growth for Huron during the past two years. The criticality of having more robust digital capabilities continues to drive demand for our services across our core industries. In recent years, we have invested in expanding our relationships and capabilities across the largest cloud providers, including, but not limited to, Oracle, Salesforce, and Workday. And we have significantly expanded our analytics offerings to provide deeper insights to our clients, seeking ways to more effectively use and apply a wide array of data to inform better, faster decision-making. Our successes have been clear with continued growth in the financial services and energy and utilities industries, as well as across the healthcare and education industries. As Mark will discuss shortly, our new operating model will strengthen the integration of our digital capabilities into our core industries, providing more seamless delivery of our collective offerings and providing Huron with greater growth opportunities. Within the business advisory segment, our strategy and M&A advisory offerings also performed well, driven by organizations seeking to evolve their business to more effectively compete in a post-pandemic environment. For full year 2021, the business advisory segment generated approximately 25 percent of its total revenues in the healthcare and education industries. We continue to believe we are most successful against our competition when we bring our deep industry expertise together with our broad set of capabilities that are most reflective of our clients' needs. That strategy is at the heart of our new integrated operating model. Turning now to the education segment, Annual revenues in the segment grew 6 percent as compared to 2020. In the fourth quarter of 2021, education segment revenues increased 41 percent over the prior year quarter, driven by the strength and demand for our services across the segment following the impact of the pandemic that hit the education industry very hard in the second half of 2020 and early 2021. The education business steadily grew quarter over quarter throughout the year. We have seen a resurgence in demand for all of our offerings in this segment, and the level of demand outperformed our expectations. Higher education institutions are turning to Huron as their trusted advisor, giving our strong reputation and market presence and deep industry expertise as they face a wide array of strategic, operational, and financial challenges. The issues and challenges in this industry are growing in complexity, and we are well positioned to help our clients navigate what will surely be significant changes in the coming years. Let me turn to our expectations and guidance for 2022. Our revenue guidance for the year is $970 million to $1.03 billion, with a midpoint of $1 billion. We also expect adjusted EBITDA in a range of 11.3 percent to 12.3 percent of revenues, and adjusted diluted earnings per share of $2.85 to $3.35. Company-wide, we are guiding to 10 percent revenue growth at the midpoint for 2022. We believe the growth and demand we experienced in the second half of 2021 will continue, and we are excited to build on that momentum in 2022. In terms of margins, at the midpoint of our 2022 guidance, we expect a 100 basis point improvement over 2021. We remain focused on expanding margins while investing in areas in our business with the greatest growth opportunities. We continue to believe we have built a strong foundation from which we can sustainably grow revenues while improving margins consistent with our long-term financial objectives. Finally, let me share my deepest appreciation for the entire Huron team. Our 2021 financial results are only possible because of the commitment of our people to serving our clients, our company, and one another. The passion and dedication they have for the work we do is unmatched, and I'm incredibly proud of the way we all work together to emerge from two tough years in such great shapes. We believe we are off to a strong start in 2022, and we are excited about our prospects for achieving our revenue and profitability goals for the year. Our markets are vibrant. We are strategically and operationally well positioned, and our new operating model creates an even stronger foundation for success in the future. Now let me turn it over to Mark to provide more color on our new operating model. Mark?

Thanks, Jim. As our press release indicates, effective January 1, 2022, we've taken the next step in our strategy. Most notably, we're expanding on our strengths in our core industries while more closely integrating our significant digital capabilities into a unified company-wide platform. This new integrated operating model is matrixed on industry expertise and capability and built on a rapidly expanding global platform. By unifying our company-wide resources focused on our two largest industries and aligning our capabilities across the enterprise, we expect to strengthen our go-to-market strategy, accelerate revenue growth, drive efficiencies that support margin expansion, and in turn, unlock meaningful shareholder value. Specifically, we're aligning our industry offerings that historically resided across multiple businesses into a unified platform from which to more seamlessly go to market in the healthcare, education, and commercial sectors. With the strengthened integration of our industry expertise, we believe we'll drive accelerated revenue growth across all of our offerings within those industries. We're harnessing the power of our deep industry expertise, which has been foundational to our historical success and will continue to be critical to our growth strategy. Our core industries of healthcare, education, financial services, and energy and utilities are facing significant change, which creates meaningful growth opportunities for Huron. The changes to our operating model position us to better serve our clients and to capitalize on the significant market opportunities that lie ahead. In terms of our capabilities, our primary focus is bringing together the full breadth of our digital technology and analytics capabilities across the company into a common platform called digital. Our focus with digital is to accelerate growth and innovation and to drive efficiencies as we operate the team on a unified global basis. Our collective organic and inorganic investments in technology assets over the past nine years have resulted in our digital technology and analytics offerings representing nearly 40% of total company revenue in 2021. Our operations in India have also grown substantially over the past seven years, and our India-based employees now represent approximately 20% of our total employee population. In our new model, we will leverage these investments to establish a much more scalable platform across technology services and products that will further promote growth, innovation, and margin expansion. The operating model also places greater emphasis on our strategy and financial advisory capabilities, more closely integrating these offerings with our focus on industry expertise, which we believe together differentiates our company in the market. We're excited about this realignment because we believe it benefits all stakeholders, first our clients. will maintain the depth of our substantial industry expertise while expanding and strengthening our presence in our core markets, and will build new competencies, including in digital technology and analytics, to accelerate innovation and improve client outcomes. Second, our employees. Our new operating model will strengthen the way we work together to serve our clients, how we innovate, collaborate, and support each other as we create new career advancement opportunities that will help us attract and retain top talent. And third, the investment community. We believe that this realignment will support the acceleration of organic revenue growth and the expansion of our operating margins. Our new reporting structure, which John will talk about in a moment, will also provide greater insight to investors on our comprehensive revenue and operating margin in our core industries as well as our consolidated revenue growth and our digital capabilities. We'll be sharing more details on our company strategy and business realignment at our upcoming investor day at the end of March. Our management team and board are confident that this is the right time to make these changes. Our organization has grown to a point where we need to take our go-to-market strategy and collaboration to the next level to capitalize on the significant market opportunities ahead of us. We believe the foundation we're putting in place will enable sustainable revenue growth and enhanced margin expansion while creating greater visibility into our business for our investors. And now let me turn it to John for a more detailed discussion of our Q4 financial results and 2022 guidance. John?