HURN Notes:

IBD article 4/5/07

• Provider of financial and operational consulting services

• Specializes in litigation, business disputes, regulatory compliance and other sources of conflict and change

• Diverse client base – Fortune 500, midsize, hospitals and universities.

• 150 managing directors – Liaison to clients

• Acquisitions a key component to growth strategy

  • Six purchases including two in Jan 2007

  • Wellspring partners for $65m – specializes in hospital and healthcare consulting.

  • Glass and Assoc. for $30m – President John DiDonato acquired to lead corporate advisory service practice

WMB 8/8/07 report

• Q2 EPS $0.56 vs. 0.36 – up 53%. Beat consensus by 0.01 due to stronger margins

• Reiterated $2.24-2.37 guidance for2007 (implies 45-54% growth)

• Revenue growth decelerated in legal financial consulting and legal operational consulting segments due to timing issues on projects

  • WMB does not believe weakness to indicate loss of market share

  • Expect demand to pick back up shortly

• Valuation below peers based on expected 12 month earnings

• Company targeting 20% organic revenue growth next few years

• Weak 2Q due to slower growth in independent contractors

  • This segment should comprise 20% of revenue in 2H 07

• Consultant utilization rate was strong, but should soften a bit next quarter after aggressive hiring

  • Management increasing headcount target for end of 2007 to 1250

• Company has highest EBITDA margins in industry and keeps improving them

• Net debt position of $105m at end of Q2 plus $59m in early Q3 to fund purchase of Callaway Partners

• Revenue guidance for Q3 2007 is 136-141m

• WMB is forecasting $3.00 for 2008 or 30% growth (16% growth when accounting for intangible expense item)

  • This estimate looks fairly conservative

DBAB 8/7/07 report

• Even though legal services were the weak area this quarter, retention is highest in this area reflecting managements optimism for the segment

  • Weakening economic environment may cause bankruptcies to rise which would generate more legal business

• Acquired Callaway Partners for $60m plus incentives – specializes in finance and accounting project management

  • Expects to leverage Atlanta office to full service presence in the Southeast

Baird Report 10/12/07

• Digital document management service is of increasing importance to businesses as most lawsuits require electronic discovery. This is driving demand for the document review portion of the business

• Additional acquisitions should drive cross selling opportunities

• Small office in Japan as the company begins to explore international opportunities.

  • Acquisition of Glass and Associates gave the company a small presence in the UK and Germany

• Acquisitions have diversified service offerings to broader number of industries spreading risk profile

• Contracts are not recurring, but many clients have long-standing relationships spanning multiple projects.

 

WMB Report 6/18/08

-          Believe higher education, health care, document review and corporate consulting services continue to grow quickly

o        Financial consulting services continue to struggle

-          Management will pursue headcount reductions in financial segment in June

o        Headcount not necessary for meeting guidance, but should bring growth closwer to historical trends

-          Refocusing financial segment from credit markets to “other potential demand drivers” such as international arbitration, financial restatements, convergence of accounting standards etc.

-          Still modeling 25% plus growth in health care and higher education segment

-          Q1 & estimated Q2 represent 38% and 31% decline in financial segment but then modeling only 14% decline for Q3 and Q4 – is this reasonable?

-          2009 estimate assumes flat finance segment and 20% growth in other 3 segments