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8-K - 8-K - NAVIGANT CONSULTING INCd435877d8k.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

For more information, contact:

Jennifer Moreno Reddick

Navigant Investor Relations

312.573.5634

jennifer.morenoreddick@navigant.com

  

Belia Ortega

Navigant Corporate Communications

312.583.2640

belia.ortega@navigant.com

NAVIGANT REPORTS SECOND QUARTER 2017 FINANCIAL RESULTS

CHICAGO, July 31, 2017 – Navigant (NYSE: NCI) today announced financial results for the second quarter ended June 30, 2017.

Financial Summary and Highlights:

 

    Second quarter 2017 revenues before reimbursements (RBR) of $235.2 million decreased 1% (or relatively flat on a currency adjusted basis) and total revenues of $256.8 million decreased 2% compared to second quarter 2016

 

    Second quarter 2017 net income was $8.8 million, or $0.18 per share, compared to $14.8 million, or $0.30 per share, for second quarter 2016

 

    Second quarter 2017 adjusted earnings per share (EPS) of $0.24 decreased from $0.33 in second quarter 2016, primarily driven by lower than expected revenues coupled with maintenance of resources in anticipation of an improved demand environment in the second half of 2017

 

    Repurchased $9.0 million of common stock during second quarter 2017, an increase of 33% over second quarter 2016

 

    Management updated its 2017 financial outlook to reflect first half performance

“Demand for our services in the second quarter was impacted by unexpected factors, some of which we have already begun to overcome, and others that will take more time to address,” stated Julie Howard, Navigant Chairman and CEO. “We experienced more conservative buying patterns than originally anticipated, leading to extended sales cycles and longer project conversion. We also believe the slowdown in demand for certain of our services was driven by legislative and regulatory uncertainty in the U.S. In response to these factors we implemented certain performance improvement actions both during and after the close of the quarter, including targeted staff reductions and other cost control measures.”

Howard further commented, “We are encouraged that we saw our overall performance improve over the course of the second quarter, and our pipeline of opportunities strengthen. We anticipate a stronger second half, primarily driven by continued organic growth in our Healthcare segment, and an improved backlog of work in our Financial Services and Compliance segment. However, we believe it is prudent to modestly adjust our guidance downward for the full year to reflect first half results, and our view of the uncertainties in the current demand environment.”


Navigant reported second quarter 2017 RBR of $235.2 million, a 1% decrease compared to $238.5 million for second quarter 2016. Total revenues decreased 2% to $256.8 million for second quarter 2017 compared to $261.7 million for second quarter 2016. Net income for second quarter 2017 was $8.8 million, or $0.18 per share, compared to $14.8 million, or $0.30 per share, in the prior year second quarter. Segment operating profit includes $3.3 million of severance expense. Additionally, severance expense of $1.1 million was incurred related to General & Administrative operations as Navigant executed against its plans to increase administrative efficiencies and implement business support improvements. Adjusted EPS was $0.24 for second quarter 2017, compared to $0.33 in second quarter 2016. Second quarter 2017 adjusted EBITDA was $29.2 million, a 21% decrease from $37.2 million for the same period in 2016.

Segment Financial Summary

 

     For the quarter ended
June 30,
       
     2017     2016     Change  

RBR ($000)

      

Healthcare

   $ 94,134     $ 89,876       4.7

Energy

     31,743       29,295       8.4

Financial Services Advisory and Compliance

     33,683       39,994       -15.8

Disputes, Forensics & Legal Technology

     75,678       79,320       -4.6
  

 

 

   

 

 

   

 

 

 

Total Company

   $ 235,238     $ 238,485       -1.4
  

 

 

   

 

 

   

 

 

 

Total Revenues ($000)

      

Healthcare

   $ 102,804     $ 98,386       4.5

Energy

     36,544       32,855       11.2

Financial Services Advisory and Compliance

     37,244       45,360       -17.9

Disputes, Forensics & Legal Technology

     80,254       85,082       -5.7
  

 

 

   

 

 

   

 

 

 

Total Company

   $ 256,846     $ 261,683       -1.8
  

 

 

   

 

 

   

 

 

 

Segment Operating Profit ($000)

      

Healthcare

   $ 28,116     $ 29,362       -4.2

Energy

     8,516       8,402       1.4

Financial Services Advisory and Compliance

     12,307       17,511       -29.7

Disputes, Forensics & Legal Technology

     21,429       28,963       -26.0
  

 

 

   

 

 

   

 

 

 

Total Company

   $ 70,368     $ 84,238       -16.5
  

 

 

   

 

 

   

 

 

 

Segment Operating Margin (% of RBR)

      

Healthcare

     29.9     32.7  

Energy

     26.8     28.7  

Financial Services Advisory and Compliance

     36.5     43.8  

Disputes, Forensics & Legal Technology

     28.3     36.5  
  

 

 

   

 

 

   

Total Company

     29.9     35.3  
  

 

 

   

 

 

   

 

2


Healthcare segment RBR increased 5% for second quarter 2017 compared to the respective period in 2016, primarily on an organic basis. Segment RBR for the quarter also increased 4% sequentially from first quarter 2017. Growth was driven by continued demand from hospital systems for large, strategy-led transformation projects and demand from life sciences companies for commercialization solutions. The segment also experienced growth in managed services contracts, albeit at a lower rate than expected. Segment operating profit declined 4% in second quarter 2017 compared to the same period in 2016, primarily due to business mix.

Energy segment RBR increased 8% for second quarter 2017 on a year-over-year basis, led by contributions from the Ecofys acquisition announced in November 2016. The trend toward a cleaner, distributed, smarter energy infrastructure is driving change in traditional strategies and business models for Navigant’s energy clients. Growth in demand from commercial sector clients related to these energy transformation trends partially offset a decline in work for the U.S. federal government, as previously disclosed in the first quarter 2017. Segment operating profit increased 1% in second quarter 2017 compared to second quarter 2016.

Financial Services Advisory and Compliance segment RBR for second quarter 2017 decreased 16% compared to the prior year quarter, but increased 2% sequentially from first quarter 2017. As previously disclosed, growth in this segment was expected to decelerate in 2017, as compared to significant organic growth of 22% in full-year 2016, but not to the degree experienced in the second quarter. Throughout the quarter, conservative buying patterns for compliance services related to consumer financial services regulation continued to put revenue pressure on the segment. In contrast, the environment for financial crime related services remained strong. Segment pipeline improved over the course of the quarter and is expected to drive improved revenue performance in the segment for the second half of the year. Segment operating profit was down 30% in second quarter 2017 compared to the respective period in 2016, as resources and capabilities were maintained in anticipation of improving demand.

Disputes, Forensics & Legal Technology second quarter 2017 segment RBR decreased 5% year-over-year and 6% on a sequential basis from first quarter 2017. The decrease in RBR was driven by general weakness in commercial litigation opportunities and a delay in the start dates for certain engagements in the segment’s legal technology solutions business. Segment operating profit was down 26% in second quarter 2017 compared to the respective period of 2016, largely due to severance expense of $1.9 million which was recorded during the quarter.

Cash Flow

Net cash provided by operating activities for second quarter 2017 was $21.3 million compared to $34.2 million for second quarter 2016. Free cash flow decreased to $13.5 million for second quarter 2017 compared to $24.4 million for the same period in 2016, primarily driven by a $10.0 million earn-out payment related to the McKinnis acquisition which was paid during the second quarter of 2017. Days Sales Outstanding was 86 days as of June 30, 2017, up five days compared to December 31, 2016.

 

3


Bank debt was $184.8 million at June 30, 2017, compared to $189.8 million at June 30, 2016 and $178.3 million at March 31, 2017, with the increase in bank debt primarily attributable to the previously mentioned McKinnis acquisition earn-out payment. Leverage (bank debt divided by trailing twelve month adjusted EBITDA) was 1.37 at June 30, 2017, compared to 1.46 at June 30, 2016 and 1.25 at March 31, 2017.

Navigant repurchased 436,122 shares of common stock during the second quarter 2017 at an aggregate cost of $9.0 million and an average cost of $20.62 per share.

2017 Outlook

Navigant adjusted its financial outlook for 2017. Full year 2017 RBR is expected to range between $955 million and $980 million while 2017 total revenues are estimated to be between $1.04 billion and $1.065 billion. Adjusted EBITDA for the full year 2017 is expected to range between $135 and $145 million and adjusted EPS for the full year 2017 is estimated to be between $1.19 and $1.29.

Non-GAAP Financial Information

This press release includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles (GAAP) are included in the financial schedules attached to this press release. This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP.

No reconciliation of Navigant’s 2017 adjusted EBITDA guidance and 2017 adjusted EPS guidance, both of which exclude the impact and tax-effected impact of severance expense and other operating costs (benefit), respectively, is included in the financial schedules attached to this press release. Navigant is not able to accurately forecast the excluded items at the level of precision that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.

Conference Call Details

Navigant will host a conference call to discuss the company’s second quarter 2017 results at 10 a.m. Eastern Time (9 a.m. Central Time) on Monday, July 31, 2017. The conference call may be accessed via the Navigant website (investors.navigant.com) or by dialing 800.988.9675 (415.228.4875 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 Consulting, Inc. (NYSE: NCI) is a specialized, global professional services firm that helps clients take control of their future. Navigant’s professionals apply deep industry knowledge, substantive technical expertise, and an enterprising approach to help clients build, manage, and/or protect their business interests. With a focus on markets and clients facing transformational change and significant regulatory or legal pressures, the firm primarily serves clients in the healthcare, energy, and financial services industries. Across a range of advisory, consulting, outsourcing, and technology/analytics services, Navigant’s practitioners bring sharp insight that pinpoints opportunities and delivers powerful results. More information about Navigant can be found at navigant.com.

Statements included in this press release which are not historical in nature are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may generally be identified by words such as “anticipate,” “believe,” “may,” “could,” “intend,” “estimate,” “expect,” “plan,” “outlook” and similar expressions. These statements are based upon management’s current expectations and speak only as of the date of this press release. The Company cautions readers that there may be events in the future that the Company is not able to accurately predict or control and the information contained in the forward-looking statements is inherently uncertain and subject to a number of risks that could cause actual results to differ materially from those contained in or implied by the forward-looking statements including, without limitation: the execution of the Company’s long-term growth objectives and margin improvement initiatives; risks inherent in international operations, including foreign currency fluctuations; ability to make acquisitions and divestitures; pace, timing and integration of acquisitions and separation of divestitures; operational risks associated with new or expanded service areas, including business process management services; impairments; changes in accounting standards or tax rates, laws or regulations; management of professional staff, including dependence on key personnel, recruiting, retention, attrition and the ability to successfully integrate new consultants into the Company’s practices; utilization rates; conflicts of interest; potential loss of clients or large engagements and the Company’s ability to attract new business; brand equity; competition; accurate pricing of engagements, particularly fixed fee and multi-year engagements; clients’ financial condition and their ability to make payments to the Company; risks inherent with litigation; higher risk client assignments; government contracting; professional liability; information security; the adequacy of our business, financial and information systems and technology; maintenance of effective internal controls; potential legislative and regulatory changes; continued and sufficient access to capital; compliance with covenants in our credit agreement; interest rate risk; and market and general economic and political conditions. Further information on these and other potential factors that could affect the Company’s financial results are included under the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, and elsewhere in the Company’s filings with the Securities and Exchange Commission (SEC), which are available on the SEC’s website or at investors.navigant.com. The Company cannot guarantee any future results, levels of activity, performance or achievement and undertakes no obligation to update any of its forward-looking statements.

###

 

5


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

(Unaudited)

 

     For the quarter ended     For the six months ended  
     June 30,     June 30,  
     2017     2016     2017     2016  

Revenues:

        

Revenues before reimbursements

   $ 235,238     $ 238,485     $ 471,449     $ 461,960  

Reimbursements

     21,608       23,198       43,234       45,010  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     256,846       261,683       514,683       506,970  

Cost of services:

        

Cost of services before reimbursable expenses

     168,721       157,966       333,773       311,906  

Reimbursable expenses

     21,608       23,198       43,234       45,010  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of services

     190,329       181,164       377,007       356,916  

General and administrative expenses

     41,726       44,507       83,210       84,338  

Depreciation expense

     7,826       7,015       15,299       13,537  

Amortization expense

     2,219       2,891       4,538       5,812  

Other operating costs (benefit):

        

Contingent acquisition liability adjustments, net

     —         850       1,199       850  

Office consolidation, net

     —         174       (38     174  

Deferred debt issuance costs write off

     —         —         145       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     14,746       25,082       33,323       45,343  

Interest expense

     1,280       1,429       2,349       2,689  

Interest income

     (81     (36     (112     (75

Other expense (income), net

     602       (444     385       (784
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

     12,945       24,133       30,701       43,513  

Income tax expense

     4,148       9,356       10,808       16,094  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 8,797     $ 14,777     $ 19,893     $ 27,419  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic per share data

        

Net income

   $ 0.19     $ 0.31     $ 0.42     $ 0.58  

Shares used in computing basic per share data

     47,113       47,550       47,023       47,488  

Diluted per share data

        

Net income

   $ 0.18     $ 0.30     $ 0.41     $ 0.56  

Shares used in computing diluted per share data

     48,696       48,841       48,833       48,936  

 

6


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AND SELECTED DATA

(In thousands, except DSO data)

 

     June 30,     December 31,  
     2017     2016  
     (unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 6,556     $ 8,291  

Accounts receivable, net

     267,283       261,755  

Prepaid expenses and other current assets

     35,225       29,762  
  

 

 

   

 

 

 

Total current assets

     309,064       299,808  

Non-current assets:

    

Property and equipment, net

     87,996       82,953  

Intangible assets, net

     24,270       28,727  

Goodwill

     630,933       625,027  

Other assets

     24,797       18,282  
  

 

 

   

 

 

 

Total assets

   $ 1,077,060     $ 1,054,797  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 8,938     $ 11,871  

Accrued liabilities

     17,739       16,144  

Accrued compensation-related costs

     65,312       106,779  

Income tax payable

     —         1,564  

Other current liabilities

     28,129       38,616  
  

 

 

   

 

 

 

Total current liabilities

     120,118       174,974  

Non-current liabilities:

    

Deferred income tax liabilities

     85,612       77,737  

Other non-current liabilities

     34,420       32,579  

Bank debt non-current

     184,787       135,030  
  

 

 

   

 

 

 

Total non-current liabilities

     304,819       245,346  
  

 

 

   

 

 

 

Total liabilities

     424,937       420,320  
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     58       57  

Additional paid-in capital

     653,096       644,519  

Treasury stock

     (195,315     (181,361

Retained earnings

     215,936       196,468  

Accumulated other comprehensive loss

     (21,652     (25,206
  

 

 

   

 

 

 

Total stockholders’ equity

     652,123       634,477  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 1,077,060     $ 1,054,797  
  

 

 

   

 

 

 

Selected Data (unaudited)

    

Days sales outstanding, net (DSO)

     86       81  

 

7


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     For the quarter ended     For the six months ended  
     June 30,     June 30,  
     2017     2016     2017     2016  

Cash flows from operating activities:

        

Net income

   $ 8,797     $ 14,777     $ 19,893     $ 27,419  

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

        

Depreciation expense

     7,826       7,015       15,299       13,537  

Amortization expense

     2,219       2,891       4,538       5,812  

Share-based compensation expense

     4,380       3,995       7,402       6,524  

Deferred income taxes

     6,893       98       8,232       1,131  

Allowance for doubtful accounts receivable

     1,171       2,911       1,175       4,547  

Contingent acquisition liability adjustments, net

     —         850       1,199       850  

Other, net

     826       384       1,477       741  

Changes in assets and liabilities (net of acquisitions):

        

Accounts receivable

     (2,731     (28,222     (7,010     (43,765

Prepaid expenses and other assets

     (9,161     1,149       (10,358     (1,025

Accounts payable

     (2,290     2,000       (2,371     2,478  

Accrued liabilities

     799       205       1,383       472  

Accrued compensation-related costs

     7,386       16,878       (41,870     (22,788

Income taxes payable

     (5,962     7,004       (1,609     12,059  

Other liabilities

     1,152       2,277       964       (337
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     21,305       34,212       (1,656     7,655  

Cash flows from investing activities:

        

Purchases of property and equipment

     (7,100     (5,080     (20,889     (10,039

Acquisitions of businesses, net of cash acquired

     —         —         —         (1,995

Other acquisition payments

     —         —         —         (5,500

Other, net

     (42     (607     (158     (625
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (7,142     (5,687     (21,047     (18,159

Cash flows from financing activities:

        

Issuances of common stock

     729       785       2,643       2,841  

Repurchases of common stock

     (8,993     (6,757     (13,954     (13,023

Payments of contingent acquisition liabilities

     (10,330     —         (10,330     (49

Repayments to banks

     (95,669     (112,853     (246,469     (209,245

Borrowings from banks

     100,789       92,482       294,591       227,239  

Payments of debt issuance costs

     (35     —         (1,201     —    

Other, net

     (3,500     (2,121     (4,827     (2,730
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (17,009     (28,464     20,453       5,033  
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     270       (157     515       (114
  

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (2,576     (96     (1,735     (5,585

Cash and cash equivalents at beginning of the period

     9,132       3,406       8,291       8,895  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of the period

   $ 6,556     $ 3,310     $ 6,556     $ 3,310  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

8


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data and percentages)

(Unaudited)

This press release includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission. Below are the reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles (GAAP). This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP. Management uses these non-GAAP financial measures in addition to GAAP financial measures to assess the Company’s operations and financial results and believes they are useful indicators of operating performance and the Company’s ability to generate cash flows from operations that are available for interest, debt service, taxes and capital expenditures. Investors should recognize that these non-GAAP financial measures may not be comparable to similarly-titled measures of other companies.

 

EBITDA, adjusted EBITDA, adjusted Net Income and

adjusted Earnings Per Share (2)

  For the quarter ended
June 30,
          For the six months ended
June 30,
       
    2017     2016           2017     2016        

Severance expense

  $ 4,385     $ 1,140       $ 6,171     $ 1,997    

Income tax benefit (3)

    (1,730     (430       (2,386     (740  
 

 

 

   

 

 

     

 

 

   

 

 

   

Tax-effected impact of severance expense

  $ 2,655     $ 710       $ 3,785     $ 1,257    
 

 

 

   

 

 

     

 

 

   

 

 

   

Other operating costs - contingent acquisition liability adjustment, net

  $ —       $ 850       $ 1,199     $ 850    

Income tax benefit (3)

    —         (341       (481     (341  
 

 

 

   

 

 

     

 

 

   

 

 

   

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

  $ —       $ 509       $ 718     $ 509    
 

 

 

   

 

 

     

 

 

   

 

 

   

Other operating cost (benefit) - office consolidation, net

  $ —       $ 174       $ (38   $ 174    

Income tax (benefit) expense (3)

    —         (70       15       (70  
 

 

 

   

 

 

     

 

 

   

 

 

   

Tax-effected impact of other operating cost (benefit) - office consolidation, net

  $ —       $ 104       $ (23   $ 104    
 

 

 

   

 

 

     

 

 

   

 

 

   

Other operating costs - deferred debt issuance costs write off

  $ —       $ —         $ 145     $ —      

Income tax benefit (3)

    —         —           (58     —      
 

 

 

   

 

 

     

 

 

   

 

 

   

Tax-effected impact of other operating costs - deferred debt issuance costs write off

  $ —       $ —         $ 87     $ —      
 

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA reconciliation:

           

Net Income

  $ 8,797     $ 14,777       $ 19,893     $ 27,419    

Interest expense

    1,280       1,429         2,349       2,689    

Interest income

    (81     (36       (112     (75  

Other expense (income), net

    602       (444       385       (784  

Income tax expense

    4,148       9,356         10,808       16,094    

Depreciation expense

    7,826       7,015         15,299       13,537    

Accelerated depreciation - office consolidation (included in other operating costs - office consolidation, net)

    —         33         —         33    

Amortization expense

    2,219       2,891         4,538       5,812    
 

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA

  $ 24,791     $ 35,021       $ 53,160     $ 64,725    

Severance expense

    4,385       1,140         6,171       1,997    

Other operating costs - contingent acquisition liability adjustment, net

    —         850         1,199       850    

Other operating cost (benefit) - office consolidation, net

    —         141         (38     141    

Other operating costs - deferred debt issuance costs write off

    —         —           145       —      
 

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

  $ 29,176     $ 37,152       $ 60,637     $ 67,713    
 

 

 

   

 

 

     

 

 

   

 

 

   

Net income

  $ 8,797     $ 14,777       $ 19,893     $ 27,419    

Tax-effected impact of severance expense

    2,655       710         3,785       1,257    

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

    —         509         718       509    

Tax-effected impact of other operating cost (benefit) - office consolidation, net

    —         104         (23     104    

Tax-effected impact of other operating costs - deferred debt issuance costs write off

    —         —           87       —      
 

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted net income

  $ 11,452     $ 16,100       $ 24,460     $ 29,289    
 

 

 

   

 

 

     

 

 

   

 

 

   

Shares used in computing adjusted per diluted share data

    48,696       48,841         48,833       48,936    

Adjusted earnings per share

  $ 0.24     $ 0.33       $ 0.50     $ 0.60    
 

 

 

   

 

 

     

 

 

   

 

 

   
    For the quarter ended           For the six months ended        

Free Cash Flow (4)

  June 30,           June 30,        
    2017     2016           2017     2016        

Net cash provided by (used in) operating activities

  $ 21,305     $ 34,212       $ (1,656   $ 7,655    

Changes in assets and liabilities

    10,807       (1,291       60,871       52,906    

Allowance for doubtful accounts receivable

    (1,171     (2,911       (1,175     (4,547  

Purchases of property and equipment

    (7,100     (5,080       (20,889     (10,039  

Payments of acquisition liabilities

    —         (498       —         (498  

Payments of contingent acquisition liabilities

    (10,330     —           (10,330     (49  
 

 

 

   

 

 

     

 

 

   

 

 

   

Free Cash Flow

  $ 13,511     $ 24,432       $ 26,821     $ 45,428    
 

 

 

   

 

 

     

 

 

   

 

 

   

Leverage Ratio (5)

  At June 30,                          
    2017     2016                          

Adjusted EBITDA for prior twelve-month period

  $ 135,214     $ 130,121          

Bank debt

  $ 184,787     $ 189,757          

Leverage ratio

    1.37       1.46          
    For the quarter ended           For the six months ended        

Organic Growth (6)

  June 30,           June 30,        
    2017     2016     Growth     2017     2016     Growth  

Revenues before reimbursements

  $ 235,238     $ 238,485       -1.4   $ 471,449     $ 461,960       2.1

Pro forma acquisition adjustment

    —         5,086         —         10,491    

Currency impact

    1,581       —           3,374       —      
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Organic RBR

  $ 236,819     $ 243,571       -2.8   $ 474,823     $ 472,451       0.5

 

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Footnotes

 

(1) Per share data may not sum due to rounding.
(2) EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA excludes the impact of severance expense and other operating costs (benefit). Adjusted net income and adjusted earnings per share exclude net income and per share net income impact of severance expense and other operating costs (benefit). Severance expense and other operating costs (benefit) are not considered to be non-recurring, infrequent or unusual to our business. Management believes that these measures provide investors with enhanced comparability of the Company’s results of operations across periods.
(3) Effective income tax expense (benefit) has been determined based on specific tax jurisdiction.
(4) Free cash flow is calculated as net cash provided from operations excluding changes in assets and liabilities and allowance for doubtful accounts receivable less cash payments for property and equipment and deferred acquisition related payments. Free cash flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayment. However, management believes that it provides investors with an indicator of cash flows available for on-going business operations and long term value creation.
(5) Leverage ratio is calculated as bank debt at the end of the period divided by adjusted EBITDA for the prior twelve-month period. Management believes that leverage ratio provides investors with an indicator of the cash flows available to repay the Company’s debt obligations.
(6) Organic growth represents revenues before reimbursements adjusted to include the impact of our acquisitions as if we owned them from the beginning of each comparable period and adjusted to exclude the impact of foreign currency exchange rate fluctuations. Management believes that organic growth reflects the growth of our existing business and is, therefore, useful in analyzing the Company’s financial condition and results of operations.

 

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