Good afternoon, ladies and gentlemen and welcome to Huron Consulting Group's webcast to discuss Financial Results for the Fourth Quarter and Full Year 2014. At this time, all conference call lines are in listen-only mode. Later, we will conduct our question-and-answer session for our 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 Web site. 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 Web site for all the disclosures required by the SEC, including reconciliations to the most comparable GAAP numbers. And now I would like to turn the call over to Jim Roth, Chief Executive Officer and President of Huron Consulting Group. Mr. Roth, please go ahead.

Good afternoon and welcome to Huron Consulting Group's fourth quarter and full year 2014 earnings call. With me today is Mark Hussey, our Chief Operating Officer and Chief Financial Officer. We had a strong finish to the year with one exception clearly the performance of our Legal segment did not meet our expectations, which we will discuss momentarily. As discussed on previous calls, we fully expected the second half of 2014 would yield a lower growth rate than we saw in the first half of the year due to the sizeable performance based fee we received in the first two quarters of 2014. I am pleased to report that even with the unanticipated fourth quarter performance in Legal, our 2014 companywide revenue growth was 12.6% and we achieved adjusted EBITDA and adjusted EPS within our latest guidance range and well on excess of our initial guidance range. As we begin 2015 the core markets we serve continue to be challenged by many of the same issues they faced in 2014 driving substantial change at our clients and ultimately creating favorable opportunities for Huron. My view is that we continue to have many opportunities to expand our current services and add new services, both contributing to the growth potential for all Huron segments. Let me spend a few minutes on 2014 results before discussing our expectations for this year. I will start with Legal before discussing the other segments. Since the credit crisis began in 2008 our Huron Legal segment has had several financial services clients that generated significant revenue. At its peak those clients were providing greater than $80 million in annual revenue for this segment. As important as those clients were to Huron Legal's performance, we always knew that the unique issues coming from the credit crisis would ultimately…

Thank you, Jim 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 and adjusted EPS. Our press release, Web site and 10-K each 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. Also our previously announced acquisitions of Sky Analytics and Studer Group which closed in January and February respectively are not included in our fourth quarter financial results. Sky Analytics will be included within our Huron Legal segment and Studer Group will be included in our Huron Healthcare segment beginning in the first quarter of 2015. Now I will walk through some of the key financial results for the quarter. Revenues for the fourth quarter of 2014 were 193.1 million down 8.6% from 211.3 million in the same quarter of 2013. Revenues for the fourth quarter of 2014 reflect our acquisitions of the Frankel Group, Vonlay and Threshold Consulting which in aggregate generated $12.7 million of revenues adding 600 basis points to total revenue growth in Q4. As I’ll discuss in further detail, the year-over-year decline in revenue is primarily attributable to two factors; first, in Q4 2013, we benefited from significantly higher than expected performance based fees creating a difficult comparison; second, as Jim mentioned, Huron Legal experienced a substantial decline in revenue during the fourth quarter due to a more suddenly than anticipated wind down of e-discovery work from some larger financial services investigations as well as the absence of large transactional work. Operating income decreased $11 million or 29.9% to 25.9 million in Q4 2014 from 36.9 million in Q4 2013. Operating margin was 13.4% in Q4 2014 compared to 17.5% in Q4 2013. The decrease…

Operator, we’d like to open up the call to questions. Operator if you are listening, we really would like to open up the call to questions.

[Operator Instructions] Our first question comes from the line of Tim McHugh. Please proceed sir. Mr. McHugh your line is open.

On the legal segment can you just your guidance for mid-teens decline this year if I just annualize the Q4 I get more like a mid-30s percentage decline. So what’s reduced the gap there is that transactional work that you been had in Q4 that you would normally expect I mean it seems like a lot of transactional work?

Tim yes that is the difference is that we don’t think that’s going to away as Jim mentioned we think that part of the decline was temporary and so our guidance range reflects that transactional work occurrence throughout the year again not a lot of visibility in terms of when, it tends to be lumpy, but we think that we'll continue to have that work within the practice.

And is that basically -- so if you don’t have visibility and I guess it was weak in Q4, are you as -- I mean how do you go about kind of make an assumption on that? And I guess does it -- you assume similar to your full year last year or I guess can you give us any color on?

Yes Tim this is Jim I mean this is the same challenge we always have for practices that are largely transactional like this. Impart on first of all if we go back and we look at some history for multiple years and there really haven’t been periods like we've just experienced where we had none of that transactional type of revenue, so that's one thing that just tells us it's likely an anomaly. There is no reason to believe that we have had any change at all in terms of our market presence and so the final part that gives us some comfort is that we do see some activities some other things that are coming on to the GSO that are likely to lead to something how much and when, it's hard to say, but we look at this as pretty much of a temporary low.

And then I guess the added headwind I missed the EPS number then I think you said $0.25 to $0.30 I guess the comments about acquisition related expenses as well impacted purchase accounting for Studer is I mean on the last call when you had talked about kind of $0.47 to $0.52 in January in terms of the accretion, I guess was that not factored into that $0.47 to $0.52?

Yes Tim just let me clarify that so the -- it was factored into the $0.47 to $0.52. The piece obviously we didn’t talk about at that time was the Workday investment so if you look at kind of the delta there which is what's different it's probably about $0.10 a share which is the 250 basis points on the ELS margins. So the $0.47 to $0.52 was inclusive of those transaction expenses, but I just called out those as, those are going to affect the EBITDA margin for the year and we expect those not to be recurring.

And then I guess just on the healthcare business. It sounds like you're still in the middle of the assessments or some of the larger engagements that are kind of ramping up. I guess could you -- how far are you into those and I guess how much visibility do you have to the scope and size of them? I know you've historically talked about having a high conversion rate, but I guess how much visibility do you have at this point in terms of the nature and contribution that you might expect for them?

Tim this is Jim. We've actually quite a bit of visibility we don’t always have visibility and as a precise start date and part of the issue that we run into particularly when you get into larger health systems or certainly multiple hospitals is that the level of coordination that it takes to be effective in what we're trying to do is much more difficult and complicated than it would be just for example for a standalone hospital and so we very appropriately just remain patient because for us to be successful it's got to be the right time and place and so the clients always want this to go on as quickly as it can, but they too have to kind of orchestrate this internally. And so that's the large part of what we end up doing, so that's part of what we do. We just want to make sure that it gets sequenced at a point in time where both we and the client could be most successful. I think once they get under I mean at this stage pretty deep into the assessments we've got a pretty good sense as to where it's going what the opportunities are and the question is just getting to point where we can get started.

And maybe just one I mean if the shift is from contingent fees to fixed fee, do you see more revenue sooner in that engagement because you're building for that all along the cycle or how do we think about how that impacts the lifecycle of revenue from a project assessment clients or so I think?

So Tim I guess I might respond to that in two ways. Probably the -- let me start kind of indirectly and then I'll come back and directly respond. Indirectly what we get really comfortable with is our kind of our expectations for the year for Healthcare what we've always said is that we're going to have variations among quarters some as you've seen before we've got more revenue than we anticipated some times less and it's always the factor of having these things work through. We've got a client right now where we had actually started talking very seriously about it being a fixed fee engagement and we've gone pretty far down the path and now they're beginning to think maybe it should be contingent and so these are things that we don’t really care we really want this to be the clients' decision and so we get -- it's just an example of why it gives us a little bit of pause at being too precise in terms of when the revenue is going to come from some of these jobs. We feel pretty good about the fact that it's going to come we don’t know exactly when we don’t if it's going to be fixed in run rate or whether it's going to be contingent, but we know that we're going to achieve our results that we want to hit when we get done. So that's the broader picture that we're dealing with and you multiply that times to the number of clients that we have ongoing and you get a sense in terms of how it can be a little challenging for us to pick and choose exactly what kind of revenue and when it's going to fall. But having said that, we have done this efficiently we know what our opportunities are particularly when we've gone through a long assessment and we've got a pretty good sense as to what we're up against and how we are going to address the client’s needs. So that gets back now to kind of more directly I think if this ends up being if some of the things ends up being fixed fee we then have a pretty good sense as to how the run rate is going to fall out over the coming months and quarters, if it’s contingent and are performance based then it gets a little bit more rough both in terms of the exact timing and the amount. So we take all of these things into stride, as you know we have a pretty detailed list that goes out into not just for the rest of the year but actually beginning certainly the next year in terms of how we expect things to go but what we deal with quite a bit is the ebb and flow of the actual jobs and the decisions that the client makes in terms of how they want to proceed. I hope that answers your question?

And just to be clear the 5% growth or mid single-digit growth for Healthcare is exclusive of Studer?

Yes, that’s right.

Our next question comes from the line of Paul Ginocchio of Deutsche Bank. Please proceed.

I guess the first question, what is the headcount growth of Healthcare during the year excluding Vonlay?

Paul you are asking on year-over-year or sequentially?

Year-on-year.

So ended the year within healthcare at the end of the period we had 1,230 people. So if you take Vonlay out largely it was relatively flat for the year. And that reflects some of the increases in productivity that the practice has been working consistently. So it’s not a surprise that we are a little bit less and frankly again I think it got some more flexibility in terms of the base of hiring relative to revenue growth.

And then as we look at your mid single-digits for next year, I kind of was thinking it was getting closer to high single-digits at least that was sort of the maybe my view. Has anything changed besides the shift on performance fees on your view is that the sort of biggest change maybe?

Paul this is Jim. Nothing has changed. I’d tell you we see this every day I have been in the market myself the issues that our clients are facing are remarkably similar and in many cases actually are probably getting more acute issues around consolidation even among healthy hospitals make for a very big challenge in terms of trying to really get successful clinical integration among recently integrated institutions. So we see an increase in terms of the kind of demand that we are hoping to see but what you look at when Mark talks about the headcount when we talk about the sequencing of the quarters it comes and goes but we see very strong demand and probably equally important we feel very comfortable with our presence in the market in terms of the projects that we are getting exposed to and the projects that we are winning.

I think you are trying to kind of away even with the shift from performance fees the fixed fees there is really no change in your operating margin. Can you just help us out a little bit more would we, it seems like obviously periods we have very high performance fees, you do have a higher margin how do you think about that going forward with that lower performance fees?

Paul when you look at any given quarter it absolutely does influence the margins because you got a mismatch in one of the effort and cost were incurred versus when the revenue is coming in, but when we price engagements we are essentially starting with our cost and lairing on top of contribution margin and we want to recover that contribution margin either way. We may have some additional upside in contingent because we always take a little bit of premium because of the risk profile but again they are largely within the range that we would expect to achieve for the year. And so our estimates would not be materially different that they were a lot more contingent or a lot less contingent.

And Paul the only thing I would add is that, I just want to remind you that, our internal estimates are certainly greater and we believe that we have got a higher estimates that are achievable what we don’t want to do is to get too aggressive in terms of assumptions about timing and even whether something is going to be performance based or fixed fee we would like to just kind of to see it rollout. So the guidance we provide we think is certainly achievable and we obviously strive internally to achieve higher both in terms of margin but also in terms of revenue.

Your next question comes from line of Tobey Summer with SunTrust. Please proceed.

Hi this is actually Michael Wheeler in for Tobey. Can you provide some color on growth and in the recurring revenue portion of your business specifically related to software and do you have aspirations to materially increase this as a percentage of total revenue in the near-term, is that something you guys are thinking about or?

This is Mark. Michael we don’t actually think all that much about it. In Legal we certainly the acquisition of Sky provides a new opportunity because it opens up the door with clients that have more recurring into the revenue. It’s from a very small base and it is going to grow hopefully rapidly but it would not necessary move the needle. And the rest of our practices it varies a little bit across each one of them. So within our Click Commerce business we sell licenses which tend to be again non-recurring but there is a maintenance portion of that, that’s a residual and the same thing in Healthcare there is probably somewhere around 15% of that business that’s maintenance of ongoing primarily revenue cycle software that’s embedded in the service delivery of the offering so we love to have more recurring revenue but it’s not a clear objective it is really a mix of how we deliver value to the clients.

And then just one follow-up on kind of the headcount growth topic can you talk a little bit about your ability to kind of continue the double-digit headcount growth and which are the segments have you found to be kind of most challenging in terms of the ability to grow headcount?

This is Jim I don’t know that we’ve had challenges in growing headcount in any of our segments we have always done our best to try to match supply and demand both within segments and actually within practices within those segments and so that’s a continua ebb and flow that we do every week, every month, every year as we kind of adjust to demand. But I think at this stage particularly in this market we really don’t have any foresee any trouble increasing headcount when we want to increase headcount.

Your next question comes from the line of Jason Anderson with Stifel. Please proceed.

Your guidance range on EPS is a bit wider I think than normal and obviously there is always variability in the business. So I was wondering if you could maybe provide some additional color maybe on what your thoughts are between the high-end and the low-end are there certain key assumptions between those that you could talk about?

Yes this is Mark. So I think we did actually widen the guidance range this year I think a little bit is just as we come into a year that’s got a little bit more uncertainty because of the Legal Consulting business we probably gave ourselves a little bit more room on the downside. What I can tell you is that we’re certainly not aiming to be at the downside or the lower end of that guidance range that would not be a good outcome for Jim or me from a compensation standpoint. So we definitely have higher aspirations in that but we think that it’s appropriate at this point to start the year with a little bit more flexibility around what that expectation might look like. Jim I don’t know if you have any…

Yes the one thing is I think we’ve kind of established the history here in recent years where we have put together guidance that we certainly believe is achievable and that rather than make it kind of incredibly aspirational thing we have aspirational goals internally I mean outside we put together estimates that we think are achievable and that we’ve worked very hard to try to beat them and that’s kind of the position we’re in right now so there are as Mark indicated some fairly significant uncertainties particularly around legal and rather than get ahead of ourselves and get really aggressive and making assumptions about what’s going to happen and when it’s going to happen we felt comfortable with this range at this point in time.

And then on the performance based fees they’re coming in the 60-80 range you talked about. Is there any -- I don’t know if you could talk about the trend there. Do you think I know you’ve talked about as a percentage of total revenue it is going to get smaller but it looks like maybe getting smaller and absolute and it could be a timing thing but I mean do you think the clients are going away from performance base as particularly as successful as you’ve been in outperforming them?

I think maybe a little bit but I am not sure that there is datapoints right now that would give us that much comfort that that’s going to be a permanent trend. As we’ve mentioned a little while ago on the one of the answers to one of the questions that this is -- it evolves very quickly and it’s really something that not only do we have no control over but we actually really prefer it to be in our client’s hands because it’s the kind of arrangement that they prefer and that makes us much more comfortable. I don’t think it will be lower than this but it could certainly be higher than this for a variety of reasons and I think we’re just going to kind of wait and see how the year plays out I think in 2014 I think it was the year we actually had we actually lowered the guidance range for contingent for performance based fees and then we actually ended up beating even the original one and so I think it’s just one of the things we try to be cautious on the front end. And so we get a little bit more certainty and that’s kind of where we’re at right now.

And then one more I had on if you could maybe talk about in ’15 maybe your cash priorities I mean between debt pay down, repo and then maybe speak to your appetite for more acquisition especially after a sizeable one here that you just closed?

Well I’ll start with the -- this is Jim I’ll start with the acquisition side and let Mark handle the other two I think on the acquisition front we said before the acquisitions Studer Group that we had always had a very robust inventory of entities that we’re looking at that were attractive and we were certainly fortunate to be able to close the Studer Group opportunity but we still have very robust group of things that we’re looking at and it certainly is part of our job and we spent a lot of time doing that and it’s an exciting area for us to be in and we feel probably the part that makes us the most excited is that we have such a solid platform with which to acquire into and we feel very confident in our integration ability. So it is a long way of saying we feel very good about the pool of opportunities that are out there and we will continue to evaluate them with the same kind of focus that we have in the past.

And Jason on the question regarding share repurchase and that data clearly with the Studer acquisition we will be into our revolver and then shortly after that we have our annual bonus payment that happens in Q1. So we will peak in terms of our debt level here which is a normal timeframe for us really absent an acquisition anyway. We will likely in the absence of price opportunities in the marketplace for share repurchase, we will definitely be working on just paying down the revolver because the best use of cash on an immediate basis. But we're going to have as we have mentioned in the midpoint of our range there is about 155 million if you look at our planned debt service and CapEx, we're going to have roughly $100 million of free cash flow in 2015. So that gives us a lot of flexibility to do a lot of things and so you could see any and all of the above.

Your next question comes from the line of Randle Reece. Please proceed.

First of all I was wondering if the percentage of contracts that include performance based fees is changing if that's responsible for all the change in your mix or if within contracts the percentage of performance based component is changing or if it's a blend of the two?

Randy this is Jim, I think A it's a blend of the two, but B I think we're also still kind of at a point in time right now where if you ask the same question three months from now, you may get a different answer. So I think this is kind of more like a -- it's a balance sheet type of view of things as opposed to an ongoing trend. Now certainly and we've referenced before that our clients we've a long deep history of being very successful for our clients and there's no question that one of the most important things that our clients do before they hire somebody is they talk to other hospitals and they try to find out how we've done and I think the answer to that question is typically very-very good. And so places legitimately go back and they question whether they should have fixed fee or a performance based. I do know that one of the challenges that a lot of our clients have again understandably is that if you do, do fixed fee that you then -- it's harder to explain internally for I think that organization to go back and say that you're going to have a fairly large engagement and that you hope it works out. So I think that's why a lot of places end up reverting back to performance based, but it's all dependent upon their culture, their preference, the nature of the work that needs to be done and their sense as to how much progress we're going to be making. But I think it's too early to call it a trend. We've always said that it's going to decline as a percentage of the total revenue and I expect that to continue, but I think we're going to still see blips up and down in terms of whether the performance based fees are a larger or smaller percentage of the total revenue.

It creates a bit of a confusion for timing reasons in understanding the growth rate of the business given one year you're pulling in the big bunch of fees in the next year it's a lower number the underlying consulting. Activity looks like it's a lot stronger than that mid single-digit growth rate that you're talking about. What kind of headcount growth are we looking at in guidance?

It's consistent with the revenue range as we've described to you Randy which essentially means we're looking to keep utilization steady where it is, bill rate steady where they are. So that’s our going in assumption. The practices really get rewarded for managing utilization versus adding headcount and so there's probably a slight bias to stretch people because it's better for them economically better actually I think for everybody economically but so I would say a starting point for guidance is consistent with the revenue ranges projected.

Where do you expect the cash and debt levels to end up at the end of this quarter?

We will end at actually I should know that at the top of my head because I look at it every single day. So cash what we've done is we've essentially funded the Studer acquisition with all the remaining cash on the balance sheet and then on top of that we've drawn the balance in terms of revolver so our net drawn revolver is probably going to be -- and then we get the bonus on top of that so we will probably would be somewhere around 170 million yes so it is probably lot -- you know what let me come back and just confirm that. So I think it will be about $420 million is my guess based on right now on the revolver and you've got $140 million roughly on the term loan. So it'd be a little bit over 500 in total.

Your next question comes from the line of Joe Foresi. Please proceed.

I was wondering could you give us some better insight into how it seems like the legal downtick sort of snuck up on you a little bit. What were your original expectations and how did it kind of sneak up on you?

So Joe this is Jim. I would tell you what so certainly we saw at the backend as we indicated in earlier in my discussion we saw at the beginning what we really became I think a series in some settlements that took place that began to take place in the summer months and there is not the spigot doesn’t necessarily drop off that same day, but it also the other things we deal with sometimes is that the spigot begins to dry up before something has been announced. And so we were really at the end of the third quarter really thinking that we would be at around $200 million year-end for Legal. And we began to see some deterioration in the run rates in the early part of the fourth quarter and then it was really we kind of things really began to fall pretty precipitously in the last part of November and certainly in December. But we ended up the third quarter thinking this is actually going to be a pretty good year for Legal and it came very quick and that’s just the nature of the business. I think it happens I mean we don’t have disputes and investigations that happens the same way sometimes in that business and it happened in our e-discovery area and so the concept of it occurring was not a big surprise the pace suddenness of it and the depth of it was a surprise.

And given the fact that these are sort of event driven opportunities I know that you trying to get some law firms on MSAs how much of an emphasis do you plan on putting on that business going forward in particularly this part of the business that tends to be more on the event side?

Well I think one of way for looking at it we have referenced in the call that we are looking from so a called new normal because we are going to establish a base. I think if you had just if the credit crisis information as the credit crisis situation had never occurred at all I think we would be sitting here expecting the same kind of growth rates in this business that we have seen in the past. So we actually the real actions that we are taking right now are simply adjusting for what we have determined to really be kind of an unusual event that is tends to be -- I don’t know the predictive exact end but it’s certainly a dramatic diminishment of the credit crisis type of engagements that we were seeing. And so the rest of our practices really proceeding as always had been. All the adjustments both in terms of headcount but also in terms of Legal facilities are really a reaction to that one-time kind of end of that type of part of the business. So we view it a little bit more as a change in the size of the market, but absent data if we take that piece of it out we view the market the same way we view market for the last two, three, four years and that it’s the proliferation of data that’s growing the business. It’s the fact that we as a company have created a practice that has passed a lot of security audits which is critical to our clients these days and the depth of our business the experience of our people all put it together and so we view nothing different in this practice absent this fairly significant drop off that came very quickly and that related not on a broad based level but just to one particular part of the market.

[Operator Instructions] And we have follow-up question from Paul Ginocchio. Please proceed.

It is for Mark or Jim. I guess nearly two-thirds of the way for the first quarter could you help us just kind of understand where revenue for the Legal consulting division could come in, in the first quarter is it going to be flat Q-on-Q up 20% is there a way to based on what you have seen so far quarter-to-date? Thank you.

I think we are obviously kind of reacting to a diminished level of revenue in Q4. I think that at this stage today we are looking at 2015 and I would expect there to be a growing trend. So I certainly expect there to be more revenue in the second part of the year than the first part of the year in that segment. And how that falls in the quarters it’s kind to hard for us to estimate but I suspect that we will see our hope is that we would see kind of a more normal patterns evolving during the first quarter and that would be in much better shape in the second quarter. But again this is very transactional type of business and we have seen before, again if we take the credit crisis thing away we have seen big blips up and big blips down before and the activity we see in the market are certainly tells us that none of that has changed that. There is some opportunities out there that we think could generate some decent revenue but how and when they are come about is just kind of too hard for us to predict. So we are probably a little bit more conservative in first half and then we will expect a more robust second half.

We have another follow-up coming from the line of Randle Reece. Please proceed.

When I look at the change in Legal revenue from the like the first half run rate to the fourth quarter, how much of that change was transactional in your analysis?

Randy this is Mark. The transactional impact was probably about half.

Mr. Roth we have concluded the allotted time for this call. I’d like to turn the conference back over to you.

Thank you spending time with us this afternoon. We look forward to speaking with you again in April when we announce our first quarter results have a good evening.