Q2 2024 Huron Consulting Group Inc Earnings Call

Good afternoon and welcome to Huron Consulting Group's webcast to discuss financial results for the second quarter 2024. At this time all conference lines are on a listen-only mode.

Operator: results for the second quarter of 2024. At this time, all conference lines are in a listen-only mode.

Operator: results for the second quarter, 2024. At this time, all conference lines are on a listen-only mode. Later, we will conduct a question-and-answer session for conference call participants and instructions we'll 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 a disclosure of factors that may impact subjects discussed in this afternoon's webcast.

Operator: Later, we will conduct a question and answer session 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.

Later, we will conduct a question and answer session for conference call participants and instructions will follow at that time.

Speaker Change: 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 a disclosure of factors that may impact subjects discussed in this afternoon's webcast.

Operator: The company will be discussing one or more non-GAAP financial measures.

Operator: 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.

The company will be discussing one or more non-GAAP financial measures.

Speaker Change: 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.

Mark Hussey: And now, I would like to turn the call over to Mark Hussey, Chief Executive Officer and President of Huron Consulting Group. Mr. Hussey, please go ahead.

Operator: Please review that information along with the filings with the SEC for a disclosure of factors that may impact the 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. Now, I would like to turn the call over to Mark Hussey, Chief Executive Officer and President of Huron Consulting Group. Mr. Hussey, please go ahead.

Speaker Change: And now, I would like to turn the call over to Mark Hussey, Chief Executive Officer and President of Huron Consulting Group. Mr. Hussey, please go ahead.

Mark Hussey: Good afternoon and welcome to Huron Consulting Group's second quarter 2024 Murray's call. With me today, are John Kelly, our Chief Financial Officer, and Ronnie Dale, our Chief Hybrid Officer. In the second quarter, we achieved record revenues led by a solid growth in our health care and education segments, and we expanded our adjusted piece-of-down margin to 15 percent. Our adjusted earnings per share also expanded to a record level, 20 percent higher than the previous high water market established in the third quarter of the last year. We generated record cash flow in the second quarter, enabling us to meet and reduce our debt while returning capital to shareholders who I'm going to share with purchases.

Mark Hussey: Good afternoon, and welcome to Huron Consulting Group's second quarter 2024 earnings call. With me today are John Kelly, our Chief Financial Officer, and Ronnie Dale, our Chief Operating Officer. In the second quarter, we achieved record revenues, led by solid growth in our health care and education segments, and we expanded our adjusted EBITDA margin to 15%. Our adjusted earnings per share also expanded to a record level, 20% higher than the previous high water mark established in the third quarter of last year. We generated record cash flow in the second quarter, enabling us to meaningfully reduce our debt while returning capital to shareholders through ongoing share repurchase. Our record second-quarter results capped a strong first-half performance for 2024.

Speaker Change: Good afternoon and welcome to Huron Consulting Group's second quarter 2024 earnings call. With me today are John Kelly, our Chief Financial Officer, and Ronnie Dale, our Chief Operating Officer.

Speaker Change: In the second quarter, we achieved record revenues, led by solid growth in our health care and education segments, and we expanded our adjusted income margin to 15%.

Speaker Change: Our adjusted earnings per share also expanded to a record level, 20% higher than the previous high water mark established in the third quarter of last year.

Speaker Change: We generated record cash flow in the second quarter, enabling us to meaningfully reduce our debt while returning capital to shareholders through ongoing share repurchases.

Mark Hussey: Our record second quarter results kept a strong first half performance for 2024. In the first half of 2024, revenues grew 9.5 percent. Our adjusted piece-of-down margins increased 60 basis points, and adjusted diluted earnings per share increased 28 percent over the same period a year ago. Our results demonstrate strong execution against our strategy, as well as the positive impact and the changes we made to our enterprise operating model at the outset of 2022. These changes have broadened the set of offerings we delivered to clients in our core of industries and allows us to operate our business at new levels of efficiencies.

Speaker Change: Our record second-quarter results capped a strong first-half performance for 2024.

Mark Hussey: In the first half of 2024, revenues grew 9.5%, adjusted EPSA margins increased 60 basis points, and adjusted diluted earnings per share increased 28% over the same period a year ago. Our results demonstrate strong execution against our strategy, as well as the positive impact of the changes we made to our enterprise operating model at the outset of 2022. These changes have broadened the set of offerings we deliver to clients in our core industries and allowed us to operate our business at new levels of efficiency.

Speaker Change: In the first half of 2024, revenues grew 9.5%, adjusted EPSA margins increased 60 basis points, and adjusted diluted earnings per share increased 28% over the same period a year ago.

Speaker Change: Our results demonstrate strong execution against our strategy, as well as the positive impact of the changes we made to our enterprise operating model at the outset of 2022.

Speaker Change: These changes have broadened the set of offerings we deliver to clients at our core of industries and allows us to operate our business at new levels of efficiency.

Mark Hussey: Our strategic focus continues to be in kind, driving sustainable revenue growth, extending margins, and effectively deploying capital to deliver superior returns for our shareholders. As it relates to improving profitability, despite its typical comparison, adjusted even down margins grew 100 basis points in the second quarter of the same period a year ago. The scaling of our business over the past three years combined with the build-out of our global delivery capabilities, and our team's focus on our key operating levels like pricing and utilization have been enhanced here on earnings power. We expect this trend to continue as we progress towards a mid-teen deep-a-down margin target.

Mark Hussey: Our strategic focus continues to be on driving sustainable revenue growth, extending margins, and effectively deploying capital to deliver superior returns for our shareholders. As it relates to improving profitability, despite a difficult comparison, adjusted eavesdown margins grew 100 basis points in the second quarter over the same period a year ago.

Speaker Change: Our strategic focus continues to be on driving sustainable revenue growth, expanding margins, and effectively deploying capital to deliver superior returns for our shareholders.

Speaker Change: As it relates to improving profitability, despite a difficult comparison, adjusted EBITDA margins grew 100 basis points in the second quarter over the same period a year ago.

Mark Hussey: The scaling of our business over the past three years, combined with the build-out of our global delivery capabilities and our team's focus on our key operating levers like pricing and utilization, have meaningfully enhanced Huron's earnings model. We expect this trend to continue as we progress towards a mid-teen EBITDA margin target. I'm incredibly proud of our team for delivery performance over the last 10 quarters that has outpaced our 2022 Investor Day financial objective.

Speaker Change: The scaling of our business over the past three years, combined with the build-out of our global delivery capabilities, and our team's focus on our key operating levers like pricing and utilization, have meaningfully enhanced Huron's earnings power.

Speaker Change: We expect this trend to continue as we progress towards our mid-team EBITDA margin target. I'm incredibly proud of our team for delivering performance over the last 10 quarters that has outpaced our 2022 Investor Day financial objectives.

Mark Hussey: I'm incredibly proud of our team for delivery and performance over the last 10 quarters that has outpaced their 2022 investor-day financials. We're looking ahead to the remainder of 2024. We expect our progress towards our medium-term financial goals to continue. As reflected by the midpoint of our updated revenue guidance, we expect sequential growth in the second half of the first half of 2024 and 9% annual revenue growth year over year. Let me take one final comment before diving into more detail out of performance in the quarter. Our success in the market and in delivering these financial results is fully possible because of our incredibly talented team.

Mark Hussey: Looking ahead to the remainder of 2024, we expect our progress towards our medium-term financial goals to continue. As reflected by the midpoints of our updated revenue guidance, we expect sequential growth in the second half over the first half of 2024 and 9% annual revenue growth year over year. Let me make one final comment before diving into more detail on our performance in the quarter.

Speaker Change: Looking ahead to the remainder of 2024, we expect our progress towards our medium-term financial goals to continue.

Speaker Change: As reflected by the midpoints of our updated revenue guidance, we expect sequential growth in the second half over the first half of 2024, and 9% annual revenue growth year-over-year.

Speaker Change: Let me make one final comment before diving into more detail on our performance in the quarter.

Mark Hussey: Our success in the market and in delivering these financial results is only possible because of our incredibly talented team. We've received numerous recognitions for being an employer of choice in 2024, more than in any year in our 22-year history. People are the heart of our business, and these honors acknowledge the power of a collaborative culture as demonstrated by our team's commitment to our clients and to one another.

Speaker Change: Our success in the market and in delivering these financial results is only possible because of our incredibly talented team.

Mark Hussey: We've received numerous recognitions for being an employer of choice in 2024, more than in any year or 22 year history. Our people are the heart of our business, and these honors acknowledge the power of a collaborative culture as demonstrated by our team's commitment to our clients and to one another. Our culture is one of our greatest competitive advantages, and it enables us to operate as one firm and to realize our full potential.

Speaker Change: We've received numerous recognitions for being an employer of choice in 2024, more than in any year in our 22-year history.

Speaker Change: Our people are the heart of our business and these honors acknowledge the power of a collaborative culture as demonstrated by our team's commitment to our clients and to one another.

Mark Hussey: Our culture is one of our greatest competitive advantages, and it has enabled us to operate as one firm and to realize our goals. Now, I'll share some additional insights into our second quarter performance. In the health care segment, second quarter revenues grew 9% over the prior year quarter, on top of 35% growth in the year-ago quarter for Q2 of 2022. The increase in revenues in the quarter was driven by continued strong demand for digital performance improvement, culture and organizational excellence, and strategy and innovation offerings.

Speaker Change: Our culture is one of our greatest competitive advantages and enabled us to operate as one firm and to realize our full potential.

Mark Hussey: Now, we'll share some additional insights into our second quarter of performance. In the healthcare segment, second quarter revenues grew 9% over the prior year quarter on top of 35% growth in the year of the quarter over Q2 of 2022. The increase in revenues in the quarter was driven by continued strong demand for our digital performance improvement, culture and organization excellence, and strategy and innovation offerings. The operating environment for healthcare organizations remains mixed and highly competitive, which continues to create solid demand across the breadth of our portfolio of offerings. Well, some health systems have realized improving margins over the past few quarters; many have not.

Speaker Change: Now I'll share some additional insights into our second quarter performance.

Speaker Change: In the healthcare segment, second quarter revenues grew 9% over the prior year quarter, on top of 35% growth in the year-ago quarter over Q2 of 2022.

Speaker Change: The increase in revenues in the quarter was driven by continued strong demand for digital performance improvement, culture and organizational excellence, and strategy and innovation offerings.

Mark Hussey: The operating environment for healthcare organizations remains mixed and highly competitive, which continues to create solid demand across the breadth of our portfolio of offers. However, while some health systems have realized improving margins over the past few quarters, many have not.

Speaker Change: The operating environment for healthcare organizations remains mixed and highly competitive, which continues to create solid demand across the breadth of our portfolio of offerings.

Speaker Change: While some health systems have realized improving margins over the past few quarters, many have not. In some cases, volumes have improved, but reimbursement trends continue to be challenging.

Mark Hussey: In some cases, volumes have improved, but reimbursement trends continue to be challenging. Whether a hospital or health system is experiencing financial distress or seeking opportunities to advance the competitive advantage from a position of strength. A client's turn here on the shape their future strategies involve their business models and optimize their operations to address the ongoing challenges and opportunities in the market. Our depth of industry expertise for other way of offerings and long track record approval results for the clients positions as very well to provide strategic operational financial and digital solutions to help them achieve a more sustainable future in this complex and challenging healthcare environment.

Mark Hussey: In some cases, volumes have improved, but reimbursement trends continue to be challenging. Whether a hospital or health system is experiencing financial distress or seeking opportunities to advance their competitive advantage from a position of strength, our clients turn to Huron to shape their future strategies, evolve their business models, and optimize their operations to address the ongoing challenges and opportunities in the market.

Speaker Change: Whether a hospital or health system is experiencing financial distress, or seeking opportunities to advance their competitive advantage from a position of strength,

Speaker Change: Our clients turn to Huron to shape their future strategies, evolve their business models, and optimize their operations to address the ongoing challenges and opportunities in the market.

Mark Hussey: Our depth of industry expertise, broad array of offerings, and long track record of proven results for our clients positions us very well to provide strategic, operational, financial, and digital solutions to help them achieve a more sustainable future in this complex and challenging healthcare environment. Turning now to education, education segment revenues grew 11% in the second quarter of 2024 over the prior year quarter, on top of 25% growth in the year of the quarter over Q2 of 2022.

Speaker Change: Our depth of industry expertise, broad array of offerings, and long track record of proven results for our clients positions us very well to provide strategic, operational, financial, and digital solutions to help them achieve a more sustainable future in this complex and challenging healthcare environment.

Mark Hussey: Turning out to education, education segment revenues grew 11% in the second quarter of 2024 over the prior quarter, on top of 25% growth in the year of the quarter over Q2 of 2022. The increase in revenues in the quarter was driven by increased demand for our strategy and operations and digital product offerings. Higher education institutions are facing complex challenges that threaten their historical business models. The issues facing university leadership are vast, and they span all areas of the institution. For example, reclining affordability continues to challenge perceived values of college degree in the face of unfavorable demographic trends.

Speaker Change: Turning now to education, education segment revenues grew 11% in the second quarter of 2024 over the prior year quarter, on top of 25% growth in the year-ago quarter over Q2 of 2022.

Mark Hussey: The increase in revenues in the quarter was driven by increased demand for our strategy and operations and digital product offerings. Higher education institutions are facing complex challenges that threaten their historical business model. The issues facing university leadership are vast, and they span all areas of the institution. For example, declining affordability continues to challenge the perceived value of a college degree in the face of unfavorable demographic trends.

Speaker Change: The increase in revenues in the quarter was driven by increased demand for our strategy and operations and digital product offerings.

Speaker Change: Higher education institutions are facing complex challenges that threaten their historical business models.

Speaker Change: The issues facing university leadership are vast, and they span all areas of an institution.

Speaker Change: For example, declining affordability continues to challenge the perceived value of a college degree in the face of unfavorable demographic trends.

Mark Hussey: Prior to cost and decreased public funding that made achieving enrollment goals even more difficult. And the need to operate more efficiently while differentiating the student experience requires investments in both new operating miles and due time. in the United States and the United States and the United States and the United States and the United States and the United States and the United States and the United States. We're going to need to partner in a higher education market in the strength of our relationships, the diversity of our offerings, and the depth of our experience. That collectively decisions is very well for continued selling growth in this business.

Mark Hussey: Rising costs and decreased public funding have made achieving enrollment goals even more difficult, and the need to operate more efficiently while differentiating the student experience requires investments in both new operating models and new technology. Building on our deep industry expertise, we've strategically expanded our portfolio of offers. We serve the needs of nearly every role in a university president's leadership team if it is collectively focused on advancing the institutional mission and planning for a sustainable long-term future.

Speaker Change: Rising costs and decreased public funding have made achieving enrollment goals even more difficult.

Speaker Change: And the need to operate more efficiently while differentiating the student experience requires investments in both new operating models and new technologies.

Speaker Change: Building on our deep industry expertise, we've strategically expanded our portfolio of offerings.

Speaker Change: We serve the needs of nearly every role in a university president's leadership team if it collectively focused on advancing the institutional mission and planning for a sustainable long-term future.

Mark Hussey: We've hired several industry leaders whose experience further strengthens our position as the trusted advisor and partner of choice to our clients. And as the needs of our clients continue to evolve, we're a unique partner in the higher education market because of the strength of our relationships, the diversity of our offerings, and the depth of our experience. And that collectively positions us very well for continued solid growth in this business. Now turning to the commercial segment, revenues declined 6% in the second quarter over the prior year quarter, reflecting softer demand for digital offerings, partially offset by an increase in demand for our financial advisory offerings, which remain strong given the continued impact of challenging capital markets and expanding competitive pressure.

Speaker Change: We've hired several industry leaders whose experience further strengthens our position as the trusted advisor and partner of choice to our clients.

Speaker Change: And as the needs of our clients continue to evolve, we're a unique partner in the higher education market given the strength of our relationships, the diversity of our offerings, and the depth of our experience, and that collectively positions us very well for continued solid growth in this business.

Mark Hussey: Now, turning to the commercial segment, round news, you're playing 6% in the second quarter of the prior year quarter. Reflecting the software demand for our digital offerings, partially offset by an increase in demand for our financial advisory offerings, which remains strong given the continuous impact of challenging capital markets and expanding competitive pressures. In our digital business, we continue to see our commercial clients taking a more cautious approach to executing large-scale initiatives and strategy-related engagements, as uncertainties in the macroeconomic and political environments persist. Like many of our competitors in the IT services industry, we're seeing some delays in decision-making and a slow pace of spending on our digital offerings.

Speaker Change: Now turning to the commercial segment, revenues declined 6% in the second quarter over the prior year quarter, reflecting softer demand for digital offerings, partially offset by an increase in demand for our financial advisory offerings.

Speaker Change: which remain strong given the continued impact of challenging capital markets and expanding competitive pressures.

Mark Hussey: In our digital business, we continue to see our commercial clients taking a more cautious approach to executing large-scale initiatives and strategy-related engagements as uncertainties in the macroeconomic and political environments persist. As a result, like many of our competitors in the IT services industry, we're seeing some delays in decision-making and a slower pace of spending on our digital offerings. We have confidence this softening of demand is temporary, that our pipelines remain solid across our broad set of solutions, and the underlying needs of our clients remain robust. We believe Japan, for our digital offerings, will return to its historic double-digit levels as macroeconomic pressures begin to abate.

Speaker Change: In our digital business, we continue to see our commercial clients taking a more cautious approach to executing large-scale initiatives and strategy-related engagements as uncertainties in the macroeconomic and political environments persist.

Speaker Change: Like many of our competitors in the IT services industry, we're seeing some delays in decision making and a slower pace of spending on our digital offerings.

Mark Hussey: In confidence, the softening of demand is temporary, but our pipeline remains solid across our broad set of solutions, and the underlying needs of our clients remain plus. We believe demand for our digital offerings will be turned to their historic double-digit levels as macroeconomic pressures begin to evade. The commercial segment is a key pillar of our enterprise growth strategy. We believe that a broad portfolio of digital financial advisory and strategy and innovation offerings, coupled with deepening industry expertise, will continue to be a solid platform for growth in the segment. We expect clients will continue to demand technology solutions delivered by partners that can enable transformation of their businesses and strengthen their competitive advantages.

Speaker Change: We have confidence that this softening of demand is temporary, that our pipelines remain solid across our broad set of solutions, and the underlying needs of our clients remain robust.

Speaker Change: We believe Japan's form of digital offerings will return to their historic double-digit levels as macroeconomic pressures begin to abate.

Mark Hussey: The commercial segment is a key pillar of our enterprise growth strategy. We believe that a broad portfolio of digital, financial advisory, and strategy and innovation offerings, coupled with evening industry expertise, will continue to be a solid platform for growth in the segment. We expect clients will continue to demand technology solutions delivered by partners that can enable the transformation of their businesses and strengthen their competitive advantage.

Speaker Change: The commercial segment is a key pillar of our enterprise growth strategy. We believe that a broad portfolio of digital, financial advisory, and strategy innovation offerings, coupled with deepening industry expertise, will continue to be a solid platform for growth in this segment.

Speaker Change: We expect clients will continue to demand technology solutions delivered by partners that can enable transformation of their businesses and strengthen their competitive advantages.

Mark Hussey: The breadth of our offerings and proven track record that delivering results positions is very well, or continued growth or commercial segment for the time. And we continue to see M&A opportunities that will complement and expand our capabilities and deepen our expertise in our industries of focus.

Mark Hussey: The breadth of our offerings and proven track record of delivering results positions us very well for continued growth in our commercial segment over time. And we continue to see M&A opportunities that will complement and expand our capabilities and deepen our expertise in our industries of focus. We make one final comment before turning to our outlook for the remainder of the year. One distinguishing feature of our business that drives significant value for shareholders is our strong pre-cash flow model.

Speaker Change: The breadth of our offerings and proven track record of delivering results positions us very well for continued growth of our commercial segment over time, and we continue to see M&A opportunities that will complement and expand our capabilities and deepen our expertise in our industries of focus.

Mark Hussey: We make one final comment before turning to our outlet for the remaining of the year. One distinguishing feature of our business that drives significant value for shareholders is our strong, free cash flow model. In the second quarter, we generated record cash flows while executing a balanced capital deployment strategy. We continue to manage the balance sheet in a manner that provides us with a flexibility and capacity to enhance returns to shareholders and to fund a creative M&A, which we continue to believe is an important part of our global strategy.

Speaker Change: Let me make one final comment before turning to our outlet for the remaining of the year.

Speaker Change: One distinguishing feature of our business that drives significant value for shareholders is our strong free cash flow model. In the second quarter, we generated record cash flows while executing a balanced capital deployment strategy.

Mark Hussey: In the second quarter, we generated record cash flows while executing a balanced capital deployment strategy. We continue to manage the balance sheet in a manner that provides us with the flexibility and capacity to enhance returns to shareholders and to fund creative M&A, which we continue to believe is an important part of our growth strategy. And now, finally, let me turn to our retail business.

Speaker Change: We continue to manage the balance sheet in a manner that provides us with the flexibility and capacity to enhance returns to shareholders and to fund accretive M&A, which we continue to believe is an important part of our growth strategy.

Mark Hussey: And now finally, let me turn to our outlook. So press release indicates or dare we are annual revenue guidance to 1.46 billion to 1.5 billion. And we're raising our annual adjust even down margin guidance by 25 basis points to a range of 13 to 13 and a half percent. Finally, we're raising our full-year adjusted diluted earnings per share to a range of $5.85 to $6.15; the mid-point represents 22% growth over 2023. We're narrowing our full-year revenue guidance to the lower half of a previously stated range due to the short-term softening of demand for our digital offerings in the commercial segment.

Mark Hussey: So, the press release indicates we're narrowing our annual revenue guidance to $1.46 billion to $1.5 billion. And we're raising our annual adjustment, even without margin guidance, by 25 basis points to a range of 13 to 13.5%. Finally, we're raising our full-year adjusted diluted earnings per share to a range of $5.85 to $6.15, which at the midpoint represents 22% growth over 2023. We are narrowing our full-year revenue guidance to the lower half of our previously stated range due to the shorter-term softening of demand for our digital offerings in the commercial segment.

Speaker Change: And now finally, let me turn to our outlook. So, press release indicates we're narrowing our annual revenue guidance to $1.46 billion to $1.5 billion.

Speaker Change: And we're raising our annual adjustment, even without margin guidance, by 25 basis points to a range of 13 to 13.5%.

Speaker Change: Finally, we're raising our full-year adjusted diluted earnings per share to a range of $5.85 to $6.15, which at the midpoint represents 22% growth over 2023.

Speaker Change: We are narrowing our full-year revenue guidance to the lower half of our previously stated range due to the shorter-term softening of demand for our digital offerings in the commercial segment. Our full-year earnings guidance reflects our first-half performance and the scale of efficiency we've made.

Mark Hussey: Our full-year earnings guidance reflects our first half performance and the scale efficiency we made. And coupled with our team's discipline around expense management, we continue to make steady progress towards the median-term financial goal set forth at our 2022 Investor Day. As we enter the second half of our five-year strategy that we outlined at our 2022 Investor Day, I'm proud of what we've been able to accomplish in the market for the clients, our business, and for our teams. Our record results in the second quarter of 2024 demonstrate our focus on achieving our strategic and financial goals.

John D. Kelly: Our full-year learnings guidance reflects our first-half performance and the scale efficiency we need. Coupled with our team's discipline around expense management, we continue to make steady progress towards the median term financial goal set forth at our 2022 investor year. As we enter the second half of our five-year strategy that we outlined at our 2022 Investor Day, I'm proud of what we've been able to accomplish in the market, with our clients, our business, and for our team.

Speaker Change: And coupled with our team's discipline around expense management, we continue to make steady progress towards the medium-term financial goals set forth at our 2022 Investor Day.

Speaker Change: As we enter the second half of our five-year strategy that we outlined at our 2022 Investor Day, I'm proud of what we've been able to accomplish in the market, with our clients, and with our customers.

John D. Kelly: Our record results in the second quarter of 2024 demonstrate our focus on achieving our strategic and financial goals. We believe we're well positioned for continued growth in the years ahead. The strong client relationships we've built, the depth of our industry expertise, and a balanced portfolio of offerings that will continue to evolve and address our clients' most complex challenges. Now, let me turn it over to John for a more detailed discussion of our financial... Thank you, Mark, and good afternoon, everyone.

Speaker Change: for our business and for our teams.

Speaker Change: A record result in the second quarter of 2024 demonstrates our focus on achieving our strategic and financial goals.

Mark Hussey: We believe a well-positioned for continued growth in the years ahead. We've strong client relationships we've built, we've kept our industry expertise, and the bounce-forward full-year offerings that will continue to evolve and address our clients' most complex challenges.

Speaker Change: We believe we're well positioned for continued growth in the years ahead.

Speaker Change: We have a strong client relationships we've built, the depth of our industry expertise, and a balanced portfolio of offerings that will continue to evolve and address our clients' most complex challenges.

John Kelly: Now let me turn it over to John for more detailed discussion of our financial results. John?

Speaker Change: Now let me turn it over to John for a more detailed discussion of our financial results.

John Kelly: Thank you, Mark.

John Kelly: Good afternoon, everyone.

John Kelly: Before I begin, please note that I will be discussing non-GAAP financial measures such as EBITDA, the Joseph EBITDA, just net income, the Joseph EPS to free cash flow. Our press release tends to do an investor relations page on a year-on-west site. Have our installations of these non-gap measures, the most comparable gap measures. Along with the discussion of why management uses these non-GAAP measures, why management believes they provide useful information to investors regarding our financial condition and operating results.

John D. Kelly: Before I begin, please note that I will be discussing non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow. For our press release, thank you to the investor relations page on the Huron website and reconciliations of these non-gap measures, the most comparable gap measures. Along with a discussion of why management uses these non-GAAP measures and why management believes they provide useful information to investors regarding our financial condition and operating results.

John D. Kelly: John ? Thank you, Mark, and good afternoon, everyone. Before I begin, please note that I will be discussing non-GAAP financial measures, such as EBITDA, adjusted EBITDA, adjusted net income, adjusted EPS, and free cash flow.

John D. Kelly: Our press release, 10Q, and investor relations page on the Huron website have reconciliations of these non- GAAP measures to the most comparable GAAP measures .

John D. Kelly: Along with a discussion of why management uses these non-GAAP measures and why management believes they provide useful information to investors regarding our financial condition and operating results.

John Kelly: Before discussing our financial results with a quarter, I would like to acknowledge two housekeeping items. First, in the second quarter of 2024, settle the litigation matter for $15 million, for which you're out with the plaintiff. The $15 million settlement gain was recorded as a complement of other genes net on our consolidated statement of operations. We've excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal cost incurred during 2024, specific to this litigation matter.

John D. Kelly: Before discussing our financial results for the quarter, I would like to acknowledge two housekeeping items. First, in the second quarter of 2024, we'll settle the litigation matter for $15 million, for which you're out with the plaintiff. This $15 million settlement gain was recorded as a component of other gains net on our consolidated statement of operations. We've excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal cost incurred during 2024 specific to this litigation matter.

Speaker Change: Before discussing our financial results for the quarter, I would like to acknowledge two housekeeping items.

Speaker Change: First, in the second quarter of 2024, we'll settle a litigation matter for $15 million for which you're out with a plaintiff.

Speaker Change: This $15 million settlement gain was recorded as a component of other gains net on our consolidated statement of operations.

Speaker Change: We've excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs incurred during 2024 specific to this litigation matter.

John Kelly: Second, I want to make a comment on revenue-generating professional mid-count growth. Our year-over-year headcount growth, 13% as of June 30, included the expansion of our India-based healthcare managed services team. Excluding the impact of the India-based managed services team, headcount growth was 6%.

John D. Kelly: Second, I want to make a comment on revenue-generating professional headcount growth. Our year-over-year headcount growth, 13% as of June 30, included the expansion of our India-based health care managed services team. Excluding the impact of the India-based managed services team, headcount growth was 6%.

Speaker Change: Second, I want to make a comment on revenue-generating professional debt count growth.

Speaker Change: Our year-over-year headcount growth, 13% as of June 30th, included the expansion of our India-based healthcare managed services team. Excluding the impact of the India-based managed services team, headcount growth was 6%.

John Kelly: Now, we'll share some of the key financial results from the second quarter. Revenue is for the second quarter of 2024 for a record high, achieving $371.7 million, up to 7.2% from $346.8 million in the same quarter of 2023. The increase in revenues for the quarter was driven by solid growth in our healthcare and education segments, and included a full quarter contribution of $6.8 million from our GGNA acquisition, which closed during this birth quarter of 2024. The second quarter of 2004 was $37.5 million for $2.03 per diluted chair. The increase in net income was driven by the litigation federal again I mentioned earlier, and revenues that outpace expenses.

John D. Kelly: Now we'll share some of the key financial results from the second quarter. Revenues for the second quarter of 2024 were a record high, achieving $371.7 million, up 7.2% from $346.8 million in the same quarter of 2023. The increase in revenues for the quarter was driven by solid growth in our healthcare and education segments and included a full quarter contribution of $6.8 million from our PG&A acquisition, which closed during the first quarter of 2024.

Speaker Change: Now we'll share some of the key financial results from the second quarter.

Speaker Change: Revenues for the second quarter of 2024 were a record high, achieving $371.7 million, up 7.2 percent from $346.8 million in the same quarter of 2023.

Speaker Change: The increase in revenues for the quarter was driven by solid growth in our healthcare and education segments, and included a full quarter contribution of $6.8 million from our PG&A acquisition, which closed during the first quarter of 2024.

John D. Kelly: Net income for the second quarter of 2024 was $37.5 million, or $2.03 per diluted share, compared to net income of $24.7 million, or $1.27 per diluted share, for the second quarter of 2023. The increase in net income was driven by the litigation settlement gain I mentioned earlier and revenues that outpaced expenses. Our effective income tax rate in the second quarter of 2024 was 28.1%, which is less favorable than the statutory rate, exclusive of state income taxes, primarily due to certain non-deductible expense items.

Speaker Change: Net income for the second quarter of 2024 was $37.5 million, or $2.03 per diluted share, compared to net income of $24.7 million, or $1.27 per diluted share in the second quarter of 2023.

Speaker Change: The increase in net income is driven by the litigation settlement gain I mentioned earlier and revenues that outpace expenses.

John Kelly: Our effective income tax rate in the second quarter of 2024 was 28.1%, which is less favorable than the statutory rate, which those state income taxes are barely due to certain high deductible expense items. Just to leave it up was a record of $55.7 million in Q2, 2024, or 15% of revenues compared to $48.5 million per 14% of revenues in Q2, 2023. The increase in the just debit up for the quarter was primarily due to the increase in segment hopper income, excluding the impact of segment restructuring charges.

Speaker Change: Our effective income tax rate in the second quarter of 2024 was 28.1%, which is less favorable than the statutory rate, exclusive of state income taxes, primarily due to certain non-deductible expense items.

John D. Kelly: Jeff Zibida was a record $55.7 million in Q2 2024, or 15% of revenues, compared to $48.5 million, or 14% of revenues, in Q2 2023. The increase in adjusted EBIT after the quarter was primarily due to the increase in segment operating income, excluding the impact of segment restructuring. We are proud of our progress in improving margins, and we remain confident in our ability to achieve full-year mid-team margins in 2025, consistent with the goal we set forth in our 2022 investor presentation. Adjusted net income was $30.9 million, a record $1.68 per diluted share in Q2 2024, compared to $27 million, or $1.38 per diluted share in the second quarter of 2023, resulting in a The Value Fair segment generated 51% of total company revenues during the second quarter of 2024.

Jeff Zbida: Jeff Zibida was a record $55.7 million in Q2 2024, or 15% of revenues, compared to $48.5 million, or 14% of revenues, in Q2 2023.

Jeff Zbida: The increase in adjusted EBIT after the quarter was primarily due to the increase in segment operating income, excluding the impact of segment restructuring charges.

John Kelly: We are proud of our progress in improving margins, and we remain competent in our ability to achieve a year mid-teen margins in 2025, consistent with the goal we set forth in our 2022 investor day. The adjusted net income was $30.9 million, a record of $1.68 per diluted share in Q2, 2024, compared to $27 million, for $1.38 per diluted share in the second quarter of 2023, resulting in a 22% increase in adjusted diluted earnings per share of Q2, 2023.

Jeff Zbida: We are proud of our progress in improving margins, and we remain confident in our ability to achieve full-year mid-team margins in 2025, consistent with the goal we set forth in our 2022 Investor Day.

Jeff Zbida: The adjusted net income was $30.9 million.

Jeff Zbida: for a record $1.68 per diluted share in Q2 2024, compared to $27 million for $1.38 per diluted share in the second quarter of 2023, resulting in a 22% increase in adjusted diluted earnings per share over Q2 2023.

John Kelly: Now discuss the performance of each of our operating segments. Value for your segment generated 51% of total company revenues during the second quarter of 2024. The segment posted revenues of $190.1 million, about $16.3 million, or 90.4% from the second quarter of 2023. The increase in revenues in the quarter reflects continued strong demand for a digital, advanced improvement, culture and organizational excellence in strategy and innovation offers. Healthcare's digital and consulting and managed services capabilities were 15% and 7%, respectively, in the second quarter, reflecting the continued broad-based demand for our operates. The second quarter of 2024 included $17 million of favorable performance-based fee adjustments, compared to $16 million of such adjustments in the second quarter of 2023.

Speaker Change: Now let's discuss the performance of each of our operating segments.

Speaker Change: The volunteer segment generated 51% of total company revenues during the second quarter of 2024.

John D. Kelly: This segment posted revenues of $190.1 million, up $16.3 million, or 9.4% from the second quarter of 2023. The increase in revenues in the quarter reflects continued strong demand for digital, performance improvement, culture and organizational excellence, and strategy and innovation offerings. Healthcare's digital and consulting and managed services capabilities grew 15% and 7%, respectively, in the second quarter, reflecting the continued fraud-based demand for our services. The second quarter of 2024 included $17 million of favorable performance-based fee adjustments compared to $16 million of such adjustments in the second quarter of 2023. The ability to earn performance-based fees as we drive benefits for our clients is a favorable and ongoing attribute of our healthcare business. Therefore, the recognition of revenue for such adjustments can vary significantly quarter to quarter.

Speaker Change: This segment posted revenues of $190.1 million, up $16.3 million, or 9.4% from the second quarter of 2023.

Speaker Change: The increase in revenues in the quarter reflects continued strong demand for digital, performance improvement, culture and organizational excellence, and strategy and innovation offerings.

Speaker Change: Healthcare's digital and consulting and managed services capabilities grew 15% and 7% respectively in the second quarter, reflecting the continued fraud-based demand for our offerings.

Speaker Change: The second quarter of 2024 included $17 million of favorable performance-based fee adjustments compared to $16 million of such adjustments in the second quarter of 2023.

John Kelly: The ability to firm performance-based fees, as we drive benefits for our clients, is a favorable and ongoing attribute of our healthcare business, though the recognition of revenue for such adjustments can vary significantly in quarter to quarter. Operating margin for healthcare was 29.1% in Q2 2024, compared to 28.3% in Q2 2023. The increase in margin was primarily due to a decrease in contractor expenses, partially offset by an increase in competition cost for our revenue generating professionals at the percentage of revenues.

Speaker Change: The ability to earn performance-based fees as we drive benefits for our clients is a favorable and ongoing attribute of our healthcare business, though the recognition of revenue for such adjustments can vary significantly quarter to quarter.

John D. Kelly: Operating margin for health care was 29.1% in Q2 2024 compared to 28.3% in Q2 2023. The increase in margin was primarily due to a decrease in contract, partially offset by an increase in compensation costs for our revenue-generating professionals at a percentage of revenue. The education segment generated 33% of total company revenues during the second quarter of 2024.

Speaker Change: Operating margin for healthcare was 29.1% in Q2 2024 compared to 28.3% in Q2 2023.

Speaker Change: The increase in margin was primarily due to a decrease in contractor expenses.

Speaker Change: Partially offset by an increase in compensation costs for our revenue-generating professionals at a percentage of revenues.

John Kelly: The education segment generated 33% of total company revenues during the second quarter of 2024. The education segment posted revenues of $122.8 million, up to $12.1 million, or 10.9%, from the second quarter of 2023, and included $6.8 million from our acquisition of PG&A. The increase in revenues in the quarter was driven by increased demand for our strategy and operations in digital product offerings. Education's consulting and managed services capability revenue was 19 percent over the second quarter of 2023. The operating market for education was 25.1 percent for Q2-2024, and tried to 24.8 percent with the same quarter in 2023.

Speaker Change: The education segment generated 33% of total company revenues during the second quarter of 2024.

John D. Kelly: The education segment posted revenues of $122.8 million, up $12.1 million, or 10.9% from the second quarter of 2023, and included $6.8 million from our acquisition of DGA. The increase in revenues in the quarter was driven by increased demand for our strategy and operations and digital product offerings. Our consulting and managed services capability revenue grew 19% over the second quarter of 2023.

Speaker Change: The education segment posted revenues of $122.8 million, up $12.1 million, or 10.9% from the second quarter of 2023, and included $6.8 million from our acquisition of DGA.

Speaker Change: The increase in revenues in the quarter was driven by increased demand for our strategy and operations in digital product offerings.

Speaker Change: Education's consulting and managed services capability revenue grew 19% over the second quarter of 2023.

John D. Kelly: The operating margin for education was 25.1% for Q2 2024, compared to 24.8% for the same quarter in 2023. The increase in operating margin for the quarter was primarily driven by revenue growth that outpaced an increase in compensation costs for our revenue-generating professionals and a decrease in contractors, partially offset by an increase in compensation costs for our support personnel as a percentage of revenue. The commercial segment generated 16% of total company revenues during the second quarter of 2024 and posted revenues of $58.8 million compared to $62.3 million in the second quarter of 2023. The decrease in revenues was driven by a slower sales cycle for our digital offerings, partially offset by an increase in demand for our financial advisory offerings.

Speaker Change: The operating margin for education was 25.1% for Q2 2024 compared to 24.8% for the same quarter in 2023.

John Kelly: The increase in operating margin in the quarter was primarily driven by revenue growth that outpaced increase in compensation costs for our revenue generating professionals and a decrease in contractor expenses, partially offset by an increase in compensation costs for our support personnel as a percentage of revenue.

Speaker Change: The increase in operating margin in the quarter was primarily driven by revenue growth that outpaced an increase in compensation costs for our revenue-generating professionals and a decrease in contractor expenses.

Speaker Change: Partially offset by an increase in compensation costs for our support personnel as a percentage of revenue.

John Kelly: The commercial segment generated 16 percent of total company revenues during the second quarter of 2024, and posted revenues of 58.8 million dollars compared to 62.3 million dollars in the second quarter of 2023. The decrease in revenues was driven by a lower sales cycle for our digital offerings, partially offset by an increase in demand for our financial advisory offerings. As Mark mentioned, despite the shorter-term softening of market demand for our digital offerings, we are confident in the long-term growth trajectory of the commercial segment as temporary macro headlines ease when we fully capture the ongoing strength in our sales pipeline.

Speaker Change: The commercial segment generated 16% of total company revenues during the second quarter of 2024 and posted revenues of $58.8 million compared to $62.3 million in the second quarter of 2023.

Speaker Change: The decrease in revenues was driven by a slower sales cycle for our digital offerings, partially offset by an increase in demand for our financial advisory offerings.

John D. Kelly: Mark mentioned that despite the shorter-term softening of market demand for our digital offerings, we are confident in the long-term growth trajectory of the commercial segment as temporary macro headlines ease when we fully capture the ongoing strength in our sales pipeline. Operating margin for the commercial segment was 15.3% in Q2 2024, compared to 16.8% for the same quarter in 2023. The decrease in operating margin was driven by an increase in compensation costs for our revenue-generating professionals as a percentage of revenues, partially offset by decreases in restructuring charges and contractor expenses as a percentage of revenues. Corporate expenses are not allocated at the segment level.

Speaker Change: As Mark mentioned, despite the shorter-term softening of market demand for our digital offerings, we are confident in the long-term growth trajectory of the commercial segment as temporary macro headlines ease when we fully capture the ongoing strength in our sales pipeline.

John Kelly: Operating margin for the commercial segment was 15.3 percent in Q2-2024 compared to 16.8 percent for the same quarter in 2023. The decrease in operating margin was driven by an increase in compensation cost for our revenue generating professionals as a percentage of revenues, partially offset by decreases in restructuring charges and contractor expenses as a percentage of revenues.

Mark Hussey: Operating margin for the commercial segment was 15.3% in Q2 2024, compared to 16.8% for the same quarter in 2023.

Mark Hussey: The decrease in operating margin was driven by an increase in compensation costs for our revenue-generating professionals as a percentage of revenues, partially offset by decreases in restructuring charges and contractor expenses as a percentage of revenues.

John Kelly: Corporate expenses not allocated at the segment level, excluding the $15 million litigation settlement gain and corporate restructuring charges for $45.6 million in Q2-2024 compared to $43 million in Q2-2023. Unallocated corporate expenses in the second quarter of 2024 and 2023 included $700,000 and $1.4 million, respectively, of expense related to the increase in the liability of our deferred compensation plan, which is offset by the investment gain and the assets used upon that plan reflected in other income. Excluding the impact of the deferred compensation plan in both periods, unallocated corporate expenses increased $3.2 million, primarily due to increases in software and data hosting expenses and compensation expense for our support personnel.

John D. Kelly: Excluding the $15 million litigation settlement gain and corporate restructuring charges, revenues were $45.6 million in Q2 2024 compared to $43 million in Q2 2023. Allocated corporate expenses in the second quarter of 2024 and 2023 included $700,000 and $1.4 million, respectively, of expense related to the increase in the liability of our deferred compensation plan, which is offset by the investment gain on the assets used to fund that plan reflected in other Excluding the impact of the Deferred Compensation Plan in both periods, unallocated corporate expenses increased $3.2 million, primarily due to increases in software and data hosting expenses and Compensation Expense for our support personnel. Now I'll turn you to the balance sheet and cash flow. Cash flow from operations in the second quarter of 2024 was a record $107.2 million. In the quarter, we invested $9 million in capital.

Mark Hussey: Corporate expenses not allocated at the segment level, excluding the $15 million litigation settlement gain and corporate restructuring charges, were $45.6 million in Q2 2024 compared to $43 million in Q2 2023.

Mark Hussey: Unallocated corporate expenses in the second quarter of 2024 and 2023 included $700,000 and $1.4 million, respectively, of expense related to the increase in the liability of our Deferred Compensation Plan.

Mark Hussey: which is offset by the investment gain on the assets used to fund that plan reflected in other income.

Mark Hussey: Excluding the impact of the Deferred Compensation Plan in both periods, unallocated corporate expenses increased $3.2 million, primarily due to increases in software and data hosting expenses and compensation expense for our support personnel.

John Kelly: Now it turns the balance sheet and cash flows. Cash flow from operations in the second quarter of 2024 was a record of $107.2 million. In the quarter, we invested $9 million in capital expenditures, inclusive of internally self software costs, resulting in free cash flow of $98.2 million. ESO was 81 days at the close of the second quarter of 2024, compared to 91 days from the first quarter of 2024, and 77 days from the second quarter of 2023. Total debt as of June 30th, 2024, was $511.6 million, consisting entirely of our senior bank... and we finished the quarter with cash of $17.6 million or net debt of $493.9 million.

Speaker Change: Now I'll turn you to the balance sheet and cash flows.

Speaker Change: Cash flow from operations in the second quarter of 2024 was a record $107.2 million.

John D. Kelly: Inclusive of Internally Felt Software Comp, resulting in free cash flow of $98.2 million. DSO was 81 days at the close of the second quarter of 2024 compared to 91 days for the first quarter of 2024 and 77 days for the second quarter of 2023. Total debt as of June 30, 2024, was $511.6 million, consisting entirely of our senior bank debt. Can we finish the quarter with cash of $17.6 million or net debt of $493.9 million?

Speaker Change: In the quarter, we invested $9 million in capital expenditures, inclusive of internally felt software costs, resulting in free cash flow of $98.2 million.

Speaker Change: DSO was 81 days at the close of the second quarter of 2024, compared to 91 days for the first quarter of 2024, and 77 days for the second quarter of 2023.

Speaker Change: Total debt, as of June 30, 2024, was $511.6 million, consisting entirely of our senior bank debt.

Speaker Change: And we finish the quarter with cash of $17.6 million or net debt of $493.9 million.

John Kelly: This was a $61.1 million decrease in net debt compared to Q1 of 2024. Our leverage ratio, defined in our senior bank agreement, was 2.2 times adjusted even up as of June 30th, 2024, consistent with the leverage ratio as of June 30th, 2023.

John D. Kelly: This was a $61.1 million decrease in net debt compared to Q1 of 2024. Our leverage ratio is defined in our senior bank agreement, and 2.2 times just to keep it up as of June 30th, 2024, consistent with the leverage ratio as of June 30, 2023. During the second quarter, we used $34.4 million to repurchase approximately 376,000 shares.

Speaker Change: This was a $61.1 million decrease in net debt compared to Q1 of 2024.

Speaker Change: Our leverage ratio, defined in our senior bank agreement, was 2.2 times adjusted EBITDA as of June 30, 2024, consistent with the leverage ratio as of June 30, 2023.

John Kelly: During the second quarter, we used $34.4 million to repurchase approximately 376,000 shares. Since the beginning of 2024, we have repurchased 1 million shares, representing 5.4% of our comments. outstanding as it is December 31st, 2023. As of June 30th, 2024, $90 million remained available for share repurchases under our current share repurchase program. We achieved record free cash blow in the second quarter of 2024 and continued to execute on our balanced capital deployment strategy. We believe the cumulative effect of our return to shareholders via share repurchases over the last several years, as well as addition, does for continued strong EPS expansion.

Speaker Change: During the second quarter, we used $34.4 million to repurchase approximately 376,000 shares.

John D. Kelly: At the beginning of 2024, we repurchased 1 million shares, representing 5.4% of our common stock outstanding as of December 31st, 2023. As of June 30, 2024, $90 million remained available for share repurchases under our current share repurchase program. We achieved record free cash flow in the second quarter of 2024 and continue to execute on our balanced capital deployment strategy. We believe the cumulative effect of our return to shareholders via share repurchases over the last several years has well positioned us for continued strong EPS expansion. At the same time, our balance sheet remains strong, providing us with the capacity for continued share repurchases and accretive M&A.

Speaker Change: Since the beginning of 2024, we have repurchased 1 million shares, representing 5.4% of our common stock outstanding as of December 31st, 2023.

Speaker Change: As of June 30, 2024, $90 million remained available for share repurchases under our current share repurchase program.

Speaker Change: We achieved record free cash flow in the second quarter of 2024 and continue to execute on our balanced capital deployment strategy.

Speaker Change: We believe the cumulative effect of our return to shareholders via share repurchases over the last several years has well positioned us for continued strong EPS expansion.

John Kelly: At the same time, our balance should remain strong, providing us the capacity for continued share repurchases and a creative M&A.

Speaker Change: At the same time, our balance sheet remains strong, providing us the capacity for continued share repurchases and accretive M&A.

John Kelly: Finally, let me turn to our guidance of the full year 2024. Smart mentions, we are updating a full year 2024 revenue and earnings guidance that follows. Narrowing our revenues before reimbursement of guidance to a range of $1.46 billion to $1.5 billion, reflecting the lower half of our previous revenue guidance range. Increasing our adjusted EBITDA at a percentage of revenue guidance to a range of 13%, 13.5%, and increasing our adjusted, diluted earnings per share guidance to a range of $5.85, $6.15.

John D. Kelly: Finally, let me turn to our guidance for the full year 2024. As Mark mentioned, we are updating our full year 2024 revenue and earnings guidance as follows. Narrowing our revenues before reimbursable expenses to a range of $1.46 billion to $1.5 billion, reflecting the lower half of our previous revenue guidance range. Increasing our adjusted EBITDA as a percentage of revenue guidance to a range of 13% to 13.5%, and increasing our adjusted diluted earnings per share guidance to a range of $5.85 to $6.15. Thanks, everyone. I would now like to open the call to questions. Operator?

Speaker Change: Finally, let me turn to our guidance for the full year of 2024.

Speaker Change: As Mark mentioned, we are updating our full year 2024 revenue and earnings guidance as follows, narrowing our revenues before reimbursable expenses guidance.

Speaker Change: To a range of $1.46 billion to $1.5 billion, reflecting the lower half of our previous revenue guidance range.

Speaker Change: Increasing our Adjusted EBITDA as a Percentage of Revenues Guidance to a range of 13% to 13.5% And increasing our Adjusted Diluted Earnings Per Share Guidance to a range of $5.85 to $6.15

John Kelly: Thank you, everyone.

Operator: I would now like to open the call to questions. Operator?

Operator: Thank you. Ladies and gentlemen, if you have a question at this time, please press star 11 on your touch-tone telephone. If your question has been answered, or you wish to remove yourself from the queue, you may do so by pressing Star 11 again. One moment for our first question.

Speaker Change: Thank you, everyone. I would now like to open the call to questions.

Operator: Thank you. Ladies and gentlemen, if you have a question at this time, please press star 11 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, you may do so by pressing star 11.

Speaker Change: Operator.

Speaker Change: Thank you. Ladies and gentlemen, if you have a question at this time, please press star 11 on your touchtone telephone.

Speaker Change: If your question has been answered or you wish to remove yourself from the queue, you may do so by pressing star 11 again.

Operator: One moment for our first question. Our first question comes from the line of Andrew Nicholas of William Blair & Company. Hi, everyone. Good afternoon.

Speaker Change: One moment for our first question.

Andrew Nicholas: Our first question comes from the line of Andrew Nicholas of William Blair & Company. Good afternoon. I wanted to ask on a commercial weakness first. Mark, you're pretty confident in this being temporary weakness.

Speaker Change: Our first question comes from the line of Andrew Nicholas of William Blair and Company.

Andrew Owen Nicholas: I wanted to ask about commercial weakness first. Mark, you're pretty confident in this being a temporary weakness. Just kind of curious if you could speak to, you know, what gives you that confidence and over what time frame you would expect this to kind of play itself out. Is it just a matter of getting through, you know, some difficult competitions and some of these budget restrictions, or is there any other catalyst you're looking for?

Andrew Owen Nicholas: Hi everyone, good afternoon. I wanted to ask on commercial weakness first.

Mark Hussey: Just kind of curious if you could speak to, you know, what gives you that confidence and over what timeframe you would expect this to kind of play itself out of the, just a matter of getting through, you know, some difficult comps and some of these budget restrictions, or is there any other catalyst you're looking for? And then, somewhat relatedly, is the plan to let us throw off the gas a little bit on the headcount growth side until you start to see evidence of those budgets falling out. Andrew, I would start with a reason for our content.

Speaker Change: mark your

Andrew Owen Nicholas: I'm pretty confident in this being temporary weakness, just kind of curious if you could speak to

Andrew Owen Nicholas: And then somewhat relatedly, is the plan to let the foot off the gas a little bit on the headcount growth side until you start to see evidence of those budgets thawing out? Yeah, Andrew. I would start with the reason for our confidence. It's really the pipeline itself.

Speaker Change: You know, what gives you that confidence and over what time frame.

Speaker Change: you would expect this to kind of play itself out? Is it just a matter of getting through, you know, some difficult comps and some of these budget restrictions or is there any other catalyst you're looking for? And then somewhat relatedly, is the plan to

Speaker Change: Let's put off the gas a little bit on the headcount growth side until you start to see evidence of those budgets thawing out.

Mark Hussey: When we look at the kinds of projects that we're bidding on and the clients that are engaging us, we look at the size of that at historical levels, and we feel confident that the demand is there and that, really, what we've got is delays in decision making that, to me, we've seen in other environments where there's some macro environment uncertainty; you've got the elections going on. So we believe that ultimately, you know, the tailwinds are going to come back, and we see signs from time to time that we're not ready to call that in the second half of the year, we have to tap the brakes on headcount additions, but there's, we see nothing that really gives us any kind of, [inaudible] When we look at the guidance update and the lowering of the midpoint of our revenue guide, it

Mark Hussey: It's really the pipeline itself. We look at the kinds of projects that we're bidding on and the clients that are engaging us. We look at the size of that at historic levels. You know, we feel confident that what the demand is there, and that really what we've got is the ways and decision making that to me, we've seen in other environments, where there's some macro environment uncertainty that the election is going on. So we believe that ultimately, you know, there's the tailwinds are going to come back. And we see signs in time to time that we're not ready to call that.

Speaker Change: Yeah, Andrew, I would start with the reason for our confidence. It's really the pipeline itself. When we look at the kinds of

Speaker Change: Projects that we're sitting on and the clients that are engaging us. We look at the size of that at historical levels.

Speaker Change: We feel confident that the demand is there and that really what we've got is delays in decision-making that, to me, we've seen in other environments where there's...

Speaker Change: You know, some macro-environment surveys, you've got the elections going on. So, we believe that ultimately...

Mark Hussey: In the second half of the year, we have tapped the brakes on head count additions, but there's, we've seen nothing that really gives us any kind of view of change and trajectory for the tunnel on the terms. And, Andrew, I'll add, when we look at the guidance update and the lowering of the midpoint of our revenue guidance by the $20 million, the majority of that actually relates to some of the softness that we experienced during the first six months of the year. When we look at the back half of the year and our projection in the back half of the year, which is supported by the pipeline, by the backlog, that's actually much more consistent with the expectations that we added the front half of the year.

Speaker Change: The tailwinds are going to come back, and we see signs from time to time. We're not ready to call that in the second half of the year. We have tapped the brakes on headcount additions, but we see nothing that really gives us any kind of...

Speaker Change: Do you have a change in trajectory for the longer term? And Andrew, I'll add...

Andrew Owen Nicholas: When we look at the guidance update and the lowering of the midpoint of our revenue guide, it's about $20 million.

Mark Hussey: The majority of that actually relates to some of the softness that we experienced during the first six months of the year. But when we look at the back half of the year and our projections for the back half of the year, which is supported by our pipeline and by our backlog, that's actually much more consistent with the expectations that we had in the front half of the year. So I think we've already digested a significant component of the weakness that Mark was referring to.

Andrew Owen Nicholas: The majority of that actually relates to some of the softness that we experienced during the first six months of the year. When we look at the back half of the year and our projections for the back half of the year, which is supported by our pipeline and by our backlog,

Andrew Owen Nicholas: That's actually...

Mark Hussey: So I think we've already digested a significant point of the weakness that are going to be in front of you. And John made it clear that that's specific to commercial.

Andrew Owen Nicholas: much more consistent with the expectations that we had at the front half of the year. So I think we've already digested a significant component of the weakness that Mark was referring to.

John D. Kelly: And John, maybe to clarify that, that's specific to commercial, you're saying, in terms of growth and system. Maybe that's a good segue, then, to just ask a follow-up on the segment-level expectations you had given us, or outline that for us on the fourth quarter call. The first quarter was a little bit different, somewhat with commercial.

Andrew Nicholas: You're saying, in terms of growth, and system was okay. Maybe that's a good segue then to just ask a follow-up on segment level expectations. You had given us or outlined that for us on the fourth quarter call. First quarter was a little bit different somewhat with commercial. I think health care was a little bit better than you had thought going, you know, after, after just three months. So if you could just outline maybe where segment level expectations are today relative to the fourth quarter call. I think that would, would be some helpful additional context for the guidance changes.

Andrew Owen Nicholas: And John , maybe to clarify, that's specific to commercial, you're saying?

John D. Kelly: in terms of growth consistent with...

John D. Kelly: Maybe that's a good segue then to just ask a follow-up on segment level expectations you had given us.

Speaker Change: Or outline that for us on the fourth quarter call. First quarter was a little bit different, somewhat with commercial. I think health care was a little bit better than you had thought going, you know, after after just three months. So if you could just outline maybe where segment level expectations are today relative to the fourth quarter call.

Andrew Owen Nicholas: I think health care was a little bit better than you had thought going in, you know, after just three months. So if you could just outline maybe where segment level expectations are today relative to the fourth quarter call, I think that would be some helpful additional context for the guys. Sure, Andrew, from a health care perspective, we're expecting the full year growth rate at this point to be in the upper single digits, lower double digit range. So that's up from here.

Speaker Change: I think that would be some helpful additional context for the guidance changes.

John Kelly: Sure, Andrew, from a, I'll start with health care. From a health care perspective, expecting the full year growth rate at this point to be in the upper single digits lower double digit range. Let's up from the up from the mid to upper single digit range back from the February call. And we still expect margins for out here to be in the 25 to 27% range. From an education perspective, we're expecting revenues now for the full year to be in the low double-digit range. And we described it as the low team range on the call back in February.

Speaker Change: Sure, Andrew. I'll start with health care, from a health care perspective.

Speaker Change: We're expecting the full year growth rate.

Speaker Change: at this point to be in the upper single-digit to lower double-digit range. So that's up from the mid to upper single-digit range back from the February recall. And we still expect margins for healthcare to be in the 25 to 27 percent range.

John D. Kelly: Up from the mid to upper single digit range back from the February call, and we still expect margins for healthcare to be in the 25 to 27% range. From an education perspective, we're expecting revenues now for the full year to be in the low double digit range. We described it as the low team range on the call back in February.

Speaker Change: From an education perspective, um, we're

Speaker Change: Expecting revenues now for the full year to be in the

Speaker Change: Low double-digit range

John Kelly: I think we still expect to be in the low double, low double digit range in there. The margins again, we expect to be in the 24 to 26% range, which is consistent from the February call. From a commercial perspective, we're now expecting the full year to be relatively flat with last year. But that was an area where we expected the outset of the year on low double-digit growth. And the margins for this part of the business also remained unchanged in the 21-23% range. Great, thank you. And then, if I could just squeeze one more in.

John D. Kelly: If we still expect to be in the low, double-low, double-digit range, and there are the margins again, we expect to be in the 24 to 26% range, which is consistent with the February call. And then from a commercial perspective, we're now expecting the full year to be relatively flat with last year. So that was an area where we expected low double-digit growth at the outset of the year, and the margins for this part of the business also remain unchanged at between 21 to 23%.

Speaker Change: We described it as the low team range on the call back in February .

Speaker Change: I think we still expect to be in the low double, low double-digit range, and there are the margins.

Speaker Change: Again, we expect to be in the 24% to 26% range, which is...

Speaker Change: Consistent from the February call and then from a commercial perspective we're now expecting the full year to be relatively flat with last year so that was an area where we expected the outset of the year low double-digit growth and the margins for this part of the business also remained unchanged in the in the 21-23 percent range.

John D. Kelly: Great, thank you. And then if I could just squeeze one more in, I mean, some movement there at the segment level, but, you know, the margin outlook consistent at the segment level, and also you were able to raise it for the full year. What gives you the ability to do that?

John Kelly: I mean, some movement there at the segment level, but you know, the margin outlook. Consistent at the segment level and also you were able to raise it for the full year. I mean, what gives you the ability to do that? Is it just really, really strong utilization trends. Is it, you know, plans to lower hedge counts growth in the back half of the year and anything else that you would touch on that the great. Yeah, Andrews John, our team has done an excellent job of really managing expenses throughout the first half of the year. For context, the tradition is we've talked about in the past couple of calls has been much lower than what we anticipated beginning of the year, which means that that careful stewardship by our teams has been all the more important to your point about utilization at the year does go on based on our forecast.

Speaker Change: Great, thank you. And then if I could just squeeze one more in, I mean, some movement there at the segment level, but you know, the margin outlook consistent at the segment level, and also you were able to raise it for the full year. I mean, what gives you the ability to do that?

Andrew Owen Nicholas: Is it just really, really strong utilization trends? Is it, you know, plans to lower hedge count growth in the back half of the year? And anything else that you would touch on, that'd be great. Yeah, Andrew. It's John.

Speaker Change: Just really, really strong utilization trends. Is it, you know, plans to lower headcount growth in the back half of the year? And anything else that you would touch on that'd be great.

John D. Kelly: Our team has done an excellent job of really managing expenses throughout the first half of the year. For context, attrition, as we've talked about in the past couple of calls, has been much lower than what we anticipated at the beginning of the year, which means that careful stewardship by our teams has been all the more important. To your point about utilization, as the year does go on, based on our forecast, we do expect utilization to continue to ramp up in the back half of the year.

Speaker Change: Andrew, it's John . Our team has done an excellent job of really managing expenses throughout the first half of the year. For context, attrition, as we've talked about in the past couple of calls, has been much lower than what we anticipated at the beginning of the year, which means that careful stewardship by our teams has been all the more important.

John D. Kelly: And so we think that's going to be another margin-accretive item as we get towards the back half of the year. And then, finally, we mentioned the litigation settlement gain. Having those litigation expenses for that settlement fully behind us at this point, that's another positive factor in terms of our full year margin outlook. Thank you, guys. Thank you. Our next question comes from the line of Tobey Sommer of Truist Security. Thank you.

John Kelly: We do expect utilization and continue to ramp up in the back half of the year. And so we think that's going to be another margin of creative item as we get towards the back half of the year.

Andrew Owen Nicholas: To your point about utilization, as the year does go on, based on our forecast, we do expect utilization to continue to ramp up in the back half of the year, and so we think that's going to be another margin accretive item as we get towards the back half of the year. And then finally, we mentioned the litigation settlement gain.

Andrew Nicholas: And then finally, you know, we mentioned the litigation settlement gain, having those litigation expenses for that settlement behind fully behind us at this point, that's another positive factor in terms of what will your margin all look. Thanks again. Thank you, Andrew.

Andrew Owen Nicholas: Those litigation expenses for that settlement are fully behind us at this point. That's another positive factor in terms of our full-year margin outlook.

Tobey Sommer: Our next question comes from the line of Tobey Sommer, up to us Securities. Thank you. I wanted to ask a sort of a broad question about incremental margins. Can you achieve the mid-teens margin target for next year, the 15% I guess. At this kind of revenue growth rate, or do you need revenue growth to accelerate for that to be achievable?

Speaker Change: Thanks again.

Speaker Change: [inaudible]

Speaker Change: Our next question comes from the line of Tobey Sommer of Truist Securities.

John D. Kelly: I wanted to ask a sort of a broad question about incremental margin. Can you achieve the mid-teens... Margin target for next year, the 15%, I guess, at this kind of revenue growth rate, or do you need revenue growth to accelerate for that to be achievable? Hey Tobey, it's John.

Tobey O'Brien Sommer: Thank you. I wanted to ask a sort of a broad question about incremental margins.

Tobey O'Brien Sommer: Can you achieve the mid-teens margin target for next year, the 15%, I guess?

Speaker Change: at this kind of revenue growth rate or do you need revenue growth to accelerate for that to be achievable?

John Kelly: Hey, Hey, Toby is John. We don't need revenue to accelerate beyond really the revenue growth profile that we're seeing this year just for the sake of discussion in order to continue the ramp or that we see with margins for the whole night year next year. That's an area where, when we look at the different levers that we have from a margin perspective, scaling our GNA, continued deployment using our global delivery model utilization, some of the pricing issues that we have underway, we feel good that those individual levers, in fact, probably oversaw the margin targets that we have out there, which of course gives us some capacity to continue to invest in the business.

Tobey O'Brien Sommer: We don't need revenue to accelerate beyond the revenue growth profile that we're seeing this year, just for the sake of discussion, in order to continue the ramp forward that we see with margins for the full year next year. That's an area where when we look at the different levers that we have from a margin perspective, scaling our SG&A, continued deployment, using our global delivery model, utilization, and some of the pricing initiatives that we have underway. We feel good that those individual levers, in fact, probably exceeded the margin targets that we have out there, which, of course, gives us some capacity to continue to invest in the business.

Speaker Change: Hey Tobey, it's John . We don't need revenue to accelerate beyond really the revenue growth profile that we're seeing this year just for the sake of discussion in order to continue the ramp forward that we see with margins for the fall next year. That's an area where

Speaker Change: When we look at the different libraries that we have from a margin perspective,

Speaker Change: Scaling around the DNA

Speaker Change: continue deployment using our global delivery model, utilization, some of the pricing initiatives that we have underway. We feel good that those

Speaker Change: Those individual levers, in fact, probably over-solve.

Mark Hussey: So we feel good about our ability to continue to manage towards the margin targets in a variety of different revenue growth rates. And Toby, I'll add, I think what is a very important addition to that, which is, you know, our managing director compensation, the targets that we set, we really have built into everybody's objectives a margin component, which really is very important. Because it, you know, many of the decisions that are made are really the micro level by individual management directors, as they manage their engagement with the soul and delivered. And so that really has shifted to a nice balance between, you know, the revenue growth, but making sure we preserve the growth of the bottom line.

John D. Kelly: So we feel good about our ability to continue to manage towards the margin targets at a variety of different revenue growth rates. And Tobey, I'll add what I think is a very important addition to that, which is in our managing director compensation, the targets that we set, we really have built into everybody's objectives a margin component, which is really very important because, you know, many of the decisions that are made are really at the micro level by individual managing directors as they manage their engagements that have been sold and delivered.

Speaker Change: The margin targets that we have out there, which of course gives us some capacity to continue to invest in the business. So we feel good about our ability to continue to manage towards the margin targets.

Speaker Change: in a variety of different revenue growth rates.

Speaker Change: And Tobey, I'll add I think what is a very important addition to that, which is

Tobey O'Brien Sommer: In our Managing Director Compensation, the targets that we set, we really have built into

Tobey O'Brien Sommer: Everybody's objective is a margin component.

Tobey O'Brien Sommer: which really is very important because it, you know, many of the decisions that are made are really at the micro level by individual managing directors as they manage their engagements that have been sold and delivered, and so that really has shifted to a nice balance between

John D. Kelly: And so that really has shifted to a nice balance between not only revenue growth but making sure that we preserve the profitability bottom line. So, you know, the rate of growth on the top line certainly is very helpful when we look at components contributed by leveraging SG&A, but there's many other levers that we have that, you know, so we're not certainly not single-threaded around just revenue growth. I'm, within the education business and what you're seeing from customers there, there's certainly been news over the last, you know, the first half a year with protests and potential impacts on fundraising, the delays with FAFSA and impacts on enrollment, and now with having to pay student athletes.

Andrew Nicholas: So, you know, the rate of growth on the top line certainly is very helpful when we look at components contributed by leveraging SGNA, but there's many of the levers that we have that, you know, and so we're not certainly not seeing what is right around just the revenue growth within the education business and what you're seeing from customers there. There's certainly been news over the last, you know, the first half of the year with protests and in potential impacts on fundraising, the delays with fast and impacts on enrollment and now like having to pay student athletes.

Tobey O'Brien Sommer: You know, the revenue growth, but making sure we preserve the profitability at the bottom line. So, you know, the rate of growth on the top line certainly is very helpful when we look at the components contributed by leveraging SG&A.

Tobey O'Brien Sommer: But there's many other levers that we have that, you know, so we're not, certainly not single-threaded around just a primary group.

Tobey O'Brien Sommer: Bye-bye.

Speaker Change: Within the education business and what you're seeing from customers there, there's certainly been news over the last...

Speaker Change: The first half of the year with protests and potential impacts on fundraising, the delays with FAFSA and impacts on enrollment, and now having to pay student-athletes. Do those factors...

Mark Hussey: Do those factors. is potentially alter the growth rate for the segment or how does new flow today impact your outlook for the business in 12 months or so. You know, it's a very fair question; it's given the promise and the headlines that you've seen. But really, when you look at it, it's really centered around the office of the president, and they mentioned even my remarks. So much of our work is done with people within the president's cabinet, if you will, that they all have responsibilities that are really tied to the improvements they need to make across their own institutions.

John D. Kelly: Is that, do those factors potentially alter the growth rate for the segment, or like, how does the news flow today impact your outlook for the business in 12 months? You know, it's a very fair question, just given the prominence in the headlines that you've seen, but really, when you look at it, it's really centered around the office of the president.

Speaker Change: potentially alter the growth rate for the segment? Or how does news flow today impact your outlook for the business in 12 months, so to speak?

Speaker Change: You know, it's a very fair question, just given the prominence in the headlines that you've seen, but really when you look at it, it's really centered around, you know, the office of the president. And as I mentioned, even in my remarks,

Tobey O'Brien Sommer: And as I mentioned, even in my remarks, so much of our work is done with people within the president's cabinet, if you will, and they all have responsibilities that are really tied to the improvements they need to make across their own institutions. And so we have not really seen any kind of impact from that, although, you know, we watch it, we monitor it, so at this point, it is not something that we're terribly concerned about, just because we've had some degree of time already between now and when some of those initial challenges happened, you know, in the 1990s. Right?

Speaker Change: So much of our work is done with people within the President's Cabinet, if you will, and they all have responsibilities that are really tied to the improvements they need to make across their own institutions.

Mark Hussey: And so we have not really seen any kind of impact out of that, although, you know, we watch it, we monitor it. So at this point, it is not something that we're terribly concerned about, but it's just because we, you know, we had some degree of time already. But between now and when some of those initial challenges happen, you know, in the ideas.

Speaker Change: And so, we have not really seen any kind of...

Speaker Change: impact out of that. Although, you know, we watch it, we monitor it. So at this point, it is not something that we're terribly concerned about. But just because we've had some degree of time already between now and when some of those initial challenges happened, you know, in the IDs.

Mark Hussey: Right, and then within the healthcare portfolio that you've broadened, demand can have services that can match a wider spectrum of sort of healthy or sick conditions at hospital customers. How are you seeing the spectrum of demand evolve? You know, several quarters ago, we had mostly performance improvement in the complexion of that seems to be shifting. How would you characterize the balance of demand and where it's strongest currently? Yeah, I'll let you elaborate, but I would just say, as a general expectation, I think the areas that are, first of all, I say the comments that we hear from our teams are margins are pretty razor thin. They're better, but it's not like there's a big purpose. But there is definitely, you know, a barbell, if you will, of clients that are doing quite well and are being aggressive toward their growth.

Mark Hussey: And then within the healthcare portfolio, you've broadened demand and can, you know, have services that can match a wider spectrum of, sort of, healthy or sick conditions at hospital customers. How are you seeing the spectrum of demand evolve? You know, several quarters ago, we had mostly performance improvement, and the complexion of that seems to be shifting. How would you characterize the balance of demand and where it's strongest currently? Yeah, I'll let John elaborate, but as a general expectation, I think the areas that are are Priscilla I.T.

Speaker Change: Right, and then within the healthcare portfolio that you've broadened demand and can you know have services that can match a wider spectrum of

Speaker Change: sort of healthy or sick conditions at hospital customers.

Speaker Change: How are you seeing the spectrum of demand evolve? Several quarters ago we had

Speaker Change: mostly performance improvement, and the complexion of that seems to be shifting. How would you characterize the balance of demand and where it's strongest currently?

Speaker Change: I'll let John elaborate, but I would just say as a general expectation, I think the areas that are

John D. Kelly: The comments that we hear from our teams are that margins are pretty razor thin; they're better, but it's not like there's a big buffer. But there is definitely, you know, a barbell, if you will, of clients that are doing quite well and are being aggressive toward their growth. Those are the areas that they're investing in technology and their digital solutions, some of these strategy areas and financial advisory, things that are on the proactive growth side.

Speaker Change: First of all, I'd like to thank you all for joining us today. I hope you have a great rest of your day.

John D. Kelly: The comments that we hear from our teams are that margins are pretty razor thin, they're better, but it's not like there's a big buffers, but there is definitely

John D. Kelly: You know, a barbell, if you will, of clients that are doing quite well and are being aggressive toward their growth. Those are the areas that they're investing in technology and their digital solutions.

John Kelly: Those are the areas that they're investing in technology in our digital solutions, some of the strategy areas and financial advisory things that are on the pro act of gross side. And yet we still see those systems that are really challenged with just, you know, headwinds around the competitive markets, the reimbursement models, and lagging. So there's been a pretty healthy mix that I would say it's leaning towards digital as the area that you really seeing people within the systems waiting into health care. Yeah, from the best, you know, from the market overview, from when you look at our pipeline, so it continues to be really well balanced.

John D. Kelly: So these strategy areas and financial advisory, things that are on the proactive growth side, and yet we still see those systems that are really challenged with just

John D. Kelly: You know, headwinds around the competitive markets, the reimbursement models, and the like. And so there's been a pretty healthy mix, but I would say it's leaning toward digital as the area that you're really seeing people within the systems leaning into. Yeah, from the market overview, when you look at our pipeline, Tobey continues to be really well balanced.

John D. Kelly: [inaudible]

John D. Kelly: Yeah, from the best, you know, from the market overview, from when you look at our pipeline, Tobey continues to be really well balanced. And so that segment of the market that's going through financial pressures right now, that's still driving significant demand for our

John Kelly: And so that segment of the market that's going through financial pressures right now, that's still driving significant demand for our performance improvement offerings. And you know, our teams continue to relay back to us that it's a robust market for those types of offerings right now, and that is supported by the data that we see in our backlog and our pipeline. Yet at the same time. The digital needs that Mark just referred to also are a big growth area. We also see a number of meaningful projects in the pipeline and opportunities related to that part of our business.

John D. Kelly: And so that segment of the market that's going through financial pressures right now is still driving significant demand for our performance improvement offerings. And our teams continue to relay back to us that there is a robust market for those types of offerings right now. And that's supported by the data that we see in our backlog and our pipeline. Yet, at the same time, the digital needs that Mark just referred to are also a big growth area.

Tobey O'Brien Sommer: performance improvement offerings. And our teams continue to relay back to us that it's a robust market for those types of offerings right now, and that's supported by the data that we see in our backlog and our pipeline. Yet, at the same time,

John D. Kelly: We also see a number of meaningful projects in the pipeline and opportunities related to that part of our business. So to your question about the trajectory of things, you're right, it was a performance improvement-weighted pipeline last year. We talked about more balance at the beginning of this year, and I'd say we continue to see that balance at this point. Thank you.

Tobey O'Brien Sommer: The digital needs that Mark just referred to also are a big growth area. We also see a number of meaningful projects in the pipeline and opportunities related to that part of our business.

John Kelly: So to hear, we asked the question about the trajectory of things to write. It was a performance improvement weighted pipeline last year. We talked about more balance at the beginning of this year, and I'd say we continue to see that balance at this point. in here.

Speaker Change: We asked a question about the trajectory of things. You're right, it was a performance improvement weighted pipeline last year. We talked about more balance at the beginning of this year and I'd say we continue to see that balance at this point this year.

Operator: Thank you.

Tobey O'Brien Sommer: And then just on your headcount growth, particularly digital in your offshore operations. Is it fair to assume that that headcount growth is attached to sales already sort of consummated and in the bag as opposed to prospective sales out in future quarters? Yeah, I would say our digital in, you know, what I referred to earlier on the band call was our managed services team in India, our global delivery team for manned services, and yes, to answer your question, that team is related to projects that have already been sold, and they're executing on those. To broaden the question to our digital team, which is also based in India, they're largely deployed and have strong utilization on our ongoing digital projects as well.

Mark Hussey: And then just on your head count growth, particularly digital in your offshore operations, is it fair to assume that that head count growth is attached to sales already sort of consummated and in the bag as opposed to prospective sales out in future quarters? Yeah, I would say our digital, in what I referred to earlier as being the call, was our managed services team in India, in our global delivery team for managed services. And yes, answered question that team is related to projects that have already been sold, and they're executing on those. We're on the question to our digital team, which is also based in India. They're largely deployed and have strong utilization on our ongoing digital projects as well.

Speaker Change: Thank you. And then, just on your headcount growth, particularly digital in your offshore operations.

Speaker Change: Is it fair to assume that that headcount growth is attached to sales already sort of consummated and in the bag, as opposed to prospective sales out in future quarters?

Speaker Change: Yeah, I would say our digital, and why I referred to you earlier to be on the call was our managed services team in

Speaker Change: India, our global delivery team for manned services. And yes, to answer your question, that team is related to projects that have already been sold and they're executing on those. To broaden the question to our digital team, which is also based in India, they're largely deployed and have strong utilization on our ongoing digital projects as well.

John Kelly: And then last numerical question for me, in the context of improving EBITDA margins and getting up to the mid teams, does that have any implications or changes to the cash flow conversion, or should the rules of thumb of the past hold true as the margins expand? The rules of thumbs and rules of thumb of the past hold true.

John D. Kelly: And then, last numerical question for me, in the context of improving EBITDA margins and getting up to the mid-teens, does that have any implications or changes to the cash flow conversion, or should the rules of thumb of the past hold true as the margins expand? I think the rule of the thumb should hold true from our perspective. Thank you very much.

Speaker Change: And then a last numerical question from me, in the context of improving EBITDA margins and getting up to the mid-teens, does that have any implications or changes to the cash flow conversion, or should the rules of thumb of the past hold true as the margins expand?

John Kelly: Thank you very much. Thank you.

Speaker Change: I think the rule of the thumb should hold true from our perspective, Toby.

Speaker Change: Thank you very much.

Bill Sutherland: Our next question comes from the line of Bill Sutherland of the Benchmark Company. Thanks, everybody.

Tobey O'Brien Sommer: Thank you. Our next question comes from the line of Bill Sutherland of the Benchmark Company. Thanks, everybody.

Tobey O'Brien Sommer: Thank you.

Tobey O'Brien Sommer: Our next question comes from the line of Bill Sutherland of the Benchmark Company.

William Sutherland: I wanted to maybe, Mark, untangle, not untangle, but take apart the digital demand a little bit, and obviously, I'm particularly interested in how you guys are participating in the AI initiatives that health systems are increasingly taking on. I noticed one just announced ahead of AI projects. I think it was Cleveland.

Mark Hussey: I wanted to maybe mark untangle, not untangle but take apart the digital demand a little bit. Obviously, particularly interested in how you guys are participating in the AI initiatives that health systems are increasingly taking on. I noticed one just announced ahead of AI projects. I think it was Cleveland. Anyway, just whatever you guys are doing there and kind of how much event is starting to move to NATO. Yeah, I would say it's still in the early meetings in general, but there's a tremendous amount of activity, to your point. And we definitely seeing many, many organizations are piloting AI ideas before they're scaling them across the organization, and what's really true in education as well.

William Sutherland: Thanks everybody. I wanted to maybe, Mark, untangle, not untangle, but take apart the digital demand a little bit and obviously particularly interested in

William Sutherland: how you guys are participating in the AI initiatives that health systems are

Speaker Change: increasingly taking on. I noticed one just announced the head of AI projects, I think it was Cleveland. Anyway, just whatever you guys are doing there and kind of how much of it is starting to move the needle.

Mark Hussey: Anyway, just whatever you guys are doing there and kind of how much of it is starting to move the needle. Yeah, I would say it's still in the early beginnings in general, but there's a tremendous amount of activity, Bill, to your point, and we're definitely seeing, you know, many, many organizations are piloting AI ideas before they're scaling them across the organization. And it's really true in education as well.

Speaker Change: Yeah, I would say it's still in the early beginnings, in general, but there's a tremendous amount of activity, Bill, to your point. We're definitely seeing...

Speaker Change: Many, many organizations are piloting AI ideas before they're scaling them across the organization. And it's really true in education as well. We do see some areas, as an example, in education, on the research side, that seem to be accelerating as well. I think for us it continues to be upside, but we're very active, not only in the healthcare and higher ed, but certainly in the commercial arts as well.

Mark Hussey: We do see some areas, as an example, in education and on the research side, that seem to be accelerating as well. So, I think for us, it continues to be upside, but we're very active, not only in healthcare and higher education but certainly in the commercial arts as well. You see a lot of activity going on. So, I think we're, feel like we're well positioned. We're very aggressive and active in the marketplace, and we get very good responses from our clients as we work with them, and you're able to build up the bench in terms of AI credentials.

Mark Hussey: We do see some areas, as an example in education on the research side, that seem to be accelerating as well. I think for us it continues to be upside, but we're very active, not only in the healthcare and higher ed; it's certainly in the commercial markets as well to see a lot of activity going on. I think we feel like we're well positioned. We're very aggressive and active in the marketplace, and we're getting very good response from the clients as we work with them. And you're able to build up the bench in terms of AI credentials?

Speaker Change: You see a lot of activity going on, so I feel like we're well positioned, we're very aggressive and active in the marketplace, and we're getting very good response from our clients as we work with them.

Speaker Change: and you're able to build up the bench in terms of AI credentials.

Mark Hussey: Yeah, the issue of we're not going out and meeting the higher deep data scientists, but people who have proud engineering backgrounds and other types of skills. We have not found an issue finding the right numbers of people that we need to scale. And then internally we're also using AI to at a greater level as we look at our own or every methodology as well. And so it's very amazing how it's been increasing in scope.

Mark Hussey: Yeah, there's, you know, the issue of, you know, we're not going out and needing to hire, you know, deep data scientists, but, you know, people who have engineering backgrounds and other types of skills. We have not found issues finding the right numbers of people that we need at this scale.

Speaker Change: Yeah, there's, you know, the issue of, you know, we're not...

Speaker Change: going out needing to hire you know deep data scientists but you know people who have engineering backgrounds and other types of skills we have not found issues.

William Sutherland: And then, you know, internally, we're also using AI at a greater level as we look at our own delivery methodologies as well. So it's very pervasive, I would say, increasing in scope. That was my follow-up question, actually: to what degree are you implementing AI? Yeah, we're not dependent on it in the sense that if we don't automate things, we're not going to be able to achieve our goals, but I feel like it's certainly, and I take AI and expand that to really the whole concept of automation in general, because there's a lot more beyond just AI that we can benefit from collectively.

Speaker Change: I mean the right numbers of people that we need to at the scale and then you know internally we're also using AI to At a greater level as we look at our own delivery methodologies as well. So It's it's very pervasive. I would say increasing in scope and scale

Mark Hussey: that was my follow-up actually was to what degree are you seeing or hope to see benefit on margin in terms of implementing AI. Yeah, we're not dependent on it in the sense that while we don't automate things, we're not going to be able to achieve our goals. But feel like it's certainly I take AI and expand that to really the whole concept of automation in general because there's a lot more than just AI. But we can benefit from collectively, and so we do think that will ultimately become an increasing benefit for us as we look at to 2025 as an example.

Speaker Change: That was my follow-up, actually, was, to what degree are you?

Speaker Change: seeing or hope to see benefit on the margin in terms of

Speaker Change: Implementing AI

Speaker Change: Yeah, we're not dependent on it in the sense that while there's, you know, we don't...

Speaker Change: Automate things, we're not going to be able to achieve our goals, but...

Speaker Change: I feel like it's certainly, and I take AI and expand that to really the whole concept of automation in general, because there's a lot more beyond just AI that we can benefit from collectively. And so we do think that will ultimately become an increasing benefit for us as we look ahead to 2025 as an example.

Mark Hussey: And so we do think that will ultimately become an increasing benefit for us as we look ahead to 2025, as an example. Hi everyone. I'm Jack Wilson.

Bill Sutherland: I miss John. I miss what you said. This is a couple of housekeeping. What GGNA contributed. It was $6.8 million for the quarter bill. 6.8? Yes, correct. Okay, couldn't quite hear you.

Jack Wilson: I missed, John, I missed what you said. This is a couple of housekeeping items, what GG&A contributed. It was $6.8 million for the quarter. $6.8.

Jack Wilson: Take care. Bye. Bye. Bye. Bye. Bye. Bye.

Speaker Change: Thank you. Bye.

Speaker Change: I missed, John , I missed what you said, this is a couple of housekeeping, what GG&A contributed.

John D. Kelly: It was 6.8 million dollars per quarter bill.

John D. Kelly: Yes, correct. Okay, I couldn't wait to hear you. And then...

John Kelly: And then did you discuss the interest expense as it presented to the second quarter and what could just kind of wondering about the size of it and what it and what had to think about the next two quarters. So the second quarter from an interest expense perspective is really our high watermark bill. You think about it, we pay out the annual incentives in kind of mid March, and so you really get the full higher borrowing levels for a full quarter in the second quarter. And you can see based on what we discussed from a pre-catchable perspective, we have some really nice paid out of our debt as the quarter progress.

John D. Kelly: 6.8

William Sutherland: I did you discuss the interest expense as it's presented for the second quarter and what, I'm just kind of wondering about the size of it and what it..., and what to think about the next two quarters. So the second quarter, from an interest expense perspective, is really our high-water mark bill. If you think about it, we pay out the annual incentives in kind of mid-March.

Speaker Change: Did you discuss the interest expense as it's presented for the second quarter and what

Speaker Change: I'm kind of wondering about the size of it and how to think about the next two quarters.

Speaker Change: So the second quarter, from an interest expense perspective, is really our high watermark bill. If you think about it, we pay out the annual incentives in kind of mid-March, so you really get the full

John D. Kelly: So you really get the full higher borrowing levels for a full quarter in the second quarter. And you can see, based on what we discussed from a free cash flow perspective, we had some really nice paydown of our debt as the quarter progressed. We expect that trend to continue in the third and fourth quarters. And so that really should be the high-water mark. I would think of the back half of the year probably being more all-in, in kind of the $10 million range. Whoa!

Speaker Change: Higher borrowing levels for a full quarter in the second quarter.

Speaker Change: And you can see, you know, based on what we discussed from a free cash flow perspective, we had some really nice pay down of our debt as the quarter progressed. We expect that trend to continue in the 3rd and 4th quarter. Um, and so that really should be the high watermark. I would think of. The.

Bill Sutherland: We expect that trend to continue in the third and fourth quarter, and so that really should be the high watermark. I would think of the back half of the year, probably being more all in a kind of a $10 million range. Okay. Thanks. Thanks, everybody. Thank you.

Speaker Change: Back half of the year probably be more all-in in kind of a ten million dollar range

William Sutherland: Yeah. OK. Thanks. Thanks, everybody.

Speaker Change: Okay. That's helpful. Yeah. Okay. Thanks. Thanks, everybody.

Operator: Thank you. Once again, to ask a question, please press star 11 on your touchtone telephone. Again, that's star 11 to ask a question.

Operator: Once again, to ask a question, please press star 11 on your touch-tone telephone. Again, that's star 11 to ask a question.

Speaker Change: Thank you. Once again, to ask a question, please press star 11 on your touchtone telephone. Again, that's star 11 to ask a question.

Kevin Steinke: Our next question. Thank you. That's right, Kevin. You named it. It's the pipeline and converting to hard-backed now in the back half of the year. I think that's true, but from a digital perspective as well as a consulting perspective within the commercial segment. So our teams, if that's really nice conversion, on the consulting side as well, from a distressed financial advisory perspective. And so we're entering a period of higher run rate on some of those projects during the third and fourth quarter. And then on top of that, some of the delays that we've seen in pipeline or in the slower sales cycle on the digital side, on our expectation is that we have more conversions there in the back half of the year to that firms up the digital side as well.

Kevin Mark Steinke: Our next question comes from the line of Kevin Steinke of the Barrington Research Association. Thanks. So.

Speaker Change: Our next question comes from the line of Kevin Steinke of Barrington Research Associates.

Kevin Mark Steinke: As you mentioned in your prepared remarks, the full-year revenue guidance still, you know, continues to imply sequential revenue growth in the second half of 2024, but looking specifically at commercial, to get to that relatively flat outlook, it looks like you have to have some pretty nice sequential revenue growth in commercial specifically. So can you comment on that? Is that correct? And if so, what would drive that?

Speaker Change: Thanks.

Speaker Change: As you mentioned in your prepared remarks, the full-year revenue guidance still, you know, continues to imply

Speaker Change: sequential revenue growth in the second half of 2024, you know, but looking specifically at commercial...

Speaker Change: To get to that relatively flat outlook, it looks like...

Speaker Change: You have to have some pretty nice sequential

Speaker Change: Revenue Growth and Commercials, specifically, so...

Speaker Change: Can you comment on that? Is that correct? And if so, what would drive that? Is it some of the pipeline beginning to move that's currently being pushed out? Or what would be to that?

John D. Kelly: Is it some of the pipeline beginning to move that's currently being pushed out? Or what would that be like? That's right, Kevin, you named it.

Kevin Mark Steinke: It's the pipeline converting to hard backlog now in the back half of the year. I think that's true both from a digital perspective as well as from a consulting perspective within the commercial segment. So, our teams have had some really nice conversion on the consulting side as well from a distressed financial advisory perspective. And so we're entering a period of higher run rate on some of those projects during the 3rd and 4th quarter.

Speaker Change: That's right, Kevin, you named it. It's the pipeline converting to hard backlog down the back half of the year. I think that's true both from a digital perspective as well as a consulting perspective within the commercial segment.

Speaker Change: Our teams have had some really nice conversions.

Speaker Change: on the consulting side as well, from a distressed financial advisory perspective, and so...

Speaker Change: We're entering a period of higher run rate on some of those projects during the third and fourth quarter.

Kevin Mark Steinke: And then on top of that, some of the delays that we've seen in pipeline or in the slower sales cycle on the digital side, our expectation is that we will have more conversions there in the back half of the year or two, which will firm up the digital side. Okay, that's helpful.

Speaker Change: And then, on top of that, some of the delays that we've seen in pipeline or in the slower sales cycle on the digital side, our expectation is that we have more conversions there in the back half of the year, too, that firms up the digital side as well.

Kevin Steinke: Okay, that's helpful.

Kevin Steinke: And then looking at healthcare, the increase to the full-year 2024 growth expectations for that segment. Can you just maybe comment on what's trended a bit better than you would have expected at the outset of the year that enables you to increase that outlook for healthcare? It's been broad-based, Kevin, within the healthcare segment. And it goes back to that conversation we had a couple of minutes ago about the pipeline and where we've been seeing demand. So I think from a performance improvement perspective, we continue to see some really strong demand from our clients there in terms of needing help from a margin improvement perspective.

John D. Kelly: And then, looking at health care. The increase to the full year 2024 growth expectations for that segment. Can you just maybe comment on that?

Speaker Change: Okay, that's helpful. And then looking at healthcare.

Speaker Change: The increase to the full year 2024 growth expectations for that segment. Can you just maybe comment on what's...

Kevin Mark Steinke: Trended a bit better than you would have expected at the outset of the year, and that enables you to increase that outlook for health care. It's been broad-based, Kevin, within the healthcare segment, and it goes back to that conversation we had a couple minutes ago about the pipeline and where we've been seeing demand. So I think from a performance improvement perspective, we continue to see some really strong demand from our clients there in terms of needing help from a margin improvement perspective.

Speaker Change: trended a bit better than you would have expected at the outset of the year that enabled you to increase that outlook for health care.

Speaker Change: It's been broad-based, Kevin, within the healthcare segment, and it goes back to that

Kevin Mark Steinke: conversation we had a couple minutes ago about the pipeline and where we've been seeing demand. So I think that from a performance improvement perspective

Speaker Change: We continue to see some really strong demand from our clients there in terms of needing help from a margin improvement perspective. And so that, I think, has been a positive item relative to our beginning of the year expectations. But then also on the digital side of the shop, and that probably relates to the customers at the other end of the spectrum.

Kevin Mark Steinke: And so that, I think, has been a positive item relative to our beginning-of-the-year expectations, but then also on the digital side of the shop, and that probably relates to the customers at the other end of the spectrum who are feeling like they're in a stronger financial position than they were a year ago. Those clients, and their investments in digital, have been stronger than we expected as well. So I'd say it's a story of balance, both in terms of the pipeline, but also in terms of the improvement in our guidance versus what our beginning of the year expectations were. Okay, thanks. That's helpful. I'll turn it back over.

Kevin Steinke: And so that, I think, has been a positive item relative to our beginning of the year expectations. But then also on the digital side of the shop, and that probably relates to the customers at the other end of the spectrum who are feeling like they're in a stronger financial position than they were a year ago. Those clients in their investment in digital have been stronger than we expected as well. So I'd say it's the story of balance, both in terms of a pipeline, but then also in terms of the improvement in our guidance versus what our beginning of the year expectations work.

Speaker Change: were

Speaker Change: feeling like they're in a stronger financial position than they were a year ago, those clients and their investments in digital have been stronger than we expected as well. So I'd say it's a story of balance both in terms of a pipeline, but then also in terms of the improvement in our guidance versus what our beginning of the year expectations were.

Kevin Steinke: Okay, thanks. That's helpful.

Operator: I'll turn it back over. Thank you. Seeing no more questions in the queue.

Speaker Change: Okay, thanks, that's helpful. I'll turn it back over.

John D. Kelly: Thank you. Seeing no more questions in the queue, I'd like to turn the call back to Mr. Well, thank you everyone for spending time with us this afternoon. We look forward to speaking with you again in October when we announce our third quarter results. Have a good evening.

Mark Hussey: I'd like to turn the call back to Mr. Hossie. Well, thanks everyone for spending time with us. After dinner, we look forward to speaking with you again in October when we announce our third quarter results. Have a good evening.

Speaker Change: Thank you. Seeing no more questions in the queue, I'd like to turn the call back to Mr. Hussey.

Mr. Hussey: Well thanks everyone for spending time with us this afternoon. We look forward to speaking with you again in October when we announce our third quarter results. Have a good evening.

Operator: That concludes today's conference call. Thank you, everyone, for your participation.

Operator: That concludes today's conference call. Thank you, everyone, for your participation. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? Good afternoon, and welcome to Huron Consulting Group's webcast to discuss financial results for the second quarter, 2024. At this time, all conference lines are on a listen-only mode.

Speaker Change: That concludes today's conference call. Thank you, everyone, for your participation.

Operator: I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I Kevin Steinke, William Sutherland, Tobey Sommer Good afternoon and welcome to here on Consulting Group Inc.

Speaker Change: www.thevenusproject.com www.thevenusproject.com

Speaker Change: John Kelly, William Sutherland, Tobey Sommer, Andrew Nicholas, John Kelly, Jasper Bibb, Jack Wilson, Huron Consulting Group Inc John Kelly, William Sutherland, Tobey Sommer, Andrew Nicholas, John Kelly, Jasper Bibb, Jack Wilson, Huron Consulting Group Inc

Operator: Later, we will conduct a question and answer session 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.

Speaker Change: Good afternoon, and welcome to Huron Consulting Group's webcast to discuss financial results for the second quarter, 2024. At this time, all conference lines are on a listen-only mode.

Austin Group's webcast to discuss financial results for the second quarter, 2024. At this time, all conference lines are on a listen-only mode. Later, we will conduct a question-and-answer session for conference call participants, and instructions we'll 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 a disclosure of factors that may impact subjects discussed in this afternoon's webcast.

Speaker Change: Later, we will conduct a question and answer session for conference call participants, and instructions will follow at that time.

Speaker Change: 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.

Speaker Change: The news release is posted on Huron's website.

Speaker Change: Please review that information along with the filings with the SEC for a 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.

Speaker Change: The company will be discussing one or more non-GAAP financial measures.

Speaker Change: 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 Mark Hussey, Chief Executive Officer and President of Huron Consulting Group. Mr. Hussey, please go ahead.

Operator: Please review that information along with the filings with the SEC for a disclosure of factors that may impact the subjects discussed in this afternoon's webinar. 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. Now, I would like to turn the call over to Mark Hussey, Chief Executive Officer and President of Huron Consulting Group. Mr. Hussey, please go ahead.

Speaker Change: And now, I would like to turn the call over to Mark Hussey, Chief Executive Officer and President of Huron Consulting Group. Mr. Hussey, please go ahead.

Good afternoon and welcome to Huron Consulting Group's second quarter of 2024 earnings call. With me today are John Kelly, our Chief Financial Officer, and Ronnie Dale, our Chief Hybrid Officer. In the second quarter, we achieved record revenues led by a solid growth in our healthcare and education segments. And we expanded our adjusted EBITDA margin to 15%. Our adjusted earnings per share also expanded to a record level. 20% higher than the previous high water mark established in the third quarter of last year. We generated record cash flow in the second quarter, enabling us to meet and reduce our debt while returning capital of shareholders who ongoing share regurgises.

Mark Hussey: Good afternoon, and welcome to Huron Consulting Group's second quarter 2024 earnings call. With me today are John Kelly, our Chief Financial Officer, and Ronnie Dale, our Chief Operating Officer. In the second quarter, we achieved record revenues, led by solid growth in our health care and education segments, and we expanded our adjusted EBITDA margin to 15%. Our adjusted earnings per share also expanded to a record level, 20% higher than the previous high water mark established in the third quarter of last year. We generated record cash flow in the second quarter, enabling us to meaningfully reduce our debt while returning capital to shareholders through ongoing share repurchase.

Speaker Change: Good afternoon and welcome to Huron Consulting Group's second quarter 2024 earnings call. With me today are John Kelly, our Chief Financial Officer, and Ronnie Dale, our Chief Operating Officer.

Speaker Change: In the second quarter, we achieved record revenues, led by solid growth in our health care and education segments, and we expanded our adjusted EBITDA margin to 15%.

Speaker Change: Our adjusted earnings per share also expanded to a record level, 20% higher than the previous high water mark established in the third quarter of last year.

Speaker Change: We generated record cash flow in the second quarter, enabling us to meaningfully reduce our debt while returning capital to shareholders through ongoing share repurchases.

Our record second quarter results kept a strong first half performance for 2024. In the first half of 2024, revenues grew 9.5%. Adjusted EBITDA margins increased 60 basis points, and adjusted diluted earnings per share increased 28% over the same period a year ago. Our results demonstrate strong execution against our strategy, as well as the positive impact and the changes we made to our enterprise operating model at the outset of 2022. These changes have broadened the set of offerings we delivered to clients in our core industries and allows us to operate our business at new levels of efficiency.

Mark Hussey: Our record second-quarter results capped a strong first-half performance for 2024. In the first half of 2024, revenues grew 9.5 percent, adjusted EBITDA margins increased 60 basis points, and adjusted diluted earnings per share increased 28 percent over the same period a year ago. Our results demonstrate strong execution against our strategy, as well as the positive impact of the changes we made to our enterprise operating model at the outset of 2022. These changes have broadened the set of offerings we deliver to clients in our core industries and allowed us to operate our business at new levels of efficiency.

Speaker Change: Our record second quarter results capped a strong first half performance for 2024. In the first half of 2024, revenues grew 9.5%, adjusted EBITDA margins increased 60 basis points, and adjusted diluted earnings per share increased 28% over the same period a year ago.

Speaker Change: Our results demonstrate strong execution against our strategy, as well as the positive impact of the changes we made to our enterprise operating model at the outset of 2022.

Speaker Change: These changes have broadened the set of offerings we deliver to clients in our core industries and allows us to operate our business at new levels of efficiency.

Our strategic focus continues to be on driving sustainable revenue growth, extended margins, and effectively deploying capital to deliver superior returns for our shareholders. As it relates to improving profitability, despite the typical comparison, I trusted Evita and margins grew from 100 phases points in the second quarter of the same period a year ago. The scaling of our business over the past three years, combined with the build-out of our global delivery capabilities, and our team's focus on our key operating levers like pricing and utilization have beautifully enhanced Huron's earnings power. We expect this trend to continue as we progress towards our mid-teens Evita margin target.

Mark Hussey: Our strategic focus continues to be on driving sustainable revenue growth, extending margins, and effectively deploying capital to deliver superior returns for our shareholders. As it relates to improving profitability, despite the difficult comparison, adjusted EBITDA margins grew 100 basis points in the second quarter of the same period a year ago.

Speaker Change: Our strategic focus continues to be on driving sustainable revenue growth, expanding margins, and effectively deploying capital to deliver superior returns for our shareholders.

Speaker Change: As it relates to improving profitability, despite a difficult comparison, adjusted EBITDA margins grew 100 basis points in the second quarter over the same period a year ago.

Mark Hussey: The scaling of our business over the past three years, combined with the build-out of our global delivery capabilities and our team's focus on our key operating levers like pricing and utilization, have beautifully enhanced Huron's earnings model. We expect this trend to continue as we progress towards a mid-team EBITDA margin target. I'm incredibly proud of our team for delivery performance over the last 10 quarters that has outpaced our 2022 Investor Day financial objective.

Speaker Change: The scaling of our business over the past three years, combined with the build-out of our global delivery capabilities, and our team's focus on our key operating levers like pricing and utilization, have meaningfully enhanced Huron's earnings power.

I'm incredibly proud of our team for delivery performance over the last ten quarters that has outpaced their 2022 investor-day financial objectives. Looking ahead to the remainder of 2024, we expect our progress towards our medium-term financial goals to continue. As reflected by the mid-points of our updated revenue guidance, we expect sequential growth in the second half over the first half of 2024, and 9% annual revenue growth year-over-year.

Speaker Change: We expect this trend to continue as we progress towards our mid-team EBITDA margin target.

Speaker Change: I'm incredibly proud of our team for delivering performance over the last 10 quarters that has outpaced our 2022 Investor Day financial objectives.

Mark Hussey: Looking ahead to the remainder of 2024, we expect our progress towards our medium-term financial goals to continue. As reflected by the midpoints of our updated revenue guidance, we expect sequential growth in the second half over the first half of 2024 and 9% annual revenue growth year over year. Let me make one final comment before diving into more detail on our performance in the quarter. Our success in the market and in delivering these financial results is only possible because of our incredibly talented team.

Speaker Change: Looking ahead to the remainder of 2024, we expect our progress towards our medium-term financial goals to continue.

Speaker Change: As reflected by the midpoints of our updated revenue guidance, we expect sequential growth in the second half over the first half of 2024, and 9% annual revenue growth year-over-year.

Let me take one final comment before diving into more detail on our performance in the quarter. Our success in the market and in delivering these financial results is only possible because it runs incredibly talented teams. We've received numerous recognitions for being an employer of choice in 2024, more than in any year of our 22-year history. Our people are the heart of our business, and these honors acknowledge the power of a collaborative culture that's demonstrated by our team's commitment to our clients and to one another. Our culture is one of our greatest competitive advantages, and it enables us to operate as one firm and to realize our full potential.

Speaker Change: Let me make one final comment before diving into more detail on our performance in the quarter.

Speaker Change: Our success in the market and in delivering these financial results is only possible because of our incredibly talented team.

Mark Hussey: We've received numerous recognitions for being an employer of choice in 2024, more than in any year in our 22-year history. Our people are the heart of our business, and these honors acknowledge the power of a collaborative culture as demonstrated by our team's commitment to our clients and to one another.

Speaker Change: We've received numerous recognitions for being an employer of choice in 2024, more than in any year in our 22-year history.

Speaker Change: Our people are the heart of our business, and these honors acknowledge the power of our collaborative culture as demonstrated by our team's commitment to our clients and to one another.

Mark Hussey: Our culture is one of our greatest competitive advantages, and it has enabled us to operate as one firm and to realize our full potential. Now, I'll share some additional insights into our second quarter performance. In the health care segment, second quarter revenues grew 9% over the prior year quarter, on top of 35% growth in the year-ago quarter for Q2 of 2022. The increase in revenues in the quarter was driven by continued strong demand for digital performance improvement, culture and organizational excellence, and strategy and innovation offerings.

Speaker Change: Our culture is one of our greatest competitive advantages and enabled us to operate as one firm and to realize our full potential.

Now we'll share some additional insights into our second quarter performance. In the healthcare segment, second quarter revenues grew 9% over the prior year quarter on top of 35% growth in the year of a quarter over Q2 of 2022. The increase in revenues in the quarter was driven by continued strong demand for our digital performance improvement, culture and organization excellence, and strategy and innovation offerings. The operating environment for healthcare organizations remains mixed and highly competitive, which continues to create solid demand across the breadth of our portfolio of offerings. While some health systems have realized improving margins over the past few quarters, many have not.

Speaker Change: Now I'll share some additional insights into our second quarter performance.

Speaker Change: In the healthcare segment, second quarter revenues grew 9% over the prior year quarter, on top of 35% growth in the year-ago quarter over Q2 of 2022.

Speaker Change: The increase in revenues in the quarter was driven by continued strong demand for digital performance improvement, culture and organizational excellence, and strategy and innovation offerings.

Mark Hussey: The operating environment for health care organizations remains mixed and highly competitive, which continues to create solid demand across the breadth of our portfolio of offers. However, while some health systems have realized improving margins over the past few quarters, many have not.

Speaker Change: The operating environment for healthcare organizations remains mixed and highly competitive, which continues to create solid demand across the breadth of our portfolio of offerings.

In some cases, volumes have improved, but green third-person trends continue to be challenging. Whether a hospital or health system is experiencing financial distress, or seeking opportunities to advance the competitive advantage from a position of strength, a client's turn here on the shape of their future strategies involves their business models, and optimizes their operations to address the ongoing challenges and opportunities in the market. Our depth of industry expertise for our array of offerings and long track record that proves the results for the clients positions are very well to provide strategic operational financial and digital solutions to help them achieve a more sustainable future in this complex and challenging healthcare environment.

Speaker Change: While some health systems have realized improving margins over the past few quarters, many have not. In some cases, volumes have improved, but reimbursement trends continue to be challenging.

Mark Hussey: In some cases, volumes have improved, but reimbursement trends continue to be challenging. Whether a hospital or health system is experiencing financial distress or seeking opportunities to advance their competitive advantage from a position of strength, our clients turn to Huron to shape their future strategies, evolve their business models, and optimize their operations to address the ongoing challenges and opportunities in the market.

Speaker Change: Whether a hospital or health system is experiencing financial distress,

Speaker Change: We're seeking opportunities to advance the competitive advantage from a position of strength.

Curon: Our clients turn to Huron to shape their future strategies, evolve their business models, and optimize their operations to address the ongoing challenges and opportunities in the market.

Mark Hussey: Our depth of industry expertise, broad array of offerings, and long track record of proven results for our clients positions us very well to provide strategic, operational, financial, and digital solutions to help them achieve a more sustainable future in this complex and challenging healthcare environment. Turning now to education, education segment revenues grew 11% in the second quarter of 2024 over the prior year quarter, on top of 25% growth in the year of the quarter over Q2 of 2022.

Curon: Our depth of industry expertise, broad array of offerings, and long track record of proven results for our clients positions us very well to provide strategic, operational, financial, and digital solutions to help them achieve a more sustainable future in this complex and challenging healthcare environment.

Turning now to education, education segment revenues grew 11% in the second quarter of 2024 over the prior quarter, on top of 25% growth in the year of the quarter of over Q2 or 2022. The increase in revenues in the quarter was driven by increased demand for our strategy and operations and digital product offerings. Higher education institutions are facing complex challenges that threaten their historical business models. The issues facing university leadership are vast, and they span all areas of the institution. For example, declining affordability continues to challenge the perceived value of a college degree in the face of unfavorable demographic trends.

Speaker Change: Turning now to education, education segment revenues grew 11% in the second quarter of 2024 over the prior year quarter, on top of 25% growth in the year ago quarter over Q2 of 2022.

Mark Hussey: The increase in revenues in the quarter was driven by increased demand for our strategy and operations and digital product offerings. Higher education institutions are facing complex challenges that threaten their historical business model. The issues facing university leadership are vast, and they span all areas of the institution.

Speaker Change: The increase in revenues in the quarter was driven by increased demand for our strategy and operations and digital product offerings.

Speaker Change: Higher education institutions are facing complex challenges that threaten their historical business models.

Speaker Change: The issues facing university leadership are vast, and they span all areas of the institution.

Mark Hussey: For example, declining affordability continues to challenge the perceived value of a college degree in the face of unfavorable demographic trends. Rising costs and decreased public funding have made achieving enrollment goals even more difficult, and the need to operate more efficiently while differentiating the student experience requires investments in both new operating models and new technology. Building on our deep industry expertise, we've strategically expanded our portfolio of offices. We serve the needs of nearly every role in a university president's leadership team as they collectively focus on advancing the institutional mission and planning for a sustainable long-term future.

Speaker Change: For example, declining affordability continues to challenge the perceived value of a college degree in the face of unfavorable demographic trends.

Rising costs and increased public funding and made achieving enrollment goals even more difficult. And the need to operate more efficiently while different achieving the student experience requires investments in both new library miles and new technologies. Building on a deep industry expertise, we've strategically expanded our portfolio of offerings. We serve the needs of nearly every role a university president's leadership team has been collectively focused on advancing the institutional mission and planning for a sustainable long-term future. We've hired several industry leaders who's experienced further strengths of position as the trusted advisor and partner of choice to our clients.

Speaker Change: Rising costs and decreased public funding have made achieving enrollment goals even more difficult.

Speaker Change: And the need to operate more efficiently while differentiating the student experience requires investments in both new operating models and new technologies.

Speaker Change: Building on our deep industry expertise, we've strategically expanded our portfolio of offerings.

Speaker Change: We serve the needs of nearly every role in a university president's leadership team if it collectively focused on advancing the institutional mission and planning for a sustainable long-term future.

Mark Hussey: We've hired several industry leaders whose experience further strengthens our position as the trusted advisor and partner of choice to our clients. And as the needs of our clients continue to evolve, we're a unique partner in the higher education market because of the strength of our relationships, the diversity of our offerings, and the depth of our experience. And that collectively positions us very well for continued and solid growth in this business. Now turning to the commercial segment, revenues declined 6% in the second quarter over the prior year quarter, reflecting softer demand for digital offerings, partially offset by an increase in demand for our financial advisory offerings, which remain strong given the continued impact of challenging capital markets and expanding competitive pressure.

Speaker Change: We've hired several industry leaders whose experience further strengthens our position as the trusted advisor and partner of choice to our clients.

And as the needs of our clients continue to evolve, where you need to partner in a higher education market, can the strength of our relationships, the diversity of our offerings, and the depth of our experience. That collectively decisions is very well for continued selling growth in this business.

Speaker Change: And as the need for our clients continues to evolve, we're a unique partner in the higher education market given the strength of our relationships, the diversity of our offerings, and the depth of our experience. And that collectively positions us very well for continued and solid growth in this business.

Now turning to the commercial segment. Routing is deploying 6% in the second quarter over the prior year quarter. Reflecting subject demand for our digital offerings, partially offset by an increase in demand for our financial advisory offerings, which remains strong given the continued impact of challenging capital markets and expanding competitive pressures. In our digital business, we continue to see our commercial clients taking a more cautious approach to executing large-scale initiatives and strategy-related engagements. As uncertainties in the macroeconomic and political environments persist. Like many of our competitors in the IT services industry, we're seeing some delays in decision making and a slow look at the spending and our digital offerings.

Speaker Change: Now turning to the commercial segment, revenues declined 6% in the second quarter over the prior year quarter, reflecting a softer demand for our digital offerings, partially offset by an increase in demand for our financial advisory offerings.

Speaker Change: which remain strong given the continued impact of challenging capital markets and expanding competitive pressures.

Mark Hussey: In our digital business, we continue to see our commercial clients taking a more cautious approach to executing large-scale initiatives and strategy-related engagements as uncertainties in the macroeconomic and political environments persist. As a result, like many of our competitors in the IT services industry, we're seeing some delays in decision-making and a slower pace of spending on our digital offerings. In confidence, this softening of demand is temporary, but our pipelines remain solid across a broad set of solutions, and the underlying needs of our clients remain robust. We believe Japan's form of digital offerings will return to their historic double-digit levels as macroeconomic pressures begin to ease.

Speaker Change: In our digital business, we continue to see our commercial clients taking a more cautious approach to executing large-scale initiatives and strategy-related engagements as uncertainties in the macroeconomic and political environments persist.

Speaker Change: Like many of our competitors in the IT services industry, we're seeing some delays in decision making and a slower pace of spending on our digital offerings.

The confidence of softening of demand is temporary, but our pipeline remains solid across our broad set of solutions, and the underlying needs of our clients remain robust. We believe demand for digital offerings will return to their historic double-digit levels as macroeconomic pressures begin to evade. The commercial segment is a key pillar of our enterprise growth strategy. We believe that a broad portfolio of digital financial advisory and strategy and innovation offerings, coupled with evening industry expertise, will continue to be a solid platform for growth in the segment. We expect clients will continue to demand technology solutions delivered by partners that can enable transformation of their businesses and strengthen their competitive advantages.

Speaker Change: We have confidence that this softening of demand is temporary, that our pipelines remain solid across our broad set of solutions, and the underlying needs of our clients remain robust.

Speaker Change: We believe Japan's foreign and digital offerings will return to their historic double-digit levels as macroeconomic pressures begin to abate.

Mark Hussey: The commercial segment is a key pillar of our enterprise growth strategy. We believe that a broad portfolio of digital, financial advisory, and strategy and innovation operations, coupled with evening industry expertise, will continue to be a solid platform for growth in the segment. We expect clients will continue to demand technology solutions delivered by partners that can enable the transformation of their businesses and strengthen their competitive advantage.

Speaker Change: The commercial segment is a key pillar of our enterprise growth strategy. We believe that a broad portfolio of digital, financial advisory, and strategy innovation offerings, coupled with deepening industry expertise, will continue to be a solid platform for growth in this segment.

Speaker Change: We expect clients will continue to demand technology solutions delivered by partners that can enable transformation of their businesses and strengthen their competitive advantages.

The breadth of our offerings and proven track record that delivering results positions is very well, the continued growth or commercial segment will retire. We continue to see an opportunity that will complement and expand our capabilities and deepen our expertise in our industries.

Mark Hussey: The breadth of our offerings and proven track record of delivering results positions us very well for continued growth in our commercial segment over time, and we continue to see M&A opportunities that will complement and expand our capabilities and deepen our expertise in our industries of focus. Let me make one final comment before turning to our outlook for the remainder of the year. One distinguishing feature of our business that drives significant value for shareholders is our strong pre-cash flow model.

Speaker Change: The breadth of our offerings and proven track record of delivering results positions us very well for continued growth of our commercial segment over time, and we continue to see M&A opportunities that will complement and expand our capabilities and deepen our expertise in our industries of focus.

Let me make one final comment before turning to our outlet for the remainder of the year. One distinguishing feature of our business that drives significant value for shareholders. It's our strong, free cash flow model. In the second quarter, we generated record cash flows while executing our balanced capital deployment strategy. We continue to manage the balance sheet in a manner that provides us with flexibility and capacity to enhance returns to shareholders and to fund a creative emanating. Which we continue to believe is an important part of our growth strategy.

Speaker Change: Let me make one final comment before turning to our outlet for the remaining of the year.

Speaker Change: One distinguishing feature of our business that drives significant value for shareholders is our strong free cash flow model. In the second quarter, we generated record cash flows while executing a balanced capital deployment strategy.

Mark Hussey: In the second quarter, we generated record cash flows while executing a balanced capital deployment strategy. We continue to manage the balance sheet in a manner that provides us with the flexibility and capacity to enhance returns to shareholders and to fund accretive M&A, which we continue to believe is an important part of our growth strategy. And now, finally, let me turn to our retail business.

Speaker Change: We continue to manage the balance sheet in a manner that provides us with the flexibility and capacity to enhance returns to shareholders and to fund a creative M&A, which we continue to believe is an important part of our growth strategy.

And now, finally, let me turn to our outlet. So, press release indicates we're narrowing our annual revenue guidance to $1.46 billion to $1.5 billion. And we're raising our annual adjusted EBITDA margin guidance by 25 basis points to a range of 13 to 13.5%. Finally, we're raising our full-year adjusted diluted earnings per share to a range of $5.85 to $6.15; the midpoint represents 22% growth over 2023. We're narrowing our full-year revenue guidance to the lower half of a previously stated range due to the short-term softening of demand for digital offerings in the commercial segment. Our full-year earnings guidance reflects our first half performance and the scale efficiency we need today.

Mark Hussey: The suppressed release indicates we're narrowing our annual revenue guidance to $1.46 billion to $1.5 billion, and we're raising our annual adjusted EBITDA margin guidance by 25 basis points to a range of 13 to 13.5%. Finally, we're raising our full-year adjusted diluted earnings per share to a range of $5.85 to $6.15, which at the midpoint represents 22% growth over 2023. We are narrowing our full-year revenue guidance to the lower half of our previously stated range due to the shorter-term softening of demand for our digital offerings in the commercial segment.

Speaker Change: And now finally, let me turn to our outlook. So press release indicates we're narrowing our annual revenue guidance to $1.46 billion to $1.5 billion.

Speaker Change: And we're raising our annual adjusted EBITDA margin guidance by 25 basis points to a range of 13 to 13.5%.

Speaker Change: Finally, we're raising our full-year adjusted diluted earnings per share to a range of $5.85 to $6.15, which at the midpoint represents 22% growth over 2023.

Speaker Change: We are narrowing our full-year revenue guidance to the lower half of our previously stated range due to the shorter-term softening of demand for our digital offerings in the commercial segment. Our full-year earnings guidance reflects our first-half performance and the scale efficiency we've made.

Mark Hussey: Our full-year learnings guidance reflects our first-half performance and the scale of efficiency we need. Coupled with our team's discipline around expense management, we continue to make steady progress towards the medium-term financial goal set forth by our 2022 investors. As we enter the second half of our five-year strategy that we outlined at our 2022 Investor Day, I'm proud of what we've been able to accomplish in the market, with our clients, our business, and for our team.

And coupled with our teams' discipline around expense management, we continue to make steady progress towards the median term financial goal set forth at our 2022 Investor Day. As we enter the second half of our five-year strategy that we outlined at our 2022 Investor Day, I'm proud of what we've been able to accomplish. In the market, the clients are a business for our teams. Our record results in the second quarter of 2024 demonstrate our focus on achieving strategic and financial goals. We believe we're well-positioned for continued growth in the years ahead. We've strong client relationships we've built; we've kept our industry expertise and the balance for full-year offerings that will continue to evolve and address our client's most complex challenges.

Speaker Change: And coupled with our team's discipline around expense management, we continue to make steady progress towards the medium-term financial goals set forth at our 2022 Investor Day.

Speaker Change: As we enter the second half of our five-year strategy that we outlined at our 2022 Investor Day, I'm proud of what we've been able to accomplish in the market, with our clients, and with our customers.

Mark Hussey: Our record results in the second quarter of 2024 demonstrate our focus on achieving our strategic and financial goals. We believe we're well positioned for continued growth in the years ahead. The strong client relationships we've built, the depth of our industry expertise, and a balanced portfolio of offerings that will continue to evolve and address our clients' most complex challenges. Now, let me turn it over to John for a more detailed discussion of our financial... Thank you, Mark, and good afternoon, everyone.

Speaker Change: Our record results in the second quarter of 2024 demonstrate our focus on achieving our strategic and financial goals.

Speaker Change: We believe we're well positioned for continued growth in the years ahead.

Speaker Change: with the strong client relationships we've built, the depth of our industry expertise, and a balanced portfolio of offerings that will continue to evolve and address our clients' most complex challenges.

Now let me turn it over to John for a more detailed discussion of our financial results. John?

Speaker Change: And now let me turn it over to John for a more detailed discussion of our financial results. John ? Thank you, Mark, and good afternoon, everyone.

Thank you, Mark.

Good afternoon, everyone. Before I begin, please note that I will be discussing non-GAAP financial measures such as EBITDA, the JAPID EBITDA, JAPID net income, and the JAPID EPS to free cash flow. Our press release tends to do an investor relations page on the DRM website. Have our affiliations of these non-GAP measures, the most comparable GAP measures. Along with the discussion of why management uses these non-GAAP measures, why management believes they provide useful information to investors regarding our financial condition and operating results.

John D. Kelly: Before I begin, please note that I will be discussing non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow. Our press release, 10Q, and investor relations page on the Huron website have reconciliations of these non-GAAP measures to the most comparable GAAP measures, along with a discussion of why management uses these non-GAAP measures and why management believes they provide useful information to investors regarding our financial condition and operating results.

John D. Kelly: Before I begin, please note that I will be discussing non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow.

John D. Kelly: Our press release, tank view, and investor relations page on the Huron website have reconciliations of these non- GAAP measures to the most comparable GAAP measures .

John D. Kelly: Along with the discussion of why management uses these non-GAAP measures, why management believes they provide useful information to investors regarding our financial condition and operating results.

Before discussing our financial results with a quarter, I would like to acknowledge two housekeeping items. First and second quarter of 2024 will settle the litigation matter for $15 million for which you're out with the plaintiff. The $15 million settlement gain was recorded as a compliment of other gains net on our consolidated statement of operations. We've excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal cost incurred during 2024, specific to this litigation matter.

John D. Kelly: Before discussing our financial results for the quarter, I would like to acknowledge two housekeeping items. First, in the second quarter of 2024, we'll settle the litigation matter for $15 million, for which you're outwith the plaintiff. This $15 million settlement gain was recorded as a component of other gains net on our consolidated statement of operations. We've excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs incurred during 2024 specific to this litigation matter.

John D. Kelly: Before discussing our financial results for the quarter, I would like to acknowledge two housekeeping items.

John D. Kelly: First, in the second quarter of 2024, we settled a litigation matter for $15 million for which your outlet was appointed.

John D. Kelly: This $15 million settlement gain was recorded as a component of other gains net on our Consolidated Statement of Operations.

John D. Kelly: We have excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs incurred during 2024 specific to this litigation matter.

2nd, I want to make a comment on revenue generating professional mid-count growth. Our year over your head count growth, 13% as of June 30, included the expansion of our India-based healthcare managed services team. Excluding the impact of the India-based managed services team, head count growth was 6%.

John D. Kelly: Second, I want to make a comment on revenue-generating professional account growth. Our year-over-year headcount growth, 13% as of June 30, included the expansion of our India-based health care managed services team. Excluding the impact of the India-based managed services team, headcount growth was 6%.

John D. Kelly: Second, I want to make a comment on revenue-generating professional debt count growth.

John D. Kelly: Our year-over-year headcount growth, 13% as of June 30th, included the expansion of our India-based healthcare managed services team, excluding the impact of the India-based managed services team. Headcount growth was 6%.

Now we share some of the key financial results from the quarter. Revenue is for the second quarter of 2004 for a record high, achieving 371.7 million dollars, up 7.2% from 346.8 million dollars in the same quarter of 2023. The increase in revenue for the quarter was driven by solid growth in our healthcare and education segments, and included a full quarter contribution of $6.8 million from our GGNA acquisition, which closed during this birth quarter of 2024. Net income for the second quarter of 2024 was $37.5 million dollars, for $2.3% for the limited share, compared to net income of $24.7 million dollars, for $1.27 per the limited share, the second quarter of 2023.

John D. Kelly: Now we'll share some of the key financial results from the second quarter. Revenues for the second quarter of 2024 were a record high, achieving $371.7 million, up 7.2% from $346.8 million in the same quarter of 2023. The increase in revenues for the quarter was driven by solid growth in our healthcare and education segments and included a full quarter contribution of $6.8 million from our VG&A acquisition, which closed during the first quarter of 2024.

John D. Kelly: Now we'll share some of the key financial results from the second quarter.

John D. Kelly: Revenues for the second quarter of 2024 were a record high, achieving $371.7 million, up 7.2 percent from $346.8 million in the same quarter of 2023.

John D. Kelly: The increase in revenues for the quarter was driven by solid growth in our healthcare and education segments, and included a full quarter contribution of $6.8 million from our PG&A acquisition, which closed during the first quarter of 2024.

John D. Kelly: Net income for the second quarter of 2024 was $37.5 million, or $2.03 per diluted share, compared to net income of $24.7 million, or $1.27 per diluted share, for the second quarter of 2023. The increase in net income is driven by the litigation settlement gain I mentioned earlier and revenues that outpace expenses. Our effective income tax rate in the second quarter of 2024 was 28.1%, which is less favorable than the statutory rate, exclusive of state income taxes, primarily due to certain non-deductible expense items.

John D. Kelly: Net income for the second quarter of 2024 was $37.5 million, or $2.03 per diluted share, compared to net income of $24.7 million, or $1.27 per diluted share in the second quarter of 2023.

The increase in net income was driven by the litigation settlement GNA mentioned earlier, and revenues that outpace expenses. Our effective income tax rate in the second quarter of 2024 was 28.1%, which is less favorable than the statutory rate, which is of state income taxes, primarily due to certain non-adoptical expense items. Just to leave it up was a record of $55.7 million dollars in Q2, 2024, or 15% of revenues, compared to $48.5 million dollars for 14% of revenues in Q2, 2023. The increase in the just to leave it up for the quarter was primarily due to the increase in segment hoppery income, excluding the impact of segment restructuring charges.

Speaker Change: The increase in net income is driven by the litigation settlement gain I mentioned earlier and revenues that outpace expenses.

Speaker Change: Our effective income tax rate in the second quarter of 2024 was 28.1%, which is less favorable than the statutory rate, exclusive of state income taxes, primarily due to certain non-deductible expense items.

John D. Kelly: Jeff Zibida was a record $55.7 million in Q2 2024, or 15% of revenues, compared to $48.5 million, or 14% of revenues, in Q2 2023. The increase in adjusted EBIT after the quarter was primarily due to the increase in segment operating income, excluding the impact of segment restructuring. We are proud of our progress in improving margins, and we remain confident in our ability to achieve full-year mid-team margins in 2025, consistent with the goal we set forth in our 2022 investor presentation. Adjusted net income was $30.9 million, a record $1.68 per diluted share in Q2 2024, compared to $27 million, or $1.38 per diluted share in the second quarter of 2023, resulting in a The volunteer segment generated 51% of total company revenues during the second quarter of 2024.

Jeff Zbida: Jeff Zbida was a record $55.7 million in Q2 2024, or 15% of revenues, compared to $48.5 million, or 14% of revenues, in Q2 2023.

Jeff Zbida: The increase in adjusted EBIT after the quarter was primarily due to the increase in segment operating income, excluding the impact of segment restructuring charters.

We are proud of our progress in improving margins, and we remain confident in our ability to achieve a year mid-teen margins in 2025, consistent with the goal we set forward in our 2022 Investor Day. The adjusted net income was $30.9 million dollars, a record of $1.68 per the limited share in Q2, 2024, compared to $27 million dollars for $1.38 per the limited share in the second quarter of 2023, resulting in a 22% increase in adjusted diluted earnings per share before the Q2, 2023.

Jeff Zbida: We are proud of our progress in improving margins, and we remain confident in our ability to achieve full-year mid-team margins in 2025, consistent with the goal we set forth in our 2022 Investor Day.

Jeff Zbida: The just-in-debt income was $30.9 million.

Jeff Zbida: A record $1.68 per diluted share in Q2 2024, compared to $27 million for $1.38 per diluted share in the second quarter of 2023, resulting in a 22% increase in adjusted diluted earnings per share over Q2 2023.

Now discuss the performance of each of our operating segments. Value for your segment generated 51% of total company revenues during the second quarter of 2024. The segment posted revenues of $190.1 million dollars, about $16.3 million dollars, or $9.4% from the second quarter of 2023. The increase in revenues in the quarter reflects continued strong demand for our digital, performance improvement, culture and organizational excellence, and strategy and innovation offerings. Healthcare's digital and consulting and managed services capabilities for 15% and 7%, respectively, in the second quarter, reflecting the continued fraud-based demand for our offerings. The second quarter of 2024 included $17 million dollars of favorable performance-based fee adjustments compared to $16 million dollars of such adjustments in the second quarter of 2023.

Speaker Change: Now let's discuss the performance of each of our operating segments.

Speaker Change: Volunteer segments generated 51% of total company revenues during the second quarter of 2024.

John D. Kelly: This segment boasts revenues of $190.1 million, up $16.3 million, or 9.4% from the second quarter of 2023. The increase in revenues in the quarter reflects continued strong demand for digital, performance improvement, culture and organizational excellence, and strategy and innovation offerings. Healthcare's digital and consulting and managed services capabilities grew 15% and 7%, respectively, in the second quarter, reflecting the continued fraud-based demand for our services. The second quarter of 2024 included $17 million of favorable performance-based fee adjustments compared to $16 million of such adjustments in the second quarter of 2023. The ability to earn performance-based fees as we drive benefits for our clients is a favorable and ongoing attribute of our healthcare business. Therefore, the recognition of revenues for such adjustments can vary significantly quarter to quarter.

Speaker Change: This segment posted revenues of $190.1 million, up $16.3 million, or 9.4% from the second quarter of 2023.

Speaker Change: The increase in revenues in the quarter reflects continued strong demand for digital, performance improvement, culture and organizational excellence, and strategy and innovation offerings.

Speaker Change: Healthcare's digital and consulting and managed services capabilities grew 15% and 7% respectively in the second quarter, reflecting the continued fraud-based demand for our offerings.

Speaker Change: The second quarter of 2024 included $17 million of favorable performance-based fee adjustments compared to $16 million of such adjustments in the second quarter of 2023.

The ability to burn and perform the space fees as we drive benefits for our clients is a favorable and ongoing attribute of our health care business, though the recognition of revenues for such adjustments can very significantly quarter to quarter. Operating margin for health care was 29.1% in Q2-2024 compared to 28.3% in Q2-2023. Increasing margin was primarily due to a decrease in contractor expenses, partially offset by an increase in compensation cost or revenue generating professionals at the percentage of revenues. The education segment generated 33% of total company revenues during the second quarter of 2024. The education segment posted revenues of $122.8 million, up to $12.1 million, or 10.9% from the second quarter of 2023, and included $6.8 million from our acquisition of GGDA.

Speaker Change: The ability to earn performance-based fees as we drive benefits for our clients is a favorable and ongoing attribute of our healthcare business, so the recognition of revenue for such adjustments can vary significantly quarter to quarter.

John D. Kelly: Operating margin for health care was 29.1% in Q2 2024 compared to 28.3% in Q2 2023. The increase in margin is primarily due to a decrease in contract, partially offset by an increase in compensation costs for our revenue-generating professionals at the percentage of revenue. The education segment generated 33% of total company revenues during the second quarter of 2024.

Speaker Change: Operating margin for healthcare was 29.1% in Q2 2024 compared to 28.3% in Q2 2023.

Speaker Change: The increase in margin was primarily due to a decrease in contractor expenses.

Speaker Change: Partially offset by an increase in compensation costs for our revenue-generating professionals at a percentage of revenues.

Speaker Change: The education segment generated 33% of total company revenues during the second quarter of 2024.

John D. Kelly: The education segment posted revenues of $122.8 million, up $12.1 million, or 10.9% from the second quarter of 2023, and included $6.8 million from our acquisition of DG&A. The increase in revenues in the quarter was driven by increased demand for our strategy and operations in digital product offerings. Our consulting and managed services capability revenue grew 19% over the second quarter of 2023.

Speaker Change: The education segment posted revenues of $122.8 million, up $12.1 million, or 10.9% from the second quarter of 2023, and included $6.8 million from our acquisition of DGA.

The increase in revenues in the quarter was driven by increased demand for our strategy and operations in digital product offerings. Education's consulting and managed services capability revenue was 19% over the second quarter of 2023. The operating margin for education was 25.1% from Q2-2024 compared to 24.8% with the same quarter in Q2-2023. The increase in operating margin in the quarter was primarily driven by revenue growth that outpaced increase in compensation costs for our revenue generating professionals and a decrease in contractor expenses, partially offset by increase in compensation costs for our support personnel as a percentage of revenue.

Speaker Change: The increase in revenues in the quarter was driven by increased demand for our strategy and operations in digital product offerings.

Speaker Change: Education's consulting and managed services capability revenue grew 19% over the second quarter of 2023.

John D. Kelly: The operating margin for education was 25.1% for Q2 2024, compared to 24.8% for the same quarter in 2023. The increase in operating margin for the quarter was primarily driven by revenue growth that outpaced an increase in compensation costs for our revenue-generating professionals and a decrease in contractors. Although partially offset by an increase in compensation costs for our support personnel as a percentage of revenue, the commercial segment generated 16% of total company revenues during the second quarter of 2024 and posted revenues of $58.8 million compared to $62.3 million in the second quarter of 2023. The decrease in revenues was driven by a slower sales cycle for our digital offerings, partially offset by an increase in demand for our financial advisory offerings.

Speaker Change: The operating margin for education was 25.1% for Q2 2024 compared to 24.8% for the same quarter in 2023.

Speaker Change: The increase in operating margin in the quarter was primarily driven by revenue growth that outpaced an increase in compensation costs for our revenue-generating professionals and a decrease in contractor expenses.

Speaker Change: Partially offset by an increase in compensation costs for our support personnel as a percentage of revenue.

The commercial segment generated 16% of total company revenues during the second quarter of 2024 and posted revenues of $58.8 million compared to $62.3 million in the second quarter of 2023. The increase in revenues was driven by a lower sales cycle for our digital offerings, partially offset by an increase in demand for our financial advisory offerings. As Mark mentioned, despite the shorter-term softening of market demand for our digital offerings, we are confident in the long-term growth trajectory of the commercial segment as temporary macro-evalent ease when we fully capture the ongoing strength in our sales pipeline. Operating margin for the commercial segment was 15.3% in Q2-2024 compared to 16.8% for the same quarter in 2023.

Speaker Change: The commercial segment generated 16% of total company revenues during the second quarter of 2024 and boasted revenues of $58.8 million compared to $62.3 million in the second quarter of 2023.

Speaker Change: The decrease in revenues was driven by a slower sales cycle for our digital offerings, partially offset by an increase in demand for our financial advisory offerings.

John D. Kelly: Mark mentioned that despite the shorter-term softening of market demand for our digital offering, we are confident in the long-term growth trajectory of the commercial segment as temporary macro headlines ease when we fully capture the ongoing strength in our sales pipeline. Operating margin for the commercial segment was 15.3% in Q2 2024, compared to 16.8% for the same quarter in 2023. The decrease in operating margin was driven by an increase in compensation costs for our revenue-generating professionals as a percentage of revenues, partially offset by decreases in restructuring charges and contractor expenses as a percentage of revenues. Corporate expenses are not allocated at the segment level.

Speaker Change: As Mark mentioned, despite the shorter-term softening of market demand for our digital offerings, we are confident in the long-term growth trajectory of the commercial segment as temporary macro headlines ease when we fully capture the ongoing strength in our sales pipeline.

Mark Hussey: Operating margin for the commercial segment was 15.3% in Q2 2024, compared to 16.8% for the same quarter in 2023.

The decrease in operating margin was driven by an increase in compensation costs for our revenue generating professionals as a percentage of revenues, partially offset by decreases in restructuring charges and contractor expenses as a percentage of revenues.

Mark Hussey: The decrease in operating margin was driven by an increase in compensation costs for our revenue generating professionals as a percentage of revenues partially offset by decreases in restructuring charges contractor expenses as a percentage of revenues

Corporate expenses not allocated at the segment level, excluding the $15 million litigation settlement gain and corporate restructuring charges for $45.6 million in Q2-2024 compared to $43 million in Q2-2023. On allocated corporate expenses in the second quarter of 2024 and 2023 included $700,000 and $1.4 million, respectively, of expense related to the increase in the liability of our deferred compensation. Plan, which is offset by the investment gains and the assets used upon that plan reflected in other income, excluding the impact of the deferred compensation plan in both periods, on allocated corporate expenses increased $3.2 million, primarily due to increases in software and data hosting expenses and compensation expense for our support personnel.

John D. Kelly: Excluding the $15 million litigation settlement gain and corporate restructuring charges, revenues were $45.6 million in Q2 2024 compared to $43 million in Q2 2023. Allocated corporate expenses in the second quarter of 2024 and 2023 included $700,000 and $1.4 million, respectively, of expense related to the increase in the liability of our deferred compensation plan, which is offset by the investment gain and the assets used to fund that plan reflected in other Excluding the impact of the deferred compensation plan in both periods, unallocated corporate expenses increased $3.2 million, primarily due to increases in software and data hosting expenses and Compensation Expense for our support personnel.

Mark Hussey: Corporate expenses not allocated at the segment level, excluding the $15 million litigation settlement gain and corporate restructuring charges, were $45.6 million in Q2 2024 compared to $43 million in Q2 2023.

Mark Hussey: Unallocated corporate expenses in the second quarter of 2024 and 2023 included $700,000 and $1.4 million, respectively, of expense related to the increase in the liability of our deferred compensation plan.

Mark Hussey: which is offset by the investment gain on the assets used to fund that plan reflected in other income.

Mark Hussey: Excluding the impact of the Deferred Compensation Plan in both periods, unallocated corporate expenses increased $3.2 million, primarily due to increases in software and data hosting expenses and compensation expense for our support personnel.

Now it turns the balance sheet and cash flows. Cash flow from operations in the second quarter of 2024 was a record of $107.2 million. In the quarter, it was about $9 million in capital expenditures, inclusive of internally-solved software costs, resulting in free cash flow of $98.2 million. ESO was 81 days at the close of the second quarter of 2024, compared to 91 days from the first quarter of 2024 and 77 days from the second quarter of 2023. Total debt, as of June 30th, 2024, was $511.6 million, consisting entirely of our senior bank debt. So we finished the quarter with cash of $17.6 million, or net debt of $493.9 million.

John D. Kelly: Now I'll turn you to the balance sheet and cash flow. Cash flow from operations in the second quarter of 2024 was a record $107.2 million. In the quarter, we invested $9 million in capital... Inclusive of Internally Felt Software Costs, resulting in free cash flow of $98.2 million. DSO was 81 days at the close of the second quarter of 2024, compared to 91 days for the first quarter of 2024 and 77 days for the second quarter of 2023. Total debt as of June 30, 2024 was $511.6 million, consisting entirely of our senior bank debt.

Speaker Change #100: Now I'll turn you to the balance sheet and cash flows.

Speaker Change #100: Cash flow from operations in the second quarter of 2024 was a record $107.2 million.

Speaker Change #100: In the quarter, we invested $9 million in capital expenditures, inclusive of internally developed software costs, resulting in a free cash flow of $98.2 million.

Speaker Change #100: DSO was 81 days at the close of the second quarter of 2024, compared to 91 days for the first quarter of 2024, and 77 days for the second quarter of 2023.

Speaker Change #100: Total debt as of June 30, 2024 was $511.6 million, consisting entirely of our senior bank debt, and we finished the quarter with cash of $17.6 million, or net debt of $493.9 million.

John D. Kelly: Can we finish the quarter with cash of $17.6 million or net debt of $493.9 million? This was a $61.1 million decrease in net debt compared to Q1 of 2024. Our leverage ratio, defined in our senior bank agreement, is 2.2 times just to keep it up as of June 30th, 2024, consistent with the leverage ratio as of June 30, 2023. During the second quarter, we used $34.4 million to repurchase approximately 37

This was a $61.1 million decrease in net debt, compared to Q1 of 2024. Our leverage ratio, defined in our senior bank agreement, was 2.2 times adjusted EBITDA as of June 30th, 2024, consistent with the leverage ratio as of June 30th, 2023. During the second quarter, we used $34.4 million to repurchase approximately 376,000 shares. Since the beginning of 2024, we have repurchased 1 million shares, representing 5.4% of our comments outstanding as of December 31st, 2023. As of June 30th, 2024, $90 million remained available for share reverses under our current share reverse program. We cheap record free cash flow in the second quarter of 2024, and continue to execute on our balanced capital deployment strategies.

Speaker Change #100: This was a $61.1 million decrease in net debt compared to Q1 of 2024.

Speaker Change #100: Our leverage ratio, defined in our senior bank agreement, was 2.2 times adjusted EBITDA as of June 30th, 2024, consistent with the leverage ratio as of June 30th, 2023.

Speaker Change #100: During the second quarter, we used $34.4 million to repurchase approximately 376,000 shares.

John D. Kelly: At the beginning of 2024, we repurchased 1 million shares, representing 5.4% of our common stock outstanding as of December 31st, 2023. As of June 30, 2024, $90 million remained available for share repurchases under our current share repurchase program. We achieved record free cash flow in the second quarter of 2024 and continue to execute on our balanced capital deployment strategy. We believe the cumulative effect of our return to shareholders via share repurchases over the last several years has well positioned us for continued strong EPS expansion. At the same time, our balance sheet remains strong, providing us with the capacity for continued share repurchases and accretive M&A.

Speaker Change #100: Since the beginning of 2024, we have repurchased 1 million shares, representing 5.4% of our common stock outstanding as of December 31st, 2023.

Speaker Change #100: As of June 30, 2024, $90 million remained available for share repurchases under our current share repurchase program.

Speaker Change #100: We achieved record free cash flow in the second quarter of 2024 and continue to execute on our balanced capital deployment strategy.

We believe the cumulative effect of our return to shareholders via share reverses over the last several years, as well as this in dust for continued strong EPS expansion. At the same time, our balance sheet remains strong, providing us the capacity for continued share reverses and a creative M&A.

Speaker Change #100: We believe the cumulative effect of our return to shareholders via share repurchases over the last several years has well positioned us for continued strong EPS expansion.

Speaker Change #100: At the same time, our balance sheet remains strong, providing us the capacity for continued share repurchases and accretive M&A.

Finally, let me turn to our guidance of the full year 2024. Mark mentioned we are updating a full year 2024 revenue and earnings guidance that follows. Narrowing our revenues before reimbursement of guidance to a range of $1.46 billion to $1.5 billion, reflecting the lower half of our previous revenue guidance range. Increasing our adjusted give it up at a percentage of revenues guidance to a range of 13%, 13.5%. An increasing our adjusted deluded earnings per share guidance to a range of $5.85, $6.15.

John D. Kelly: Finally, let me turn to our guidance for the full year 2024. Mark mentioned we are updating our full year 2024 revenue and earnings guidance as follows. Narrowing our revenues before reimbursable expenses guide to a range of $1.46 billion to $1.5 billion, reflecting the lower half of our previous revenue guidance range. Increasing our adjusted EBITDA as a percentage and revenue guidance to a range of 13% to 13.5%, and increasing our adjusted diluted earnings per share guidance to a range of $5.85 to $6.15. Thank you, everyone. I would now like to open the call to questions. Operator?

Speaker Change #100: Finally, let me turn to our guidance for the full year of 2024.

Speaker Change #100: As Mark mentioned, we are updating our full year 2024 revenue and earnings guidance as follows, narrowing our revenues before reimbursable expenses guidance.

Speaker Change #101: To a range of $1.46 billion to $1.5 billion, reflecting the lower half of our previous revenue guidance range.

Speaker Change #101: Increasing our Adjusted EBITDA as a Percentage of Revenues Guidance to a range of 13% to 13.5% And increasing our Adjusted Diluted Earnings Per Share Guidance to a range of $5.85 to $6.15

Thanks, everyone. I would now like to open the call for questions.

Operator?

Thank you, ladies and gentlemen. If you have a question at this time, please press star 11 on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, you may do so by pressing star 11. Game, one moment for our first question.

Operator: Thank you. Ladies and gentlemen, if you have a question at this time, please press star 11 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, you may do so by pressing star 1 1 again.

Speaker Change #102: Thank you, everyone. I would now like to open the call to questions.

Speaker Change #102: Operator.

Speaker Change #103: Thank you. Ladies and gentlemen, if you have a question at this time, please press star 11 on your touchtone telephone.

Speaker Change #104: If your question has been answered or you wish to remove yourself from the queue, you may do so by pressing star 11 again.

Operator: One moment for our first question. Our first question comes from the line of Andrew Nicholas from William Blair and Kelly. Hi, everyone. Good afternoon.

Our first question comes from the line of Andrew Nicholas of William Blair & Company. Good afternoon. I wanted to ask on a commercial weakness first. Mark, you're pretty confident in this being temporary weakness. Just kind of curious if you could speak to, you know, what gives you that confidence, and over what time frame you would expect this to kind of play itself out of it. It's just a matter of getting through, you know, some difficult comps and some of these budget restrictions, or is there any other catalyst you're looking for?

Speaker Change #105: One moment for our first question.

Speaker Change #106: Our first question comes from the line of Andrew Nicholas of William Blair and Company.

Andrew Owen Nicholas: I wanted to ask about commercial weakness first. Mark, you're pretty confident in this being a temporary weakness. Just kind of curious if you could speak to, you know, what gives you that confidence and over what time frame you would expect this to kind of play itself out. Is it just a matter of getting through, you know, some difficult competitions and some of these budget restrictions, or is there any other catalyst you're looking for?

Andrew Owen Nicholas: Hi everyone, good afternoon. I wanted to ask on commercial weakness first.

Speaker Change #107: mark your

Andrew Owen Nicholas: I'm pretty confident in this being temporary weakness, just kind of curious if you could speak to

Andrew Owen Nicholas: And then somewhat relatedly, is the plan to let the foot off the gas a little bit on the headcount growth side until you start to see evidence of those budgets thawing out? Yeah, Andrew. I would start with a reason for our confidence. It's really the pipeline itself.

Speaker Change #108: You know, what gives you that confidence and over what time frame.

Speaker Change #109: you would expect this to kind of play itself out? Is it just a matter of getting through, you know, some difficult comps and some of these budget restrictions or is there any other catalyst you're looking for? And then somewhat relatedly, is the plan to

And then, somewhat relatedly, is the plan to let us put off the gas a little bit on the head count growth side until you start to see evidence of those budgets going out. Yeah, Andrew, I would start with a reason for our content. It's really the pipeline itself. When we look at the kinds of projects that we're bidding on, and the clients that are engaging us, we look at the size of that and the historic levels, you know, we feel confident that what the demand is there, and that's really what we've got is the ways and decision-making that, to me, we've seen in other environments where there's, you know, some macro environment and certainty that the election is going on.

Speaker Change #110: Let's put off the gas a little bit on the headcount growth side until you start to see evidence of those budgets thawing out.

Mark Hussey: When we look at the kinds of projects that we're bidding on and the clients that are engaging us, we look at the size of that at historical levels, and we feel confident that the demand is there and that really, what we've got is delays in decision making that, to me, we've seen in other environments where there's some macro environment uncertainty that the election is going on. So we believe that, ultimately, the tailwinds are going to come back, and we see signs from time to time.

Speaker Change #110: Yeah, Andrew, I would start with the reason for our confidence. It's really the pipeline itself. When we look at the kinds of

Speaker Change #111: Projects that we're sitting on and the clients that are engaging us. We look at the size of that at historical levels.

Speaker Change #111: We feel confident that the demand is there and that really what we've got is delays in decision-making that, to me, we've seen in other environments where there's...

So we believe that ultimately, you know, there's the tailwinds are going to come back. And we see signs in time to time; we're not ready to call that. In the second half of the year, we have kept the brakes on head count additions, but there's, we've seen nothing that really gives us any kind of view of change and trajectory for the people on the terms. And Andrew, I'll add, when we look at the guidance update and the lowering of the midpoint of our revenue guidance by the $20 million dollars, the majority of that actually relates to some of the softness that we experienced during the first six months of the year.

Speaker Change #111: There was a macro-environment survey that the election was going on, so we believe that ultimately...

Mark Hussey: We're not ready to call that in the second half of the year. We have tapped the brakes on headcount additions, but there's, we see nothing that really gives us any kind of indication that you have changed the trajectory for the longer term. And Andrew, I'll add.

Speaker Change #111: The tailwinds are going to come back, and we see signs from time to time, we're not ready to call that in the second half of the year. We have tapped the brakes on headcount additions, but we see nothing that really gives us any kind of...

John D. Kelly: When we look at the guidance update and the lowering of the midpoint of our revenue guidance by $20 million, the majority of that actually relates to some of the softness that we experienced during the first six months of the year. When we look at the back half of the year and our projections for the back half of the year, which is supported by our pipeline and by our backlog, that's actually much more consistent with the expectations that we had for the front half of the year. So I think we've already digested a significant component of the weakness that Mark was referring to.

Speaker Change #111: Do you have a change in trajectory for the longer term? And Andrew, I'll add...

Andrew Owen Nicholas: When we look at the guidance update and the lowering of the midpoint of our revenue guide, it's about $20 million.

When we look at the back half of the year and our, our rejecting the back half of the year, which is supported by our pipeline and by our backlog, that's actually much more consistent with the expectations that we had at the front half of the year. So I think we've already diagnosed it as significant coins on the weakness that it was in front of to.

Andrew Owen Nicholas: The majority of that actually relates to some of the softness that we experienced during the first six months of the year. When we look at the back half of the year and our projections for the back half of the year, which is supported by our pipeline and by our backlog,

Speaker Change #111: That's actually...

Speaker Change #111: much more consistent with the expectations that we had at the front half of the year. So I think we've already digested a significant component of the weakness that Mark was referring to.

John D. Kelly: And John needed to clarify that that's specific to commercial, you're saying, in terms of growth and system. Maybe that's a good segue, then, to just ask a follow-up on the segment-level expectations you had given us, or outline that for us on the fourth quarter call. The first quarter was a little bit different, somewhat with commercial.

And John needed to clarify that specific to commercial, you're saying in terms of growth and system was okay.

Speaker Change #111: And John , maybe to clarify, that's specific to commercial, you're saying?

Maybe that's a good segue then to just ask a follow-up on segment level expectations. You had given us or outlined that for us on the fourth quarter call. First quarter was a little bit different somewhat with commercial; I think helped you a little bit better than you had thought going, you know, after, after just three months. So if you could just outline maybe where segment level expectations are today relative to the fourth quarter call, I think that would be some helpful additional context for the guys' changes. Sure, Andrew, from a, I'll start with health care from a health care perspective.

John D. Kelly: in terms of growth consistent with the...

Speaker Change #112: Maybe that's a good segue then to just ask a follow-up on segment level expectations you had given us.

Speaker Change #113: outlined that for us on the fourth quarter call. First quarter was a little bit different, somewhat with commercial. I think health care was a little bit better than you had thought going, you know, after just three months. So if you could just outline maybe where segment level expectations are today relative to the fourth quarter call.

Andrew Owen Nicholas: I think health care was a little bit better than you had thought going in, you know, after just three months. So if you could just outline maybe where segment level expectations are today relative to the fourth quarter call, I think that would be some helpful additional context for the guidance. Sure, Andrew.

Speaker Change #114: I think that would be some helpful additional context for the guidance changes.

John D. Kelly: I'll start with health care. From a health care perspective, we're expecting the full year growth rate at this point to be in the upper single digits to lower double digit range. So that's up from the up, up from the mid to upper single-digit range back from the February call. And we still expect margins for health care to be in the 25 to 27% range. From an education perspective, we're expecting revenues now for the full year to be in the low double digit range. We described it as the low teen range on the call back in February. We still expect to be in the low double, low double digit range. And then there are the margins.

Respecting the full year growth rate at this point to be in the upper single digit, lower double digit range. Let's up from the, up, up from the mid to upper single digit range back from the February call. And we still expect margins for out there to be in the 25 to 27% range. From an education perspective, we're expecting revenues now for the full year to be in the low double-digit range. And we described it as the low team range on the call back in February. It would still expect to be in the low double, low double digit range.

Speaker Change #115: Sure, Andrew. I'll start with health care, from a health care perspective.

Speaker Change #116: We're expecting the full-year growth rate at this point to be in the upper single-digit to lower double-digit range. So that's up from the mid-to-upper single-digit range back from the February call. And we still expect margins for healthcare to be in the 25 to 27 percent range.

Speaker Change #116: From an education perspective, we're

Speaker Change #116: Expecting revenues now for the full year to be in the

Speaker Change #116: Low double-digit range. We described it as the low teen range on the call back in February . I think we still expect to be in the low double-digit range, and there are the margins.

And there are the margins. Again, we expect to be in the 24 to 26% range, which is consistent from the February call. And then, from a commercial perspective, we're now expecting the full year to be relatively flat with last year, but that was an area where we expected, at the outset of the year, on low double-digit growth. And the margins for this part of the business also remain unchanged in the 21 to 23% college.

John D. Kelly: Again, we expect to be in the 24 to 26% range, which is consistent with the February call. And then from a commercial perspective, we're now expecting the full year to be relatively flat with last year. So that was an area where we expected, at the outset of the year, low double-digit growth, and the margins for this part of the business also to remain unchanged at between 21 and 233%. Great, thank you.

Speaker Change #116: Again, we expect to be in the 24% to 26% range, which is...

Speaker Change #116: is consistent from the February call.

Speaker Change #116: And then from a commercial perspective, we're now expecting the full year to be relatively flat.

Speaker Change #116: with last year. So that was an area where we expected the outset of the year.

Speaker Change #116: low double-digit growth, and the margins for this part of the business also remain unchanged in the 21-23 percent range.

Great. Thank you. And then, if I could just squeeze one more in. I mean, some movement there at the segment level, but you know the margin outlook consistent at the segment level and also you were able to raise it for the full year. I mean, what gives you the ability to do that? Is it just really, really strong utilization trends. Is it, you know, high end to lower head count growth in the back half of the year and anything else that you would touch on that the great. Yeah, Andrews, John, our team has done an excellent job of really managing expenses throughout the first half of the year.

John D. Kelly: And then if I could just squeeze one more in, I mean, some movement there at the segment level, but, you know, the margin outlook consistent at the segment level, and also you were able to raise it for the full year. What gives you the ability to do that?

Speaker Change #117: Great, thank you. And then if I could just squeeze one more in. I mean, some movement there at the segment level, but you know, the margin outlook.

Speaker Change #118: consistent at the segment level and also you were able to raise it for the full year I mean what gives you the ability to do that is it

Andrew Owen Nicholas: Is it just really, really strong utilization trends? Is it, you know, plans to lower headcount growth in the back half of the year and anything else that you would touch on? That'd be great. Yeah, Andrew. It's John.

Speaker Change #119: Just really, really strong utilization trends. Is it, you know, plans to lower headcount growth in the back half of the year? And anything else that you would touch on that'd be great.

John D. Kelly: Our team has done an excellent job of really managing expenses throughout the first half of the year. For context, attrition, as we've talked about in the past couple of calls, has been much lower than what we anticipated at the beginning of the year, which means that careful stewardship by our teams has been all the more important. To your point about utilization, as the year does go on, based on our forecast, we do expect utilization to continue to ramp up in the back half of the year.

Speaker Change #119: Andrew, it's John . Our teams have done an excellent job of really managing expenses throughout the first half of the year. For context, attrition, as we've talked about in the past couple of calls, has been much lower than what we anticipated at the beginning of the year, which means that careful stewardship by our teams has been all the more important.

For contact, the traditions we talked about in the past couple of calls has been much lower than what we anticipated beginning of the year, which means that careful stewardship by our teams has been all the more important. So your point about utilization and the year does go on based on our forecast. We do expect utilization and continue to ramp off in the back half of the year. And so we think that's going to be another margin of creative item as we get towards the back half of the year. And then finally, you know, we mentioned the litigation settlement gain, having those litigation expenses for that settlement.

Andrew Owen Nicholas: To your point about utilization, as the year does go on, based on our forecast, we do expect utilization to continue to ramp up in the back half of the year, and so we think that's going to be another margin accretive item as we get towards the back half of the year. And then finally, we mentioned the litigation settlement gain.

And I'm fully behind us at this point; that's another positive factor in terms of that full year margin outlook. Thanks again.

Andrew Owen Nicholas: Those litigation expenses for that settlement are fully behind us at this point. That's another positive factor in terms of our full-year margin outlook.

John D. Kelly: And so we think that's going to be another margin-accretive item as we get towards the back half of the year. And then finally, we mentioned the litigation settlement gain. Having those litigation expenses for that settlement fully behind us at this point, that's another positive factor in terms of our full-year margin outlook. Thanks again. Hey, how are you?

Thank you, Andrew.

Our next question comes from the line of Toby Somer up to his securities. Thank you. I wanted to ask a sort of a broad question about incremental margins.

Tobey O'Brien Sommer: Our next question comes from the line of Tobey Sommer of Truist Security. Thank you. I wanted to ask a sort of a broad question about incremental margin. Can you achieve the mid-teens... Margin target for next year, the 15%, I guess, at this kind of revenue growth rate, or do you need revenue growth to accelerate for that to be achievable? Hey Tobey, it's John.

Speaker Change #120: Thanks again.

Speaker Change #121: Thank you.

Speaker Change #122: Our next question comes from the line of Tobey Sommer of Truist Securities.

Tobey O'Brien Sommer: Thank you. I wanted to ask a sort of a broad question about incremental margins.

Can you achieve the mid-teens margin target for next year, the 15% I guess, at this kind of revenue growth rate, or do you need revenue growth to accelerate for that to be achievable? Hey, Toby. Is John? We don't need revenue to accelerate beyond really the revenue growth profile that we're seeing this year, just for the sake of discussion, in order to continue the ramp or that we see with margins for the whole next year next year. That's an area where, when we look at the different libraries that we have from a margin perspective, scaling our as GNA, continued deployment using our global delivery model utilization, some of the pricing issues that we have underway, we feel good that those.

Tobey O'Brien Sommer: Can you achieve the mid-teens margin target for next year, the 15%, I guess?

Speaker Change #123: at this kind of revenue growth rate or do you need revenue growth to accelerate for that to be achievable?

John D. Kelly: We don't need revenue to accelerate beyond, really, the revenue growth profile that we're seeing this year, just for the sake of discussion, in order to continue the ramp forward that we see with margins for the full year next year. That's an area where when we look at the different levers that we have from a margin perspective, Scaling our SG&A, continued deployment, using our global delivery model, utilization, and some of the pricing initiatives that we have underway.

John D. Kelly: Hey Tobey, it's John . We don't need revenue to accelerate beyond really the revenue growth profile that we're seeing this year just for the sake of discussion in order to continue the ramp forward that we see with margins for the fall next year. That's an area where when we look at the different levers that we have from a margin perspective

Speaker Change #124: Scaling our own DNA.

Speaker Change #124: continue deployment using our global delivery model.

John D. Kelly: We feel good that those individual levers, in fact, probably exceeded the margin targets that we have out there, which, of course, gives us some capacity to continue to invest in the business. So we feel good about our ability to continue to manage towards the margin targets at a variety of different revenue growth rates. And, Tobey, I'll add, I think, what is a very important addition to that, which is, in our managing director compensation, the targets that we set, we really have built into everybody's objectives a margin component, which is really very important because, you know, many of the decisions that are made are really at the micro level by individual managing directors as they manage their engagements that have been sold and delivered.

Speaker Change #124: Utilization, some of the pricing initiatives that we have underway. We feel good that those those individual levers in fact probably over sell.

Those individual levers, in fact, probably oversold the margin targets that we have out there, which, of course, gives us some capacity to continue to invest in the business. So we feel good about our ability to continue to manage towards the March targets in a variety of different revenue growth rates.

Speaker Change #124: The market targets that we have out there, which of course gives us some capacity to continue to invest in the business. So we feel good about our ability to continue to manage towards the market targets in a variety of different revenue growth rates.

Toby, I think what is a very important addition to that, which is in our managing director compensation, the targets that we set, we really have built into everybody's objectives a margin component, which really is very important. Because many of the decisions that are made are really the micro level by individual management directors as they manage their engagement with the sold and delivered. And so that really has shifted to a nice balance between the revenue growth but making sure we preserve the growth of the dollar and bottom line. So the rate of growth on the top line certainly is very helpful when we look at components contributed by leveraging SGNA.

Speaker Change #124: And, Tobey, I'll add I think what is a very important addition to that, which is

Tobey O'Brien Sommer: In our Managing Director Compensation, the targets that we set, we really have built into

Tobey O'Brien Sommer: Everybody's objective is a margin component.

Tobey O'Brien Sommer: which really is very important because it...

Tobey O'Brien Sommer: You know, many of the decisions that are made are really at the micro level by individual managing directors as they manage their engagements that have been sold and delivered, and so that really has shifted to a nice balance between

John D. Kelly: And so that really has shifted to a nice balance between not only revenue growth but making sure we preserve profitability at the bottom line. So, you know, the rate of growth on the top line certainly is very helpful when we look at the components contributed by leveraging SG&A. But there's many other levers that we have that, you know, so we're not, certainly not single-threaded around just revenue growth. I'll be.

Tobey O'Brien Sommer: Not only revenue growth, but making sure we preserve the profitability at the bottom line.

Tobey O'Brien Sommer: So, you know, the rate of growth on the top line certainly is very helpful when we look at the components contributed by leveraging SG&A, but there's many other levers that we have that, you know, so we're not certainly not single-threaded around just revenue growth.

But there's many of the levers that we have that, so we're not certainly not single spread it around just revenue.

Within the education business and what you're seeing from customers there, there's certainly been news over the last, you know, the first half a year with protests and potential impacts on fundraising, the delays with fast and impacts on enrollment, and now like having to pay student athletes. Do those factors potentially alter the growth rate for the segment or like how does news flow today impact your outlook for the business in, you know, 12 months or so. You know, it's a very fair question; it's given the promise and the headlines that you've seen. But really, when you look at it, it's really centered around the office of the president, and as they mentioned, even my remarks, so much of our work is done with people within the president's cabinet, if you will, that and they all have responsibilities that are really tied to the improvements they need to make across, you know, their own institutions. And so we have not really seen any kind of impact out of that, although, you know, we watch it, we monitor it. So at this point, it is not something that we're terribly concerned about, but just because we, you know, we had some degree of time already between now and when some of those initial challenges happen, you know, in the ideas.

Tobey O'Brien Sommer: Within the education business and what you're seeing from customers there, there's certainly been news over the last, you know, the first half a year with protests and potential impacts on fundraising, the delays with FAFSA and impacts on enrollment, and now with having to pay student athletes. Is the, do those factors potentially alter the growth rate for the segment, or like, how does the news flow today impact your outlook for the business in, you know, 12 months? You know, it's a very fair question, just given the prominence in the headlines that you've seen, but really, when you look at it, it's really centered around the office of the president.

Tobey O'Brien Sommer: Bye-bye.

Tobey O'Brien Sommer: Within the education business and what you're seeing from customers there, there's certainly been news over the last...

Speaker Change #125: The first half of the year with protests and potential impacts on fundraising, the delays with FAFSA and impacts on enrollment, and now having to pay student-athletes. Do those factors...

Speaker Change #126: potentially alter the growth rate for the segment? Or how does news flow today impact your outlook for the business in 12 months, so to speak?

Speaker Change #127: You know, it's a very fair question, just given the prominence in the headlines that you've seen, but really when you look at it, it's really centered around, you know, the office of the president. And as I mentioned, even in my remarks,

Mark Hussey: And as I mentioned, even in my remarks, so much of our work is done with people within the president's cabinet, if you will, and they all have responsibilities that are really tied to the improvements they need to make across their own institutions. And so we have not really seen any kind of impact from that, although, you know, we watch it, we monitor it. So at this point, it is not something that we're terribly concerned about.

Speaker Change #127: So much of our work is done with people within the President's Cabinet, if you will, and they all have responsibilities that are really tied to the improvements they need to make across their own institutions.

Speaker Change #127: And so, we have not really seen any kind of...

Speaker Change #127: impact out of that. Although, you know, we watch it, we monitor it. So at this point, it is not something that we're terribly concerned about, but just because we, you know, we've had some degree of time already between now and when some of those initial challenges happened, you know, in the 90s.

Mark Hussey: But just because we've had some degree of time already between now and when some of those initial challenges happen, you know, in the Ivies. And then within the healthcare portfolio, you've broadened demand and can, you know, have services that can match a wider spectrum of, sort of, healthy or sick conditions at hospital customers. How are you seeing the spectrum of demand evolve? You know, several quarters ago, we had mostly performance improvement, and the complexion of that seems to be shifting.

Right, and then within the healthcare portfolio that you've broadened, demand and can, you know, have services that can match a wider spectrum of sort of healthy or sick conditions at hospital customers. How are you seeing the spectrum of demand evolve? You know, several quarters ago, we had mostly performance improvements in the complexion of that seems to be shifting. How would you characterize the balance of the demand and where it's strongest currently? Yeah, I'll let John elaborate, but I would just say as a general expectation, I think the areas that are, first of all, I'd say the comments that we hear from our teams of margins are pretty razor thin. They're better, but it's not like there's a big purpose, but there is definitely, you know, a barbell, if you will, of clients that are doing quite well and are being aggressive toward their growth.

Speaker Change #128: Right, and then within the healthcare portfolio that you've broadened demand and can you know have services that can match a wider spectrum of

Speaker Change #128: sort of healthy or sick conditions at hospital customers.

Speaker Change #129: How are you seeing the the spectrum of demand evolve? You know, it was several quarters ago we had

Speaker Change #130: mostly performance improvement, and the complexion of that seems to be shifting. How would you characterize the balance of demand and where it's strongest currently?

Mark Hussey: How would you characterize the balance of demand and where it's strongest currently? Yeah, I'll let John elaborate, but I would just say, as a general expectation, I think the areas that are are Personal IT. The comments that we hear from our teams are that margins are pretty razor thin; they're better, but it's not like there's a big buffer.

Speaker Change #129: Yeah, I'll let John elaborate, but I would just say as a general expectation, I think the areas that are, first of all, I'd say,

John D. Kelly: The comments that we hear from our teams are that margins are pretty razor thin. They're better, but it's not like there's a big buffers. But there is definitely.

John D. Kelly: But there is definitely, you know, a barbell, if you will, of clients that are doing quite well and are being aggressive toward their growth. Those are the areas that they're investing in technology and their digital solutions, some of these strategy areas and financial advisory, things that are on the proactive growth side. You know, headwinds around competitive markets, reimbursement models, and the like. And so there's been a pretty healthy mix, but I would say it's leaning toward digital as the area that you're really seeing people within the systems leaning into.

Those are the areas that they're investing in technology in their digital solutions; some of these strategy areas, financial advisory, things that are on the pro-active growth side. And yet, we still see those systems that are really challenged with just, you know, headwinds around their competitive markets, the reimbursement models, and the like. And so, there's been a pretty healthy mix that I would say is leaning towards digital as the area that you really see in people within the systems leading into healthcare. Yeah, from the market overview, from when you look at our pipeline, Toby continues to be really well-balanced, and so that segment in the market that's going through financial pressures right now, that's still continued to relay back to us that it's a road loss market for those types of offerings right now, and that's supported by the data that we see in our backlog in our pipeline.

John D. Kelly: You know, a barbell, if you will, of clients that are doing quite well and are being aggressive toward their growth. Those are the areas that they're investing in technology and their digital solutions.

John D. Kelly: So these strategy areas and financial advisory, things that are on the proactive growth side, and yet we still see those systems that are really challenged with just

John D. Kelly: [inaudible]

John D. Kelly: Yeah, from the best of the best, you know, from the market overview when you look at our pipeline, Tobey continues to be really well balanced. And so that segment of the market that's going through financial pressures right now, that's still driving significant demand for our performance improvement offerings.

John D. Kelly: Yeah, from the market overview, when you look at our pipeline, Tobey continues to be really well balanced, and so that segment of the market that's going through financial pressures right now, that's still driving significant demand for our

John D. Kelly: And our teams continue to relay back to us that there is a robust market for those types of offerings right now, and that's supported by the data that we see in our backlog and in our pipeline. Yet at the same time, the digital needs that Mark just referred to are also a big growth area. We also see a number of meaningful projects in the pipeline and opportunities related to that part of our business. So, to your question about the trajectory of things, you're right.

Tobey O'Brien Sommer: Performance Improvement Offerings, and our teams continue to relay back to us that it's a robust market for those types of offerings right now, and that's supported by the data that we see in our backlog and our pipeline. Yet, at the same time,

Yet, at the same time, the digital needs that Mark just referred to also are a big growth area. We also see a number of meaningful projects in the pipeline and opportunities related to that part of our business.

Tobey O'Brien Sommer: The digital needs that Mark just referred to also are a big growth area. We also see a number of meaningful projects in the pipeline and opportunities related to that part of our business.

John D. Kelly: Last year, it was a performance improvement weighted pipeline last year. We talked about more balance at the beginning of this year, and I'd say we continue to see that balance at this point.

So, this year, we asked the question about the trajectory of things, right? It was a performance-weighted pipeline last year. We talked about more balances at the beginning of this year, and I'd say we continue to see that balance at this point. then here.

Mark Hussey: The way you asked the question about the trajectory of things, you're right, it was a performance improvement weighted pipeline last year. We talked about more balance at the beginning of this year, and I'd say we continue to see that balance at this point this year.

Thank you.

John D. Kelly: And then just on headcount growth, particularly digital in your offshore operations. Is it fair to assume that that headcount growth is attached to sales already sort of consummated and in the bag as opposed to prospective sales out in future quarters? Yeah, I would say our digital, and what I referred to earlier at the beginning of the call was our managed services team in India, our global delivery team for manned services, and yes, to answer your question, that team is related to projects that have already been sold, and they're executing To broaden the question to our digital team, which is also based in India, they're largely deployed and have strong utilization on our ongoing digital projects as well.

And then just on your head count growth, particularly digital in your offshore operations, is it fair to assume that that head count growth is attached to sales already sort of consummated and in the bag as opposed to prospective sales out in future quarters? Yeah, I would say our digital, in, you know, I referred to earlier as being the call with our managed services team in India, in our global delivery team for managed services. And yes, answered question that team is related to projects that have already been sold, and they're executing on those. I don't think we're on the question to our digital team, which is also made in India.

Speaker Change #131: Thank you. And then, just on your headcount growth, particularly digital in your offshore operations.

Speaker Change #132: Is it fair to assume that that headcount growth is attached to sales already sort of consummated and in the bag, as opposed to prospective sales out in future quarters?

Speaker Change #133: Yeah, I would say our digital, in what I referred to earlier, Bandicall was our managed services team in

Speaker Change #133: India, our global delivery team for manned services. And yes, to answer your question, that team is related to projects that have already been sold and they're executing on those. To broaden the question to our digital team, which is also based in India, they're largely deployed and have strong utilization on our ongoing digital projects as well.

They're largely deployed and have strong utilization on our ongoing digital project as well.

And then last numerical question for me, will, in the context of improving EBITDA margins and getting up to the mid teams, does that have any implications or changes to the cash flow conversion, or should the rules of some of the past hold true as the margins expand? I think the rules of the funds are hold true tomorrow. Thank you very much. Thank you.

John D. Kelly: And then last numerical question for me, in the context of improving EBITDA margins and getting up to the mid-teens, does that have any implications or changes to the cash flow conversion, or should the rules of thumb of the past hold true as the margins expand? I think the rule of the thumb should hold true from our perspective. Thank you very much. Thank you. Our next question comes from the line of Bill Sutherland of the Benchmark Company. Thanks, everybody. I wanted to maybe, Mark, untangle, not untangle, but take apart digital demand a little bit.

Speaker Change #134: And then last numerical question for me, in the context of improving EBITDA margins and getting up to the mid-teens, does that have any implications or changes to the cash flow conversion, or should the rules of thumb of the past hold true as the margins expand?

Speaker Change #133: I think the rule of the thumb should hold true from our perspective, Toby.

Our next question comes from the line of Bill Sutherland of the Benchmark Company. Thanks, everybody.

Speaker Change #135: Thank you very much.

Tobey O'Brien Sommer: Thank you.

Tobey O'Brien Sommer: Our next question comes from the line of Bill Sutherland of the Benchmark Company.

I wanted to maybe mark untangle, not untangle, but take apart the digital demand a little bit. Obviously, particularly interested in how you guys are participating in the AI initiatives that health systems are increasingly taking on. I noticed one just announced ahead of AI projects. I think it was Cleveland. Anyway, just whatever you guys are doing there and how much of that is starting to move to NATO. Yeah, I would say it's still in your early meetings in general, but there's a tremendous amount of activity to hold, to your point. And we definitely seeing, you know, many, many organizations are piloting AI ideas.

Tobey O'Brien Sommer: Bye.

William Sutherland: Thanks everybody. I wanted to maybe, Mark, untangle, not untangle, but pick apart the digital demand a little bit and obviously particularly interested in

William Sutherland: And obviously, particularly interested in how you guys are participating in the AI initiatives that health systems are increasingly taking on. I noticed one just announced ahead of AI projects. I think it was Cleveland.

Speaker Change #136: how you guys are participating in the AI initiatives that health systems are

William Sutherland: increasingly taking on. I noticed one just announced ahead of AI projects, I think it was Cleveland. Anyway, just whatever you guys are doing there and kind of how much of it is starting to move the needle.

Mark Hussey: Anyway, just whatever you guys are doing there and kind of how much of it is starting to move the needle. Yeah, I would say it's still in the early innings in general, but there's a tremendous amount of activity, though, to your point, and we're definitely seeing, you know, many, many organizations are piloting AI ideas before they're scaling them across the organization, and it's really true in education as well. We do see some areas, as an example, in education and on the research side, that seem to be accelerating as well.

Speaker Change #137: Yeah, I would say it's still in the early beginnings in general, but there's a tremendous amount of activity, though, to your point, and we're definitely seeing

I, you know, before they're scaling them across the organization. And that's really true in education as well. We do see some areas as an example in education on the research side that seem to be accelerating as well. I think for us, it continues to be upside, but we're very active, not only in the healthcare and higher ed, certainly in the commercial markets as well to see a lot of activity going on. So I think we feel like we're well positioned. We're very aggressive and active in the marketplace, and we're getting very good response from clients as we look at it.

Speaker Change #138: You know, many, many organizations are piloting AI ideas, you know, before they're scaling them across the organization, and it's really true in education as well. We do see some areas, as an example, in education, on the research side, that seem to be accelerating as well. I think for us, it continues to be upside, but we're very active, not only in the healthcare and higher ed, but certainly in the commercial markets as well.

Mark Hussey: I think for us, it continues to be upside, but we're very active, not only in healthcare and higher education but certainly in the commercial markets as well. You see a lot of activity going on. So I think we feel like we're well positioned. We're very aggressive and active in the marketplace, and we get very good responses from our clients as we work with them, and you're able to build up the bench in terms of AI credentials.

Speaker Change #138: You see a lot of activity going on, so I think we're feeling like we're well-positioned. We're very aggressive and active in the marketplace, and we're getting very good response from our clients as we work with them.

And you're able to build up the bench in terms of AI credentials? Yeah, there's, you know, the issue of, you know, we're not going out and needing the higher, you know, deep data scientists. But, you know, people who have prompt engineering backgrounds and other types of skills, we have not found an issue. I mean, the right numbers of people that we need to at the scale. And then, you know, internally, we're also using AI to at a greater level as we look at our own library methodologies as well. And so it's very pervasive, I would say, increasing in scope.

Speaker Change #139: And you're able to build up the bench in terms of AI credentials.

Mark Hussey: Yeah, there's, you know, the issue of, you know, we're not. Go to www.thevenusproject.com for more information. That was, actually, my follow-up question was, to what degree are you? Implementing AI. Yeah, we're not dependent on it in the sense that while there's, you know, we don't automate things, we're not going to be able to achieve our goals, but I feel like it's certainly, and I take AI and expand that to really the whole concept of automation in general, because there's a lot more beyond just AI that we can benefit from collectively.

Speaker Change #140: Yeah, there's, you know, the issue of, you know, we're not...

Speaker Change #140: going out needing to hire you know deep data scientists but you know people who have engineering backgrounds and other types of skills we have not found issues.

Speaker Change #140: I think the right numbers of people that we need to at the scale and then you know internally we're also using AI to At a greater level as we look at our own delivery methodologies as well. So It's it's very pervasive. I would say increasing in scope and scale

School. That was my follow-up, actually, was to what degree are you seeing or hope to see benefit on margin in terms of implementing AI. Yeah, we're not dependent on it in the sense that while there's, you know, we don't automate things, we're not going to be able to achieve our goals. But feel like it's certainly, and I take AI and expand that to really the whole concept of automation in general because there's a lot more than just AI, but we can benefit from collectively. And so we do think that will ultimately become an increasing benefit for us as we look ahead to 2025, as an example.

Speaker Change #141: That was my follow-up, actually, was, to what degree are you...

Speaker Change #142: seeing or hope to see benefit on the margin in terms of implementing AI.

Speaker Change #142: Yeah, we're not dependent on it in the sense that while there's, you know, we don't automate things, we're not going to be able to achieve our goals.

Speaker Change #143: I feel like it's certainly, and I take AI and expand that to really the whole concept of automation in general, because there's a lot more beyond just AI that we can benefit from collectively. And so we do think that will ultimately become an increasing benefit for us as we look ahead to 2025 as an example.

William Sutherland: And so we do think that will ultimately become an increasing benefit for us as we look ahead to 2025, as an example. I missed, John, I missed what you said. This is a couple of housekeeping items, what GG&A contributed. It was $6.8 million for the quarter. $6.8.

I miss John. I miss what you said. This is a couple of housekeeping. What GGNA contributed. It was $6.8 million for the quarter bill, $6.8? Yes, correct. Okay, couldn't quite agree.

Speaker Change #143: Mm-hmm.

Speaker Change #143: [inaudible]

Speaker Change #143: I missed, John , I missed what you said, this is a couple of housekeeping, what GG&A contributed.

John D. Kelly: Yes, correct. Okay, couldn't wait to hear you. I did you discuss the interest expense as it presented in the second quarter and what, I'm just kind of wondering about the size of it and what it... and what to think about the next two quarters. So the second quarter, from an interest expense perspective, is really our high-water mark bill. If you think about it, we pay out the annual incentives in kind of mid-March.

John D. Kelly: It was 6.8 million dollars for the quarter bill.

And then did you discuss the interest expense as it's presented to the second quarter, and what could just kind of wondering about the size of it and what it and what how to think about the next two quarters. So the second quarter from an interest expense perspective is really our high watermark bill. You think about it, we pay out the annual incentives in kind of mid-March, so you really get the full higher borrowing levels for a full quarter in the second quarter, and you can see based on what we discussed from a pre-catchable perspective, we have some really nice payout of our get ethic for progress.

John D. Kelly: 6.8

Speaker Change #144: Yes, correct. Okay. Couldn't quite hear you.

Speaker Change #145: Did you discuss the interest expense as it's presented for the second quarter and what

Speaker Change #146: I'm kind of wondering about the size of it and how to think about the next two quarters.

Speaker Change #147: So the second quarter, from an interest expense perspective, is really our high watermark bill. If you think about it, we pay out the annual incentives in kind of mid-March, and so you really get the full

John D. Kelly: So you really get the full higher borrowing levels for a full quarter in the second quarter. And you can see, based on what we discussed from a free cash flow perspective, we had some really nice paydown of our debt as the quarter progressed. We expect that trend to continue in the third and fourth quarters. And so that really should be the high-water mark. I would think of the back half of the year probably being more all-in, in kind of the $10 million range.

Speaker Change #147: Higher borrowing levels for a full quarter in the second quarter.

Speaker Change #147: And you can see, based on what we discussed from a free cash flow perspective, we had some really nice pay down of our debt as the quarter progressed. We expect that trend to continue in the third and fourth quarter. And so that really should be the high watermark. I would think of

We expect that trend to continue in the third and fourth quarter, and so that really should be the high watermark. I would think of the back half of the year probably being more all-in and kind of a $10 million range. Okay, a little interest. That's helpful. Yeah. Okay, thanks. Thanks, everybody. Thank you.

Speaker Change #147: The back half of the year, probably be more all-in in kind of the $10 million dollar range.

William Sutherland: Okay. [inaudible] Yeah. OK. Thanks. Thanks, everybody. Thank you. Once again, to ask a question, please press star 11 on your touchtone telephone. Again, that's star 11 to ask a question.

Speaker Change #148: Okay, that's helpful. Yeah, okay, thanks. Thanks everybody.

Once again to ask a question, please press star 11 on your touch-tone telephone. Again, that's star 11 to ask a question.

Speaker Change #149: Thank you. Once again, to ask a question, please press star 1-1 on your touchtone telephone. Again, that's star 1-1 to ask a question.

Our next question.

Kevin Mark Steinke: Our next question comes from the line of Kevin Steinke of the Barrington Research Association. Thanks. So, as you mentioned in your prepared remarks, the full-year revenue guidance still, you know, continues to imply sequential revenue growth in the second half of 2024, you know, but looking specifically at commercial, to get to that relatively flat outlook, it looks like you have to have some pretty nice sequential revenue growth in commercial specifically. So can you comment on that? Is that correct? And if so, what would drive that?

Gump from the line of Kevin Steinke of Barrington Research and Associates. Thanks. So, as you mentioned in your prepared remarks, the full year revenue guidance still continues to imply sequential revenue growth in the second half of 2024. Looking specifically at commercial to get to that relatively flat outlook, it looks like you have to have some pretty nice sequential revenue growth in commercial specifically. So can you comment on that? Is that correct? What would drive that? Is it some of the pipeline beginning to move that that's currently being pushed out? What would be to that? That's right, Kevin.

Speaker Change #149: Our next question comes from the line of Kevin Steinke of Barrington Research Associates.

Speaker Change #149: Thanks, so.

Speaker Change #150: As you mentioned in your prepared remarks, the full-year revenue guidance still, you know, continues to imply

Speaker Change #151: sequential revenue growth in the second half of 2024, you know, but looking specifically at commercial...

Speaker Change #152: To get to that relatively flat outlook, it looks like...

Speaker Change #153: You have to have some pretty nice sequential revenue growth in commercials specifically, so can you comment on that? Is that correct? And if so, you know, what would drive that? Is it some of the pipeline?

John D. Kelly: Is it some of the pipeline beginning to move that's currently being pushed out? Or what would that be like? That's right, Kevin, you named it.

Speaker Change #154: beginning to move you know that that's currently being pushed out or what what would be what would be to that?

Kevin Mark Steinke: It's the pipeline converting to hard backlog now in the back half of the year. I think that's true both from a digital perspective as well as from a consulting perspective within the commercial segment. So, our teams have had some really nice conversion on the consulting side as well from a distressed financial advisory perspective. And so, we're entering a period of higher run rate on some of those projects during the 3rd and 4th quarter.

You named it. It's the pipeline, converting to hard-backed now in the back half of the year. I think that's true, but from a digital perspective as well, the consulting perspective was in the commercial segment. So our teams, if that's a really nice conversion, on the consulting side as well, from a distressed financial advisory perspective. And so we're entering a period of higher-rug rate on some of those projects during the third and fourth quarter. And then on top of that, some of the delays that we've seen in pipeline or in the slower sales cycle on the digital side, on our expectation is that we have more conversions there in the back half of the year to that firms up the digital side as well.

Speaker Change #154: That's right, Kevin. You named it. It's the pipeline converting to hard backlog now in the back half of the year. I think that's true both from a digital perspective as well as a consulting perspective within the commercial segment.

Speaker Change #154: Our teams have had some really nice conversions.

Kevin Mark Steinke: And then on top of that, some of the delays that we've seen in pipeline or in the slower sales cycle on the digital side, our expectation is that we will have more conversions there in the back half of the year too, which will firm up the digital side. Okay, that's helpful. And then, looking at health care.

Speaker Change #154: On the consulting side as well, from a distressed financial advisory perspective, and so.

Speaker Change #154: We're entering a period of higher run rate on some of those projects during the third and fourth quarter. And then on top of that, some of the delays that we've seen in pipeline, or in this lower sales cycle on the digital side, our expectation is that we have

Speaker Change #154: More conversions there in the back half of the year too, that firms up the digital side as well.

Okay, that's helpful. And then looking at healthcare, the increase to the full-year 2024 growth expectations for that segment. Can you just maybe comment on what's trended a bit better than you would have expected at the outset of the year that enables you to increase that outlook for healthcare? It's been broad-based, Kevin, within the healthcare segment. And it goes back to that conversation we had a couple of minutes ago about the pipeline and where we can see demand. So I think from a performance improvement perspective, we can keep you to see some really strong demand from our clients there in terms of needing help from a margin improvement perspective.

Speaker Change #155: Okay, that's helpful. And then looking at health care...

John D. Kelly: The increase to the full-year 2024 growth expectations for that segment. Can you just maybe comment on what? trended a bit better than you would have expected at the outset of the year that enables you to increase that outlook for health care. It's been broad-based, Kevin, within the healthcare segment, and it goes back to that conversation we had a couple minutes ago about the pipeline and where we've been seeing demand.

Speaker Change #156: The increase to the full year 2024 growth expectations for that segment, can you just maybe comment on what's...

Speaker Change #157: trended a bit better than you would have expected at the outset of the year that enables you to increase that outlook for health care.

Speaker Change #157: It's been broad-based, Kevin, within the healthcare segment, and it goes back to that

John D. Kelly: So I think from a performance improvement perspective, we continue to see some really strong demand from our clients there in terms of needing help from a margin improvement perspective. And so that, I think, has been a positive item relative to our beginning-of-the-year expectations, but then also on the digital side of the shop, and that probably relates to the customers at the other end of the spectrum who are. Feeling like they're in a stronger financial position than they were a year ago, those clients and their investments in digital have been stronger than we expected as well. So I'd say it's a story of balance, both in terms of the pipeline, but also in terms of the improvement in our guidance versus what our beginning of the year expectations were.

Kevin Mark Steinke: conversation we had a couple minutes ago about the pipeline and where we've been seeing demand. So I think that from a performance improvement perspective

Kevin Mark Steinke: We continue to see some really strong demand from our clients there in terms of needing help from a margin improvement perspective. And so that, I think, has been a positive item relative to our beginning of the year expectations. But then also on the digital side of the shop, and that probably relates to the customers at the other end of the spectrum.

And so that, I think, has been a positive item relative to our beginning-of-the-year expectations. But then also on the digital side of the shop, and that probably relates to the customers at the other end of the spectrum who are feeling like they're in a stronger financial position than they were a year ago. Those clients in their investments in digital have been stronger than we expected, as well. So I'd say it's a story of balance, both in terms of the pipeline, but then also in terms of the improvement in our guidance versus what our beginning of the year expectations work.

Kevin Mark Steinke: or

Kevin Mark Steinke: feeling like they're in a stronger financial position than they were a year ago, those clients and their investments in digital has been stronger than we expected as well. So I'd say it's a story of balance, both in terms of the pipeline, but then also in terms of the improvement in our guidance versus what our beginning of the year expectations were.

Okay, thanks. That's helpful.

Kevin Mark Steinke: Okay, thanks. That's helpful. I'll turn it back over.

I'll turn it back over. Thank you.

Speaker Change #158: Okay, thanks, that's helpful. I'll turn it back over.

Operator: Thank you. Seeing no more questions in the queue, I'd like to turn the call back to Mr. Well, thank you everyone for spending time with us this afternoon, and we look forward to speaking with you again in October when we announce our third quarter results. Have a good evening. That concludes today's conference call. Thank you, everyone, for your participation.

Seeing no more questions in the queue. I'd like to turn the call back to Mr. Hosse. Well, thanks everyone for spending time with us. After dinner, we look forward to speaking with you again in October when we announce our third quarter results. Have a good evening.

Speaker Change #158: Thank you. Seeing no more questions in the queue, I'd like to turn the call back to Mr. Hussey.

Mr. Hussey: Well, thanks everyone for spending time with us this afternoon. We look forward to speaking with you again in October when we announce our third quarter results. Have a good evening.

That concludes today's conference call. Thank you, everyone, for your participation.

Speaker Change #159: That concludes today's conference call. Thank you, everyone, for your participation.