Huron Consulting Group Inc (HURN) 2006 Q2 法說會逐字稿

Good morning ladies and gentlemen and welcome to the Huron Consulting Group Web cast to discuss results for the second quarter ended June 30, 2006.

[OPERATOR INSTRUCTIONS]

And now I would like to turn the call over to Gary Holdren, Chairman and Chief Executive Officer of Huron Consulting Group. Mr. Holdren, please go ahead.

Thank you and good morning to all of you that are joining the call. Thank you for joining us for today's Web cast to discuss Huron Consulting Group's second quarter 2006 results.

Before we begin, I would like to point all of you to the disclosure at the end of our news release for information about any forward-looking statements that may be made or discussed on this call. We have posted the news release on our Web site. Please review that information, along with our filings with the SEC, for disclosure of factors that may impact subjects discussed in this morning's Web cast.

Also on this call, we will be discussing one or more non-GAAP financial measures. Please look at our earnings release for all the disclosures required by the SEC, including reconciliation to the most comparable GAAP numbers.

Good morning. We are hosting our second quarter 2006 earnings call from our brand new offices in New York. We have 58,000 square feet of brand new beautiful space. When completely filled, we will have more than 350 professionals in New York. Our board will meet here Wednesday and Thursday and the CO Advisory Council will be here on Friday.

The management of Huron - the management team of Huron will be here all week and several of us will be spending more and more of our time in New York in the future. New York is the biggest market for every service that Huron offers and we need to expand every one of our service offerings in New York over the next 24 months.

Joining me on the earnings call today are Gary Burge, our Chief Financial Officer, Mary Sawall, our Vice President of Human Resources, Dan Broadhurst, our Vice President of Operations, and Stan Logan, who joined us in May as Huron's Vice President of Strategy and Business Development.

Since our last earnings call, there has been a lot of activity in both market demand and the adding of resources to build Huron for the future. I would like to cover market demand this morning and introduce you to our new resources and businesses we have added and tell you how we continue to build the Huron brand.

Our results for the second quarter were very good and reflect all the work and planning to create a balanced portfolio of service offerings. We are most proud of the 25% adjusted EBITDA we achieved in the second quarter.

Our financial consulting segment, starting in the first quarter of 2005 through the first quarter of 2006, had robust growth and profitability that allowed us to build our operational consulting segment during 2005, allowing us to achieve the strong results we did this quarter.

As you will see in our second quarter 2006 segment, the operational consulting business is now bigger than the financial consulting business. Both businesses will have substantial growth going forward and both will be able to achieve 45% gross margin before including any stock-based compensation.

Let me start with the market demands and the people we have added to our financial consulting business. Our disputes and investigation business demand is as good or better since we've started Huron. During the month of July, our utilization was back to Q1 levels of 80%. During quarter two, our utilization was in the mid-70s due to completion of the Fannie Mae assignment and our need to realign the practice from such a big, long and successful assignment.

Our corporate advisory service practice and the [inaudible] business make up the rest of our financial consulting business. Demand for both of these businesses remains soft due to the excess capital and the lack of debt defaults in the market. We will continue to manage these businesses to maintain adequate margin and we remain optimistic because once the market turns, we'll be ready. We will also continue to aggressively grow our disputes and investigation business.

We have added the following managing directors since the last call, Economist Dr. Jeff Gray joined the company to lead Huron's Economic and Quantitative Analysis Group. He will also be an active member of Huron's Academic Council. Jeff has recently added two experienced Ph.D. economists to his growing economic team, who will be a key to this initiative going forward. Ken Evola and Jason Sevier, both well recognized for their expertise in advising clients on complex accounting issues, joined us in June.

We will continue to add CPAs and auditors to Huron's team as we grow Huron's disputes and investigation practice. We also added Joe DiSalvatore, who brings more than 25 years of experience in the valuation of businesses, corporate securities and intangible assets.

Frank Bernatowicz CEO of FAB Advisory Service, joined us recently and brought four consultants from his firm to our D&I practice. Frank and his people have a strong track record, helping clients resolve business disputes by providing expert testimony, reports and other litigation [and developing] services.

We will continue to aggressively add MDs and staff to build all of our disputes and investigation services, investigations, forensic accounting, disputes, valuation and economics. And we will expand both our West Coast and Houston disputes and investigation practice in the coming years.

Now let me turn to our operational consulting practice. Let me start with talking about the Galt practice. They had a great first quarter with Huron and we are continuing to develop our go-to-market strategies which integrate the service offerings of Huron with those of Galt.

We see tremendous long opportunities to offer Fortune 500 companies multiple Huron services. Randy DeGeer has also joined Galt as a new MD. Randy advises senior level executives and board level management on the strategies, resource allocations, and organizational changes needed to deliver superior shareholder returns.

Next, I want to cover our higher education, pharma and health plans and the healthcare provider practice. These practices more and more are going to market with integrated service offerings and they are having great success. The higher education practice is growing more than 50%.

That demand is being driven by the $50 billion of research that their clients receive. They are currently working on 45 active projects at different colleges, universities, hospitals and academic medical centers. They help clients manage cost, risk and business operations associated with research. Huron has the number one market position in this business. We are aggressively looking to add more MDs and professionals to this business.

The pharma and health plans practice is also seeing great demand. The Medicare drug benefit is driving some large projects as well as pharma pricing litigation. Medicare proposal preparation will drive demand in the latter half of this year. We also added four MDs to our pharma compliance practice this year. We expect to see positive impact in the marketplace in the latter half of this year as well.

The most recent MD hire is Tim Nugent. He specializes in pharmaceutical operations and compliance matters. Tim's knowledge of sales and marketing, commercial contracting, government price reporting, and distribution supply chain expands our bench in the pharma industry.

In the healthcare provider practice, we continue to see demand to help the 5,000 hospitals in the U.S. improve their cash flow and operating results. [Irene Turena] has joined us to help build our business in the provider channel. Irene, who is also a registered nurse, will improve our offerings in patient care and operational consulting. To build our brand in healthcare, we held our first perspectives in healthcare forum in May.

We brought together 200 representatives from provider, payer, and pharma organizations to discuss today's healthcare environment. It was co-sponsored by Huron and Northwestern University's Kellogg School of Management, and the speakers included a number of industry leaders as well as former president, Bill Clinton.

Now let me turn to legal business consulting and our service to the office of the general counsel. Our strategy of selling a full suite of services to the office of the general counsel is really starting to take hold. Our clients are more and more wanting us to offer services in the following areas, strategy, process improvement, including systems to manage their business, document retention, contract administration, and a full range of discovery services from collection, processing, reviewing, and producing the documents.

We currently have 93 active engagements with GC's of Fortune 1000 companies. This practice has more than doubled its revenue growth. We also hosted our general counsel summit in May which addressed the many emerging legal issues and business matters affecting the office of the general counsel.

The recent acquisitions of both Aaxis Technologies and Document Review Consulting Services, the former management team of NEXTER Solutions, was driven by our GC clients seeking these services. Aaxis Technologies, founded by Eric Ansley, Brian Ansley and Chris Getner provide full-service electronic discovery support for litigation teams and corporate counsel across the country.

Their services include forensic and data gathering, end-to-end data processing, and information consulting. Aaxis has proven methodologies and processes, equipment and people to expand their business significantly.

Document Review Consulting Services offers comprehensive document review services using experienced contract reviewers. Bob Rowe and his team built NEXTRA Solutions. The document review business currently has three facilities that have 250 seats for legal personnel to review documents.

And we are delighted to have the people from Aaxis and Document Review joining Huron and adding to the service that we provide the legal channel. Many of you have heard me say that we are continuing to build a business at Huron as based on a balanced portfolio of clients and service offerings so we are never dependent on a hot market or individual service offerings.

I hope you can tell how excited we all are here about the future of Huron's consulting group. Dan Logan, who has more than 25 years in professional service, recently joined us to lead Huron's marketplace initiatives, to continue to build a strong and diverse book of business. He is spearheading the development of sales and other go-to-market strategies, including identifying service line extension opportunities and pulling these strategies together in a way that helps to expand a relationship with our customers.

Dan came to Huron from KPMG, where was the managing partner of the Chicago office and I'm delighted to have him as a member of the Huron executive team. In closing, I would like to thank all the employees at Huron for a great second quarter and in continuing to build the foundation of our great company.

Now, I'll turn it over to Gary Burge.

Thanks Gary and good morning everyone. We are very pleased with our strong results for the second quarter of 2006. Some of the financial highlights for the second quarter included revenues of 67.8 million were up 34.2% year-over-year.

EBITDA increased 50% to 14.5 million in the second quarter compared to 9.6 million a year ago, and our EBITDA margins increased 230 basis points to 21.4% from 19.1% a year ago. Adjusted EBITDA before stock-based comp also increased 50% to 17 million in the second quarter compared to 11.3 million last year, and our adjusted EBITDA margins increased 260 basis points to 25% from 22.4% a year ago.

Operating income with 1.4 million in increased intangible amortization related to acquisitions, still improved nearly 39% to 11.3 million for the quarter, up from 8.2 million last year. GAAP diluted EPS came in at $0.36 compared to $0.28 a year ago, and adjusted EPS without the amortization of intangibles and stock-based comp increased nearly 42% to $0.51 from $0.36 in 2005. We had 17.2 million diluted shares outstanding, which was up 2.8% from a year ago.

Other quarterly highlights include the following, our financial consulting segment posted solid revenues of 31.4 million, which was up 5% from a year ago. I would describe this quarter as a transition quarter for this segment as the Fannie Mae engagement in our disputes and investigations practice concluded early in the second quarter, as Gary mentioned. This engagement was Huron's top engagement in the second quarter last year as well as the first quarter of this year.

After weaning ourselves from this job in the second quarter, we are pleased that our disputes and investigations practice has rebounded in the third quarter with new engagements to the point where our utilization has gotten back close to the first quarter level.

With regard to the operational consulting segment, we are very pleased with the investments we have made in the past year that have provided us with great returns in the second quarter. Operational consulting represented nearly 54% of revenues in the quarter, its highest contribution in Huron's history.

They posted revenues of 36.3 million, a 76% increase from the same quarter last year. As Gary said, we are very pleased with the Galt acquisition and the investments we have made in such practices as higher ed and legal business consulting that have provided us with great results.

On an overall basis, utilization remains strong at 76.7% for Huron. In total, with the balanced portfolio, again at work as utilization came down in the financial consulting segment from the 80% level last year to the mid-70s this quarter due to the aforementioned Fannie Mae transition.

On the other hand, our operational consulting segment dramatically picked up the pace from a year ago as utilization rose from around 72% last year to nearly 79% this quarter.

We know that utilization can sometimes be hard to predict at the practice level from year to year, but we also know that if you have a strong portfolio of market relevant service offerings, that over time, these service offerings will all be successful and that in the short run, they can pick each other up as major engagements phase out in certain practices or growth moderates for a period of time in other practices.

Now for a few more stats, DSO came in at 69 days for the quarter continuing our strong performance with respect to managing our working capital. Using our trailing 12-month GAAP net income, we are pleased to report that we had a nearly 16% return on assets and a nearly 26% return on equity in the second quarter. These returns include approximately 8.6 million in pretax and non-cash stock-based comp expense and one million in secondary offering costs over the last 12 months.

Now, for Q3 2006 and full year guidance. These guidance numbers include the acquisitions of Aaxis Technologies and Document Review Consulting Services. For Q3, we expect revenues of 71 to 74 million, operating income of 11 to 12 million, and $0.36 to $0.38 in diluted earnings per share.

For the full year, we are expecting revenues of 280 to 285 million, operating income without secondary offering costs of 47 to 49 million, and full year EPS, again without the secondary offering costs, of between $1.50 and $1.55.

GAAP operating income, including these secondary offering costs, is predicted to be in the range of 46 to 48 million, with GAAP EPS in the range of $1.47 to $1.52. These estimates include approximately 3 million and 10 million of stock-based comp expense in Q3 and for the full year, respectively.

Weighted average diluted share counts for 2006 are estimated to be approximately 17.4 million for both Q3 and the full year 2006. For modeling purposes, you should continue to assume an effective tax rate of 43.5% for the full year.

Let's open it up for questions now.

[OPERATOR INSTRUCTIONS] Our first question comes from the line of Matt Litfin with William Blair Company. Please proceed.

Yes, good morning, congratulations on another strong quarter.

Thank you Matt.

So you had an 80% plus July utilization wise in financial consulting. What are you guys baking in in terms of expectations for that metric in that segment during the second half of this year?

Not quite that much.

Somewhere in the mid-70s, Matt.

Is any percent plus, do you view that as sort of an unsustainable level or is that just more conservatism as you look forward?

I think the issue, Matt, is we think we've told you guys before, we continue to need more people and I don't think that we - I think we think the higher the utilization is in the long run, it adds to the whole turnover and we just don't think it's a healthy balance to have long term.

So we have - we built in some conservatism, but we also need to add a substantial number of people that should bring that down and we're just sort of making sure that we don't over promise the numbers if we bring these people in and there's just some transition on the start of the new people.

Following up on that, Gary, speaking of turnover, a number of other specialty consulting firms have talked about a little higher turnover level recently in their consultant base. I wonder if you could address that and talk about whether you're seeing that or whether maybe you're even benefiting from that?

Mary, [inaudible] but we're not any - we're just right with the pack, Matt, and we're all seeing I think pretty much the low 20s turnover. Mary?

Yes, that's right. Our second quarter voluntary turnover this year was just under 7%, which is a little bit lower than Q2 of '05. Our turnover in Q2 was a little higher than Q1, but that's to be expected and we planned for that.

We should probably see on an annual basis, Matt, we should probably see in the lower 20s, [been improving]. No one leaves in Q4 and so we'll see a little bit of improvement, but we're all - and I think we've told you guys before, with half of our workforce being less than five years, it's just impossible not to have a certain amount of turnover in this business.

A final question, you've made a number of small acquisitions in the last few months. Can you refresh us as to the process that you typically undertake, not just to integrate those acquisitions, but to get their services known and cross-sold by your existing consultant base?

Yes. As we're starting right and we're making - we're working on our marketing materials, just to give you an example, our Washington, D.C. office was over in the offices of Aaxis yesterday.

The leaders of Aaxis and Bob Rowe and all are at some clients in Houston today, we plan to have - our typical way is that we introduce these to our managing directors as soon as we can. We put incentives in place and we try to go to market right away.

So the first thing we'll do is we'll go to all of our general counsels of all of our clients and all of our targets and we'll start trying to set up sales calls. We basically - and we'll have all of our FEC disputes investigations guys know about it, introduce them to their law firm, so it's a pretty detailed process but we think we're getting pretty good at it.

Okay, congratulations again.

Our next question comes from the line of Brandt Sakakeeny with Deutsche Bank. Please proceed.

Thanks, good morning Gary Burge and Holdren, great quarter. A question to Gary Holdren, for you I think, at the time of the IPO, you had sort of given some broader goals for margins and given this quarter, you're up close to sort of 50% growth and sort of north of 20% on the EBIT margin.

I guess can you sort of talk about again what your long-term goals are for margins given the strong performance so far to date?

Well, one of the things I think that if you just think about it, I think we believe that we're always going to have to give $0.55 of every dollar to our employees for the revenues. So in base comp and bonus, the best you're really ever going to see is maybe 45%.

We're getting a little bit bump out of some of the [inaudible] though because they run a little bit higher, but I think just all along you should look at 45 or 46%. You're probably going to have 3% of stock-based comp and you're going to have somewhere around 21% of SG&A maybe, maybe let's say a range of 19 to 22 and depreciation and amortization around 3%.

I think the best you should ever get us to at our optimum is 20% pretax. I think we'll rotate, you know, we'll be somewhere around 18 to 20 will sort of be our long-term goals with 20 being the optimum.

Great, great. That's helpful. And question for Gary Burge, Gary, could you just give us an update on what the three acquisitions that you recently did showed to contribute to the '06 rev?

Well, it's built into the guidance that we gave and we've not talked specifically about that, but as you may recall from our press releases, Galt had 17 million of trailing 12-month revenues and then Aaxis and Document Review Services had combined revenues last year of 18 million. So I guess all I could say would be to use that as some guidance as you look into your models.

Use that pro rata and put some growth on it.

Okay, great. And a final question, just on the tax rate this quarter, I think you gave us the full year expectations. What drove the lower tax rate and over time, should we expect - what should we sort of expect out of the tax rate?

Well, we think - we were about 43.5% in the third quarter itself and that's what we're predicting for the full year. So we'd like to think we could tweak that down, but just given the emphasis and presence we have in New York, New York is the highest state income tax rate in the country right now.

We'll do our best, but I wouldn't count on that coming down dramatically on a go forward basis.

Okay, great. Thank you.

Our next question comes from the line of Kelly Flynn with UBS. Please proceed.

Good morning, this is Andrew Fones for Kelly Flynn. I wanted to ask you a question on organic growth. I know you did this [Spelse and Weiss] acquisition in May last year and then you had Galt come in during Q2. Can you help me understand roughly where that is running?

Well, the operation consulting practice, we try not to disclose all these various segments information, but you can just imagine with any kind of prediction of what Galt's revenues were, that our organic growth in our operational consulting business was pretty dramatic in Q2.

And our organic growth was - Q2 was down a little bit, but all the growth in financial consulting in Q2 was organic because we had most of the Spelse and Weiss in last year's Q2.

Okay, thanks. Just back to Brandt's question on margins, and I think you mentioned in your comments, you're expecting a 45% gross margin. Is that - should we look at that as guidance for this year, by the end of the year, or is that just kind of longer-term guidance?

That's just basically our - that's our structure, it's our structured gross margin which we're basically going to move our - the amount of bonus we pay out, as long as we have the revenue growth and our base salaries is just a part of our total comp, so people have to basically make the revenues to make the bonus.

And if they exceed revenues, they get 55 cents on every dollar. Don't expect our margins to go up dramatically for a long time, so just margin us - model us at 45%.

Okay, thanks. And then I had a question just on e-discovery. You did the acquisitions this quarter in Documents and e-discovery. Just a broader question, as you look at the Fortune 500, in terms of the adoption of customized solutions for e-discovery, how do you see the market there and what are your expectations for growth in e-discovery over the next two or three years?

We process - we're going to process information and so we don't have any software solutions, so what our corporations are asking us to do is process their information. You get it in a form that can be reviewed. Then our other business is going to use contract attorneys to review that document, so I'm not sure I really understand your question about the customized solutions.

Well, it seems as though you're going to be partnering with law firms to help them with their e-discovery needs and I was just wondering, as you look at the market, what percentage of firms would you say you've got to kind of go after versus firms that are perhaps already partnered up?

Well, I can only tell you that most of the general counsel that we've gone to are either not partnered with someone or they're ready to change to a better low-cost solution.

Okay, thank you.

Our next question comes from the line of Jim Wilson with JMP Securities. Please proceed.

Thanks, good morning guys. Two questions. First, I was wondering if - and I know you were giving complete specifics on the internal growth rate, but in the operational consulting set, that was extremely impressive, but can you give any more color as to which parts, which components grew fastest or any other way of coloring it given obviously the magnitude of that growth?

Well, you saw my - you heard my remarks that the higher end had grown more than 50%.

So that was one of the keys? All right.

Legal business consulting has grown almost 100%. As I said, almost doubled, so those two were the huge drivers and in our other practices, our profit improvement practices and others did very well as well.

Okay. And then just one other question. Your larger - your couple of larger clients and obviously one that doesn't generate any profit from you, but I know that you were transitioning out of those and I'm sure that process is included in your guidance, but are those clients virtually gone at this point or where does that sort of stand?

Or I should say where is your largest clients as a percentage of revenue, roughly where do they sit now at this point?

Yes, Jim, Gary Burge here. Say in terms of our top clients, our top 10 clients now represent slightly less than 40% of total revenues which is for the first time for a long time that that number has been under 40%. So I think that's good news.

It's suggesting we have more diversity in terms of our revenues, and so we've been very successful as both Gary and I commented in moving on from the Fannie Mae engagement, which was a fabulous engagement and we found other things to replace it with. And so I think that just talks about the strength of our portfolio and the strength we showed in the operational consulting segment this past quarter, is evidence of that.

St. Vincent's to may be one you're referring to is not a very large client of Huron anymore. We've only got about eight or nine people out there at cost, and it's baked into our guidance.

Okay, so that one is pretty well phased out? Okay, great. Thanks a lot.

Our next question comes from the line of Sandra Notardonato with Robert Baird. Please proceed.

Great, thank you. A couple of questions on operational consulting. Is that 79% utilization that you generated in the quarter sustainable?

I think it could be, Sandy. One of the things is that we see that - the one thing that's good about the operational consulting business is they're longer-term assignments and they basically have a little bit less predictability to them. And so if you work someone 40 hours, that's 100% utilized, right?

Right.

And if you have them pretty well leveraged and you've got good sort of what I would say forward-looking type jobs that have three and four and five-month type, I think that we can potentially have a higher utilization rate long run in the operational consulting business than the FC business.

Okay. So if I use the - even just keeping it flat with this quarter and I think you're not guiding to, but suggesting that utilization in the financial consulting business should be around 75% in the third quarter, so utilization overall should increase in Q3?

It could.

Yes. Sandy, this is Gary Burge. Just as we've said before, it's very hard to predict the utilization on a practice-by-practice level and I think we feel comfortable saying overall, from here on, we can maintain in the mid-70s now.

And if there are peaks and valleys in a particular practice or segment one quarter to the next, we think over the long term mid 70's is definitely sustainable.

Okay, fair enough. Can you give the leverage ratio MDs to more junior billable professionals?

Yes. We've had great success if you've noted over the last six months in terms of hiring on MDs, and so we're chasing an uphill battle constantly in terms of improving that leverage ratio. So at this stage, at the end of the second quarter, we're sitting somewhere in the neighborhood of about 6.5 or so, around six consultants per MD.

It's higher in the operational consulting side and lower on the financial consulting side like it has always been, but we've just added so many MDs to both segments right now that we've got to hire and that's the number one objective of ours.

But you also will see some new college students coming in that - in August and September that will help that.

Okay, great. Can you remind us, Gary, how many college students you'll bring on in that timeframe?

Our total - this is Mary. Our total is about 75 this year and I believe in July, August, September, it's about 57, 58.

Okay, great. Thank you.

And we've had some start in July already, I mean in June, I'm sorry.

You had some start in June already?

Yes.

Okay. And the amortization of intangible, Gary Burge, can you - I was off in what I was modeling. Can you help for the second half of the year what we should be looking for?

Yes. Let me - I've got to find that number, but I think we should be in the neighborhood of - bear with me just a second.

Sure, no problem.

For the first half - or in the third quarter, amortization of intangibles ran about 1.8 million. That will tweak down on the acquisitions we had completed prior to Aaxis and NEXTRA over the next six months.

Aaxis and NEXTRA, we're still in the process of valuing those intangibles, so I would probably assume for purposes of modeling that that number will tweak down over the next two quarters to maybe a million and a half range on average for both of the next two quarters.

Okay.

That might be a little high, but I'd rather it be high than too low.

Sure. So your guidance includes the higher number I imagine?

Yes.

Okay. And then the couple of acquisitions that you made at Aaxis and Document Review, is there any revenue concentration at those companies? And then if you could also comment on the type of margins you're seeing from these types of businesses?

There's no concentration of clients, Sandy. The one thing that on Aaxis is we bought a company that had been building up capacity and has a very large facility there to process a lot more than they do currently, so right now, those margins will only improve.

But you will see both of these businesses be able to achieve a pretax income of 20%.

Okay. Well, great, great quarter. Thank you very much.

[OPERATOR INSTRUCTIONS] Our next question is a follow-up on the line of Matt Litfin with Williams Blair Company. Please proceed.

Hi, just a couple of clean-up questions. What was the - what is the MD head count as of today?

I think it's 97.

Yes. That includes a couple of people who are starting in the next two or three weeks.

One, Bob Rowe - from Bob Rowe's business, the document business, three from Aaxis and then some are starting in the next, but for right now, Matt, we should have 97 MD's.

Okay. And then can you update us after all of the hires and acquisitions what the head count goal is for year end, maybe even split it up by MD's and other?

Well, we should end up around 100 MD's and clearly, one of the things you have to remember is that we added about 60 employees from the two acquisitions, but we also use about 250 contract attorneys at the Document Review business.

So we originally were trying to get 800 before the acquisitions, which we think we'll achieve, so we're going to be 850 total employees without the contract attorneys.

850 employees or are you talking about billable heads?

Billable heads I mean.

Okay, great. Thanks very much.

Our next question comes from the line of Kelly Flynn with UBS. Please proceed.

Hi. I had a follow-up question. It's Andrew Fones again. On the corporate finance practice, you said that demand there remains soft and I think also [inaudible]. Could you give us an update on kind of the outlook there and what we might expect the second half and as we look out beyond that?

We're right now, Andrew, we're not expecting our revenue guidance - we're not expecting any basic growth in those two businesses at all, staying flat for the rest of '06. We'll have to see what happens as we get near '07, but there's just - there's not a lot of demand out there for these businesses right now.

And there's just so much money that's refinancing deals that there's just - we're not seeing a lot of activity or proposals.

Okay, thanks.

At this time, I'd like to turn the conference back over to Mr. Holdren.

Well, thanks all of you for participating and I think you can see from our comments today, that we're very, very excited about the future Huron and just the things that we've done to balance our portfolio and the kinds of - the managing directors we've added and just the workforce we've got and the culture we're building at Huron and the clients that are continuing to buy repeat business.

So we look forward to giving you more news in Q3 and giving you a little bit more update on how our new businesses have worked three months from now. So we look forward to talking to all of you on the third quarter ca ll in November.

That concludes today's conference call. Thank you everyone for your participation. Have a good day.