Huron Annual Report I | 2019 Annual Report | Huron
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2019 HURON 2019 HURON ANNUAL REPORT ANNUAL 20HURON ANNUAL19 REPORT I | 2019 ANNUAL REPORT | HURON III | A LETTER FROM THE CHIEF EXECUTIVE OFFICER 2019 ANNUAL REPORT | When we launched our strategic plan two HURON years ago, we knew that our clients and the markets they serve were undergoing significant transformation. We also recognized that there were competitive forces rapidly impacting our core markets, and that we, too, would need to transform to stay ahead of the substantial change taking place in the professional services industry and the industries we serve. We began executing against our five-year plan in 2018 with the fundamental objective to foster a collaborative, innovative environment that would help us ideate, design, nurture, and grow a set of new offerings that, coupled with the strength of our core businesses, would position Huron for long-term growth. As we approach the midpoint of our five-year strategic plan, I am incredibly proud of the progress we made in 2019 to achieve our vision and the way we are positioning this company for long-term success. IV The business advisory segment achieved | Building Upon Our revenue growth of seven percent in 2019 Momentum in 2019 over 2018, driven by solid growth in our enterprise solutions and analytics and Because of the work we had done to achieve business advisory practices. Collaboration our strategy, we left 2018 with a strong belief between our business advisory segment that we had built a solid foundation from and our healthcare and education segments which we could sustainably grow revenues remained strong in 2019 as 32 percent of and expand margins over time. That belief business advisory segment revenue was 2019 ANNUAL REPORT held true in 2019 as full year revenues grew attributable to the healthcare and education | 10 percent over 2018, driven by strong organic industries. The business advisory segment growth across all three operating segments. is also focused on pursuing our commercial strategy and developing new services to HURON Healthcare segment revenues in 2019 grew grow beyond our traditional offerings. We nine percent over 2018. The year-over-year believe the business advisory segment will increase was primarily attributable to strong continue to be a driver of growth for Huron growth in our performance improvement as we expand our competencies within and solution. In 2019, we continued to broaden beyond our traditional industry verticals of our collective services across the healthcare healthcare, education and life sciences. continuum, developing new offerings to help our clients transform care delivery, create Education segment revenues grew 16 percent customer-centric experiences, and utilize over 2018, achieving another year of record technology and analytics to enable our clients revenue. This growth was primarily driven by to achieve sustained, continuous improvement our research and technology solutions as we for their organizations while also improving continue to expand our offerings to serve the the health and wellbeing of their patients. leading research universities and academic With our expanding services for the healthcare medical centers around the world. In 2019, industry, we believe we are well-positioned to we accelerated the hiring of resources in strategically and operationally help our clients this segment in the areas we believe will improve the quality of care while lowering the drive future growth to capitalize on market cost of that care. opportunities as we position ourselves for growth in 2020 and beyond. Because of the work we had done to In 2019, we built on the financial momentum we achieved in 2018 by delivering strong achieve our strategy, we left 2018 organic revenue growth and improving with a strong belief that we had built our adjusted EBITDA margin. We remain focused on sustainably growing revenues a solid foundation from which we and expanding margins consistent with could sustainably grow revenues and our long-term financial objectives. expand margins over time. That belief held true in 2019.” V Some examples of how we invested in our | Investing people in 2019 include: 2019 ANNUAL REPORT In Our People • Redefining the employee experience The success we achieved in 2019 was driven with the introduction of our talent and by the hard work and dedication of our culture framework. This framework incredible team. Their focus and commitment provides a robust and personalized to our clients, our company and to each other employee journey, from onboarding a is what makes Huron such a special place to new hire to supporting each employee’s personal and professional development. work. We have grown to 3,750 employees as | of December 31, 2019, and we have worked to HURON provide our people with career opportunities • We held our inaugural “Women in that encourage innovation and creativity, while Leadership Summit,” which is designed to fostering an internal culture that enables our empower, influence, connect, inspire and employees to achieve their full potential. encourage our female employees in the workplace. We know the empowerment In 2019, we were again recognized for our and advancement of women – within our strong commitment to our people, our values, organization and around the world – helps our clients and the communities we serve. We drive innovation and contributes to our have been named a ‘Best Firm to Work For’ overall success. We are proud that women nine years running by Consulting magazine. In make up nearly half of our global workforce. addition, for six years in a row we have been recognized by the Human Rights Campaign By investing in our people’s personal and Foundation for receiving a perfect score of professional growth, we can nurture a global 100 on the Corporate Equality Index and workforce and foster a culture that is well- the designation as a ‘Best Place to Work’ for positioned to stay ahead of market changes LGBTQ Equality. and help our clients tackle their most complex business challenges. James H. Roth Chief Executive Officer VI | Supporting Our Continuing Communities Our Commitment In 2019, we furthered our efforts to improve to Strategic the communities around us and expanded the adoption of sustainable business Transformation practices to build a better future for all. Our We do not take our recent success for Sustainability Council is committed to helping granted and remain focused on executing 2019 ANNUAL REPORT our organization promote environmentally our strategy. In 2020, our strategic priorities | friendly business practices and reduce our to drive shareholder value remain: achieving carbon footprint. In 2019, we launched our sustainable organic growth, driving margin “Bring It Huron” initiative, focused on reducing HURON expansion, strategically deploying capital and paper use, improving our recycling efforts, investing in our people. utilizing biodegradable copiers and toners, and promoting sustainable practices across all of To further drive shareholder value and enable our offices and project sites. our transformation, we continue to invest for the long-term. In 2019, we saw the fruits of We will continue to build on our progress our 2018 investments in new businesses and and expand our “Bring It Huron” initiative in business models begin to take hold, and we 2020 to include reducing our waste footprint are committed to investing in the areas we and expanding our recycling program. We believe have the greatest growth potential. remain focused on shaping a more sustainable It is exciting to see our teams bring these future and challenge ourselves to make a innovative ideas to life as we continuously look lasting impact on our people, our clients, the for new ways to collaborate and better serve environment and the communities we serve. our clients. James H. Roth Chief Executive Officer VII Financial and Operating Highlights Year Ended December 31 | 2019 ANNUAL REPORT 2015 2016 2017 2018 2019 Revenues (before reimbursable expenses) $699,010 $726,272 $732,570 $795,125 $876,757 Operating Income $103,498 $74,234 $(207,456) $52,096 $63,706 Operating Margin(1) 14.8% 10.2% -28.3% 6.6% 7.3% Net Income (Loss) from Continuing Operations $61,895 $39,480 $(170,505) $13,944 $41,979 | Income (Loss) from Discontinued Operations, net of tax $(2,843) $(1,863) $388 $(298) $(236) HURON Net Income (Loss) $59,052 $37,617 $(170,117) $13,646 $41,743 Diluted Earnings (Loss) Per Share from Continuing Operations $2.74 $1.84 $(7.95) $0.63 $1.87 Diluted Earnings (Loss) Per Share $2.61 $1.76 $(7.93) $0.62 $1.85 Return on Assets(2) 4.8% 3.3% -15.0% 1.3% 3.8% (IN THOUSANDS, EXCEPT FOR EARNINGS PER SHARE) Return on Equity(3) 9.4% 5.9% -29.7% 2.6% 7.4% (1) Operating margin is defined as operating income expressed as a percentage of revenues. (2) Return on assets is calculated by dividing net income by average total assets. The average total assets for the years ended December 31, 2015, 2016, 2017, 2018, and 2019 were $1,226.2 million, $1,148.8 million, $1,130.7 million, $1,045.7 million, and $1,104.4 million, respectively. (3) Return on equity is calculated by dividing net income by average total stockholders’ equity. The average total stockholders’ equity for the years ended December 31, 2015, 2016, 2017, 2018 and 2019 were $627.4 million, $634.5 million, $571.9 million, $520.0 million, and $566.3 million, respectively. Revenues in millions $876.8 $795.1 $726.3 $732.6 $699.0 2015 2016 2017 2018 2019 Note: The financial and operating information presented above is on a continuing operations basis, unless otherwise noted. Board of Directors & Executive Team VIII | BOARD OF DIRECTORS EXECUTIVE TEAM John F. McCartney (1, 3) Hugh E. Sawyer James H. Roth Non-Executive Chairman Chief Executive Officer, Chief Executive Officer of the Board President and Director and Director Board of Directors Regis Corporation Datatec Limited C.