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8-K - FORM 8-K - NAVIGANT CONSULTING INC | c64339e8vk.htm |
Exhibit 99.1
For more information contact:
Jennifer Moreno Reddick
Executive Director, Investor Relations
312.573.5634
jennifer.morenoreddick@navigant.com
Jennifer Moreno Reddick
Executive Director, Investor Relations
312.573.5634
jennifer.morenoreddick@navigant.com
NAVIGANT REPORTS FIRST QUARTER 2011 FINANCIAL RESULTS
| First quarter 2011 revenue before reimbursements (RBR) of $170 million, representing year over year and sequential growth of 10% and 5%, respectively. | ||
| GAAP EPS of $0.17 for first quarter 2011, up from $0.13 in first quarter 2010 and $0.01 in fourth quarter 2010. Adjusted EPS of $0.19 for first quarter 2011, up from $0.14 in first quarter 2010 and $0.15 in fourth quarter 2010. | ||
| Consultant utilization of 78% for first quarter 2011, up from 77% in first quarter 2010 and 74% in fourth quarter 2010. |
CHICAGO, April 27, 2011 Navigant (NYSE:NCI) today announced financial results for the first
quarter ended March 31, 2011.
Our first quarter results began to more fully reflect contributions from recent growth investments
in healthcare, energy, disputes and economics, stated William M. Goodyear, Chairman and Chief
Executive Officer. Top line revenue growth was again up both sequentially and year over year,
aided by improving market drivers for our key practice areas.
First Quarter 2011 Results
The Companys first quarter 2011 results are summarized as follows:
Total Company First Quarter 2011 Financial Results (1)
Q1 2011 | Q1 2010 | Change | Q4 2010 | Change | ||||||||||||||||
Revenue Before Reimbursements ($000) |
$ | 169,604 | $ | 153,870 | 10.2 | % | $ | 161,752 | 4.9 | % | ||||||||||
Total Revenues ($000) |
$ | 188,799 | $ | 173,550 | 8.8 | % | $ | 182,940 | 3.2 | % | ||||||||||
EBITDA ($000) |
$ | 22,380 | $ | 21,180 | 5.7 | % | $ | 18,608 | 20.3 | % | ||||||||||
Adjusted EBITDA ($000) |
$ | 23,616 | $ | 22,016 | 7.3 | % | $ | 21,201 | 11.4 | % | ||||||||||
Net Income ($000) |
$ | 8,778 | $ | 6,447 | 36.2 | % | $ | 559 | N/M | |||||||||||
Earnings Per Share |
$ | 0.17 | $ | 0.13 | 30.8 | % | $ | 0.01 | N/M | |||||||||||
Adjusted Earnings Per Share |
$ | 0.19 | $ | 0.14 | 35.7 | % | $ | 0.15 | 26.7 | % | ||||||||||
Average Billable Full Time Equivalents (FTEs) |
1,782 | 1,679 | 6.1 | % | 1,755 | 1.5 | % | |||||||||||||
End of Period Billable FTEs |
1,776 | 1,661 | 6.9 | % | 1,779 | -0.2 | % | |||||||||||||
Consultant Utilization (1,850 base) |
78 | % | 77 | % | 1.3 | % | 74 | % | 5.4 | % | ||||||||||
Average Bill Rate (excluding performance based fees) |
$ | 274 | $ | 264 | 3.8 | % | $ | 267 | 2.6 | % | ||||||||||
Days Sales Outstanding (DSO) |
83 | 83 | 0.0 | % | 81 | 2.5 | % |
(1) | EBITDA, Adjusted EBITDA and Adjusted Earnings per Share are non GAAP financial measures. See the attached financial schedules for a reconciliation of EBITDA, Adjusted EBITDA and Adjusted Earnings per Share to the most directly comparable GAAP financial measures. |
Navigant reported first quarter 2011 RBR of $170 million, up from $154 million in first
quarter 2010 and $162 million in fourth quarter 2010. Top line improvements resulted from multiple
factors including the full impact of recent acquisitions and continued improvement in the market
for Navigants services. Utilization was 78% for first quarter 2011, up from 77% in first quarter
2010 and 74% in fourth quarter 2010. Additionally, average bill rate, excluding performance based
fees, for first quarter 2011 was $274, up from $264 in first quarter 2010 and $267 in fourth
quarter 2010.
Both segment operating profit and EBITDA improved year over year and sequentially. First quarter
2011 cost of services before reimbursements and general and administrative expenses were both up
from the year ago period. Higher expenses were the result of recent growth investments, as well as
higher employment taxes and employee benefit costs. As expected, depreciation, amortization and
interest expense were each down from year ago levels. DSO was 83 for first quarter 2011,
consistent with first quarter 2010 and up slightly from 81 in fourth quarter 2010.
2
Business Segment Highlights
Business Segment First Quarter 2011 Financial Results (2)
Q1 2011 | Q1 2010 | Change | Q4 2010 | Change | ||||||||||||||||
Business Segment Revenues ($000) |
||||||||||||||||||||
Business Consulting Services |
$ | 79,627 | $ | 66,250 | 20.2 | % | $ | 78,185 | 1.8 | % | ||||||||||
Dispute and Investigative Services |
72,006 | 67,894 | 6.1 | % | 70,627 | 2.0 | % | |||||||||||||
Economic Consulting |
18,539 | 18,609 | -0.4 | % | 18,082 | 2.5 | % | |||||||||||||
International Consulting |
18,627 | 20,797 | -10.4 | % | 16,046 | 16.1 | % | |||||||||||||
Total Company |
$ | 188,799 | $ | 173,550 | 8.8 | % | $ | 182,940 | 3.2 | % | ||||||||||
Business Segment Revenue before Reimbursements ($000) |
||||||||||||||||||||
Business Consulting Services |
$ | 70,469 | $ | 57,399 | 22.8 | % | $ | 68,749 | 2.5 | % | ||||||||||
Dispute and Investigative Services |
65,753 | 63,338 | 3.8 | % | 63,540 | 3.5 | % | |||||||||||||
Economic Consulting |
17,874 | 16,988 | 5.2 | % | 16,703 | 7.0 | % | |||||||||||||
International Consulting |
15,508 | 16,145 | -3.9 | % | 12,760 | 21.5 | % | |||||||||||||
Total Company |
$ | 169,604 | $ | 153,870 | 10.2 | % | $ | 161,752 | 4.9 | % | ||||||||||
Business Segment Operating Profit ($000) |
||||||||||||||||||||
Business Consulting Services |
$ | 23,182 | $ | 19,017 | 21.9 | % | $ | 22,722 | 2.0 | % | ||||||||||
Dispute and Investigative Services |
25,777 | 25,408 | 1.5 | % | 23,733 | 8.6 | % | |||||||||||||
Economic Consulting |
5,757 | 6,296 | -8.6 | % | 4,878 | 18.0 | % | |||||||||||||
International Consulting |
3,282 | 3,740 | -12.2 | % | 1,632 | 101.1 | % | |||||||||||||
Total Company |
$ | 57,998 | $ | 54,461 | 6.5 | % | $ | 52,965 | 9.5 | % | ||||||||||
(2) | A metrics summary including data by segment is available at www.navigant.com/investor_relations. |
Navigants Business Consulting Services segment generated RBR of $70 million in first quarter
2011, up 23% from first quarter 2010 and 3% from fourth quarter 2010. Utilization ran a strong 81%
in first quarter 2011, up slightly from one year ago and up 2% from fourth quarter 2010.
Additionally, segment operating profit was $23 million for the period, up 22% from first quarter
2010 and 2% from fourth quarter 2010. The segments healthcare and energy practices represented
76% of first quarter 2011 Business Consulting Services RBR.
Navigants Dispute and Investigative Services segment reported RBR of $66 million in first quarter
2011, up 4% from both first quarter 2010 and fourth quarter 2010. Utilization was 76% for first
quarter 2011, representing a continuation of the gradual improvement trend which began in second
quarter 2010. Additionally, segment operating profit was $26 million for the period, up 2% from
first quarter 2010 and 9% from fourth quarter 2010. The overall litigation market continues to
improve at a modest pace. Steady demand continues for Navigants expertise in the areas of credit
crisis litigation, anti-corruption compliance and investigations, and other commercial litigation
and arbitrations.
3
Navigants Economic Consulting segment generated record RBR of $18 million in first quarter 2011,
up 5% from first quarter 2010 and 7% from fourth quarter 2010. Utilization returned to more
typical levels, reaching 79% in first quarter 2011. Segment operating profit was $6 million for
first quarter 2011, down 9% from first quarter 2010 while up 18% from fourth quarter 2010. The
addition of senior level talent throughout 2010 has enabled the Economic Consulting segment to grow
and diversify its base of expertise and clients.
Navigants International Consulting segment reported RBR of $16 million in first quarter 2011, down
4% from first quarter 2010 and up 22% from fourth quarter 2010. Utilization in first quarter 2011
was flat compared to first quarter 2010, but improved significantly on a sequential basis. Segment
operating profit was $3 million for first quarter 2011, down 12% from first quarter 2010 while
twice that of fourth quarter 2010. First quarter results reflected actions taken last year to
improve performance in the Companys International Consulting segment.
2011 Outlook
Navigant affirmed its 2011 outlook as originally discussed on February 2, 2011. Total 2011
revenues are estimated to range from $715 to $760 million and RBR is expected to be between $650
and $690 million. 2011 Adjusted EBITDA is estimated to be between $95 and $105 million, while
Adjusted EPS is expected to range between $0.70 and $0.77 per share.
Conference Call Details
Goodyear will host a conference call to discuss the Companys first quarter 2011 financial results
at 10:00 a.m. Eastern Time on Wednesday, April 27, 2011. The conference call may be accessed via
the Navigant website (www.navigant.com/investor_relations) or by dialing 888.847.7597 (630.395.0268
for international callers) and referencing pass code NCI. A replay of the web cast will be
available for approximately 90 days.
About Navigant
Navigant (NYSE: NCI) is a specialized, global expert services firm dedicated to assisting clients
in creating and protecting value in the face of critical business risks and opportunities. Through
senior level engagement with clients, Navigant professionals combine technical expertise in
Disputes and Investigations, Economics, Financial Advisory and Management Consulting, with business
pragmatism in the highly regulated Construction, Energy, Financial Services and Healthcare
industries. More information about Navigant can be found at www.navigant.com.
Statements included in this press release which are not historical in nature are forward-looking
statements as defined within the Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by words including outlook, plans, goals, anticipates,
believes, intends, estimates, expects and similar expressions. These statements are based
upon managements current expectations and speak only as of the date of this press release. The
Company
4
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 success and timing of the Companys implementation of its strategic business assessment; the
success of the Companys organizational changes and cost reduction actions; risks inherent in
international operations, including foreign currency fluctuations; ability to make acquisitions;
pace, timing and integration of acquisitions; impairment charges; management of professional staff,
including dependence on key personnel, recruiting, attrition and the ability to successfully
integrate new consultants into the Companys practices; utilization rates; conflicts of interest;
potential loss of clients; clients financial condition and their ability to make payments to the
Company; risks inherent with litigation; higher risk client assignments; professional liability;
potential legislative and regulatory changes; continued access to capital; and general economic
conditions. Further information on these and other potential factors that could affect the
Companys financial results are included under the Risk Factors section and elsewhere in the
Companys filings with the Securities and Exchange Commission (SEC), which are available on the
SECs website or at www.navigant.com/investor_relations. 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.
###
5
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
For the quarters ended March 31, | ||||||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Revenues before reimbursements |
$ | 169,604 | $ | 153,870 | ||||
Reimbursements |
19,195 | 19,680 | ||||||
Total revenues |
188,799 | 173,550 | ||||||
Cost of Services: |
||||||||
Cost of services before reimbursable expenses |
114,815 | 102,230 | ||||||
Reimbursable expenses |
19,195 | 19,680 | ||||||
Total costs of services |
134,010 | 121,910 | ||||||
General and administrative expenses |
32,409 | 30,460 | ||||||
Depreciation expense |
3,377 | 3,801 | ||||||
Amortization expense |
2,301 | 2,796 | ||||||
Operating income |
16,702 | 14,583 | ||||||
Interest expense |
1,840 | 3,478 | ||||||
Interest income |
(367 | ) | (313 | ) | ||||
Other (income) expense, net |
(36 | ) | 105 | |||||
Income before income tax expense |
15,265 | 11,313 | ||||||
Income tax expense |
6,487 | 4,866 | ||||||
Net income |
$ | 8,778 | $ | 6,447 | ||||
Basic net income per share |
$ | 0.17 | $ | 0.13 | ||||
Shares used in computing income per basic share |
50,176 | 48,691 | ||||||
Diluted net income per share |
$ | 0.17 | $ | 0.13 | ||||
Shares used in computing income per diluted share |
51,034 | 50,096 |
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AND SELECTED DATA
(In thousands, except DSO data)
(Unaudited)
CONSOLIDATED BALANCE SHEETS AND SELECTED DATA
(In thousands, except DSO data)
(Unaudited)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,632 | $ | 1,981 | ||||
Accounts receivable, net |
186,245 | 179,058 | ||||||
Prepaid expenses and other current assets |
26,430 | 19,697 | ||||||
Deferred income tax assets |
12,097 | 18,749 | ||||||
Total current assets |
226,404 | 219,485 | ||||||
Non-current assets: |
||||||||
Property and equipment, net |
37,343 | 38,903 | ||||||
Intangible assets, net |
21,360 | 23,194 | ||||||
Goodwill |
564,486 | 561,002 | ||||||
Other assets |
24,751 | 26,451 | ||||||
Total assets |
$ | 874,344 | $ | 869,035 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 11,760 | $ | 10,900 | ||||
Accrued liabilities |
7,795 | 7,936 | ||||||
Accrued compensation-related costs |
41,507 | 72,639 | ||||||
Income tax payable |
| 2,306 | ||||||
Term loan current |
18,397 | 18,397 | ||||||
Other current liabilities |
42,587 | 43,401 | ||||||
Total current liabilities |
122,046 | 155,579 | ||||||
Non-current liabilities: |
||||||||
Deferred income tax liabilities |
43,395 | 42,274 | ||||||
Other non-current liabilities |
24,206 | 25,907 | ||||||
Bank debt non-current |
63,961 | 33,695 | ||||||
Term loan non-current |
146,260 | 150,859 | ||||||
Total non-current liabilities |
277,822 | 252,735 | ||||||
Total liabilities |
399,868 | 408,314 | ||||||
Stockholders equity: |
||||||||
Common stock |
61 | 61 | ||||||
Additional paid-in capital |
565,466 | 564,214 | ||||||
Treasury stock |
(206,162 | ) | (206,162 | ) | ||||
Retained earnings |
124,021 | 115,243 | ||||||
Accumulated other comprehensive loss |
(8,910 | ) | (12,635 | ) | ||||
Total stockholders equity |
474,476 | 460,721 | ||||||
Total liabilities and stockholders equity |
$ | 874,344 | $ | 869,035 | ||||
Selected Data |
||||||||
Days sales outstanding, net (DSO) |
83 | 81 | ||||||
NAVIGANT CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share data)
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share data)
(Unaudited)
For the quarters ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 8,778 | $ | 6,447 | ||||
Adjustments to reconcile net income to net cash
used in operating activities: |
||||||||
Depreciation expense |
3,377 | 3,801 | ||||||
Amortization expense |
2,301 | 2,796 | ||||||
Share-based compensation expense |
1,700 | 975 | ||||||
Accretion of interest expense |
308 | 205 | ||||||
Deferred income taxes |
7,156 | 5,319 | ||||||
Allowance for doubtful accounts receivable |
2,025 | 1,584 | ||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
(8,373 | ) | (13,610 | ) | ||||
Prepaid expenses and other assets |
(4,884 | ) | (1,250 | ) | ||||
Accounts payable |
816 | 1,155 | ||||||
Accrued liabilities |
(191 | ) | 2,146 | |||||
Accrued compensation-related costs |
(31,263 | ) | (30,416 | ) | ||||
Income tax payable |
(2,370 | ) | (609 | ) | ||||
Other liabilities |
(2,800 | ) | 500 | |||||
Net cash used in operating activities |
(23,420 | ) | (20,957 | ) | ||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment |
(1,724 | ) | (3,056 | ) | ||||
Acquisitions of businesses, net of cash acquired |
| (4,000 | ) | |||||
Payments of acquisition liabilities |
(217 | ) | | |||||
Other, net |
(225 | ) | | |||||
Net cash used in investing activities |
(2,166 | ) | (7,056 | ) | ||||
Cash flows from financing activities: |
||||||||
Issuances of common stock |
640 | 661 | ||||||
Borrowings from banks, net of repayments |
29,707 | 19,315 | ||||||
Payments of term loan |
(4,599 | ) | (40,460 | ) | ||||
Other, net |
(676 | ) | (390 | ) | ||||
Net cash provided by (used in) financing activities |
25,072 | (20,874 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
165 | 104 | ||||||
Net decrease in cash and cash equivalents |
(349 | ) | (48,783 | ) | ||||
Cash and cash equivalents at beginning of the period |
1,981 | 49,144 | ||||||
Cash and cash equivalents at end of the period |
$ | 1,632 | $ | 361 | ||||
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
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 measures calculated and presented in accordance with generally accepted
accounting principles (GAAP) are included in this press release. In recent years, the Company
incurred significant severance expense directly related to its strategic realignment, as well as
substantial staffing reductions made to meet weaker market demand primarily during the recessionary
period which began at the end of 2008. Adjusted EBITDA and adjusted operating income excludes
severance and adjusted earnings per share excludes the net income impact of severance in all
periods presented. Severance is not considered to be non-recurring, infrequent or unusual to our
business, however, management believes providing investors with this information enhances the
comparability of the companys operating performance across periods. While management believes that
these non-GAAP financial measures are useful in evaluating Navigants operations, this information
should be considered as supplemental in nature and not as a substitute for or superior to, any
measure prepared in accordance with GAAP.
EBITDA, Adjusted EBITDA, Adjusted operating income
EBITDA (earnings before interest, taxes, depreciation and amortization) is not a measure of
financial performance under generally accepted accounting principles (GAAP). The Company believes
EBITDA provides useful supplemental information for investors to evaluate financial performance.
This data is also used by the Company for assessment of its operating and financial results, in
addition to operating income, net income and other GAAP measures. Management believes EBITDA is a
useful indicator of the Companys financial and operating performance and its ability to generate
cash flows from operations that are available for interest, debt service, taxes and capital
expenditures. Investors should recognize that EBITDA might not be comparable to similarly-titled
measures of other companies. Adjusted EBITDA and adjusted operating income excludes the impact of
severance as discussed above. This measure 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.
For the quarters ended March 31, | ||||||||
2011 | 2010 | |||||||
EBITDA reconciliation: |
||||||||
Operating income |
$ | 16,702 | $ | 14,583 | ||||
Depreciation |
3,377 | 3,801 | ||||||
Amortization |
2,301 | 2,796 | ||||||
EBITDA |
$ | 22,380 | $ | 21,180 | ||||
Adjusted EBITDA and operating income to exclude severance expense reconciliation to operating income: |
||||||||
Operating income |
$ | 16,702 | $ | 14,583 | ||||
Severance expense |
1,236 | 836 | ||||||
Adjusted operating income to exclude severance expense |
$ | 17,938 | $ | 15,419 | ||||
Depreciation |
3,377 | 3,801 | ||||||
Amortization |
2,301 | 2,796 | ||||||
Adjusted EBITDA, excluding severance expense |
$ | 23,616 | $ | 22,016 | ||||
Adjusted earnings per share (adjusted to exclude the net income impact from severance
expense)
The Company discloses adjusted earnings per share to exclude the net income impact from severance
expense. Management believes the adjusted earnings per share information provides additional
insights into Navigants ongoing operating performance. This measure 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.
For the quarters ended March 31, | ||||||||
2011 | 2010 | |||||||
Severance expense |
$ | 1,236 | $ | 836 | ||||
Income tax (benefit) (1) |
(440 | ) | (322 | ) | ||||
Net income impact of severance expense |
$ | 796 | $ | 514 | ||||
Shares used in computing income per diluted share |
51,034 | 50,096 | ||||||
Diluted income per share impact of severance expense |
$ | 0.02 | $ | 0.01 | ||||
Net income |
$ | 8,778 | $ | 6,447 | ||||
Net income impact of severance expense |
796 | 514 | ||||||
Adjusted net income, excluding the net income impact of severance expense |
$ | 9,574 | $ | 6,961 | ||||
Shares used in computing income per diluted share |
51,034 | 50,096 | ||||||
Adjusted earnings per share, excluding the net income impact of severance expense |
$ | 0.19 | $ | 0.14 | ||||
(1) | Effective income tax (benefit) has been determined based on specific tax jurisdiction. |