Good morning, ladies and gentlemen, and welcome to Huron Consulting Group's webcast to discuss financial results for the first quarter 2017. 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 will follow at that time. As a reminder, this conference call is being recorded. Before we begin, I would like to point all of you to the disclosure at the end of the company's news release for information about any forward-looking statements that may be made or discussed on this call. The news release is posted on Huron's website. Please review that information along with the filings with the SEC for a disclosure of factors that may impact subjects discussed in this morning's webcast. The company will be discussing one or more non-GAAP financial measures. Please look at the earnings release and on Huron's website for all of the disclosures required by the SEC, including reconciliation to the most comparable GAAP numbers. And now, I'd like to turn the call over to Jim Roth, Chief Executive Officer and President of Huron Consulting Group. Mr. Roth, please go ahead.

Good morning and welcome to Huron Consulting Group's first quarter 2017 earnings call. With me today is John Kelly, our Chief Financial Officer; and Mark Hussey, our Chief Operating Officer. Revenue from continuing operations grew nearly 5% over the prior year quarter. And our first quarter results were in line with our expectations and consistent with our full year guidance. The Education and Life Sciences, and Business Advisory segments both achieved strong results in the first quarter. Our Healthcare business remained challenged, primarily due to continued softness and demand for our performance improvement solution. I will now provide a brief overview of the performance for each segment and then John will add color to the financials. Let me begin with Healthcare. During the first quarter, Healthcare segment revenues declined 14% compared to the prior year quarter. On an organic basis, Healthcare revenues decreased approximately 19% over the first quarter of 2016. The quarter-over-quarter decline, which we anticipated in our 2017 guidance, was primarily attributable to continued softness in our revenue cycle offering within the performance improvement solution. While we continue to win revenue cycle engagements across the healthcare spectrum, there has been a significant change in the way our clients are buying our services. As we've mentioned recently, we are seeing very few large anchor engagements in our revenue cycle solution. Although we have more projects under way, new projects tend to be smaller, driving increased margin pressure. We anticipate the demand for our revenue cycle offerings will stabilize, albeit at levels below our historical norms. To align our healthcare business with these market changes, we continue to evolve our go-to-market strategy and solutions to respond to the needs of our healthcare clients. In addition, we have and we'll continue to make adjustments to our cost structure to manage our…

Thank you, Jim. Good morning, everyone. Before I begin, please note that I'll be discussing non-GAAP financial measures such as EBITDA, adjusted EDITDA, adjusted net income, adjusted EPS and free cash flow. Our press release, 10-Q 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. Also our acquisitions of Pope Woodhead and Innosight, which closed in January and March respectively, are included in our first quarter financial results. Pope Woodhead is included in the Education and Life Sciences segment, Innosight is included in the Business Advisory segment. Our recent acquisition of the international business of ADI Strategies, which closed on April 1, is not included in our first quarter financial results. The international business of ADI Strategies will be included in the Business Advisory segment beginning in the second quarter of 2017. Now, let me walk you through some of the key financial results for the quarter. Revenues from continuing operations for the first quarter of 2017 increased 4.6% to $188.8 million compared to $180.5 million in the same quarter of 2016. First quarter 2017 revenues included $12.8 million from our acquisitions of HSM Consulting, Pope Woodhead, and Innosight, all which closed after the first quarter of 2016, and $300,000 of incremental revenues due to the full quarter impact of our acquisition of MyRounding. First quarter 2017 revenues also included revenues from our acquisition of the U.S. business of ADI Strategies, which was completed after the first quarter of 2016, and have since been fully integrated into our business. Net income from continuing operations was $5.2 million or $0.24 per diluted share in the first quarter of 2017, compared to $6.9 million or $0.32 per diluted share in…

Thank you. First, the Education segment, it was a noticeable step-up. I know your commentary was positive. But I guess, I would describe your commentary sounding kind of similar to what we - you might have said before about that. So, I guess, what changed to drive this kind of the incremental step-up in the growth in the revenue level in that business?

Tim, it's Jim. A couple of comments, first of all, I mean, broadly as we see now for the better path of the last year and a half or so, there is a pretty - there is a lot going on in the higher education segment, I mean, in the industry. And it is best driving a fair amount of our demand. So I think that's been one of the fundamental reasons for us to have - we had an uptick. I think this specific uptick this past quarter, we've got a number of projects that had some unusual intensity in the last quarter that we're not 100% sure is going to continue for the duration. So that's the basis for a little bit of our cautiousness there.

Okay. It was those - I mean, with that broad base over there, was there a particular area that attracted those more intense type of activity level?

It was actually across the board, across all of the businesses within higher ed.

Okay. And then, just Healthcare, the commentary, it sounds like - I think some of the comments, maybe I'm parsing words here, but sounded like it was more the future tense when you're describing revenue will stabilize or - and you continue to take actions. Can you talk about just on the project flow and the pace of new assignments? Have you seen stability there yet or is it more something you're still kind of trying to find the base in the revenue there?

Yes. Hey, Tim, this is Mark. What we're seeing is an increased number of projects. And so, I think it's fair to say that we see increasing pressure across little providers. And they're showing up in different ways and shapes and forms. I think what's continuing to be the case is just the manner in which the projects are being purchased is essentially one that, again, is smaller in basis and more incremental in expanding over time as opposed to the larger assignments to start from the get-go. But clearly, I would say, we definitely see increased signs of pressure across the industry and so the level of activity is definitely, I would say, continuing to increase a little bit it. I wouldn't say it's dramatically different than it was a quarter ago. But it's definitely in a positive trajectory.

And, Tim, it's Jim. I would just only add that, as we are - we're obviously in the market quite a bit. And if you look at the degree of uncertainty and lack of clarity that our clients are facing, I mean, it's really pretty amazing in terms of having these big businesses that are getting increasingly complicated. And you've got such an uncertainty around the overall national policy. I think while a lot of them are kind of waiting to see how that rolls out and that may still be a while before it rolls out with any clarity. I think the one thing that is beginning to hit home very quickly is the cost pressures, just the margin declines for a lot of our clients are pretty significant as well. And so, that gives us some confidence that there is going to be some stabilization here. But I think just the broader strategy around how they should be approaching the market is so unclear. I think it's just going to continue to make them a little bit cautious in terms of driving a larger project. So as Mark indicated, I think in the interim we're faced with a larger number of smaller jobs. But I think some confidence that the cost pressures are going to continue to kind of develop some demand for us. But we just have to wait and see. It's just - we're in the market all the time. I feel good about the fact that we have a broader base of clients now than we've ever had before. I feel very good about that. But obviously, the size differential compared to what we used to have is significant as well. So we are doing the best we can to continue to maneuver the types of offerings that we have in practice and helping our clients as they try to maneuver through a pretty uncertain environment right now.

Okay. Then just contingencies, I guess, $12 million this quarter, and you're saying $20 million to $30 million for the year. What's - I guess, I'm surprised that it implies a very small amount for the rest of the year. Is there timing or, I guess that the impact of large projects, just any more color that would be helpful?

That's right, Tim. It is really impact to large projects. As we talked about that past couple of quarters, we've got a couple of the larger jobs winding down during the first half of the year. And those had larger contingent fee contributions during the first quarter. So what you're really seeing there, when you compare that $11.7 million to the range of $20 million to $30 million for the rest of the year is wind-down of those large projects.

And I guess just your comment, they wind down in the first half, I guess, do we get a - is that really - do we see that 1Q to 2Q or is that more? I guess, how far into Q2 do those large projects that are winding down continue?

The majority of the impact from those large projects has wound down during the first quarter.

Okay. Thank you.

Thank you. Our next question comes from Kevin Steinke with Barrington Research. Please proceed.

Good morning. So you talked about the smaller engagements, but also a larger number of clients. So you've talked about in the past, how maybe you can take that situation and turn it to your advantage a little bit in terms of just getting more clients and maybe cross-selling more services, and also if there are smaller engagements maybe the duration of the total client relationship is longer. So, just any update on initiatives to increase the duration of client relationships and the ability to cross sell into those relationships?

Well, Kevin, this is Jim. I think you said it right. We think that that - even though as we probably indicated over the last year, that transition for us from a smaller number of larger projects to a larger number of smaller projects creates some rough-spots that have been - you noticed them in our results. But I think as we said very clearly, the end result of this is I think the more organizations that we are working at, at any given day provides us with opportunities to stay close to management as they're evolving through their own complex transition. And it gives us a chance to be able to sell more of our services across not just the Healthcare business, but also some of our other businesses where we see improved collaboration, particularly with our ES&A practice. So I will tell you, as rough as this transition is, I think in the long run for Huron we're better off having a large stable of clients, where we can provide multiple services. And I think that will bode well for us over time.

And Kevin, the thing I would add is that we have seen a really nice acceleration in our ability to bring in other solutions within Healthcare on a more comprehensive basis. We're less siloed than we've ever been before internally. And then even across the other areas of Healthcare and technology, Business Advisory that all touch each other, we're seeing a lot of collaboration in the market, and it continues to be we think an area that we want to exploit and focus on, because we think it can produce a lot better results over time.

Yes. And I think - this is Jim again. We've drawn some analogies historically to our higher education practice, which has a large broad base of clients and we have some of those clients we've been working at almost constantly for upwards of 8, 9, 10 years on a variety of projects. And it's just that is the kind of working relationship that we like to have where we are the partner with our clients, and helping them on an array of their issues. And that they continue to look to us to be their business advisors. And I think we're going to establish that on a broader basis in Healthcare that will service very well for the future.

All right. That's helpful. And on that same topic, I know it's still early into you owning ES&A [ph]. But what sort of opportunities are you seeing to cross collaborate cross segments and take those offerings to your Healthcare, and Education and Life Sciences clients?

I think the short answer is it's just going very well. The longer answer is we actually started collaborating even before we closed the deal. They are just - they've already have some work they're doing in the Healthcare space. And we have been talking with them about a variety of ways for helping us integrate with our Health, Education and Life Sciences businesses. It's great group of people. They are very market relevant. And we see this as a big opportunity for them, not only to continue to grow their business on the corporate side, outside of those industry segments, but we are actively involved in working with our industry focus in health, education, life sciences to really try to take their competencies and bring them to our clients. And I think that's going to be a very successful thing over the coming years.

All right, good. And on the Business Advisory segment, I don't - did you mention an organic number there and also the contribution from ADI?

Yes, Kevin, so we commented that ADI is fully integrated now. And so we've really lost the ability to separately track the U.S. portion of ADI's business from the legacy portion of the business. The teams are integrated, the projects are integrated, so we don't have precision around that.

Okay, okay. That makes sense. You talked about last quarter a bit of a slowdown in ES&A practice due to a vendor realigning a sales organization. Is that little headwind pretty much behind you now?

In part, I think there is still some uncertainty around that. So I think things have gotten a little bit better. But I think there still are some headwinds from that. I think it's still evolving with the vendor.

Kevin, the other thing I would add is that that practice has done a very nice job of creating direct client relationships that have produced good size. And so they are dependence on the vendor channel has continued to be less than it has been in the past.

And, Kevin, I just want add that, as they're still working through some of those headwinds there is nothing that's outside of what we contemplated with our guidance.

Okay. On the Business Advisory legacy practice, it sounds likes that continues to go well. Obviously, you're doing some turnaround work there. And just wondering if you see that continuing especially on the turnaround side, I know you've talked about doing some work with oil and gas. So I don't know how much exposure you have here, but with things picking up in oil and gas, could that potentially fall off a little bit or what's just kind of the overall outlook for the legacy practice for the remainder of the year?

Well, we have made investments in the legacy business in some very specific areas, energy is obviously one of them, retail recently, also Life Sciences, and with some capabilities. So I think we are at the point, where I don't think there is one industry that's going to dominate the results for the legacy business. We feel good about the broad-based capabilities across multiple industries. I think in terms of energy, we've talked about this recently with the team. I think that there is some stabilization in the energy business. But I think there are still a lot of things that it'll be worked through. So we feel good about that part of the business. We feel good about some of the other areas, like particularly retail and so on, that we think have some real opportunities for us to grow. In think in general, this business has just been very well run. And they've done a great job of attracting new talent that has various industry expertise. And they have had a pretty consistent run for the last four, five years. And I expect that to be able to continue.

The other thing, Kevin, that they've done is really diversify it from just being a restructuring and turnaround practice, particularly over the last five years. And so there is service lines, whether it's more increasingly in the operational improvement area as well as just working with companies that are maybe stressed or not completely distressed has enabled them to really have a broader set of client opportunities, broader set of relationships that bring in business. And I think that over time has really provided a much broader base to grow from.

Okay. And then, the Education and Life Sciences margin seem particularly strong, but at the same time, you're ramping up your cloud-based implementation services, which I believe are lower margin. So how should we think about the ELS margin going forward?

Kevin, I would describe it as still consistent with what we've talked about at Investor Day and the guidance what we said at the beginning of the year. We said in that 23% to 24% range for the full-year. The 29.7% that you saw this quarter, that really relates to some of that intensity on several projects that we saw during the quarter, where we are able to get highly utilized on those projects, and more or less fell straight to the bottom line. But for the full year, I'd stick with the guidance that we have out there.

Okay. Just a couple of more here, on the SG&A levels, it was up a bit sequential - a fair amount sequentially. Although, I guess, you talked about some acquisition related expenses in there. So I assume we should expect that to trend down sequentially and reach more normalized levels as we move throughout the year?

That's correct, Kevin.

All right. And how are you thinking about the tax rate for the rest of the year or full-year?

We are sticking with the guidance that we put out there at the beginning of the year, that 41%. So we anticipated that Q1 would be the quarter where we get hit by the new accounting rules related to share based compensation. And so, when you see that over 50% rate that's almost entirely due to the adoption of the new rule and investing from certain share-based awards during the first quarter this year. If you would strip that out it'd be more in the upper 30s for the quarter.

Okay. That's all I had. Thanks for taking the questions.

Thanks, Kevin.

Thank you. Our next question comes from Tobey Sommer with SunTrust. Please proceed.

Thanks. When you talk about revenue cycle expectation for that to stabilize, just kind of want to revisit that. Is it a function of the broadening of customers as well as just kind of waiting for whatever anchor contracts you have to run off, and kind of expecting it to continue at that level?

Tobey, I think what you're seeing is really just the way revenue cycle services are being purchased by clients different than it has been historically. So in the past, when we had large engagements, we would send in large teams of people to be on site for an extended period of time, and a pretty intensive implementation. What we are seeing is really a couple of things. One is more advisory type assignments that enable us to help clients do things themselves as they've gotten better and made investments of their own around revenue cycle. We are seeing things outside of just you liquid [ph] setting into position areas as well. And so, I think just as revenue cycle over time is going to continue to be an extremely important element of every hospital's revenue stream. And so it's not going away, but what we are doing is just working through that period where those larger assignments are just working their way off the base. And I have to say that they haven't gone completely away, because I think they're - I don't think we'll see them disappear forever. But I do think that as we think about where things are going in the future, it's going to be difference from what we historically and a way those services are basically acquired into - and the way that we deliver them as well.

A kind of a broad question about the Education and Life Sciences segment, we talk now probably for - I don't know two, three years about how conditions are kind of increasingly challenging for higher education institutions that they are kind of starting to grapple with them more seriously. Is this increased pace of demand? Is it something that may be sustainable because of those pressures? Is this something - could this just be a higher growth area for the firm going forward?

Tobey, it's Jim. I think it is going to be good growth area for us. I mean, I think, the challenges that the higher education market have been facing I think are going to remain for a while. I think to some extent the way we've kind of described the challenges are that the cost pressure - there's really very little opportunity for revenue growth for a lot of these institutions. And so, you either have to address it by looking at scale, which is hard to do, or you got to reduce costs. And that's a challenge so we're certainly doing a lot of work around that area. I think the broader issue also is that as new technologies come on board there are better opportunities to deliver a high quality curriculum at lower costs. And I think you're going to see some - a lot more kind of changes in the way that education is delivered. And just collectively that puts a lot of pressure. Some segments of the industry are more pressured than others, and no question, the tuition dependent prices are obviously the most pressured. But even for our larger clients, all the issues around the academic medical centers and the implications of the clinical versus the academic side are challenging. The research environment continues to be very costly. And you put all that together, it's just a very - you got a business that has challenges in the top line and expenses that are growing much faster than revenues. And that's why there are actually some similarities to healthcare in this area as well. So we're pretty bullish about the way things are going to continue to evolve in higher ed. And they've had a number of years of really strong growth across all their businesses. And we expect that to continue.

Curious, last night, this morning there's talk about a funding increase for the National Institutes of Health. Is that something that could be a catalyst for the firm? If you could just refresh us on how that may impact your business if at all. Thanks.

It's interesting. Three weeks ago, they were talking about a 20% reduction in NIH budget or something like that. And they were also talking about the possibility of taking away indirect costs, which all would have been incredibly damaging to our client base, for our research university client base. And so, I think you take that threat away and you talk about an increase, so that's - are going to clearly be beneficial. But - and this is an important note, that the research enterprise still is very costly. The average subsidy is about $0.30 on the $1. So if you expand your research enterprise, you have to increase the subsidy to support that research enterprise and this is the challenge for a lot of places as well. So I think the research enterprise is obviously hugely critical to our client's mission. But at the same time, it becomes increasingly costly in an environment where it's hard to support those costs. So we do a lot of work as you know in the research area and I expect that to continue, whether there is an increase or decrease in the budget.

Okay. And then my last question, I know you said you fully integrated, I think ADI and can't track it going forward. But could you tell us what the expected revenue contribution is for this year?

For ADI specifically?

If you can isolate it, just since that happened after the quarter.

So I think last year when we acquired ADI, we described them as being about $3 million a month or a $35 million business for the full year. And so, they are growing at pace consistent, I'd say, with the rest of our ES&A business heading into 2017.

Yes, so, Tobey, you got probably somewhere in the $12 million - $12 million, $15 million range of incremental growth year on year just to kind of match up the full year since it was acquired May 1 of - actually a year ago today.

Yes, okay, thank you very much.

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

Thank you for spending time with us this morning. We look forward to speaking with you again in July when we announce our second quarter results. Have a good day.

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