Navigant (NYSE: NCI) today announced financial results for the
first quarter ended March 31, 2017.
Financial Summary and Highlights:
- First quarter 2017 revenues before
reimbursements (RBR) of $236.2 million increased 6%, with 4%
organic growth, compared to first quarter 2016
- First quarter 2017 total revenues of
$257.8 million increased 5% compared to first quarter 2016
- First quarter 2017 net income was $11.1
million, or $0.23 per share, compared to $12.6 million, or $0.26
per share, for first quarter 2016
- First quarter 2017 adjusted earnings
per share (EPS) of $0.27 was flat compared to first quarter
2016
- Refinanced $400 million revolving
credit facility extending maturity date to March 2022 under
favorable terms
- Extended share repurchase authorization
through Dec. 31, 2019 with an approved limit of $100 million
- Reiterated 2017 outlook
“During the quarter, Navigant continued to achieve organic
growth following a very strong 2016. As anticipated, contributions
from our segments varied specific to client and industry demands in
the face of an uncertain regulatory environment in some of our core
industry sectors,” said Julie Howard, Navigant chairman and CEO.
“Looking ahead, we are focused on the consistent execution of our
growth strategy. With our diverse portfolio of service offerings
and our disciplined management approach, we remain confident in our
ability to deliver on our financial and operating goals for
2017.”
Navigant reported first quarter 2017 RBR of $236.2 million, a 6%
increase (4% organic growth), compared to $223.5 million for first
quarter 2016. Total revenues increased 5% to $257.8 million for
first quarter 2017 compared to $245.3 million for first quarter
2016. Net income for first quarter 2017 was $11.1 million, or $0.23
per share, compared to $12.6 million, or $0.26 per share, in the
prior year first quarter. Adjusted EPS was $0.27 for first quarter
2017, flat compared to first quarter 2016. First quarter 2017
adjusted EBITDA was $31.5 million, a 3% increase, compared to $30.6
million for the same period in 2016.
Segment Financial
Summary
For the quarter ended
March 31,
2017 2016
Change RBR ($000) Healthcare $ 90,546 $ 81,667
10.9% Energy 32,498 26,896 20.8% Financial Services Advisory and
Compliance 32,907 33,650 -2.2% Disputes, Forensics & Legal
Technology 80,260 81,262 -1.2%
Total Company $ 236,211 $ 223,475 5.7%
Total Revenues ($000) Healthcare $ 98,689 $ 90,102 9.5%
Energy 37,722 31,279 20.6% Financial Services Advisory and
Compliance 36,855 36,907 -0.1% Disputes, Forensics & Legal
Technology 84,571 86,999 -2.8%
Total Company $ 257,837 $ 245,287 5.1%
Segment Operating Profit ($000) Healthcare $ 27,613 $ 23,768
16.2% Energy 8,879 6,714 32.2% Financial Services Advisory and
Compliance 11,614 13,506 -14.0% Disputes, Forensics & Legal
Technology 26,339 28,710 -8.3%
Total Company $ 74,445 $ 72,698 2.4%
Segment Operating Margin (% of RBR) Healthcare 30.5% 29.1%
Energy 27.3% 25.0% Financial Services Advisory and Compliance 35.3%
40.1% Disputes, Forensics & Legal Technology
32.8% 35.3% Total Company
31.5% 32.5%
Healthcare segment RBR increased 11% for first quarter 2017
compared to the respective period in 2016, mostly on an organic
basis. Growth was driven by continued demand from providers for
large, strategy-led transformation projects, in addition to demand
from life sciences companies for commercialization solutions.
Segment operating profit was up 16% in first quarter 2017 compared
to the respective period of 2016.
Energy segment RBR increased 21% for first quarter 2017 on a
year-over-year basis, led by contributions from the Ecofys
acquisition announced in November 2016. Segment operating profit
was up 32% in first quarter 2017 compared to first quarter
2016.
Financial Services Advisory and Compliance segment RBR for first
quarter 2017 decreased 2% compared to the prior year quarter,
primarily driven by the conclusion of some engagements and
lighter-than-normal volume in compliance and controls services for
some of our core financial institution clients. Segment operating
profit was down 14% in first quarter 2017 compared to the
respective period of 2016.
Disputes, Forensics & Legal Technology first quarter 2017
segment RBR decreased 1% year-over-year (flat on a foreign currency
neutral basis), which is relatively stable compared to prior
quarter results. The segment experienced continued demand for our
global expertise in complex industrial, infrastructure and
commercial project matters, an increase in the volume of legal
technology engagements, and an increase in performance-based fees
associated with mass tort claims. Segment operating profit was down
8% in first quarter 2017 compared to the respective period of
2016.
Cash Flow
Net cash used in operating activities for first quarter 2017 was
$23.0 million compared to $26.6 million for first quarter 2016.
Free cash flow decreased to $13.3 million for first quarter 2017
compared to $21.0 million for the same period in 2016, primarily
driven by increased capital expenditures due to the relocation of
our Chicago headquarters. Days Sales Outstanding was 86 days as of
March 31, 2017, up eight days compared to March 31, 2016.
Bank debt was $178.3 million at March 31, 2017, compared to
$211.5 million at March 31, 2016 and $135.0 million at Dec. 31,
2016. Leverage (bank debt divided by trailing twelve month adjusted
EBITDA) was 1.25 at March 31, 2017, compared to 1.72 at March 31,
2016 and 0.95 at Dec. 31, 2016. The increase in the debt leverage
as of March 31, 2017 compared to the previous quarter was driven by
2016 annual incentive compensation payments. Also, during the
quarter, Navigant entered into a new credit agreement, refinancing
its $400-million revolving credit facility and extending the
maturity date of the facility to March 2022.
Navigant repurchased 207,298 shares of common stock during first
quarter 2017 at an aggregate cost of $5.0 million and an average
cost of $23.93 per share. Effective May 1, 2017, our board of
directors increased the amount available under the company’s stock
repurchase authorization to $100 million and extended the
authorization through Dec. 31, 2019.
2017 Outlook
Navigant reiterated its 2017 financial outlook. As previously
disclosed, full year 2017 RBR is expected to range between $975
million and $1.010 billion while 2017 total revenues are estimated
to be between $1.075 billion and $1.115 billion. Adjusted EBITDA
for the full year 2017 is expected to range between $145 and $156
million and adjusted EPS for the full year 2017 is estimated to be
between $1.29 and $1.36.
Non-GAAP Financial
Information
This press release includes certain non-GAAP financial measures
as defined by the Securities and Exchange Commission.
Reconciliations of these non-GAAP financial measures to the most
directly comparable financial measure calculated and presented in
accordance with generally accepted accounting principles (GAAP) are
included in the financial schedules attached to this press release.
This information should be considered as supplemental in nature and
not as a substitute for, or superior to, any measure of performance
prepared in accordance with GAAP.
No reconciliation of Navigant’s 2017 adjusted EBITDA guidance
and 2017 adjusted EPS guidance, both of which exclude the impact
and tax-effected impact of severance expense and other operating
costs (benefit), respectively, is included in the financial
schedules attached to this press release. Navigant is not able to
accurately forecast the excluded items at the level of precision
that would be required to be included in the most directly
comparable GAAP financial measure without unreasonable efforts.
Conference Call Details
Navigant will host a conference call to discuss the company’s
first quarter 2017 results at 10 a.m. Eastern Time (9 a.m. Central
Time) on Wednesday, May 3, 2017. The conference call may be
accessed via the Navigant website (investors.navigant.com) or by
dialing 888.455.9733 (630.395.0358 for international callers) and
referencing pass code “NCI.” An archived version of the webcast
will also be available via the Navigant website. A report of
financial and related supplemental information is also available
via the Navigant website.
About Navigant
Navigant Consulting, Inc. (NYSE: NCI) is a specialized, global
professional services firm that helps clients take control of their
future. Navigant’s professionals apply deep industry knowledge,
substantive technical expertise, and an enterprising approach to
help clients build, manage, and/or protect their business
interests. With a focus on markets and clients facing
transformational change and significant regulatory or legal
pressures, the firm primarily serves clients in the healthcare,
energy, and financial services industries. Across a range of
advisory, consulting, outsourcing, and technology/analytics
services, Navigant’s practitioners bring sharp insight that
pinpoints opportunities and delivers powerful results. More
information about Navigant can be found at navigant.com.
Statements included in this press release which are not
historical in nature are forward-looking statements as defined in
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may generally be identified by words
such as “anticipate,” “believe,” “may,” “could,” “intend,”
“estimate,” “expect,” “plan,” “outlook” and similar expressions.
These statements are based upon management’s current expectations
and speak only as of the date of this press release. The Company
cautions readers that there may be events in the future that the
Company is not able to accurately predict or control and the
information contained in the forward-looking statements is
inherently uncertain and subject to a number of risks that could
cause actual results to differ materially from those contained in
or implied by the forward-looking statements including, without
limitation: the execution of the Company’s long-term growth
objectives and margin improvement initiatives; risks inherent in
international operations, including foreign currency fluctuations;
ability to make acquisitions and divestitures; pace, timing and
integration of acquisitions and separation of divestitures;
operational risks associated with new or expanded service areas,
including business process management services; impairments;
changes in accounting standards or tax rates, laws or regulations;
management of professional staff, including dependence on key
personnel, recruiting, retention, attrition and the ability to
successfully integrate new consultants into the Company’s
practices; utilization rates; conflicts of interest; potential loss
of clients or large engagements and the Company’s ability to
attract new business; brand equity; competition; accurate pricing
of engagements, particularly fixed fee and multi-year engagements;
clients’ financial condition and their ability to make payments to
the Company; risks inherent with litigation; higher risk client
assignments; government contracting; professional liability;
information security; the adequacy of our business, financial and
information systems and technology; maintenance of effective
internal controls; potential legislative and regulatory changes;
continued and sufficient access to capital; compliance with
covenants in our credit agreement; interest rate risk; and market
and general economic and political conditions. Further information
on these and other potential factors that could affect the
Company’s financial results are included under the “Risk Factors”
section of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2016, and elsewhere in the Company’s filings
with the Securities and Exchange Commission (SEC), which are
available on the SEC’s website or at investors.navigant.com. The
Company cannot guarantee any future results, levels of activity,
performance or achievement and undertakes no obligation to update
any of its forward-looking statements.
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME (In thousands, except per share
data(1)) (Unaudited) For the quarter
ended March 31, 2017 2016 Revenues:
Revenues before reimbursements $ 236,211 $ 223,475 Reimbursements
21,626 21,812 Total revenues
257,837 245,287 Cost of services: Cost of services before
reimbursable expenses 165,052 153,940 Reimbursable expenses
21,626 21,812 Total cost of services
186,678 175,752 General and administrative expenses 41,484 39,831
Depreciation expense 7,473 6,522 Amortization expense 2,319 2,921
Other operating costs (benefit): Contingent acquisition liability
adjustments, net 1,199 - Office consolidation, net (38 ) - Deferred
debt issuance costs write off 145 -
Operating income 18,577 20,261 Interest expense 1,069 1,260
Interest income (31 ) (39 ) Other income, net (217 )
(340 ) Income before income tax expense 17,756 19,380 Income
tax expense 6,660 6,738 Net
income $ 11,096 $ 12,642 Basic
per share data Net income $ 0.24 $ 0.27 Shares used in computing
basic per share data 46,932 47,425 Diluted per share data
Net income $ 0.23 $ 0.26 Shares used in computing diluted per share
data 48,969 49,031
NAVIGANT CONSULTING, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AND SELECTED
DATA (In thousands, except DSO data)
March 31, December 31, 2017 2016
(unaudited) ASSETS Current assets: Cash and cash equivalents
$ 9,132 $ 8,291 Accounts receivable, net 264,874 261,755 Prepaid
expenses and other current assets 30,646
29,762 Total current assets 304,652 299,808
Non-current assets: Property and equipment, net 85,935 82,953
Intangible assets, net 26,433 28,727 Goodwill 628,377 625,027 Other
assets 19,643 18,282 Total
assets $ 1,065,040 $ 1,054,797
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 11,208 $ 11,871 Accrued liabilities 13,407 16,144 Accrued
compensation-related costs 57,668 106,779 Income tax payable 5,967
1,564 Other current liabilities 37,679
38,616 Total current liabilities 125,929 174,974 Non-current
liabilities: Deferred income tax liabilities 78,734 77,737 Other
non-current liabilities 36,571 32,579 Bank debt non-current
178,336 135,030 Total non-current
liabilities 293,641 245,346
Total liabilities 419,570 420,320
Stockholders' equity: Common stock 57 57 Additional paid-in
capital 648,941 644,519 Treasury stock (186,322 ) (181,361 )
Retained earnings 207,139 196,468 Accumulated other comprehensive
loss (24,345 ) (25,206 ) Total stockholders'
equity 645,470 634,477 Total
liabilities and stockholders' equity $ 1,065,040 $
1,054,797
Selected Data
(unaudited)
Days sales outstanding, net (DSO) 86 81
NAVIGANT CONSULTING,
INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands) (Unaudited)
For the quarter ended March 31, 2017
2016 Cash flows from operating activities: Net
income $ 11,096 $ 12,642 Adjustments to reconcile net income to net
cash used in operating activities: Depreciation expense 7,473 6,522
Amortization expense 2,319 2,921 Share-based compensation expense
3,022 2,529 Deferred income taxes 1,339 1,033 Allowance for
doubtful accounts receivable 4 1,636 Contingent acquisition
liability adjustments, net 1,199 - Other, net 651 357 Changes in
assets and liabilities (net of acquisitions): Accounts receivable
(4,279 ) (15,543 ) Prepaid expenses and other assets (1,197 )
(2,174 ) Accounts payable (81 ) 478 Accrued liabilities 584 267
Accrued compensation-related costs (49,256 ) (39,666 ) Income taxes
payable 4,353 5,055 Other liabilities (188 )
(2,614 ) Net cash used in operating activities (22,961 )
(26,557 ) Cash flows from investing activities: Purchases of
property and equipment (13,789 ) (4,959 ) Acquisitions of
businesses, net of cash acquired - (1,995 ) Other acquisition
payments - (5,500 ) Other, net (116 ) (18 )
Net cash used in investing activities (13,905 ) (12,472 )
Cash flows from financing activities: Issuances of common
stock 1,914 2,056 Repurchases of common stock (4,961 ) (6,266 )
Repayments to banks (150,800 ) (96,392 ) Borrowings from banks
193,802 134,757 Payments of debt issuance costs (1,166 ) - Other,
net (1,327 ) (658 ) Net cash provided by
financing activities 37,462 33,497
Effect of exchange rate changes on cash and cash
equivalents 245 43 Net increase
(decrease) in cash and cash equivalents 841 (5,489 ) Cash and cash
equivalents at beginning of the period 8,291
8,895 Cash and cash equivalents at end of the period
$ 9,132 $ 3,406
NAVIGANT CONSULTING, INC.
AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (In thousands, except per share data and
percentages) (Unaudited) This press release
includes certain non-GAAP financial measures as defined by the
Securities and Exchange Commission. Below are the reconciliations
of these non-GAAP financial measures to the most directly
comparable financial measure calculated and presented in accordance
with generally accepted accounting principles (GAAP). This
information should be considered as supplemental in nature and not
as a substitute for, or superior to, any measure of performance
prepared in accordance with GAAP. Management uses these non-GAAP
financial measures in addition to GAAP financial measures to assess
the Company's operations and financial results and believes they
are useful indicators of operating performance and the Company's
ability to generate cash flows from operations that are available
for interest, debt service, taxes and capital expenditures.
Investors should recognize that these non-GAAP financial measures
may not be comparable to similarly-titled measures of other
companies.
EBITDA, adjusted
EBITDA, adjusted Net Income and
adjusted Earnings
Per Share (2)
For the quarter ended
March 31,
2017 2016 Severance expense $ 1,786
$ 857 Income tax benefit (3) (656 )
(310 ) Tax-effected impact of severance expense $ 1,130
$ 547 Other operating costs - contingent
acquisition liability adjustment, net $ 1,199 $ - Income tax
benefit (3) (481 ) - Tax-effected
impact of other operating costs - contingent acquisition liability
adjustment, net $ 718 $ - Other
operating benefit - office consolidation, net $ (38 ) $ - Income
tax expense (3) 15 -
Tax-effected impact of other operating benefit - office
consolidation, net $ (23 ) $ - Other operating
costs - deferred debt issuance costs write off $ 145 $ - Income tax
benefit (3) (58 ) - Tax-effected impact
of other operating costs - deferred debt issuance costs write off $
87 $ - EBITDA reconciliation: Net
Income $ 11,096 $ 12,642 Interest expense 1,069 1,260 Interest
income (31 ) (39 ) Other income, net (217 ) (340 ) Income tax
expense 6,660 6,738 Depreciation expense 7,473 6,522 Amortization
expense 2,319 2,921 EBITDA $
28,369 $ 29,704 Severance expense 1,786 857 Other operating costs -
contingent acquisition liability adjustment, net 1,199 - Other
operating benefit - office consolidation, net (38 ) - Other
operating costs - deferred debt issuance costs write off 145
- Adjusted EBITDA $ 31,461
$ 30,561 Net income $ 11,096 $ 12,642
Tax-effected impact of severance expense 1,130 547 Tax-effected
impact of other operating costs - contingent acquisition liability
adjustment, net 718 - Tax-effected impact of other operating
benefit - office consolidation, net (23 ) - Tax-effected impact of
other operating costs - deferred debt issuance costs write off
87 - Adjusted net income $
13,008 $ 13,189 Shares used in computing
adjusted per diluted share data 48,969 49,031 Adjusted earnings per
share $ 0.27 $ 0.27
For the quarter
ended
Free Cash Flow
(4)
March 31, 2017 2016 Net cash used in
operating activities $ (22,961 ) $ (26,557 ) Changes in assets and
liabilities 50,064 54,197 Allowance for doubtful accounts
receivable (4 ) (1,636 ) Purchases of property and equipment
(13,789 ) (4,959 ) Payments of contingent acquisition liabilities
- (49 ) Free Cash Flow $ 13,310
$ 20,996
Leverage Ratio
(5)
At March 31, 2017 2016 Adjusted EBITDA
for prior twelve-month period $ 143,190 $ 123,110 Bank debt $
178,336 $ 211,521 Leverage ratio 1.25 1.72
For the
quarter ended
Organic Growth
(6)
March 31, 2017 2016
Growth Revenues before reimbursements $ 236,211 $ 223,475
5.7 % Pro forma acquisition adjustment - 5,496 Currency impact
1,812 - Organic
RBR $ 238,023 $ 228,971 4.0 % Footnotes (1) Per share data
may not sum due to rounding. (2) EBITDA is earnings before
interest, taxes, depreciation and amortization. Adjusted EBITDA
excludes the impact of severance expense and other operating costs
(benefit). Adjusted net income and adjusted earnings per share
exclude net income and per share net income impact of severance
expense and other operating costs (benefit). Severance expense and
other operating costs (benefit) are not considered to be
non-recurring, infrequent or unusual to our business. Management
believes that these measures provide investors with enhanced
comparability of the Company's results of operations across
periods. (3) Effective income tax expense (benefit) has been
determined based on specific tax jurisdiction. (4) Free cash flow
is calculated as net cash provided from operations excluding
changes in assets and liabilities and allowance for doubtful
accounts receivable less cash payments for property and equipment
and deferred acquisition related payments. Free cash flow does not
represent discretionary cash available for spending as it excludes
certain contractual obligations such as debt repayment. However,
management believes that it provides investors with an indicator of
cash flows available for on-going business operations and long term
value creation. (5) Leverage ratio is calculated as bank debt at
the end of the period divided by adjusted EBITDA for the prior
twelve-month period. Management believes that leverage ratio
provides investors with an indicator of the cash flows available to
repay the Company's debt obligations. (6) Organic growth represents
revenues before reimbursements adjusted to include the impact of
our acquisitions as if we owned them from the beginning of each
comparable period and adjusted to exclude the impact of foreign
currency exchange rate fluctuations. Management believes that
organic growth reflects the growth of our existing business and is,
therefore, useful in analyzing the Company's financial condition
and results of operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170503005075/en/
Navigant Investor RelationsAaron
Miles312.583.5820aaron.miles@navigant.comorNavigant Corporate
CommunicationsBelia Ortega312.583.2640belia.ortega@navigant.com
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