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Exhibit 99.1

 

LOGO

NAVIGANT REPORTS FOURTH QUARTER AND FULL YEAR 2015

FINANCIAL RESULTS; PROVIDES INITIAL OUTLOOK FOR 2016

CHICAGO, February 11, 2016 – Navigant (NYSE: NCI) today announced financial results for the fourth quarter and full year ended December 31, 2015. The Company also introduced its business and financial outlook for 2016.

Financial Summary and Highlights:

 

    Fourth quarter 2015 revenues before reimbursements (RBR) increased 6%, nearly all organic, over fourth quarter 2014; full year 2015 RBR up 9% over 2014, more than half attributable to organic growth

 

    Fourth quarter 2015 GAAP earnings per share (EPS) of $0.27 with full year 2015 GAAP EPS of $1.23

 

    Fourth quarter 2015 adjusted EBITDA flat to prior year while up 4% for full year 2015

 

    Fourth quarter 2015 adjusted EPS of $0.28, flat to prior year; full year 2015 adjusted EPS of $1.07, up 5% over 2014

 

    Issues financial outlook for 2016 with expected year-over-year growth in RBR, adjusted EBITDA and adjusted EPS

Navigant reported fourth quarter 2015 RBR of $212.0 million, a 6% increase, nearly all organic, compared to $199.5 million for fourth quarter 2014. Total revenues increased 4% to $232.6 million for fourth quarter 2015 compared to $223.6 million for fourth quarter 2014. Net income from continuing operations for fourth quarter 2015 was $13.2 million, or $0.27 per share, compared to $12.3 million, or $0.25 per share, in the prior year quarter. Adjusted EPS was $0.28 for fourth quarter 2015, flat compared to fourth quarter 2014. Fourth quarter 2015 adjusted EBITDA was $30.9 million compared to $30.2 million for the same period in 2014.

RBR for full year 2015 increased 9% on a year-over-year basis, with more than half attributable to organic growth, to $833.8 million compared to $766.6 million for 2014. Total revenues for full year 2015 increased 7% on a year-over-year basis to $919.5 million compared to $859.6 million for full year 2014. Net income from continuing operations for full year 2015 was $60.3 million, or $1.23 per share, compared to a net loss from continuing operations of $36.9 million, or $0.76 per share, in 2014, which included a non-cash goodwill impairment of $122.0 million ($86.9 million or $1.78 per share on an after-tax basis) recorded in second quarter 2014. Adjusted EPS was $1.07 for full year 2015 compared to $1.02 for full year 2014. Full year 2015 adjusted EBITDA was $120.9 million compared to $116.2 million for the full year 2014. Increased general and administrative costs as well as higher non-cash depreciation and amortization expenses impacted year-over-year EPS growth.


“We are extremely pleased with our 2015 results which reflected strong organic revenue growth and meaningful impacts from our recent investments,” commented Julie Howard, Chairman and Chief Executive Officer. “The progress we made throughout the year demonstrated our ability to meet or exceed our financial targets while continuing to invest in the business. Looking ahead to 2016, we anticipate reaping benefits from the foundation we have built across each of our core businesses, which is expected to translate into greater top line and bottom line growth.”

Segment Financial Summary

 

     For the quarter ended
December 31,
          For the full year ended
December 31,
       
     2015     2014     Change     2015     2014     Change  

RBR ($000)

            

Disputes, Investigations & Economics

   $ 76,820      $ 77,382        -0.7   $ 314,628      $ 309,570        1.6

Financial, Risk & Compliance

     31,605        34,643        -8.8     124,359        135,498        -8.2

Healthcare

     76,059        61,672        23.3     288,798        223,817        29.0

Energy

     27,511        25,761        6.8     106,023        97,667        8.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Company

   $ 211,995      $ 199,458        6.3   $ 833,808      $ 766,552        8.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues ($000)

            

Disputes, Investigations & Economics

   $ 82,600      $ 83,227        -0.8   $ 338,152      $ 333,273        1.5

Financial, Risk & Compliance

     35,151        41,537        -15.4     142,959        162,637        -12.1

Healthcare

     83,082        68,218        21.8     313,884        248,095        26.5

Energy

     31,785        30,651        3.7     124,491        115,612        7.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Company

   $ 232,618      $ 223,633        4.0   $ 919,486      $ 859,617        7.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit ($000)

            

Disputes, Investigations & Economics

   $ 24,014      $ 26,271        -8.6   $ 102,449      $ 104,466        -1.9

Financial, Risk & Compliance

     12,476        14,674        -15.0     49,130        58,929        -16.6

Healthcare

     23,796        16,874        41.0     90,869        65,104        39.6

Energy

     8,247        8,245        0.0     31,380        30,507        2.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Company

   $ 68,533      $ 66,064        3.7   $ 273,828      $ 259,006        5.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Margin (% of RBR)

            

Disputes, Investigations & Economics

     31.3     33.9       32.6     33.7  

Financial, Risk & Compliance

     39.5     42.4       39.5     43.5  

Healthcare

     31.3     27.4       31.5     29.1  

Energy

     30.0     32.0       29.6     31.2  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Company

     32.3     33.1       32.8     33.8  
  

 

 

   

 

 

     

 

 

   

 

 

   

Our Healthcare segment delivered an outstanding 2015 with revenue and profit growth as well as margin improvement. RBR for the segment increased 23% year-over-year for fourth quarter 2015 with 17% organic growth for the period. For the full year 2015, RBR for the segment was up 29% from 2014 with 13% organic growth. Strength was driven by increased demand in key consulting areas including provider performance improvement solutions, revenue cycle consulting, life sciences and regulatory work for governmental agencies. In addition, business process management services (full year acquisition impact as well as organic growth) contributed to the growth. Segment operating profit margin for fourth quarter 2015 increased to 31% compared to 27% in the same period 2014, and for full year 2015, segment operating profit margin improved to 32% compared to 29% in 2014.

 

2


Energy segment RBR increased 7% for the fourth quarter 2015 and 9% for the full year 2015 compared to the equivalent periods in 2014, all of which represented organic growth. RBR growth for the quarter was driven by an increase in strategy and operations as well as market intelligence engagements, reflecting increased success from the segment’s key client accounts program. In addition, full year RBR growth also benefited from the impact of senior hires. Fourth quarter 2015 segment operating profit was flat compared to the same period of 2014, and for the full year 2015 increased 3% compared to 2014, as higher RBR was partially offset by higher compensation and benefits expenses.

The Disputes, Investigations & Economics segment RBR results for fourth quarter and full year 2015 were relatively flat compared to the same periods in 2014. For the full year, growth in global construction, healthcare and financial services disputes was largely offset by lower contributions from forensic investigations and economic consulting engagements. Segment operating profit was down 9% in fourth quarter 2015 and down 2% in full year 2015 compared to the respective periods of 2014, driven by higher costs to better align resources.

The Financial, Risk & Compliance segment RBR for fourth quarter 2015 decreased 9% compared to the prior year quarter and decreased 8% for full year 2015 compared to 2014, primarily reflecting the lower volume of work from an ongoing large financial institution client, partially offset by continued strength in anti-money laundering and other consumer finance compliance engagements. Segment operating profit margins for both the quarter and year returned to more typical levels while declining from prior year periods due to the impact of lower RBR.

Cash Flow

Free cash flow was $7.5 million for fourth quarter 2015 compared to $12.7 million for the same period in 2014. Full year 2015 free cash flow was $49.0 million compared to $72.4 million for 2014, reflecting increased capital expenditures and investments. Days Sales Outstanding (DSO) was 76 days as of December 31, 2015, up 7 days compared to December 31, 2014.

Bank debt was $173.7 million at December 31, 2015 compared to $109.8 million at December 31, 2014. Leverage (bank debt divided by trailing twelve month adjusted EBITDA) was 1.44 at December 31, 2015 compared to 0.94 at December 31, 2014. The increase was mainly due to additional borrowings to fund the McKinnis Consulting Services acquisition in December 2015.

Navigant repurchased 341,200 shares of common stock during fourth quarter 2015 at an aggregate cost of $5.8 million and an average cost of $17.04 per share. For the full year, the Company repurchased approximately 1.6 million shares at an aggregate cost of $24.0 million and an average cost of $15.12 per share. As of December 31, 2015, $88.1 million remained available under the Company’s share repurchase authorization.

 

3


2016 Outlook

Navigant is introducing its 2016 financial outlook. Full year 2016 RBR is expected to range between $900 and $940 million while 2016 total revenues are estimated to be between $960 million and $1.01 billion. Adjusted EBITDA for full year 2016 is expected to range between $132 and $145 million and adjusted EPS for full year 2016 is estimated to be between $1.05 and $1.15.

Non-GAAP Financial Information and Key Operating Metrics

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.

As used in this press release, organic growth represents RBR adjusted to include the impact of acquisitions as if the Company owned them from the beginning of each comparable period and adjusted to exclude the impact of foreign currency exchange rate fluctuations. Our definition of organic growth may not be comparable to similarly titled metrics at other companies. 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.

Conference Call Details

Navigant will host a conference call to discuss the Company’s fourth quarter and full year quarter 2015 results at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday, February 11, 2016. The conference call may be accessed via the Navigant website (www.navigant.com/investor_relations) 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 industries and clients facing transformational change and significant regulatory or legal pressures, the Firm primarily serves clients in the healthcare, energy and financial services markets. 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.

 

4


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 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; 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; 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; professional liability; information security controls; potential legislative and regulatory changes; continued access to capital; 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 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

Navigant Investor Relations

312.583.5820

aaron.miles@navigant.com

Megan Maupin

Navigant Corporate Communications

312.583.5703

###

 

5


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

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

(Unaudited)

 

     For the quarter ended     For the year ended  
     December 31,     December 31,  
     2015     2014     2015     2014  

Revenues:

        

Revenues before reimbursements

   $ 211,995      $ 199,458      $ 833,808      $ 766,552   

Reimbursements

     20,623        24,175        85,678        93,065   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     232,618        223,633        919,486        859,617   

Cost of services:

        

Cost of services before reimbursable expenses

     146,195        136,378        571,894        519,157   

Reimbursable expenses

     20,623        24,175        85,678        93,065   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of services

     166,818        160,553        657,572        612,222   

General and administrative expenses

     36,100        34,651        147,462        136,057   

Depreciation expense

     6,579        5,202        23,612        19,580   

Amortization expense

     1,963        1,291        8,613        5,959   

Other operating costs (benefit):

        

Contingent acquisition liability adjustments, net

     (422     (554     (13,047     (4,992

Office consolidation, net

     26        725        2,766        725   

(Gain) loss on disposition of assets

     —          (541     283        (541

Goodwill impairment

     —          —          —          122,045   

Other impairment

     —          1,139        98        1,343   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     21,554        21,167        92,127        (32,781

Interest expense

     928        1,741        4,916        5,918   

Interest income

     (72     (58     (250     (274

Other income, net

     (212     (378     (692     (167
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     20,910        19,862        88,153        (38,258

Income tax expense (benefit)

     7,711        7,541        27,808        (1,351
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     13,199        12,321        60,345        (36,907

Income from discontinued operations, net of tax

     —          —          —          509   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 13,199      $ 12,321      $ 60,345      $ (36,398
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic per share data

        

Net income (loss) from continuing operations

   $ 0.28      $ 0.25      $ 1.26      $ (0.76

Income from discontinued operations, net of tax

   $  —        $  —        $  —        $ 0.01   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 0.28      $ 0.25      $ 1.26      $ (0.75
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing basic per share data

     47,516        48,393        47,906        48,741   

Diluted per share data

        

Net income (loss) from continuing operations

   $ 0.27      $ 0.25      $ 1.23      $ (0.76

Income from discontinued operations, net of tax

   $  —        $  —        $  —        $ 0.01   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 0.27      $ 0.25      $ 1.23      $ (0.75
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing diluted per share data (2)

     49,007        49,542        49,224        48,741   

 

6


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AND SELECTED DATA

(In thousands, except DSO data)

 

     December 31,     December 31,  
     2015     2014  
     (unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 8,895      $ 2,648   

Accounts receivable, net

     216,660        187,652   

Prepaid expenses and other current assets

     29,729        27,142   

Deferred income tax assets

     —          13,455   
  

 

 

   

 

 

 

Total current assets

     255,284        230,897   

Non-current assets:

    

Property and equipment, net

     76,717        60,617   

Intangible assets, net

     38,160        26,502   

Goodwill

     623,204        568,091   

Other assets

     22,531        17,386   
  

 

 

   

 

 

 

Total assets

   $ 1,015,896      $ 903,493   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 9,497      $ 11,735   

Accrued liabilities

     10,719        11,311   

Accrued compensation-related costs

     91,577        83,061   

Income tax payable

     —          1,763   

Other current liabilities

     32,147        52,526   
  

 

 

   

 

 

 

Total current liabilities

     143,940        160,396   

Non-current liabilities:

    

Deferred income tax liabilities

     75,719        76,329   

Other non-current liabilities

     28,956        14,387   

Bank debt non-current

     173,743        109,790   
  

 

 

   

 

 

 

Total non-current liabilities

     278,418        200,506   
  

 

 

   

 

 

 

Total liabilities

     422,358        360,902   
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     64        64   

Additional paid-in capital

     627,976        611,882   

Treasury stock

     (296,624     (275,608

Retained earnings

     278,682        218,337   

Accumulated other comprehensive loss

     (16,560     (12,084
  

 

 

   

 

 

 

Total stockholders’ equity

     593,538        542,591   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 1,015,896      $ 903,493   
  

 

 

   

 

 

 

Selected Data

    

Days sales outstanding, net (DSO)

     76        69   

 

7


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     For the quarter ended     For the year ended  
     December 31,     December 31,  
     2015     2014     2015     2014  

Cash flows from operating activities:

        

Net income (loss)

   $ 13,199      $ 12,321      $ 60,345      $ (36,398

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

        

Depreciation expense

     6,579        5,202        23,612        19,580   

Accelerated depreciation - office consolidation

     26        —          165        —     

Amortization expense

     1,963        1,291        8,613        5,959   

Amortization expense - client-facing software

     191        393        867        1,218   

Share-based compensation expense

     2,122        2,150        10,328        9,316   

Accretion of interest expense

     21        786        1,185        2,351   

Deferred income taxes

     7,097        3,150        13,807        (18,052

Allowance for doubtful accounts receivable

     886        700        2,578        5,009   

Contingent acquisition liability adjustments, net

     (422     (554     (13,047     (4,992

(Gain) loss on disposition of assets

     —          (541     283        (541

Gain on disposition of discontinued operations

     —          —          —          (509

Goodwill impairment

     —          —          —          122,045   

Other impairment

     —          1,139        98        1,343   

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

  

     

Accounts receivable

     7,812        23,678        (27,875     (14,844

Prepaid expenses and other assets

     2,142        475        (5,575     (303

Accounts payable

     414        898        (2,271     (2,123

Accrued liabilities

     (1,695     (191     476        (1,316

Accrued compensation-related costs

     10,623        13,621        6,875        2,712   

Income taxes payable

     (5,060     (3,928     (4,081     2,185   

Other liabilities

     3,078        2,614        6,696        (2,543
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     48,976        63,204        83,079        90,097   

Cash flows from investing activities:

        

Purchases of property and equipment

     (7,934     (8,441     (39,094     (23,506

Acquisitions of businesses, net of cash acquired

     (42,658     —          (64,037     (89,180

Proceeds from dispositions, net of selling costs

     —          1,500        —          2,324   

Payments of acquisition liabilities

     (11,350     (3,850     (13,546     (4,960

Capitalized client-facing software

     (124     (17     (735     (881
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (62,066     (10,808     (117,412     (116,203

Cash flows from financing activities:

        

Issuances of common stock

     486        402        5,974        2,833   

Repurchases of common stock

     (5,814     (6,487     (24,021     (27,284

Payments of contingent acquisition liabilities

     (4,000     (357     (4,592     (464

Repayments to banks

     (101,822     (92,173     (332,455     (323,374

Borrowings from banks

     129,306        44,892        397,320        377,839   

Other, net

     (116     (194     (1,415     (2,668
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     18,040        (53,917     40,811        26,882   
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (72     (83     (231     (96
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     4,878        (1,604     6,247        680   

Cash and cash equivalents at beginning of the period

     4,017        4,252        2,648        1,968   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of the period

   $ 8,895      $ 2,648      $ 8,895      $ 2,648   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

8


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,
 
     2015     2014     2015     2014  

Severance expense

   $ 1,151      $ 1,733      $ 6,490      $ 4,885   

Income tax benefit (5)

     (378     (617     (2,247     (1,821
  

 

 

   

 

 

   

 

 

   

 

 

 

Tax-effected impact of severance expense

   $ 773      $ 1,116      $ 4,243      $ 3,064   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating benefit - contingent acquisition liability adjustment, net

   $ (422   $ (554   $ (13,047   $ (4,992

Income tax (benefit) expense (5)(6)(7)

     166        224        (924     2,014   
  

 

 

   

 

 

   

 

 

   

 

 

 

Tax-effected impact of other operating benefit - contingent acquisition liability adjustment, net

   $ (256   $ (330   $ (13,971   $ (2,978
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating costs - office consolidation, net

   $ 26      $ 725      $ 2,766      $ 725   

Income tax benefit (5)

     (11     (292     (1,119     (292
  

 

 

   

 

 

   

 

 

   

 

 

 

Tax-effected impact of other operating costs - office consolidation, net

   $ 15      $ 433      $ 1,647      $ 433   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating costs (benefit) - (gain) loss on disposition of assets

   $  —        $ (541   $ 283      $ (541

Income tax expense (5)(8)

     —          218        —          218   
  

 

 

   

 

 

   

 

 

   

 

 

 

Tax-effected impact of other operating costs (benefit) - (gain) loss on disposition of assets

   $  —        $ (323   $ 283      $ (323
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating costs - goodwill impairment

   $  —        $  —        $  —        $ 122,045   

Income tax benefit (5)

     —          —          —          (35,111
  

 

 

   

 

 

   

 

 

   

 

 

 

Tax-effected impact of other operating costs - goodwill impairment

   $  —        $  —        $  —        $ 86,934   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other operating costs - other impairment

   $  —        $ 1,139      $ 98      $ 1,343   

Income tax benefit (5)

     —          (459     (40     (541
  

 

 

   

 

 

   

 

 

   

 

 

 

Tax-effected impact of other operating costs - other impairment

   $  —        $ 680      $ 58      $ 802   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA reconciliation:

        

Operating income (loss)

   $ 21,554      $ 21,167      $ 92,127      $ (32,781

Depreciation expense

     6,579        5,202        23,612        19,580   

Accelerated depreciation - office consolidation

     26        —          165        —     

Amortization expense

     1,963        1,291        8,613        5,959   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 30,122      $ 27,660      $ 124,517      $ (7,242

Severance expense

     1,151        1,733        6,490        4,885   

Other operating benefit - contingent acquisition liability adjustment, net

     (422     (554     (13,047     (4,992

Other operating costs - office consolidation, net

     —          725        2,601        725   

Other operating costs (benefit) - (gain) loss on disposition of assets

     —          (541     283        (541

Other operating costs - goodwill impairment

     —          —          —          122,045   

Other operating costs - other impairment

     —          1,139        98        1,343   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 30,851      $ 30,162      $ 120,942      $ 116,223   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

   $ 13,199      $ 12,321      $ 60,345      $ (36,907

Tax-effected impact of severance expense

     773        1,116        4,243        3,064   

Tax-effected impact of other operating benefit - contingent acquisition liability adjustment, net

     (256     (330     (13,971     (2,978

Tax-effected impact of other operating costs - office consolidation, net

     15        433        1,647        433   

Tax-effected impact of other operating costs (benefit) - (gain) loss on disposition of assets

     —          (323     283        (323

Tax-effected impact of other operating costs - goodwill impairment

     —          —          —          86,934   

Tax-effected impact of other operating costs - other impairment

     —          680        58        802   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 13,731      $ 13,897      $ 52,605      $ 51,025   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing adjusted per diluted share data (9)

     49,007        49,542        49,224        49,976   

Adjusted earnings per share

   $ 0.28      $ 0.28      $ 1.07      $ 1.02   
  

 

 

   

 

 

   

 

 

   

 

 

 
     For the quarter ended     For the year ended  

Free Cash Flow (10)

   December 31,     December 31,  
     2015     2014     2015     2014  

Net cash provided by operating activities

   $ 48,976      $ 63,204      $ 83,079      $ 90,097   

Changes in assets and liabilities

     (17,314     (37,167     25,755        16,232   

Allowance for doubtful accounts receivable

     (886     (700     (2,578     (5,009

Purchases of property and equipment

     (7,934     (8,441     (39,094     (23,506

Payments of acquisition liabilities

     (11,350     (3,850     (13,546     (4,960

Payments of contingent acquisition liabilities

     (4,000     (357     (4,592     (464
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

   $ 7,492      $ 12,689      $ 49,024      $ 72,390   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Leverage Ratio (11)

   At
December 31,
 
     2015      2014  

Adjusted EBITDA for prior twelve-month period

   $ 120,942       $ 116,223   

Bank debt

   $ 173,743       $ 109,790   

Leverage ratio

     1.44         0.94   

 

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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) 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) A portion of the deferred contingent acquisition liability adjustment for the year ended December 31, 2015 was non-taxable in nature.
(7) On May 15, 2015, we executed an Amendment to Merger Agreement with the Cymetrix Sellers, establishing a definitive amount for the obligation and eliminating the contingent aspect of the Cymetrix acquisition liability. As a result of this agreement, the Company will no longer record an interest expense for imputed interest resulting from the contingent aspect of the acquisition liability. Based on this change, the Company re-evaluated the need for a deferred tax liability associated with expected non-deductible imputed interest and recorded an $826 thousand benefit to reverse the remaining tax impact in the quarter ended June 30, 2015.
(8) The loss on dispositions recorded during the year ended December 31, 2015 is subject to capital loss treatment in Canada. The tax benefit associated with this capital loss is subject to a full valuation allowance.
(9) 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.
(10) 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.
(11) 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.

 

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