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Revenues dip at Huron and Booz Allen in hard US trading

Dr Ralph Shrader

McLean, Virginia and Chicago: The latest financial results from two of America's senior consulting firms suggest that trading conditions in the US remain difficult, particularly in the public sector.

  • Booz Allen first quarter revenues down 1 percent
  • Huron Consulting Group second quarter revenues down 6 percent

Booz Allen Hamilton Holding Corporation, the parent company of management and technology consulting firm Booz Allen Hamilton Inc., today announced solid earnings growth on a slight fall in revenues for its first quarter of fiscal 2013.

In the three months to June 30, 2012, revenue was $1.43 billion, compared with $1.45 billion in same period in 2011, a decrease of 1 percent.

Earlier, Huron Consulting Group reported that revenues for the second quarter to June 30 were $144.7 million compared to $153.1 million for the second quarter of 2011.

The company's second quarter 2012 operating income was $14.7 million compared to $22.3 million in the second quarter of 2011. Net income from continuing operations was $6.3 million for the second quarter of 2012 compared to $9.2 million for the same period last year. Net income was $6.5 million for the second quarter of 2012 compared to $9.5 million.

Booz Allen said this modest decline in revenues was "primarily due to a decrease in billable expenses and a lower rate of indirect expenses which reduces revenue under cost reimbursable contracts. The negative impact on revenue of these two factors was partially offset by continued modest growth in consulting staff labour. The lower rate of indirect expenses is primarily attributable to the cost reduction actions the company implemented in early 2012."

Net income increased 17 percent to $61.9 million from $51.1 million in the same period a year earlier, and Adjusted Net Income increased12percent to $66.0 million from $58.0.

Ralph W. Shrader, Booz Allen's Chairman, Chief Executive Officer, and President, said "We continue to win major contract awards across all markets in our government business, ably serving our federal clients in their core missions, despite the generally challenging conditions in that sector, and we've expanded our business base in commercial and international markets.

"Our recent wins include large new and re-compete contract awards with the US Army, Navy, and Missile Defense Command, the Departments of Energy, Justice, Labor, Health & Human Services, and the Federal Reserve, as well as major commercial financial institutions and health care providers. We've also been proactive and diligent in managing our cost base which has enabled us to continue to deliver on bottom-line commitments.

The firm's backlog as of June 30, 2012 was $2.58 billion, compared to $2.45 billion as of June 30, 2011. Booz Allen's total backlog as of June 30, 2012 was $10.23 billion, compared with $11.21 billion as of June 30, 2011. The decrease in total backlog is a reflection of general caution in the US government procurement market.

Huron upbeat

"Huron's two largest business segments continued to benefit from attractive market conditions," said James Roth, chief executive officer and president, Huron Consulting Group.

"Our Health and Education Consulting segment again had solid utilization in the second quarter, and we continue to be successful in hiring new personnel to meet market demand.

"As expected, performance-based fees in the healthcare practice were lower in Q2 2012 compared to second quarter last year, when performance-based revenue was the highest of any quarter.

"Our Legal Consulting segment continues to benefit from e-discovery needs among global corporations resulting from large-scale litigation and investigations. We expect this segment to be further strengthened by the recently announced acquisitions of AdamsGrayson and Ascertus.

"The market for Huron's services remains vibrant, and we are looking forward to a strong second half as we assist our clients with the complexities and challenges stemming from this uncertain economy."

Financial outlook

Given the uncertainty in the second half of Booz Allen's fiscal year, which coincides with the beginning of a new government fiscal year, the firms says it is currently providing top-line guidance for only the first half of our fiscal year; it expects to see revenue flat or down by low-single digits.

Huron's updated guidance for full year 2012 revenues is in a range of $630.0 million to $650.0 million, including approximately $10.0 million for the recent acquisition of AdamsGrayson.

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