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8-K - FORM 8-K - NAVIGANT CONSULTING INCc64339e8vk.htm
Exhibit 99.1
(NAVIGANT LOGO)
For more information contact:
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 Company’s 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 Navigant’s 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.

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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.
Navigant’s 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 segment’s healthcare and energy practices represented 76% of first quarter 2011 Business Consulting Services RBR.
Navigant’s 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 Navigant’s expertise in the areas of credit crisis litigation, anti-corruption compliance and investigations, and other commercial litigation and arbitrations.

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Navigant’s 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.
Navigant’s 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 Company’s 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 Company’s 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 management’s current expectations and speak only as of the date of this press release. The Company

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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 Company’s implementation of its strategic business assessment; the success of the Company’s 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 Company’s 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 Company’s financial results are included under the “Risk Factors” section and elsewhere in the Company’s filings with the Securities and Exchange Commission (SEC), which are available on the SEC’s 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.
###

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NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
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)
                 
    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)
                 
    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)
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 company’s operating performance across periods. While management believes that these non-GAAP financial measures are useful in evaluating Navigant’s 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 Company’s 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 Navigant’s 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.