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8-K - FORM 8-K - NAVIGANT CONSULTING INCd870137d8k.htm

Exhibit 99.1

 

LOGO

NAVIGANT REPORTS FOURTH QUARTER AND

FULL YEAR 2014 FINANCIAL RESULTS

CHICAGO, February 12, 2015 – Navigant (NYSE: NCI) today announced financial results for the fourth quarter and full year ended December 31, 2014. The Company also introduced its business and financial outlook for 2015.

Financial Summary and Highlights:

 

    Fourth quarter 2014 revenues before reimbursements (RBR) increased 12% year-over-year to $199.5 million, and total revenues increased 9% year-over-year to $223.6 million; net income from continuing operations was $12.3 million or $0.25 per share; adjusted earnings per share (EPS) increased 12% year-over-year to $0.28, and adjusted EBITDA increased 1% year-over-year to $30.2 million.
    Fourth quarter 2014 RBR results included organic growth of 2% year-over-year, highlighted by an increase in organic growth in three out of four segments.
    Full year 2014 RBR increased 4% year-over-year to $766.6 million, and total revenues increased 3% year-over-year to $859.6 million; net loss from continuing operations was $36.9 million, or $0.76 per share, which included a goodwill impairment charge of $122.0 million recorded in second quarter 2014; adjusted EPS was $1.02, and adjusted EBITDA was $116.2 million.
    Bank debt lowered to $109.8 million during fourth quarter 2014, which decreased leverage (bank debt divided by trailing twelve month adjusted EBITDA) to 0.94 on a sequential basis from the 2014 third quarter.
    449,191 shares of common stock repurchased in fourth quarter 2014 at an average cost of $14.44 per share for a total of approximately 1.7 million shares repurchased in 2014 at an average cost of $16.50 per share.

Navigant reported fourth quarter 2014 RBR of $199.5 million, a 12% increase compared to $177.8 million for fourth quarter 2013, with year-over-year RBR growth in three segments. Total revenues increased 9% to $223.6 million for fourth quarter 2014 compared to $204.8 million for fourth quarter 2013. Net income from continuing operations for fourth quarter 2014 was $12.3 million, or $0.25 per share, compared to $14.2 million, or $0.28 per share, in the prior year quarter. The effective income tax rate was 38% for fourth quarter 2014 compared to 45% in the prior year quarter. Adjusted EPS increased 12% to $0.28 for fourth quarter 2014 compared to $0.25 for fourth quarter 2013. Adjusted EBITDA increased 1% to $30.2 million for fourth quarter 2014 compared to $29.8 million for the same period in 2013.

RBR for full year 2014 improved 4% on a year-over-year basis to $766.6 million compared to $734.4 million for 2013. Total revenues also improved 3% on a year-over-year basis to $859.6 million for full year 2014 compared to $835.6 million for the prior year. Net loss from


continuing operations for full year 2014 was $36.9 million, or $0.76 per share, which included a goodwill impairment charge of $122.0 million recorded in second quarter 2014, compared to net income from continuing operations of $55.1 million, or $1.08 per share, in the prior year. Adjusted EPS for full year 2014 was $1.02 compared to $1.06 for 2013. Adjusted EBITDA was $116.2 million for full year 2014 compared to $124.1 million in 2013. Adjusted EBITDA margin (adjusted EBITDA as a percentage of RBR) was 15% for full year 2014.

Julie Howard, Chairman and Chief Executive Officer, commented, “Fourth quarter results were as expected with year-over-year growth in three of our four reporting segments. As we reflect on 2014, we are pleased with the trends in our organic growth performance over the course of the year. Additionally, we have high expectations as we enter 2015 about our prospects to build on the strong foundation and combination of specialized consulting, technology solutions and business process management services we now have in place.”

Howard continued, “We expect the anticipated market trends, industry reforms and regulatory environments facing our clients will lead to increasing demand for our complementary mix of expertise and solutions that address business risk, business performance and business transformation.”

Segment Financial Summary

 

     For the quarter ended
December 31,
          For the full year ended
December 31,
       
     2014     2013     Change     2014     2013     Change  

RBR ($000)

            

Disputes, Investigations & Economics

   $ 77,382      $ 72,852        6.2   $ 309,570      $ 301,545        2.7

Financial, Risk & Compliance

     34,643        37,691        -8.1     135,498        155,656        -13.0

Healthcare

     61,672        44,298        39.2     223,817        182,783        22.4

Energy

     25,761        22,948        12.3     97,667        94,449        3.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Company

$ 199,458    $ 177,789      12.2 $ 766,552    $ 734,433      4.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues ($000)

Disputes, Investigations & Economics

$ 83,227    $ 78,700      5.8 $ 333,273    $ 326,130      2.2

Financial, Risk & Compliance

  41,537      47,180      -12.0   162,637      190,116      -14.5

Healthcare

  68,218      49,920      36.7   248,095      205,215      20.9

Energy

  30,651      29,024      5.6   115,612      114,124      1.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Company

$ 223,633    $ 204,824      9.2 $ 859,617    $ 835,585      2.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit ($000)

Disputes, Investigations & Economics

$ 26,271    $ 22,880      14.8 $ 104,466    $ 99,828      4.6

Financial, Risk & Compliance

  14,674      14,590      0.6   58,929      62,487      -5.7

Healthcare

  16,874      15,815      6.7   65,104      67,696      -3.8

Energy

  8,245      7,441      10.8   30,507      31,280      -2.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Company

$ 66,064    $ 60,726      8.8 $ 259,006    $ 261,291      -0.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Margin (% of RBR)

Disputes, Investigations & Economics

  33.9   31.4   33.7   33.1

Financial, Risk & Compliance

  42.4   38.7   43.5   40.1

Healthcare

  27.4   35.7   29.1   37.0

Energy

  32.0   32.4   31.2   33.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Company

  33.1   34.2   33.8   35.6

 

2


RBR for the Healthcare segment increased 39% year-over-year for fourth quarter 2014 with 1% organic RBR growth for the period. RBR growth was driven primarily by business process management services, which includes the Cymetrix operations acquired in May 2014. Segment operating profit margin was 27% versus 36% in the same period last year, mainly due to the lower margin profile of the business process management services operations. For full year 2014, RBR increased 22% year-over-year, also primarily driven by the business process management services operations. Segment operating profit margin was 29% in 2014 compared to 37% in 2013, as a result of the lower margin profile of the business process management services operations in addition to costs of maintaining consulting capabilities despite lower than anticipated levels of RBR.

The Financial, Risk & Compliance segment RBR for fourth quarter 2014 decreased 8% compared to the prior year quarter. Growth driven by continued demand from large financial institutions was offset by a previously anticipated reduction in RBR from restructuring-related services. Growth of more profitable engagements led to a 1% increase in fourth quarter 2014 segment operating profit year-over-year. For full year 2014, an RBR decrease of 13% and a segment operating profit decrease of 6%, respectively, were substantially less than anticipated as compared to 2013. Segment performance for the year reflects the expected reduced contribution from mortgage servicing review engagements and restructuring-related services, partially offset by new compliance work from large financial institutions.

The Energy segment RBR for fourth quarter 2014 increased 12%, which was entirely organic, compared to fourth quarter 2013. The segment benefitted from investments made in senior hires earlier in the year in addition to the continued demand for energy efficiency and demand-side energy management services. Fourth quarter 2014 segment operating profit increased 11% year-over-year. Full year 2014 RBR increased 3%, which was entirely organic, versus the prior year. Segment operating profit for full year 2014 declined 2% compared to 2013, mainly due to investments in senior hires during the first half of 2014.

The Disputes, Investigations & Economics segment fourth quarter 2014 RBR increased 6% year-over-year, which was nearly all organic. The increase was driven primarily by higher demand for our legal technology solutions and general litigation, and increased activity in global construction, which included a success fee of $1.9 million, partially offset by a lower contribution from economics engagements. Segment operating profit increased 15% in fourth quarter 2014 compared to the same period of 2013. Full year 2014 RBR increased 3% compared to 2013. Segment operating profit for 2014 increased 5% compared to 2013.

Cash Flow

Free cash flow was $12.7 million for fourth quarter 2014 compared to $15.2 million for the same period in 2013. Full year 2014 free cash flow was $72.4 million compared to $78.8 million for 2013. Days Sales Outstanding (DSO) was 69 days as of December 31, 2014, up 4 days compared to December 31, 2013, reflecting the very strong cash collections in fourth quarter 2013.

 

3


Bank debt was $109.8 million at December 31, 2014 compared to $56.7 million at December 31, 2013. Leverage (bank debt divided by trailing twelve month adjusted EBITDA) was 0.94 at December 31, 2014 compared to 0.46 at December 31, 2013. However, 2014 fourth quarter debt levels declined sequentially from the 2014 second and third quarters following additional borrowings to fund the Cymetrix acquisition in second quarter 2014.

Navigant repurchased 449,191 shares of common stock during fourth quarter 2014 at an aggregate cost of $6.5 million and an average cost of $14.44 per share. For the full year, the Company repurchased approximately 1.7 million shares at an aggregate cost of $27.3 million and an average cost of $16.50 per share. As of December 31, 2014, $72.7 million was available under the Company’s share repurchase authorization.

“We made significant progress in advancing our growth strategy during 2014,” said Lucinda (Cindy) Baier, Executive Vice President and Chief Financial Officer. “In particular, we completed strategic acquisitions and made organic investments to both complement and enhance our core businesses. As always, we remained intensely focused on strong capital management while investing in our future. Looking ahead, we are focused on generating improved organic revenue growth in 2015 and further positioning the company for success over the long term.”

2015 Outlook

Navigant is introducing its 2015 financial outlook. Full year 2015 RBR is expected to range between $815 and $845 million while 2015 total revenues are estimated to be between $900 and $930 million. Adjusted EBITDA is expected to range between $115 and $125 million and adjusted EPS is estimated to be between $0.90 and $1.00.

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.

Conference Call Details

Julie Howard and Cindy Baier will host a conference call to discuss the Company’s fourth quarter and full year 2014 results at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday, February 12, 2015. The conference call may be accessed via the Navigant website (www.navigant.com/investor_relations) or by dialing 888.989.6515 (630.395.0130 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.

 

4


About Navigant

Navigant (NYSE: NCI) is a specialized, global professional 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 deliver expert and advisory work through implementation and business process management services. The firm combines deep technical expertise in Disputes and Investigations, Economics, Financial Advisory and Management Consulting, with business pragmatism to address clients’ needs in highly regulated industries, including Construction, Energy, Financial Services and Healthcare. 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,” “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 success of the Company’s organizational changes 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; 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 or large engagements; 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 market 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.

For additional information contact:

Aaron Miles

Investor Relations

312.583.5820

aaron.miles@navigant.com

 

5


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share data (1))

(Unaudited)

 

     For the quarter ended
December 31,
    For the year ended
December 31,
 
     2014     2013     2014     2013  

Revenues:

        

Revenues before reimbursements

   $ 199,458      $ 177,789      $ 766,552      $ 734,433   

Reimbursements

     24,175        27,035        93,065        101,152   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

  223,633      204,824      859,617      835,585   

Costs of services:

Cost of services before reimbursable expenses

  136,378      120,390      519,157      487,967   

Reimbursable expenses

  24,175      27,035      93,065      101,152   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs of services

  160,553      147,425      612,222      589,119   

General and administrative expenses

  34,651      28,043      136,057      127,079   

Depreciation expense

  5,202      4,228      19,580      16,180   

Amortization expense

  1,291      1,600      5,959      6,826   

Other operating costs (benefit):

Contingent acquisition liability adjustments, net

  (554   (3,399   (4,992   (5,399

Office consolidation, net

  725      —        725      348   

Gain on disposition of assets

  (541   —        (541   (1,715

Goodwill impairment

  —        —        122,045      —     

Other impairment

  1,139      —        1,343      —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

  21,167      26,927      (32,781   103,147   

Interest expense

  1,741      942      5,918      4,433   

Interest income

  (58   (92   (274   (463

Other (income) expense, net

  (378   218      (167   175   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income tax (benefit) expense

  19,862      25,859      (38,258   99,002   

Income tax (benefit) expense

  7,541      11,640      (1,351   43,890   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

  12,321      14,219      (36,907   55,112   

Income (loss) from discontinued operations, net of tax

  —        —        509      (2,919
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

$ 12,321    $ 14,219    $ (36,398 $ 52,193   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic per share data

Net income (loss) from continuing operations

$ 0.25    $ 0.29    $ (0.76 $ 1.11   

Income (loss) from discontinued operations, net of tax

$ —      $ —      $ 0.01    $ (0.06
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) (1)

$ 0.25    $ 0.29    $ (0.75 $ 1.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing basic per share data

  48,393      49,174      48,741      49,771   

Diluted per share data

Net income (loss) from continuing operations

$ 0.25    $ 0.28    $ (0.76 $ 1.08   

Income (loss) from discontinued operations, net of tax

$ —      $ —      $ 0.01    $ (0.06
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

$ 0.25    $ 0.28    $ (0.75 $ 1.02   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing diluted per share data (2)

  49,542      50,603      48,741      50,951   


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AND SELECTED DATA

(In thousands, except DSO data)

 

     December 31,
2014
    December 31,
2013
 
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 2,648      $ 1,968   

Accounts receivable, net

     187,652        167,066   

Prepaid expenses and other current assets

     27,142        24,554   

Deferred income tax assets

     13,455        17,314   
  

 

 

   

 

 

 

Total current assets

  230,897      210,902   

Non-current assets:

Property and equipment, net

  60,617      44,338   

Intangible assets, net

  26,502      10,778   

Goodwill

  568,091      615,343   

Other assets

  17,386      22,836   
  

 

 

   

 

 

 

Total assets

$ 903,493    $ 904,197   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 11,735    $ 13,415   

Accrued liabilities

  11,311      12,691   

Accrued compensation-related costs

  83,061      78,610   

Income tax payable

  1,763      1,137   

Other current liabilities

  52,526      32,009   
  

 

 

   

 

 

 

Total current liabilities

  160,396      137,862   

Non-current liabilities:

Deferred income tax liabilities

  76,329      86,571   

Other non-current liabilities

  14,387      26,016   

Bank debt non-current

  109,790      56,673   
  

 

 

   

 

 

 

Total non-current liabilities

  200,506      169,260   
  

 

 

   

 

 

 

Total liabilities

  360,902      307,122   
  

 

 

   

 

 

 

Stockholders' equity:

Common stock

  64      63   

Additional paid-in capital

  611,882      598,724   

Treasury stock

  (275,608   (247,106

Retained earnings

  218,337      254,735   

Accumulated other comprehensive loss

  (12,084   (9,341
  

 

 

   

 

 

 

Total stockholders' equity

  542,591      597,075   
  

 

 

   

 

 

 

Total liabilities and stockholders' equity

$ 903,493    $ 904,197   
  

 

 

   

 

 

 

Selected Data

Days sales outstanding, net (DSO)

  69      65   


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     For the quarter ended
December 31,
    For the year ended
December 31,
 
     2014     2013     2014     2013  

Cash flows from operating activities:

        

Net income (loss)

   $ 12,321      $ 14,219      $ (36,398   $ 52,193   

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

        

Depreciation expense

     5,202        4,228        19,580        16,180   

Accelerated depreciation – office consolidation

     —          —          —          498   

Amortization expense

     1,291        1,600        5,959        6,826   

Amortization expense – client-facing software

     393        222        1,218        459   

Share-based compensation expense

     2,150        2,885        9,316        11,079   

Accretion of interest expense

     786        266        2,351        942   

Deferred income taxes

     3,150        5,671        (18,052     18,421   

Allowance for doubtful accounts receivable

     700        (2,024     5,009        (107

Contingent acquisition liability adjustments, net

     (554     (3,399     (4,992     (5,399

Gain on disposition of assets

     (541     —          (541     (1,715

(Gain) loss on disposition of discontinued operations

     —          —          (509     3,675   

Goodwill impairment

     —          —          122,045        —     

Other impairment

     1,139        —          1,343        —     

Changes in assets and liabilities (net of acquisitions and dispositions):

        

Accounts receivable

     23,678        42,158        (14,844     19,604   

Prepaid expenses and other assets

     475        2,160        (303     12,260   

Accounts payable

     898        (1,249     (2,123     (4,623

Accrued liabilities

     (191     (3,767     (1,316     (382

Accrued compensation-related costs

     13,621        11,038        2,712        (3,470

Income taxes payable

     (3,928     (6,690     2,185        (6,386

Other liabilities

     2,614        1,813        (2,543     (286
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

  63,204      69,131      90,097      119,769   

Cash flows from investing activities:

Purchases of property and equipment

  (8,441   (5,510   (23,506   (14,217

Acquisitions of businesses, net of cash acquired

  —        —        (89,180   (2,989

Proceeds from dispositions, net of selling costs

  1,500      —        2,324      16,973   

Payments of acquisition liabilities

  (3,850   (5,028   (4,960   (6,866

Capitalized client-facing software

  (17   (793   (881   (3,285
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

  (10,808   (11,331   (116,203   (10,384

Cash flows from financing activities:

Issuances of common stock

  402      524      2,833      3,144   

Repurchase of common stock

  (6,487   (6,004   (27,284   (28,325

Payments of contingent acquisition liabilities

  (357   —        (464   (3,287

Repayments to banks

  (92,173   (115,718   (323,374   (382,045

Borrowings from banks

  44,892      62,033      377,839      304,499   

Payments of debt issuance costs

  —        (62   —        (731

Other, net

  (194   (141   (2,668   (1,692
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in) provided by financing activities

  (53,917   (59,368   26,882      (108,437
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

  (83   17      (96   (32
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

  (1,604   (1,551   680      916   

Cash and cash equivalents at beginning of the period

  4,252      3,519      1,968      1,052   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of the period

$ 2,648    $ 1,968    $ 2,648    $ 1,968   
  

 

 

   

 

 

   

 

 

   

 

 

 


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (3)

(In thousands, except per share data)

(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 (4)

   For the quarter ended
December 31,
    For the year ended
December 31,
 
     2014     2013     2014     2013  

Severance expense

   $ 1,733      $ 421      $ 4,885      $ 4,686   

Income tax benefit (5)

     (617     (170     (1,821     (1,558
  

 

 

   

 

 

   

 

 

   

 

 

 

Impact of severance expense, net of tax

$ 1,116    $ 251    $ 3,064    $ 3,128   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating benefit – contingent acquisition liability adjustment, net

$ (554 $ (3,399 $ (4,992 $ (5,399

Income tax expense (5)

  224      1,371      2,014      2,178   
  

 

 

   

 

 

   

 

 

   

 

 

 

Impact of other operating benefit – contingent acquisition liability adjustment, net, net of tax

$ (330 $ (2,028 $ (2,978 $ (3,221
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating costs – office consolidation

$ 725    $ —      $ 725    $ 348   

Income tax expense (5)

  (292   —        (292   (141
  

 

 

   

 

 

   

 

 

   

 

 

 

Impact of other operating costs – office consolidation, net of tax

$ 433    $ —      $ 433    $ 207   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating benefit – gain on disposition of assets

$ (541 $ —      $ (541 $ (1,715

Income tax expense (5)

  218      —        218      692   
  

 

 

   

 

 

   

 

 

   

 

 

 

Impact of other operating benefit – gain on disposition of assets, net of tax

$ (323 $ —      $ (323 $ (1,023
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating costs – goodwill impairment

$ —      $ —      $ 122,045    $ —     

Income tax benefit (5)

  —        —        (35,111   —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Impact of other operating costs – goodwill impairment, net of tax

$ —      $ —      $ 86,934    $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating costs – other impairment

$ 1,139    $ —      $ 1,343    $ —     

Income tax benefit (5)

  (459   —        (541   —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Impact of other operating costs – other impairment, net of tax

$ 680    $ —      $ 802    $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA reconciliation:

Operating income (loss)

$ 21,167    $ 26,927    $ (32,781 $ 103,147   

Depreciation expense

  5,202      4,228      19,580      16,180   

Accelerated depreciation – office consolidation

  —        —        —        498   

Amortization expense

  1,291      1,600      5,959      6,826   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

$ 27,660    $ 32,755    $ (7,242 $ 126,651   

Severance expense

  1,733      421      4,885      4,686   

Other operating benefit – contingent acquisition liability adjustment, net

  (554   (3,399   (4,992   (5,399

Other operating costs (benefit) – office consolidation

  725      —        725      (150

Other operating benefit – gain on disposition of assets

  (541   —        (541   (1,715

Other operating costs – goodwill impairment

  —        —        122,045      —     

Other operating costs – other impairment

  1,139      —        1,343      —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

$ 30,162    $ 29,777    $ 116,223    $ 124,073   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

$ 12,321    $ 14,219    $ (36,907 $ 55,112   

Impact of severance expense, net of tax

  1,116      251      3,064      3,128   

Impact of other operating benefit – contingent acquisition liability adjustment, net, net of tax

  (330   (2,028   (2,978   (3,221

Impact of other operating costs – office consolidation, net of tax

  433      —        433      207   

Impact of other operating benefit – gain on disposition of assets, net of tax

  (323   —        (323   (1,023

Impact of other operating costs – goodwill impairment, net of tax

  —        —        86,934      —     

Impact of other operating costs – other impairment, net of tax

  680      —        802      —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

$ 13,897    $ 12,442    $ 51,025    $ 54,203   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing adjusted per diluted share data (6)

  49,542      50,603      49,976      50,951   

Adjusted earnings per share

$ 0.28    $ 0.25    $ 1.02    $ 1.06   
  

 

 

   

 

 

   

 

 

   

 

 

 
Free Cash Flow (7)    For the quarter ended
December 31,
    For the year ended
December 31,
 
     2014     2013     2014     2013  

Net cash provided by operating activities

   $ 63,204      $ 69,131      $ 90,097      $ 119,769   

Changes in assets and liabilities

     (37,167     (45,463     16,232        (16,717

Allowance for doubtful accounts receivable

     (700     2,024        (5,009     107   

Purchases of property and equipment

     (8,441     (5,510     (23,506     (14,217

Payments of acquisition liabilities

     (3,850     (5,028     (4,960     (6,866

Payments of contingent acquisition liabilities

     (357     —          (464     (3,287
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

$ 12,689    $ 15,154    $ 72,390    $ 78,789   
  

 

 

   

 

 

   

 

 

   

 

 

 
Leverage Ratio (8)    At
December 31,
             
     2014     2013              

Adjusted EBITDA for prior twelve-month period

   $ 116,223      $ 124,073       

Bank debt

   $ 109,790      $ 56,673       

Leverage ratio

     0.94        0.46       


    Footnotes

 

(1) Per share data may not sum due to rounding.

(2) For the year ended December 31, 2014, the Company reported a net loss. For that period, the basic weighted average common shares outstanding equals the diluted weighted average common shares outstanding for purposes of calculating U.S. GAAP earnings per share because potentially dilutive securities would be antidilutive.

(3) During the year ended December 31, 2013, the United Kingdom financial services advisory business was sold. The results of operations from this business are presented as discontinued operations. All non-GAAP financial measures are presented on a continuing operations basis unless otherwise noted.

(4) EBITDA is earnings from continuing operations 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 the net income (loss) and per share net income (loss) impact of discontinued operations, 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.

(5) Effective income tax expense (benefit) has been determined based on specific tax jurisdiction.

(6) For the year ended December 31, 2014, the Company reported a net loss. For non-GAAP purposes, the per share and share amounts presented here reflect the inclusion of potentially dilutive shares based on the impact of the add backs included in Adjusted Net Income.

(7) 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.

(8) 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.