Navigant Reports Fourth Quarter and Full-Year 2018 Financial Results and Provides 2019 Outlook
Fourth quarter 2018 financial summary:
-
Revenues and revenues before reimbursements (RBR) of
$193.2 and$174.6 million respectively, were up 9% and 11% compared to fourth quarter 2017 -
Net income from continuing operations of
$3.8 million was down$18.6 million from the prior year period primarily due to the tax gain related to the Tax Cuts and Jobs Act (Tax Reform) recognized in 2017 -
Net income attributable to
Navigant Consulting, Inc. of$5.9 million , or$0.14 per share, was down$37.2 million compared to the prior year period primarily due to the impact of divesting the Company’s Disputes, Forensics and Legal Technology segment and Transaction Advisory Services practice (SaleCo divestiture) earlier in 2018 and the gain related to Tax Reform recognized in the prior year period -
Adjusted Earnings per Share (EPS) from continuing operations of
$0.10 was up$0.01 compared to fourth quarter 2017 -
Repurchased
$57.1 million of common stock through the Company’s accelerated share repurchase plan
Full year 2018 financial summary:
-
Revenues and revenues before reimbursements (RBR) of
$743.6 and$672.7 million respectively, were up 4% and 6% compared to full year 2017 -
Net income from continuing operations of
$15.2 million was down$16.2 million from the prior year period primarily due to the Tax Reform gain recognized in 2017 -
Net income attributable to
Navigant Consulting, Inc. of$120.6 million , or$2.64 per share, was up$45.6 million compared to the prior year period primarily due to the gain recognized from the SaleCo divestiture which more than offset the benefit related to Tax Reform recognized in the prior year period -
Adjusted EPS from continuing operations of
$0.47 increased$0.11 compared to full year 2017 -
Returned
$116.9 million to shareholders, including repurchases of common stock totaling$112.5 million and the initiation of a quarterly dividend - Delivered full-year 2018 results within communicated guidance ranges
2019 outlook:
-
Management provides full year 2019 financial outlook including RBR
guidance of between
$735 million and $765 million , Adjusted EBITDA between$70 million and $80 million and Adjusted EPS between$0.85 and $1.00
“2018 was a year of significant transformation for Navigant,” said
Howard continued, “We accomplished these objectives while also producing solid operating results and delivering against our guidance targets for the year. We enter 2019 with significant opportunities in front of us, the financial flexibility to pursue growth and confidence in our ability to execute. Our future has never been brighter.”
FOURTH QUARTER AND FULL-YEAR 2018 FINANCIAL RESULTS |
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For the quarter ended December 31, | For the year ended December 31, | |||||||||||||||||||||||||||||||
Increase / | Increase / | |||||||||||||||||||||||||||||||
(Dollars in millions, excluding per share data) |
2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | ||||||||||||||||||||||||||
Revenue | $ | 193.2 | $ | 177.0 | $ | 16.2 | $ | 743.6 | $ | 714.1 | $ | 29.5 | ||||||||||||||||||||
RBR | $ | 174.6 | $ | 156.6 | $ | 18.0 | $ | 672.7 | $ | 636.9 | $ | 35.8 | ||||||||||||||||||||
Net income from continuing operations | $ | 3.8 | $ | 22.4 | $ | (18.6 | ) | $ | 15.2 | $ | 31.4 | $ | (16.2 | ) | ||||||||||||||||||
Net income attrib. to Navigant Consulting, Inc. | $ | 5.9 | $ | 43.1 | $ | (37.2 | ) | $ | 120.6 | $ | 75.0 | $ | 45.6 | |||||||||||||||||||
Adjusted EBITDA (1) | $ | 12.8 | $ | 15.2 | $ | (2.4 | ) | $ | 57.0 | $ | 59.1 | $ | (2.1 | ) | ||||||||||||||||||
Adjusted Earnings per Share (1) | $0.10 | $0.09 | $0.01 | $0.47 | $0.36 | $0.11 | ||||||||||||||||||||||||||
(1) Continuing operations only. See definition and reconciliation of non-GAAP measures elsewhere in this release | ||||||||||||||||||||||||||||||||
Navigant reported fourth quarter 2018 revenues and RBR of
Adjusted EBITDA from continuing operations for fourth quarter 2018 was
Fourth quarter 2018 net income attributable to
Navigant reported full year 2018 revenues and RBR of
Adjusted EBITDA from continuing operations for 2018 was
Net income attributable to
CASH FLOW AND BALANCE SHEET
Fourth quarter 2018 net cash used in operating activities was
Navigant continued its accelerated pace of share buybacks by
repurchasing 2.5 million shares of common stock during the fourth
quarter 2018 at an aggregate cost of
FOURTH QUARTER 2018 SEGMENT RESULTS |
|||||||||||||||
For the quarter ended December 31, | |||||||||||||||
Increase / | |||||||||||||||
(Dollars in millions, numbers may not foot due to rounding) |
2018 | 2017 | (Decrease) | ||||||||||||
RBR | |||||||||||||||
Healthcare | $ | 105.5 | $ | 93.7 | $ | 11.8 | |||||||||
Energy | 34.6 | 30.7 | 3.9 | ||||||||||||
Financial Services Advisory and Compliance | 34.5 | 32.2 | 2.3 | ||||||||||||
Total Company | $ | 174.6 | $ | 156.6 | $ | 18.0 | |||||||||
Revenues | |||||||||||||||
Healthcare | $ | 113.2 | $ | 102.8 | $ | 10.4 | |||||||||
Energy | 42.4 | 37.0 | 5.4 | ||||||||||||
Financial Services Advisory and Compliance | 37.6 | 37.2 | 0.4 | ||||||||||||
Total Company | $ | 193.2 | $ | 177.0 | $ | 16.2 | |||||||||
Segment Operating Profit | |||||||||||||||
Healthcare | $ | 28.5 | $ | 27.3 | $ | 1.2 | |||||||||
Energy | 10.1 | 8.3 | 1.8 | ||||||||||||
Financial Services Advisory and Compliance | 9.8 | 12.8 | (3.0 | ) | |||||||||||
Total Company | $ | 48.4 | $ | 48.4 | $ | - | |||||||||
Segment Operating Margin (% of RBR) | |||||||||||||||
Healthcare | 27.0 | % | 29.1 | % | -2.1 | % | |||||||||
Energy | 29.2 | % | 27.0 | % | 2.2 | % | |||||||||
Financial Services Advisory and Compliance | 28.4 | % | 39.8 | % | -11.4 | % | |||||||||
Total Company | 27.7 | % | 30.9 | % | -3.2 | % |
Healthcare segment RBR of
Energy segment RBR for fourth quarter 2018 of
FSAC segment RBR for the fourth quarter 2018 finished at
2019 GUIDANCE
Management provides its full year 2019 outlook:
-
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
CONFERENCE CALL DETAILS
Navigant will host a conference call to discuss the Company’s fourth
quarter and full year 2018 results at
NON-GAAP FINANCIAL INFORMATION
This press release includes certain non-GAAP financial measures as
defined by the
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), as applicable. 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.
BASIS OF PRESENTATION
Due to the sale of the Disputes, Forensics and Legal Technology segment and the Transaction Advisory Services practice, formerly part of the Financial Services Advisory and Compliance segment, the Company has classified these businesses as discontinued operations with the assets and liabilities being presented as held-for-sale in prior periods. Prior period comparisons have been adjusted to reflect this reporting change.
DEFINITIONS
-
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 including the
benefit recognized in the fourth quarter 2017 related to the 2017 Tax
Cuts and Jobs Act and the impact of prior period tax adjustments
related to the settlement of our 2014 income tax audit with the
IRS (impacting 2018 periods only), 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. 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.
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 Form 10-K,
and elsewhere in the Company’s filings with the
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
(In thousands, except per share data (1)) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
|
||||||||||||||||||
For the quarter ended | For the year ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Revenues: | ||||||||||||||||||
Revenues before reimbursements | $ | 174,639 | $ | 156,635 | $ | 672,694 | $ | 636,942 | ||||||||||
Reimbursements | 18,576 | 20,398 | 70,920 | 77,124 | ||||||||||||||
Total revenues | 193,215 | 177,033 | 743,614 | 714,066 | ||||||||||||||
Cost of services: | ||||||||||||||||||
Cost of services before reimbursable expenses | 127,570 | 109,009 | 479,572 | 443,423 | ||||||||||||||
Reimbursable expenses | 18,576 | 20,398 | 70,920 | 77,124 | ||||||||||||||
Total cost of services | 146,146 | 129,407 | 550,492 | 520,547 | ||||||||||||||
General and administrative expenses | 34,507 | 32,663 | 138,571 | 139,024 | ||||||||||||||
Depreciation expense | 5,074 | 4,806 | 20,040 | 20,398 | ||||||||||||||
Amortization expense | 1,476 | 2,156 | 6,461 | 8,574 | ||||||||||||||
Other operating costs | 51 | 280 | 3,128 | 2,600 | ||||||||||||||
Operating income | 5,961 | 7,721 | 24,922 | 22,923 | ||||||||||||||
Interest expense | 300 | 758 | 2,708 | 3,022 | ||||||||||||||
Interest income | (1,095 | ) | (109 | ) | (1,988 | ) | (320 | ) | ||||||||||
Other (benefit) expense, net | (449 | ) | 410 | 119 | 895 | |||||||||||||
Income from continuing operations before income tax expense | 7,205 | 6,662 | 24,083 | 19,326 | ||||||||||||||
Income tax expense (benefit) | 3,381 | (15,704 | ) | 8,900 | (12,031 | ) | ||||||||||||
Net income from continuing operations | 3,824 | 22,366 | 15,183 | 31,357 | ||||||||||||||
Income from discontinued operations, net of tax | 2,413 | 20,754 | 105,848 | 43,595 | ||||||||||||||
Net income | 6,237 | 43,120 | 121,031 | 74,952 | ||||||||||||||
Income attributable to non-controlling interest, net of tax | (319 | ) | - | (389 | ) | - | ||||||||||||
Net income attributable to Navigant Consulting, Inc. | $ | 5,918 | $ | 43,120 | $ | 120,642 | $ | 74,952 | ||||||||||
Basic net income per share data | ||||||||||||||||||
Income from continuing operations attributable to Navigant Consulting, Inc. | $ | 0.08 | $ | 0.49 | $ | 0.33 | $ | 0.67 | ||||||||||
Income from discontinued operations, net of tax | $ | 0.06 | $ | 0.45 | $ | 2.39 | $ | 0.94 | ||||||||||
Net income attributable to Navigant Consulting, Inc. | $ | 0.14 | $ | 0.94 | $ | 2.72 | $ | 1.61 | ||||||||||
Shares used in computing basic per share data | 42,442 | 45,708 | 44,328 | 46,593 | ||||||||||||||
Diluted net income per share data | ||||||||||||||||||
Income from continuing operations attributable to Navigant Consulting, Inc. | $ | 0.08 | $ | 0.47 | $ | 0.32 | $ | 0.65 | ||||||||||
Income from discontinued operations, net of tax | $ | 0.06 | $ | 0.44 | $ | 2.31 | $ | 0.90 | ||||||||||
Net income attributable to Navigant Consulting, Inc. | $ | 0.14 | $ | 0.91 | $ | 2.64 | $ | 1.55 | ||||||||||
Shares used in computing diluted per share data | 43,594 | 47,223 | 45,727 | 48,226 | ||||||||||||||
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES | ||||||||||
CONSOLIDATED BALANCE SHEETS AND SELECTED DATA | ||||||||||
(In thousands, except DSO data) | ||||||||||
(Unaudited) | ||||||||||
December 31, | December 31, | |||||||||
2018 | 2017 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 206,920 | $ | 8,449 | ||||||
Accounts receivable, net and contract assets | 179,923 | 165,838 | ||||||||
Prepaid expenses and other current assets | 22,512 | 21,006 | ||||||||
Assets held for sale | - | 361,030 | ||||||||
Total current assets | 409,355 | 556,323 | ||||||||
Non-current assets: | ||||||||||
Property and equipment, net | 63,025 | 71,432 | ||||||||
Intangible assets, net | 14,166 | 20,172 | ||||||||
Goodwill | 422,357 | 422,959 | ||||||||
Other assets | 8,644 | 9,378 | ||||||||
Total assets | $ | 917,547 | $ | 1,080,264 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 13,302 | $ | 8,404 | ||||||
Accrued liabilities | 15,558 | 9,734 | ||||||||
Accrued compensation-related costs | 69,555 | 58,515 | ||||||||
Income tax payable | 13,357 | 3,199 | ||||||||
Other current liabilities | 34,044 | 30,550 | ||||||||
Liabilities held for sale | - | 86,384 | ||||||||
Total current liabilities | 145,816 | 196,786 | ||||||||
Non-current liabilities: | ||||||||||
Deferred income tax liabilities | 33,901 | 36,598 | ||||||||
Other non-current liabilities | 25,277 | 26,602 | ||||||||
Bank debt non-current | - | 132,944 | ||||||||
Total non-current liabilities | 59,178 | 196,144 | ||||||||
Total liabilities | 204,994 | 392,930 | ||||||||
Stockholders' equity: | ||||||||||
Common stock | 49 | 58 | ||||||||
Additional paid-in capital | 664,473 | 659,825 | ||||||||
Treasury stock | (160,972 | ) | (224,366 | ) | ||||||
Retained earnings | 211,543 | 270,995 | ||||||||
Accumulated other comprehensive loss | (6,529 | ) | (19,178 | ) | ||||||
Total Navigant Consulting Inc. stockholders' equity | 708,564 | 687,334 | ||||||||
Non-controlling interest | 3,989 | - | ||||||||
Total stockholders' equity | 712,553 | 687,334 | ||||||||
Total liabilities and stockholders' equity | $ | 917,547 | $ | 1,080,264 | ||||||
Days sales outstanding, net (DSO) - Continuing operations | 70 | 73 | ||||||||
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) | ||||||||||||||||||
For the quarter ended | For the year ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income | $ | 6,307 | $ | 43,120 | $ | 121,031 | $ | 74,952 | ||||||||||
Adjustments to reconcile net income to net cash provided by | ||||||||||||||||||
operating activities: | ||||||||||||||||||
Depreciation expense | 5,074 | 6,785 | 23,815 | 28,826 | ||||||||||||||
Amortization expense | 1,475 | 2,247 | 6,672 | 8,960 | ||||||||||||||
Share-based compensation expense | 1,462 | 2,623 | 6,582 | 13,037 | ||||||||||||||
Deferred income taxes | (1,355 | ) | (23,517 | ) | (27,706 | ) | (16,463 | ) | ||||||||||
Allowance for doubtful accounts receivable | 1,157 | 1,411 | 8,742 | 7,755 | ||||||||||||||
Payments of contingent acquisition liabilities in excess of initial fair value | - | - | (1,186 | ) | (1,700 | ) | ||||||||||||
Contingent acquisition liability adjustments, net | - | - | - | 2,213 | ||||||||||||||
Loss (gain) on disposition of assets | 2,735 | - | (84,436 | ) | - | |||||||||||||
Other, net | (816 | ) | 1,286 | 996 | 3,113 | |||||||||||||
Changes in assets and liabilities (net of dispositions): | ||||||||||||||||||
Accounts receivable, net and contract assets | (5,269 | ) | 28,160 | (34,464 | ) | (11,773 | ) | |||||||||||
Prepaid expenses and other assets | (6,289 | ) | (5,677 | ) | 3,806 | (6,712 | ) | |||||||||||
Accounts payable | 4,356 | 152 | 1,436 | 1,058 | ||||||||||||||
Accrued liabilities | (6,586 | ) | 89 | (86 | ) | 1,158 | ||||||||||||
Accrued compensation-related costs | 5,827 | 7,354 | 1,938 | (10,589 | ) | |||||||||||||
Income taxes payable | (27,288 | ) | 3,281 | 8,457 | 3,248 | |||||||||||||
Other liabilities | 13,410 | 3,402 | 1,992 | 5,452 | ||||||||||||||
Net cash (used in) provided by operating activities | (5,800 | ) | 70,716 | 37,589 | 102,535 | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||||
Purchases of property and equipment | (4,253 | ) | (7,921 | ) | (15,543 | ) | (38,650 | ) | ||||||||||
Acquisitions of businesses, net of cash acquired | - | (5,000 | ) | - | (5,000 | ) | ||||||||||||
Proceeds from dispositions, net of selling costs | - | - | 426,079 | - | ||||||||||||||
Other, net | - | (121 | ) | - | (812 | ) | ||||||||||||
Net cash (used in) provided by investing activities | (4,253 | ) | (13,042 | ) | 410,536 | (44,462 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||||
Issuances of common stock | 440 | 708 | 3,550 | 3,919 | ||||||||||||||
Repurchases of common stock | (57,096 | ) | (14,993 | ) | (112,546 | ) | (43,005 | ) | ||||||||||
Dividend payments | (2,093 | ) | - | (4,315 | ) | - | ||||||||||||
Payments of contingent acquisition liabilities | (1,000 | ) | - | (2,170 | ) | (8,630 | ) | |||||||||||
Repayments to banks | - | (108,036 | ) | (453,064 | ) | (457,200 | ) | |||||||||||
Borrowings from banks | - | 64,066 | 321,231 | 452,524 | ||||||||||||||
Payments of debt issuance costs | (451 | ) | (5 | ) | (451 | ) | (1,297 | ) | ||||||||||
Non-controlling interest | - | - | 3,600 | - | ||||||||||||||
Other, net | (167 | ) | (122 | ) | (4,861 | ) | (5,009 | ) | ||||||||||
Net cash used in financing activities | (60,367 | ) | (58,382 | ) | (249,026 | ) | (58,698 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (85 | ) | 152 | (628 | ) | 783 | ||||||||||||
Net (decrease) increase in cash and cash equivalents | (70,505 | ) | (556 | ) | 198,471 | 158 | ||||||||||||
Cash and cash equivalents at beginning of the period | 277,425 | 9,005 | 8,449 | 8,291 | ||||||||||||||
Cash and cash equivalents at end of the period | $ | 206,920 | $ | 8,449 | $ | 206,920 | $ | 8,449 | ||||||||||
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 | For the year ended | ||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Severance expense | $ | 246 | $ | 268 | $ | 2,492 | $ | 4,593 | ||||||||||
Income tax benefit (3) | (49 | ) | (98 | ) | (659 | ) | (1,772 | ) | ||||||||||
Tax-effected impact of severance expense | $ | 197 | $ | 170 | $ | 1,833 | $ | 2,821 | ||||||||||
Other operating (benefit) costs - contingent acquisition liability adjustment, net | $ | (984 | ) | $ | - | $ | (984 | ) | $ | 2,213 | ||||||||
Income tax expense (benefit) (3) | 205 | - | 205 | (888 | ) | |||||||||||||
Tax-effected impact of other operating (benefits) costs - contingent acquisition liability adjustment, net | $ | (779 | ) | $ | - | $ | (779 | ) | $ | 1,325 | ||||||||
Other operating costs (benefit) - gain on termination of swaps and other financing costs | $ | 30 | $ | - | $ | (418 | ) | $ | 145 | |||||||||
Income tax (benefit) expense (3) | (8 | ) | - | 114 | (58 | ) | ||||||||||||
Tax-effected impact of other operating costs (benefit) - gain on termination of swaps and other financing costs | $ | 22 | $ | - | $ | (304 | ) | $ | 87 | |||||||||
Other operating costs - asset impairment | $ | 1,019 | $ | - | $ | 1,019 | $ | - | ||||||||||
Income tax benefit (3) | (278 | ) | - | (278 | ) | - | ||||||||||||
Tax-effected impact of other operating costs - other impairment | $ | 741 | $ | - | $ | 741 | $ | - | ||||||||||
Other operating costs -other (benefits) costs (4) | $ | (14 | ) | $ | 280 | $ | 3,511 | $ | 242 | |||||||||
Income tax expense (benefit) (3) | 1 | (113 | ) | (960 | ) | (97 | ) | |||||||||||
Tax-effected impact of other operating (benefits) costs - other costs | $ | (13 | ) | $ | 167 | $ | 2,551 | $ | 145 | |||||||||
Adjusted EBITDA reconciliation: | ||||||||||||||||||
Net income from continuing operations | $ | 3,824 | $ | 22,366 | $ | 15,183 | $ | 31,357 | ||||||||||
Interest expense | 300 | 758 | 2,708 | 3,022 | ||||||||||||||
Interest income | (1,095 | ) | (109 | ) | (1,988 | ) | (320 | ) | ||||||||||
Other (benefit) expense, net | (449 | ) | 410 | 119 | 895 | |||||||||||||
Income tax expense (benefit) | 3,381 | (15,704 | ) | 8,900 | (12,031 | ) | ||||||||||||
Depreciation expense | 5,074 | 4,806 | 20,040 | 20,398 | ||||||||||||||
Accelerated depreciation - office consolidation (included in other operating costs) | - | 101 | - | 101 | ||||||||||||||
Amortization expense | 1,476 | 2,156 | 6,461 | 8,574 | ||||||||||||||
EBITDA | $ | 12,511 | $ | 14,784 | $ | 51,423 | $ | 51,996 | ||||||||||
Severance expense | 246 | 268 | 2,492 | 4,593 | ||||||||||||||
Other operating (benefit) costs - contingent acquisition liability adjustment, net | (984 | ) | - | (984 | ) | 2,213 | ||||||||||||
Other operating costs (benefit) - gain on termination of swaps and other financing costs | 30 | - | (418 | ) | 145 | |||||||||||||
Other operating costs - other impairment | 1,019 | - | 1,019 | - | ||||||||||||||
Other operating (benefits) costs - other costs | (14 | ) | 179 | 3,511 | 141 | |||||||||||||
Adjusted EBITDA from continuing operations | $ | 12,808 | $ | 15,231 | $ | 57,043 | $ | 59,088 | ||||||||||
Adjusted Net Income reconciliation: | ||||||||||||||||||
Net income from continuing operations | $ | 3,824 | $ | 22,366 | $ | 15,183 | $ | 31,357 | ||||||||||
Tax-effected impact of severance expense | 197 | 170 | 1,833 | 2,821 | ||||||||||||||
Tax-effected impact of other operating (benefits) costs - contingent acquisition liability adjustment, net | (779 | ) | - | (779 | ) | 1,325 | ||||||||||||
Tax-effected impact of other operating costs (benefit) - gain on termination of swaps and other financing costs | 22 | - | (304 | ) | 87 | |||||||||||||
Tax-effected impact of other operating costs - other impairment | 741 | - | 741 | - | ||||||||||||||
Tax-effected impact of other operating (benefits) costs - other costs | (13 | ) | 167 | 2,551 | 145 | |||||||||||||
Impact of certain income tax related items (5) | 235 | (18,493 | ) | 2,235 | (18,493 | ) | ||||||||||||
Adjusted Net Income from continuing operations | $ | 4,227 | $ | 4,210 | $ | 21,460 | $ | 17,242 | ||||||||||
Shares used in computing adjusted per diluted share data | 43,594 | 47,223 | 45,727 | 48,226 | ||||||||||||||
Adjusted Earnings per Share from continuing operations | $ | 0.10 | $ | 0.09 | $ | 0.47 | $ | 0.36 | ||||||||||
For the quarter ended | For the year ended | |||||||||||||||||
Adjusted Free Cash Flow (6) |
December 31, | December 31, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Net cash (used in) provided by operating activities | $ | (5,800 | ) | $ | 70,716 | $ | 37,589 | $ | 102,535 | |||||||||
Changes in assets and liabilities | 21,839 | (36,761 | ) | 16,921 | 18,158 | |||||||||||||
Allowance for doubtful accounts receivable | (1,157 | ) | (1,411 | ) | (8,742 | ) | (7,755 | ) | ||||||||||
Purchases of property and equipment | (4,253 | ) | (7,921 | ) | (15,543 | ) | (38,650 | ) | ||||||||||
Payments of contingent acquisition liabilities | (1,000 | ) | - | (2,170 | ) | (8,630 | ) | |||||||||||
Adjusted Free Cash Flow | $ | 9,629 | $ | 24,623 | $ | 28,055 | $ | 65,658 | ||||||||||
Leverage Ratio (7) |
At December 31, | |||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Adjusted EBITDA for prior twelve-month period (continuing + discontinued operations) | $ | 110,526 | $ | 125,838 | ||||||||||||||||||
Bank debt | $ | - | $ | 132,944 | ||||||||||||||||||
Leverage Ratio | - | 1.06 | ||||||||||||||||||||
For the quarter ended | For the year ended | |||||||||||||||||||||
Organic Growth (8) |
December 31, | December 31, | ||||||||||||||||||||
2018 | 2017 | Growth | 2018 | 2017 | Growth | |||||||||||||||||
Revenues before reimbursements | $ | 174,639 | $ | 156,635 | 11.5 | % | $ | 672,694 | $ | 636,942 | 5.6 | % | ||||||||||
Pro forma acquisition adjustment | - | 473 | - | 4,741 | ||||||||||||||||||
Currency impact | 436 | - | (1,907 | ) | - | |||||||||||||||||
Organic RBR | $ | 175,075 | $ | 157,108 | 11.4 | % | $ | 670,787 | $ | 641,683 | 4.5 | % | ||||||||||
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 including the benefit recognized in the fourth quarter 2017 related to the 2017 Tax Cuts and Jobs Act and the impact of prior period tax adjustments related to the settlement of our 2014 income tax audit with the IRS (impacting 2018 periods only), 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) Effective income tax expense 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 SaleCo transaction. |
(5) In Q4 2017, the Company recorded adjustments to its deferred income tax liabilities related to the impact of 2017 Tax Cuts and Jobs Act that resulted in an income tax benefit. In Q4 2018, the Company settled its 2014 income tax audit with the IRS. The settlement resulted in an incremental tax expense related to the timing of tax deductions on certain executive compensation awards that required employment beyond the year of deduction. Although tax expense also includes adjustments for the 2014-2017 tax years, the adjustment is primarily driven by the deductions taken on our 2014 income tax return. After reaching this settlement in Q4 2018, the Company restated the Q1-Q3 2018 Adjusted EPS figures to reflect amounts accrued in those periods for this settlement. The adjustment includes related interest cost. |
(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 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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190226005345/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