Navigant Reports Second Quarter 2013 Results
Navigant Reports Second Quarter 2013 Results
- Revenues before reimbursements were $189.7 million for second quarter 2013, an increase of 5% over the prior year quarter. Total revenues were $213.1 million for second quarter 2013, an increase of 4% over the prior year quarter.
- Net income for second quarter 2013 was $14.0 million, an increase of 46% over the prior year quarter.
- Adjusted EBITDA for second quarter 2013 increased 40% compared to the same period in 2012, to $34.1 million. Adjusted EBITDA margin improved 450 basis points to 18% for the second quarter 2013 compared to the same period in 2012.
- EPS for second quarter 2013 increased 50% year over year to $0.27. Adjusted EPS for the second quarter 2013 increased 48% year over year to $0.31.
- Repurchased 579,694 shares of common stock in second quarter 2013 at an average price of $12.85 per share.
Navigant reported second quarter 2013 revenues before reimbursements (RBR) of $189.7 million, compared to $181.5 million for second quarter 2012, a 5% increase. RBR growth for the quarter was led by especially strong results from the Healthcare segment, with a 30% increase in RBR, and a 12% increase in RBR from the Energy segment. Total revenues were $213.1 million for the second quarter 2013, compared to $204.6 million for second quarter 2012, an increase of 4%.
Adjusted EBITDA of $34.1 million for second quarter 2013 rose 40% compared to $24.4 million for second quarter 2012, with Adjusted EBITDA margin (Adjusted EBITDA as a percentage of RBR) at 18% for second quarter 2013, compared to 13% for the same period in 2012. The improvement in margin was due to a 9% increase in segment operating profit and a 9% reduction in general and administrative expenses. The decrease in general and administrative expenses was due to reduced information technology costs, lower bad debt expense and lower facilities costs.
Net income for second quarter 2013 was $14.0 million, compared to $9.6 million in the prior year quarter, an increase of 46%. Effective income tax rate was 43% for second quarter 2013 compared to 41% for second quarter 2012.
Earnings per share (EPS) were $0.27 for second quarter 2013, compared to $0.18 for second quarter 2012, a 50% increase. Adjusted EPS were $0.31 for second quarter 2013, compared to $0.21 for second quarter 2012, an increase of 48%.
"We realized growth in revenues and a significant increase in profitability while making additional progress on our long-term strategic objectives in the period," commented Julie Howard, Chief Executive Officer. "Healthcare and Energy, which represent higher growth markets, performed well, and the Financial, Risk & Compliance segment exceeded our expectations on the strength of the diversity of our offerings and our ability to quickly identify and transition resources to new work. Moving forward, we will continue to pursue opportunities that solidify Navigant's leadership in the financial services, healthcare, and energy sectors while optimizing our portfolio for sustainable, profitable growth."
Segment Financial Highlights
|For the quarter ended June 30,|
|Disputes, Investigations & Economics||$||76,352||$||81,350||-6.1||%|
|Financial, Risk & Compliance||42,738||42,800||-0.1||%|
|Total Revenues ($000)|
|Disputes, Investigations & Economics||$||82,828||$||86,894||-4.7||%|
|Financial, Risk & Compliance||50,376||52,847||-4.7||%|
|Segment Operating Profit ($000)|
|Disputes, Investigations & Economics||$||25,393||$||27,995||-9.3||%|
|Financial, Risk & Compliance||16,440||15,402||6.7||%|
|Segment Operating Margin (% of RBR)|
|Disputes, Investigations & Economics||33.3||%||34.4||%||-1.1||%|
|Financial, Risk & Compliance||38.5||%||36.0||%||2.5||%|
Healthcare RBR increased 30% for second quarter 2013 compared to the same quarter of 2012. Approximately two-thirds of the increase was organically driven growth. Navigant's strength in strategy consulting and expertise across industry disciplines continued to meet growing client needs to address the challenges of the Affordable Care Act, Medicaid managed care and other industry reforms. Second quarter 2013 Healthcare segment operating profit increased 58% compared to second quarter 2012 reflecting exceptional RBR growth while costs increased only modestly, demonstrating the benefits of scaling this business.
Energy RBR increased 12% for second quarter 2013 compared to second quarter 2012. Segment growth was driven by demand for energy efficiency solutions from utility clients and the U.S. federal government as they focus on reducing energy consumption. Second quarter 2013 Energy segment operating profit increased 8% compared to second quarter 2012 primarily due to increased RBR.
Financial, Risk & Compliance RBR for second quarter 2013 was flat with the prior year quarter and ahead of Company expectations. Segment performance was driven by a greater than expected contribution from mortgage servicing review engagements that are winding down coupled with increased activity on regulatory compliance, including anti-money laundering engagements. These factors were offset by reduced activity in the restructuring area and lower revenues related to a portion of Navigant's financial services business based in the UK, which was sold early in third quarter 2013. Second quarter 2013 Financial, Risk & Compliance segment operating profit increased 7% compared to second quarter 2012 due to effective cost management.
Disputes, Investigations & Economics RBR declined 6% for second quarter 2013 compared to the same period of 2012. The decrease was primarily the result of the first quarter 2013 disposition of a portion of the Economics practice. Contributions from the December 2012 acquisition of AFE Consulting offset a portion of the revenues lost through the disposition. Second quarter 2013 Disputes, Investigations & Economics segment operating profit decreased 9% compared to second quarter 2012 principally due to the decline in RBR, partially offset by cost reductions.
Free cash flow was $24.4 million for second quarter 2013, an increase of 15% compared to second quarter 2012.
$36.5 million of cash was used to pay down debt during second quarter 2013. Debt levels were 24% lower at June 30, 2013 compared to year earlier levels, reflecting continued strong operating cash flow. Leverage (Debt divided by trailing twelve month Adjusted EBITDA) improved to 1.03 at June 30, 2013 compared to 1.61 at June 30, 2012. As of June 30, 2013, the Company had approximately $270 million in additional borrowing capacity under its credit facility.
Navigant repurchased 579,694 shares of common stock during second quarter 2013, at an aggregate cost of $7.5 million and average cost of $12.85 per share. This compares to 331,900 shares of common stock repurchased during second quarter 2012. As of June 30, 2013, there was $65 million remaining on the Company's share repurchase authorization.
Navigant narrowed its full year 2013 outlook within its original guidance range. Full year 2013 RBR is expected to range between $740 and $770 million while total 2013 revenues are estimated to be between $820 and $850 million. Adjusted EBITDA is anticipated to range between $115 and $120 million and Adjusted EPS is estimated to be between $0.95 and $1.05.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles (GAAP) are included in the financial schedules attached to this press release. This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP.
Conference Call Details
Julie Howard and Lucinda (Cindy) Baier will host a conference call to discuss the Company's second quarter 2013 results at 10:00 a.m. Eastern Time on Tuesday, July 30, 2013. The conference call may be accessed via the Navigant website (www.navigant.com/investor_relations) or by dialing 888.593.8430 (312.470.7390 for international callers) and referencing pass code "NCI." A replay of the web cast will be available for one year. A report of financial and related supplemental information is available at www.navigant.com/investor_relations.
Navigant (NYS: NCI) is a specialized, global expert services firm dedicated to assisting clients in creating and protecting value in the face of critical business risks and opportunities. Through senior level engagement with clients, Navigant professionals combine technical expertise in Disputes and Investigations, Economics, Financial Advisory and Management Consulting, with business pragmatism in the highly regulated Construction, Energy, Financial Services and Healthcare industries. More information about Navigant can be found at www.navigant.com.
Statements included in this press release which are not historical in natureare forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words including "outlook," "plans," "goals," "anticipates," "believes," "intends," "estimates," "expects" and similar expressions. These statements are based upon management's current expectations and speak only as of the date of this press release. The Company cautions readers that there may be events in the future that the Company is not able to accurately predict or control and the information contained in the forward-looking statements is inherently uncertain and subject to a number of risks that could cause actual results to differ materially from those contained in or implied by the forward-looking statements including, without limitation: the success of the Company's organizational changes and margin improvement initiatives; risks inherent in international operations, including foreign currency fluctuations; ability to make acquisitions and divestitures; pace, timing and integration of acquisitions and separation of divestitures; impairment charges; management of professional staff, including dependence on key personnel, recruiting, attrition and the ability to successfully integrate new consultants into the Company's practices; utilization rates; conflicts of interest; potential loss of clients or large engagements; clients' financial condition and their ability to make payments to the Company; risks inherent with litigation; higher risk client assignments; professional liability; potential legislative and regulatory changes; continued access to capital; and market and general economic conditions. Further information on these and other potential factors that could affect the Company's financial results are included under the "Risk Factors" section and elsewhere in the Company's filings with the Securities and Exchange Commission (SEC), which are available on the SEC's website or at www.navigant.com/investor_relations . The Company cannot guarantee any future results, levels of activity, performance or achievement and undertakes no obligation to update any of its forward-looking statements.
|NAVIGANT CONSULTING, INC. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF INCOME|
|(In thousands, except per share data)|
|For the quarter ended||For the six months ended|
|June 30,||June 30,|
|Revenues before reimbursements||$||189,707||$||181,529||$||376,964||$||367,909|
|Costs of services:|
|Cost of services before reimbursable expenses||125,363||122,243||251,727||246,203|
|Total costs of services||148,748||145,314||302,628||289,515|
|General and administrative expenses||32,577||35,848||65,060||71,405|
|Other operating costs (benefit):|
|Contingent acquisition liability adjustments, net||-||620||-||620|
|Gain on disposition of assets||-||-||(1,715||)||-|
|Other (income) expense, net||6||(144||)||(142||)||(39||)|
|Income before income tax expense||24,598||16,327||48,173||36,619|
|Income tax expense||10,648||6,771||20,425||15,421|
|Basic net income per share||$||0.28||$||0.19||$||0.55||$||0.42|
|Shares used in computing net income per basic share||50,041||51,112||50,168||51,072|
|Diluted net income per share||$||0.27||$||0.18||$||0.54||$||0.41|
|Shares used in computing net income per diluted share||51,022||51,685||51,191||51,741|
|NAVIGANT CONSULTING, INC. AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEETS AND SELECTED DATA|
|(In thousands, except DSO data)|
|June 30,||December 31,|
|Cash and cash equivalents||$||2,588||$||1,052|
|Accounts receivable, net||204,109||198,709|
|Prepaid expenses and other current assets||23,463||25,054|
|Deferred income tax assets||14,329||17,821|
|Total current assets||244,489||242,636|
|Property and equipment, net||42,236||45,342|
|Intangible assets, net||12,506||16,123|
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