Navigant Reports First Quarter 2019 Financial Results
First quarter 2019 highlights:
-
Revenues and revenues before reimbursements (RBR) were
$202.9 and$186.1 million respectively, up 14% and 15% compared to first quarter 2018 -
Net income from continuing operations attributable to
Navigant Consulting, Inc. of$4.8 million , or$0.12 per share, was up$6.4 million compared to the first quarter 2018 -
Adjusted Earnings per Share (EPS) from continuing operations of
$0.18 , which includes per share income attributable to non-controlling interest, net of tax, increased$0.15 compared to first quarter 2018 -
Repurchased
$53.5 million of common stock through the Company’s expanded share repurchase plan -
Refreshed its share repurchase authorization through
Dec. 31, 2021 with an approved limit of$175 million - Management affirms previously provided 2019 financial guidance targets
Commenting on first quarter performance,
|
FIRST QUARTER 2019 FINANCIAL RESULTS |
||||||||||||||
| For the quarter ended March 31, | ||||||||||||||
| Increase / | ||||||||||||||
| (Dollars in millions, excluding per share data) | 2019 | 2018 | (Decrease) | |||||||||||
| Revenue | $ | 202.9 | $ | 178.1 | $ | 24.8 | ||||||||
| RBR | $ | 186.1 | $ | 161.4 | $ | 24.7 | ||||||||
| Net income (loss) from cont. ops. attrib. to Navigant Consulting, Inc. | $ | 4.8 | $ | (1.6 | ) | $ | 6.4 | |||||||
| Adjusted EBITDA (1) | $ | 16.3 | $ | 9.2 | $ | 7.1 | ||||||||
| Adjusted Earnings per Share (1) | $ | 0.18 | $ | 0.03 | $ | 0.15 | ||||||||
| (1) From continuing operations, which includes results attributable to non-controlling interests. See definition and reconciliation of non-GAAP measures elsewhere in this release | ||||||||||||||
Navigant reported first quarter 2019 revenues and RBR of
Adjusted EBITDA from continuing operations in the first quarter 2019 was
Net income from continuing operations attributable to
First quarter 2019 Adjusted EPS from continuing operations of
|
FIRST QUARTER 2019 SEGMENT RESULTS |
||||||||||||
| For the quarter ended March 31, | ||||||||||||
| Increase / | ||||||||||||
| (Dollars in millions, numbers may not foot due to rounding) | 2019 | 2018 | (Decrease) | |||||||||
| RBR | ||||||||||||
| Healthcare | $ | 119.0 | $ | 90.1 | $ | 28.9 | ||||||
| Energy | 36.2 | 33.7 | 2.5 | |||||||||
| Financial Services Advisory and Compliance | 30.9 | 37.6 | (6.7 | ) | ||||||||
| Total Company | $ | 186.1 | $ | 161.4 | $ | 24.7 | ||||||
| Revenues | ||||||||||||
| Healthcare | $ | 126.6 | $ | 98.7 | $ | 27.9 | ||||||
| Energy | 43.7 | 37.6 | 6.1 | |||||||||
| Financial Services Advisory and Compliance | 32.6 | 41.7 | (9.1 | ) | ||||||||
| Total Company | $ | 202.9 | $ | 178.1 | $ | 24.8 | ||||||
| Segment Operating Profit | ||||||||||||
| Healthcare | $ | 36.8 | $ | 20.4 | $ | 16.4 | ||||||
| Energy | 10.4 | 10.7 | (0.3 | ) | ||||||||
| Financial Services Advisory and Compliance | 5.2 | 14.8 | (9.6 | ) | ||||||||
| Total Company | $ | 52.4 | $ | 45.9 | $ | 6.5 | ||||||
| Segment Operating Margin (% of RBR) | ||||||||||||
| Healthcare | 30.9 | % | 22.6 | % | 8.3 | % | ||||||
| Energy | 28.7 | % | 31.8 | % | -3.1 | % | ||||||
| Financial Services Advisory and Compliance | 16.8 | % | 39.4 | % | -22.6 | % | ||||||
| Total Company | 28.2 | % | 28.4 | % | -0.2 | % | ||||||
Healthcare segment RBR of
Energy segment RBR for first quarter 2019 of
Financial Services Advisory and Compliance segment RBR for the first
quarter 2019 finished at
CASH FLOW AND BALANCE SHEET
First quarter 2019 net cash used in operating activities was
Navigant continued executing its share buyback program by repurchasing
2.3 million shares of common stock during the first quarter of 2019 at
an aggregate cost of
2019 GUIDANCE
Management affirms full year 2019 guidance for continuing operations,
which include results from non-controlling interests, as originally
communicated on
-
Revenues estimated to be between
$810 million and $840 million -
RBR expected to range between
$735 million and $765 million -
Adjusted EBITDA expected to range between
$70 million and $80 million -
Adjusted EPS estimated to be between
$0.85 and $1.00 per share -
Adjusted Free Cash Flow estimated to be between
$43 million and $53 million -
Capital expenditures estimated to be approximately
$20 million
BASIS OF PRESENTATION
In
NON-GAAP FINANCIAL INFORMATION
This press release includes certain non-GAAP financial measures as
defined by the
Navigant has provided guidance regarding Adjusted EBITDA, Adjusted EPS, both of which exclude the impact of severance expense and other operating costs (benefit), as applicable. Navigant has also provided guidance regarding Adjusted Free Cash Flow, which excludes changes in assets and liabilities and allowance for doubtful accounts receivable less cash payments for property and equipment and deferred acquisition related payments.
- Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Share (EPS) Adjusted EBITDA is EBITDA – earnings before interest, taxes, depreciation, and amortization – excluding the impact of severance expense and other operating costs (benefit), as applicable. Adjusted Net Income and Adjusted Earnings per Share exclude the net income and per share net income impact of severance expense, other operating costs (benefit) and certain tax adjustments, as applicable. While other operating costs (benefit) are generally non-recurring in nature, severance expense and certain other operating costs are not considered to be non-recurring, infrequent or unusual to the business. Management believes that these non-GAAP financial measures provide investors with enhanced comparability of Navigant’s results of operations across periods. See non-GAAP reconciliations for more details.
- Adjusted Free Cash Flow is calculated as net cash provided by (used in) operations excluding the change in assets, liabilities and allowance for doubtful accounts less cash payment for property, equipment and deferred acquisition liabilities. Adjusted Free Cash Flow does not represent cash available for spending as it excludes certain contractual obligations such as debt repayment. However, management believes that Adjusted Free Cash Flow provides investors with an indicator of cash available for on-going business operations and long-term value creation. See non-GAAP reconciliations for more details.
CONFERENCE CALL DETAILS
Navigant will host a conference call to discuss the Company’s first
quarter 2019 results at
ABOUT NAVIGANT
Statements included in this report 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,” “should,”
“could,” “intend,” “estimate,” “expect,” “likely,” “continue,” “plan,”
“projects,” “positioned,” “outlook” and similar expressions. These
statements are based upon management’s current expectations and speak
only as of the date of this report. 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 risk of unanticipated costs,
liabilities or an adverse impact on the Company’s business operations
arising from the Company’s provision of post-divestiture transition
services and support in connection with the sale of the Company’s
Disputes, Forensics and Legal Technology segment and the transaction
advisory services practice within the Company’s Financial Services
Advisory and Compliance segment; 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 and complete
such acquisitions and divestitures in the time anticipated; pace, timing
and integration of acquisitions; 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 business and financial condition and the results of operations
are included in the “Risk Factors” section of the Company’s Annual
Report on Form 10-K for the year ended
| NAVIGANT CONSULTING, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (In thousands, except per share data (1)) | ||||||||
| (Unaudited) | ||||||||
| For the quarter ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenues: | ||||||||
| Revenues before reimbursements | $ | 186,129 | $ | 161,445 | ||||
| Reimbursements | 16,733 | 16,623 | ||||||
| Total revenues | 202,862 | 178,068 | ||||||
| Cost of services: | ||||||||
| Cost of services before reimbursable expenses | 135,356 | 116,936 | ||||||
| Reimbursable expenses | 16,733 | 16,623 | ||||||
| Total cost of services | 152,089 | 133,559 | ||||||
| General and administrative expenses | 35,167 | 37,079 | ||||||
| Depreciation expense | 4,586 | 4,997 | ||||||
| Amortization expense | 1,372 | 1,752 | ||||||
| Other operating costs | 32 | 983 | ||||||
| Operating income (loss) | 9,616 | (302 | ) | |||||
| Interest expense | 318 | 828 | ||||||
| Interest income | (689 | ) | (119 | ) | ||||
| Other expense, net | 132 | 361 | ||||||
| Income (loss) from continuing operations before income tax expense | 9,855 | (1,372 | ) | |||||
| Income tax expense | 3,047 | 225 | ||||||
| Net income (loss) from continuing operations | 6,808 | (1,597 | ) | |||||
| (Loss) income from discontinued operations, net of tax | (489 | ) | 13,450 | |||||
| Net income | 6,319 | 11,853 | ||||||
| Income attributable to non-controlling interest, net of tax | (2,038 | ) | - | |||||
| Net income attributable to Navigant Consulting, Inc. | $ | 4,281 | $ | 11,853 | ||||
| Basic net income per share data | ||||||||
| Income (loss) from continuing operations attributable to Navigant Consulting, Inc. | $ | 0.12 | $ | (0.04 | ) | |||
| (Loss) income from discontinued operations, net of tax | $ | (0.01 | ) | $ | 0.30 | |||
| Net income attributable to Navigant Consulting, Inc. | $ | 0.11 | $ | 0.26 | ||||
| Shares used in computing basic per share data | 40,218 | 45,120 | ||||||
| Diluted net income per share data | ||||||||
| Income (loss) from continuing operations attributable to Navigant Consulting, Inc. | $ | 0.12 | $ | (0.04 | ) | |||
| (Loss) income from discontinued operations, net of tax | $ | (0.01 | ) | $ | 0.30 | |||
| Net income attributable to Navigant Consulting, Inc. | $ | 0.10 | $ | 0.26 | ||||
| Shares used in computing diluted per share data | 41,408 | 45,120 | ||||||
| NAVIGANT CONSULTING, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS AND SELECTED DATA | ||||||||
| (In thousands, except DSO data) | ||||||||
| (Unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 107,217 | $ | 206,920 | ||||
| Accounts receivable, net and contract assets | 186,523 | 179,923 | ||||||
| Prepaid expenses and other current assets | 26,835 | 22,512 | ||||||
| Total current assets | 320,575 | 409,355 | ||||||
| Non-current assets: | ||||||||
| Property and equipment, net | 61,374 | 63,025 | ||||||
| Operating lease right-of-use asset | 83,959 | - | ||||||
| Intangible assets, net | 15,470 | 14,166 | ||||||
| Goodwill | 425,069 | 422,357 | ||||||
| Other assets | 8,703 | 8,644 | ||||||
| Total assets | $ | 915,150 | $ | 917,547 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 12,869 | $ | 13,302 | ||||
| Accrued liabilities | 16,075 | 15,558 | ||||||
| Accrued compensation-related costs | 40,784 | 69,555 | ||||||
| Income tax payable | 10,519 | 13,357 | ||||||
| Operating lease liabilities | 22,368 | - | ||||||
| Other current liabilities | 22,761 | 34,044 | ||||||
| Total current liabilities | 125,376 | 145,816 | ||||||
| Non-current liabilities: | ||||||||
| Deferred income tax liabilities | 38,492 | 33,901 | ||||||
| Operating lease liabilities | 85,297 | - | ||||||
| Other non-current liabilities | 4,321 | 25,277 | ||||||
| Total non-current liabilities | 128,110 | 59,178 | ||||||
| Total liabilities | 253,486 | 204,994 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 49 | 49 | ||||||
| Additional paid-in capital | 666,794 | 664,473 | ||||||
| Treasury stock | (214,465 | ) | (160,972 | ) | ||||
| Retained earnings | 213,830 | 211,543 | ||||||
| Accumulated other comprehensive loss | (6,971 | ) | (6,529 | ) | ||||
| Total Navigant Consulting Inc. stockholders' equity | 659,237 | 708,564 | ||||||
| Non-controlling interest | 2,427 | 3,989 | ||||||
| Total stockholders' equity | 661,664 | 712,553 | ||||||
| Total liabilities and stockholders' equity | $ | 915,150 | $ | 917,547 | ||||
| Days sales outstanding, net (DSO) | 73 | 70 | ||||||
| NAVIGANT CONSULTING, INC. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (In thousands) | |||||||||
| (Unaudited) | |||||||||
| For the quarter ended | |||||||||
| March 31, | |||||||||
| 2019 | 2018 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 6,319 | $ | 11,853 | |||||
| Adjustments to reconcile net income to net cash used in | |||||||||
| operating activities: | |||||||||
| Depreciation expense | 4,586 | 6,845 | |||||||
| Amortization expense | 1,372 | 1,856 | |||||||
| Share-based compensation expense | 2,769 | 3,377 | |||||||
| Deferred income taxes | 5,086 | 968 | |||||||
| Allowance for doubtful accounts receivable | 448 | 3,130 | |||||||
| Loss from disposition of discontinued operations | 672 | - | |||||||
| Other, net | 185 | 1,007 | |||||||
| Changes in assets and liabilities (net of acquisitions): | |||||||||
| Accounts receivable, net and contract assets | (7,014 | ) | (23,615 | ) | |||||
| Prepaid expenses and other assets | (4,305 | ) | (716 | ) | |||||
| Accounts payable | (423 | ) | (2,100 | ) | |||||
| Accrued liabilities | (119 | ) | 2,200 | ||||||
| Accrued compensation-related costs | (28,772 | ) | (36,458 | ) | |||||
| Income taxes payable | (3,356 | ) | 2,926 | ||||||
| Other liabilities | (8,587 | ) | (6,120 | ) | |||||
| Net cash used in operating activities | (31,139 | ) | (34,847 | ) | |||||
| Cash flows from investing activities: | |||||||||
| Purchases of property and equipment | (3,007 | ) | (5,750 | ) | |||||
| Acquisitions of businesses, net of cash acquired | (6,000 | ) | - | ||||||
| Net cash used in investing activities | (9,007 | ) | (5,750 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Issuances of common stock | 856 | 1,238 | |||||||
| Repurchases of common stock | (53,493 | ) | (11,357 | ) | |||||
| Dividend payments | (1,994 | ) | - | ||||||
| Repayments to banks | - | (79,144 | ) | ||||||
| Borrowings from banks | - | 129,677 | |||||||
| Distributions to non-controlling interest holder | (3,600 | ) | - | ||||||
| Other, net | (1,306 | ) | (1,596 | ) | |||||
| Net cash (used in) provided by financing activities | (59,537 | ) | 38,818 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (20 | ) | (24 | ) | |||||
| Net decrease in cash and cash equivalents | (99,703 | ) | (1,803 | ) | |||||
| Cash and cash equivalents at beginning of the period | 206,920 | 8,449 | |||||||
| Cash and cash equivalents at end of the period | $ | 107,217 | $ | 6,646 | |||||
| NAVIGANT CONSULTING, INC. AND SUBSIDIARIES | ||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
| (In thousands, except per share data and percentages (1)) | ||||||||
| (Unaudited) | ||||||||
|
EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share (2) |
For the quarter ended | |||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Adjusted items: | ||||||||
| Severance expense | $ | 677 | $ | 1,783 | ||||
| Income tax benefit (3) | (185 | ) | (475 | ) | ||||
| Tax-effected impact of severance expense | $ | 492 | $ | 1,308 | ||||
| Other operating costs -other costs (4) | $ | 32 | $ | 983 | ||||
| Income tax benefit (3) | (9 | ) | (268 | ) | ||||
| Tax-effected impact of other operating costs - other costs | $ | 23 | $ | 715 | ||||
| Adjusted EBITDA reconciliation: | ||||||||
| Net income attributable to Navigant Consulting, Inc. | $ | 4,281 | $ | 11,853 | ||||
| Income attributable to non-controlling interest, net of tax | 2,038 | - | ||||||
| Loss (income) from discontinued operations, net of tax | 489 | (13,450 | ) | |||||
| Net income (loss) from continuing operations | $ | 6,808 | $ | (1,597 | ) | |||
| Interest expense | 318 | 828 | ||||||
| Interest income | (689 | ) | (119 | ) | ||||
| Other expense, net | 132 | 361 | ||||||
| Income tax expense | 3,047 | 225 | ||||||
| Depreciation expense | 4,586 | 4,997 | ||||||
| Amortization expense | 1,372 | 1,752 | ||||||
| EBITDA | $ | 15,574 | $ | 6,447 | ||||
| Adjusted items: | ||||||||
| Severance expense | 677 | 1,783 | ||||||
| Other operating costs - other costs | 32 | 983 | ||||||
| Adjusted EBITDA from continuing operations | $ | 16,283 | $ | 9,213 | ||||
| Adjusted Net Income reconciliation: | ||||||||
| Net income attributable to Navigant Consulting, Inc. | $ | 4,281 | $ | 11,853 | ||||
| Income attributable to non-controlling interest, net of tax | 2,038 | - | ||||||
| Loss (income) from discontinued operations, net of tax | 489 | (13,450 | ) | |||||
| Net income (loss) from continuing operations | $ | 6,808 | $ | (1,597 | ) | |||
| Adjusted items: | ||||||||
| Tax-effected impact of severance expense | 492 | 1,308 | ||||||
| Tax-effected impact of other operating costs - other costs | 23 | 715 | ||||||
| Impact of certain income tax related items (5) | - | 1,100 | ||||||
| Tax-effected adjusted items | 515 | 3,123 | ||||||
| Adjusted Net Income from continuing operations | $ | 7,323 | $ | 1,526 | ||||
| Shares used in computing adjusted per diluted share data | 41,408 | 46,834 | ||||||
| Earnings per share from continuing operations attributable to Navigant Consulting, Inc. | $ | 0.12 | $ | (0.04 | ) | |||
| Earnings per Share attributable to non-controlling interest | 0.05 | - | ||||||
| Earnings per Share from adjusted items | 0.01 | 0.07 | ||||||
| Adjusted Earnings per Share from continuing operations (1) | $ | 0.18 | $ | 0.03 | ||||
| For the quarter ended | ||||||||
|
Adjusted Free Cash Flow (6) |
March 31, | |||||||
| 2019 | 2018 | |||||||
| Net cash used in operating activities | $ | (31,139 | ) | $ | (34,847 | ) | ||
| Changes in assets and liabilities | 52,576 | 63,883 | ||||||
| Allowance for doubtful accounts receivable | (448 | ) | (3,130 | ) | ||||
| Purchases of property and equipment | (3,007 | ) | (5,750 | ) | ||||
| Payments of contingent acquisition liabilities | - | (80 | ) | |||||
| Adjusted Free Cash Flow | $ | 17,982 | $ | 20,076 | ||||
|
Leverage Ratio (7) |
At March 31, | ||||||||||
| 2019 | 2018 | ||||||||||
| Adjusted EBITDA for prior twelve-month period (continuing + discontinued operations) | $ | 96,899 | $ | 124,287 | |||||||
| Bank debt | $ | - | $ | 184,327 | |||||||
| Leverage Ratio | - | 1.48 | |||||||||
| For the quarter ended | |||||||||||
|
Organic Growth (8) |
March 31, | ||||||||||
| 2019 | 2018 | Growth | |||||||||
| Revenues before reimbursements | $ | 186,129 | $ | 161,445 | 15.3 | % | |||||
| Pro forma acquisition adjustment | - | 598 | |||||||||
| Currency impact | 834 | ||||||||||
| Organic RBR | $ | 186,963 | $ | 162,043 | 15.4 | % | |||||
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), as applicable. 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) and certain tax adjustments, as applicable. While other operating costs (benefit) are generally non-recurring in nature, severance expense and certain other operating costs 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 Navigant's results of operations across periods.
(3) Income tax impact has been determined based on specific tax jurisdiction.
(4) In 2018, the Company incurred non-recurring legal costs relating to a shareholder proxy contest, as well as non-recurring fees and expenses relating to the divestiture of its former Disputes, Forensics and Legal Technology segment and Transaction Advisory Services practice.
(5) In Q4 2018, the Company settled its 2014 income tax audit with the
(6) Adjusted 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. Adjusted 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.
(7) Leverage ratio is calculated as bank debt at the end of the period divided by Adjusted EBITDA (for continuing and discontinued operations) 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.
(8) Organic growth represents revenues before reimbursements from continuing operations adjusted to include the impact of our 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. 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190425005161/en/
Source: Navigant
Kyle Bland
Navigant Investor Relations
312.573.5624
kyle.bland@navigant.com
Belia
Ortega
Navigant Corporate Communications
312.583.2640
belia.ortega@navigant.com