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8-K - 8-K - NAVIGANT CONSULTING INCd481570d8k.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

For more information, contact:

 

Kyle Bland

Navigant Investor Relations

312.573.5624

kyle.bland@navigant.com

  

Belia Ortega

Navigant Corporate Communications 312.583.2640

belia.ortega@navigant.com

NAVIGANT REPORTS THIRD QUARTER 2017 FINANCIAL RESULTS

CHICAGO, Oct. 26, 2017 – Navigant (NYSE: NCI) today announced financial results for the quarter ended Sept. 30, 2017.

Third quarter 2017 financial summary and highlights:

 

    Revenue and revenues before reimbursements (RBR) of $262.3 and $237.5 million, respectively were both comparable to third quarter 2016 and up 2% and 1%, respectively, from second quarter 2017

 

    Net income was $11.9 million, or $0.25 per share, compared to $17.2 million, or $0.35 per share, for third quarter 2016 and $8.8 million, or $0.18 per share, in the second quarter 2017

 

    Adjusted Earnings per Share (EPS) of $0.30 decreased from $0.37 in third quarter 2016, but improved from $0.24 in the second quarter 2017

 

    Repurchased $14.1 million of common stock, significantly higher than the $5.8 million repurchased in the prior year period

 

    Management affirms its revised 2017 financial outlook, as previously provided in conjunction with its second quarter 2017 earnings release

“Our third quarter results reflect comparable year-over-year top-line performance and modest sequential improvement,” said Julie Howard, Chairman and CEO of Navigant. “Performance in the quarter was driven by continued growth in our Healthcare segment and positive, sequential momentum from improvements in our Financial Services Advisory and Compliance (FSAC) segment, while tempered by demand-side headwinds in certain other areas of our business. With an expected strong finish from both our Healthcare and FSAC segments, we remain positioned to achieve our full-year 2017 guidance targets.”

Consolidated Results

Navigant reported third quarter 2017 revenue and RBR of $262.3 million and $237.5 million, respectively, both comparable to third quarter 2016. Growth in the Healthcare segment and the benefit of the November 2016 Ecofys acquisition were offset by lower RBR from U.S. Federal Government engagements in the Energy segment, as well as lower revenue in both the FSAC segment and the Disputes, Forensics & Legal Technology segment.

Third quarter 2017 cost of services were higher compared to the third quarter 2016 driven primarily by increased headcount and absorbed costs from the Ecofys acquisition. This drove lower segment operating profit of $78.2 million, compared to $84.0 million in the prior year period. General and administrative expense increased primarily due to higher bad debt expense, including a large, single customer bankruptcy. Excluding bad debt expense, general and administrative expenses were lower in the current year period and represented 16.4% of RBR.


Third quarter 2017 Adjusted EBITDA was $32.9 million, a decrease of 17% from $39.8 million for the same prior year period. Net income for third quarter 2017 was down 30% to $11.9 million driven primarily by the items discussed above. Adjusted EPS was $0.30 for third quarter 2017, compared to $0.37 in third quarter 2016.

Segment Financial Summary

 

     For the quarter ended
September 30,
       
     2017     2016     Change  

RBR ($000)

      

Healthcare

   $ 95,860     $ 91,046       5.3

Energy

     29,597       28,436       4.1

Financial Services Advisory and Compliance

     38,016       40,265       -5.6

Disputes, Forensics & Legal Technology

     74,032       77,368       -4.3
  

 

 

   

 

 

   

 

 

 

Total Company

   $ 237,505     $ 237,115       0.2
  

 

 

   

 

 

   

 

 

 

Total Revenues ($000)

      

Healthcare

   $ 104,397     $ 100,033       4.4

Energy

     35,144       32,076       9.6

Financial Services Advisory and Compliance

     44,584       46,391       -3.9

Disputes, Forensics & Legal Technology

     78,151       82,909       -5.7
  

 

 

   

 

 

   

 

 

 

Total Company

   $ 262,276     $ 261,409       0.3
  

 

 

   

 

 

   

 

 

 

Segment Operating Profit ($000)

      

Healthcare

   $ 29,693     $ 31,896       -6.9

Energy

     8,077       8,336       -3.1

Financial Services Advisory and Compliance

     15,937       17,682       -9.9

Disputes, Forensics & Legal Technology

     24,499       26,099       -6.1
  

 

 

   

 

 

   

 

 

 

Total Company

   $ 78,206     $ 84,013       -6.9
  

 

 

   

 

 

   

 

 

 

Segment Operating Margin (% of RBR)

      

Healthcare

     31.0     35.0  

Energy

     27.3     29.3  

Financial Services Advisory and Compliance

     41.9     43.9  

Disputes, Forensics & Legal Technology

     33.1     33.7  
  

 

 

   

 

 

   

Total Company

     32.9     35.4  
  

 

 

   

 

 

   

Healthcare segment RBR of $95.9 million increased 5% for third quarter 2017 compared to the same prior year period. Segment RBR for the quarter also increased 2% sequentially from second quarter 2017. Growth was supported by improved performance from existing revenue cycle managed services contracts and increased demand from life sciences clients seeking product commercialization solutions. Segment operating profit of $29.7 million declined 7% in third quarter 2017 compared to the same period in 2016, primarily due to increased headcount in revenue cycle managed services, as well as business mix.


Energy segment RBR increased 4% for third quarter 2017 to $29.6 million compared to the third quarter 2016, driven by contributions from the Ecofys acquisition which closed in November 2016. Offsetting the Ecofys impact was continued depressed demand from U.S. Federal Government engagements. Segment operating profit was relatively flat compared to the prior year period.

Financial Services Advisory and Compliance segment RBR for third quarter 2017 was $38.0 million, a 6% decrease compared to very strong third quarter 2016 performance. RBR increased 13% from second quarter 2017 as demand in financial crime-related services drove strong sequential improvement. Segment operating profit of $15.9 million was down 10% in third quarter 2017 compared to the same period in 2016 due to project mix.

Disputes, Forensics & Legal Technology segment RBR for the third quarter 2017 was $74.0 million, a 4% decrease compared to the prior year period. Reduced processing activities in the legal technology solutions business was only partially offset by strong performance in the global construction practice. Segment operating profit was down $1.6 million in third quarter 2017 compared to third quarter 2016, as lower operating cost across the segment only partially offset the decline in revenue.

Cash Flow

Net cash provided by operating activities for third quarter 2017 was $35.2 million compared to $48.0 million for third quarter 2016. Free Cash Flow decreased to $14.2 million for third quarter 2017 compared to $25.5 million for the same period in 2016, primarily driven by lower profitability and higher capital expenditures. Days Sales Outstanding was 94 days as of Sept. 30, 2017, up 13 days compared to Dec. 31, 2016, as elongated collection experience was further impacted by the migration to a new billing platform.

Navigant repurchased 840,735 shares of common stock during the third quarter 2017 at an aggregate cost of $14.1 million and an average price of $16.72 per share. As of Sept. 30, 2017, the company had $78.6 million remaining under its stock repurchase authorization which expires on Dec. 31, 2019.

2017 Outlook

Navigant affirms its revised 2017 financial outlook, which was previously provided in conjunction with second quarter 2017 earnings. Full year 2017 RBR is expected to range between $955 million and $980 million while 2017 total revenue is 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.

Navigant has provided guidance regarding Adjusted EBITDA and Adjusted Earnings Per Share, both of which exclude the impact of severance expense and other operating costs (benefit). 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 third quarter 2017 results at 10 a.m. Eastern Time (9 a.m. Central Time) on Thursday, October 26, 2017. The conference call may be accessed via the Navigant website (investors.navigant.com) 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.

Definitions

 

  Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Share Adjusted EBITDA is EBITDA – earnings from continuing operations before interest, taxes, depreciation, and amortization – excluding the impact of severance expense and other operating costs (benefit). Adjusted Net Income and Adjusted Earnings per Share exclude the 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 non-GAAP financial measures provide investors with enhanced comparability of the Navigant’s results of operations across periods.

 

  Free Cash Flow is calculated as net cash provided by (used in) operations excluding the change in asset, liabilities and allowance for doubtful accounts less cash payment for property, equipment and deferred acquisition liabilities. Free Cash Flow does not represent cash available for spending as it excludes certain contractual obligations such as debt repayment. However, management believes that Free Cash Flow provides investors with an indicator of cash available for on-going business operations and long-term value creation.

About Navigant

Navigant Consulting, Inc. (NYSE: NCI) (“the Company”) 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.

###


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

(Unaudited)

 

     For the quarter ended     For the nine months
ended
 
     September 30,     September 30,  
     2017     2016     2017     2016  

Revenues:

        

Revenues before reimbursements

   $ 237,505     $ 237,115     $ 708,954     $ 699,075  

Reimbursements

     24,771       24,294       68,005       69,304  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     262,276       261,409       776,959       768,379  

Cost of services:

        

Cost of services before reimbursable expenses

     161,597       156,061       495,370       467,967  

Reimbursable expenses

     24,771       24,294       68,005       69,304  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of services

     186,368       180,355       563,375       537,271  

General and administrative expenses

     44,180       42,126       127,390       126,464  

Depreciation expense

     6,742       7,008       22,041       20,545  

Amortization expense

     2,175       2,905       6,713       8,717  

Other operating costs (benefit):

        

Contingent acquisition liability adjustments, net

     1,014       480       2,213       1,330  

Office consolidation, net

     —         —         (38     174  

Deferred debt issuance costs write off

     —         —         145       —    

Other costs

     1,620       —         1,620       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     20,177       28,535       53,500       73,878  

Interest expense

     1,367       1,310       3,716       3,999  

Interest income

     (124     (35     (236     (110

Other expense (income), net

     104       (350     489       (1,134
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

     18,830       27,610       49,531       71,123  

Income tax expense

     6,891       10,435       17,699       26,529  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 11,939     $ 17,175     $ 31,832     $ 44,594  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic per share data

        

Net income

   $ 0.26     $ 0.36     $ 0.68     $ 0.94  

Shares used in computing basic per share data

     46,619       47,369       46,888       47,448  

Diluted per share data

        

Net income

   $ 0.25     $ 0.35     $ 0.66     $ 0.91  

Shares used in computing diluted per share data

     48,017       48,763       48,561       48,878  


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AND SELECTED DATA

(In thousands, except DSO data)

 

     September 30,     December 31,  
     2017     2016  
     (unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 9,005     $ 8,291  

Accounts receivable, net

     295,750       261,755  

Prepaid expenses and other current assets

     27,335       29,762  
  

 

 

   

 

 

 

Total current assets

     332,090       299,808  

Non-current assets:

    

Property and equipment, net

     88,139       82,953  

Intangible assets, net

     22,124       28,727  

Goodwill

     633,045       625,027  

Other assets

     23,658       18,282  
  

 

 

   

 

 

 

Total assets

   $ 1,099,056     $ 1,054,797  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 12,233     $ 11,871  

Accrued liabilities

     14,035       16,144  

Accrued compensation-related costs

     89,335       106,779  

Income tax payable

     1,648       1,564  

Other current liabilities

     29,452       38,616  
  

 

 

   

 

 

 

Total current liabilities

     146,703       174,974  

Non-current liabilities:

    

Deferred income tax liabilities

     84,389       77,737  

Other non-current liabilities

     35,834       32,579  

Bank debt non-current

     176,723       135,030  
  

 

 

   

 

 

 

Total non-current liabilities

     296,946       245,346  
  

 

 

   

 

 

 

Total liabilities

     443,649       420,320  
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     58       57  

Additional paid-in capital

     656,616       644,519  

Treasury stock

     (209,373     (181,361

Retained earnings

     227,875       196,468  

Accumulated other comprehensive loss

     (19,769     (25,206
  

 

 

   

 

 

 

Total stockholders’ equity

     655,407       634,477  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 1,099,056     $ 1,054,797  
  

 

 

   

 

 

 
Selected Data (unaudited)     

Days sales outstanding, net (DSO)

     94       81  


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     For the quarter ended     For the nine months ended  
     September 30,     September 30,  
     2017     2016     2017     2016  

Cash flows from operating activities:

        

Net income

   $ 11,939     $ 17,175     $ 31,832     $ 44,594  

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation expense

     6,742       7,008       22,041       20,545  

Amortization expense

     2,175       2,905       6,713       8,717  

Share-based compensation expense

     3,012       2,921       10,414       9,445  

Deferred income taxes

     (1,178     (506     7,054       625  

Allowance for doubtful accounts receivable

     5,169       2,459       6,344       7,006  

Contingent acquisition liability adjustments, net

     1,014       480       2,213       1,330  

Other, net

     350       344       1,827       1,085  

Changes in assets and liabilities (net of acquisitions):

        

Accounts receivable

     (32,923     (20,152     (39,933     (63,917

Prepaid expenses and other assets

     9,323       6,340       (1,035     5,315  

Accounts payable

     3,277       (1,519     906       959  

Accrued liabilities

     (314     612       1,069       1,084  

Accrued compensation-related costs

     23,927       23,084       (17,943     296  

Income taxes payable

     1,576       4,881       (33     16,940  

Other liabilities

     1,086       1,944       2,050       1,607  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     35,175       47,976       33,519       55,631  

Cash flows from investing activities:

        

Purchases of property and equipment

     (9,840     (3,425     (30,729     (13,464

Acquisitions of businesses, net of cash acquired

     —         (6,000     —         (7,995

Other acquisition payments

     —         —         —         (5,500

Payments of acquisition liabilities

     —         (667     —         (1,165

Other, net

     (533     (332     (691     (459
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (10,373     (10,424     (31,420     (28,583

Cash flows from financing activities:

        

Issuances of common stock

     568       727       3,211       3,568  

Repurchases of common stock

     (14,058     (5,778     (28,012     (18,801

Payments of contingent acquisition liabilities

     —         (779     (10,330     (828

Repayments to banks

     (102,695     (99,481     (349,164     (308,726

Borrowings from banks

     93,867       71,608       388,458       298,847  

Payments of debt issuance costs

     (91     —         (1,292     —    

Other, net

     (60     (72     (4,887     (2,802
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (22,469     (33,775     (2,016     (28,742
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     116       (43     631       (157
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     2,449       3,734       714       (1,851

Cash and cash equivalents at beginning of the period

     6,556       3,310       8,291       8,895  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of the period

   $ 9,005     $ 7,044     $ 9,005     $ 7,044  
  

 

 

   

 

 

   

 

 

   

 

 

 


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
          For the nine months
ended
       
     September 30,           September 30,        
     2017     2016           2017     2016        

Severance expense

   $ 1,156     $ 879       $ 7,327     $ 2,876    

Income tax benefit (3)

     (449     (288       (2,835     (1,028  
  

 

 

   

 

 

     

 

 

   

 

 

   

Tax-effected impact of severance expense

   $ 707     $ 591       $ 4,492     $ 1,848    
  

 

 

   

 

 

     

 

 

   

 

 

   

Other operating costs - contingent acquisition liability adjustment, net

   $ 1,014     $ 480       $ 2,213     $ 1,330    

Income tax benefit (3)

     (407     (193       (888     (534  
  

 

 

   

 

 

     

 

 

   

 

 

   

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

   $ 607     $ 287       $ 1,325     $ 796    
  

 

 

   

 

 

     

 

 

   

 

 

   

Other operating cost (benefit) - office consolidation, net

   $ —       $ —         $ (38   $ 174    

Income tax (benefit) expense (3)

     —         —           15       (70  
  

 

 

   

 

 

     

 

 

   

 

 

   

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

   $ —       $ —         $ (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     $ —      
  

 

 

   

 

 

     

 

 

   

 

 

   

Other operating costs - other costs

   $ 1,620     $ —         $ 1,620     $ —      

Income tax benefit (3)

     (650     —           (650     —      
  

 

 

   

 

 

     

 

 

   

 

 

   

Tax-effected impact of Other operating costs - other costs

   $ 970     $ —         $ 970     $ —      
  

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA reconciliation:

            

Net Income

   $ 11,939     $ 17,175       $ 31,832     $ 44,594    

Interest expense

     1,367       1,310         3,716       3,999    

Interest income

     (124     (35       (236     (110  

Other expense (income), net

     104       (350       489       (1,134  

Income tax expense

     6,891       10,435         17,699       26,529    

Depreciation expense

     6,742       7,008         22,041       20,545    

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

     —         —           —         33    

Amortization expense

     2,175       2,905         6,713       8,717    
  

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA

   $ 29,094     $ 38,448       $ 82,254     $ 103,173    

Severance expense

     1,156       879         7,327       2,876    

Other operating costs - contingent acquisition liability adjustment, net

     1,014       480         2,213       1,330    

Other operating cost (benefit) - office consolidation, net

     —         —           (38     141    

Other operating costs - deferred debt issuance costs write off

     —         —           145       —      

Other operating costs - other costs

     1,620       —           1,620       —      
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 32,884     $ 39,807       $ 93,521     $ 107,520    
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income

   $ 11,939     $ 17,175       $ 31,832     $ 44,594    

Tax-effected impact of severance expense

     707       591         4,492       1,848    

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

     607       287         1,325       796    

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

     —         —           (23     104    

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

     —         —           87       —      

Tax-effected impact of Other operating costs - other costs

     970       —           970       —      
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted net income

   $ 14,223     $ 18,053       $ 38,683     $ 47,342    
  

 

 

   

 

 

     

 

 

   

 

 

   

Shares used in computing adjusted per diluted share data

     48,017       48,763         48,561       48,878    

Adjusted earnings per share

   $ 0.30     $ 0.37       $ 0.80     $ 0.97    
  

 

 

   

 

 

     

 

 

   

 

 

   
     For the quarter
ended
          For the nine months
ended
       

Free Cash Flow (4)

   September 30,           September 30,        
     2017     2016           2017     2016        

Net cash provided by operating activities

   $ 35,175     $ 47,976       $ 33,519     $ 55,631    

Changes in assets and liabilities

     (5,952     (15,190       54,919       37,716    

Allowance for doubtful accounts receivable

     (5,169     (2,459       (6,344     (7,006  

Purchases of property and equipment

     (9,840     (3,425       (30,729     (13,464  

Payments of acquisition liabilities

     —         (667       —         (1,165  

Payments of contingent acquisition liabilities

     —         (779       (10,330     (828  
  

 

 

   

 

 

     

 

 

   

 

 

   

Free Cash Flow

   $ 14,214     $ 25,456       $ 41,035     $ 70,884    
  

 

 

   

 

 

     

 

 

   

 

 

   

Leverage Ratio (5)

   At September 30,                          
     2017     2016                          

Adjusted EBITDA for prior twelve-month period

   $ 128,291     $ 138,371          

Bank debt

   $ 176,723     $ 161,208          

Leverage ratio

     1.38       1.17          
     For the quarter
ended
          For the nine months
ended
       

Organic Growth (6)

   September 30,           September 30,        
     2017     2016     Growth     2017     2016     Growth  

Revenues before reimbursements

   $ 237,505     $ 237,115       0.2   $ 708,954     $ 699,075       1.4

Pro forma acquisition adjustment

     —         5,015         —         16,130    

Currency impact

     488       —           3,869       —      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Organic RBR

   $ 237,993     $ 242,130       -1.7   $ 712,823     $ 715,205       -0.3


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.