Press Release

Navigant Reports Growth in Second Quarter Revenues and Earnings Per
Share

July 27, 2011 at 7:06 AM EDT
  • Second quarter 2011 revenues before reimbursements (RBR) of $173 million, up 12% year over year and 2% sequentially. First half 2011 RBR up 11% over the same period in 2010.
  • GAAP EPS of $0.21 for second quarter 2011, up from $0.16 in second quarter 2010 and $0.17 in first quarter 2011. Adjusted EPS of $0.21 for second quarter 2011, up from $0.17 in second quarter 2010 and $0.19 in first quarter 2011. First half 2011 adjusted EPS of $0.40, up 29% from the same period in 2010.
  • Consultant utilization of 79% for second quarter 2011, up from 73% in second quarter 2010 and 78% in first quarter 2011.
  • Strong cash flow results in $23 million net debt reduction from first quarter 2011. $400 million five-year, unsecured revolving credit facility completed during the quarter.

CHICAGO, Jul 27, 2011 (BUSINESS WIRE) --

Navigant (NYSE:NCI) today announced financial results for the second quarter ended June 30, 2011.

"We are pleased with our year to date operating and financial performance," stated William M. Goodyear, Chairman and Chief Executive Officer. "For the third consecutive quarter, revenues improved both sequentially and year over year while market demand in our key practice areas drove the highest utilization we have seen in over three years. The breadth of client demand in each of our four segments is encouraging. Based on this solid first half and our updated outlook for the rest of the year, full year 2011 revenues and adjusted earnings per share are expected to move toward the higher end of our previously communicated ranges."

Second Quarter 2011 Results

The Company's second quarter 2011 results are summarized as follows:

Total Company Second Quarter 2011 Financial Results (1)
Q2 2011 Q2 2010 Change Q1 2011 Change
Revenues Before Reimbursements ($000) $ 173,293 $ 154,617 12.1 % $ 169,604 2.2 %
Total Revenues ($000) $ 194,408 $ 172,323 12.8 % $ 188,799 3.0 %
EBITDA ($000) $ 25,328 $ 23,400 8.2 % $ 22,380 13.2 %
Adjusted EBITDA ($000) $ 25,571 $ 24,407 4.8 % $ 23,616 8.3 %
Net Income ($000) $ 10,760 $ 7,828 37.5 % $ 8,778 22.6 %
Earnings Per Share $ 0.21 $ 0.16 31.3 % $ 0.17 23.5 %
Adjusted Earnings Per Share $ 0.21 $ 0.17 23.5 % $ 0.19 10.5 %
Average Billable Full Time Equivalents (FTEs) 1,764 1,660 6.3 % 1,782 -1.0 %
End of Period Billable FTEs 1,768 1,668 6.0 % 1,776 -0.5 %
Consultant Utilization (1,850 base)

79%

73%

8.2 %

78%

1.3 %
Average Bill Rate (excluding performance based fees) $ 277 $ 266 4.1 % $ 274 1.1 %
Days Sales Outstanding (DSO) 82 79 3.8 % 83 -1.2 %

1) EBITDA, Adjusted EBITDA and Adjusted Earnings per Share are non GAAP financial measures.See the attached financial schedules for a reconciliation of EBITDA, Adjusted EBITDA and Adjusted Earnings per Share to the most directly comparable GAAP financial measures.

Navigant reported second quarter 2011 RBR of $173 million, up 12% from $155 million in second quarter 2010 and up 2% from $170 million in first quarter 2011. Top line improvements reflected growing demand in key practice areas as well as the ongoing impact of investments and senior hires made in 2010. Consultant utilization was a strong 79% for second quarter 2011, an increase from 73% in second quarter 2010 and 78% in first quarter 2011. Average billable FTEs were 1,764 for second quarter 2011, up from 1,660 in second quarter 2010 and down modestly from 1,782 in first quarter 2011. Average bill rate, excluding performance based fees, improved to $277 for second quarter 2011 compared to $266 in second quarter 2010 and $274 in first quarter 2011.

RBR improved for every segment on both a year over year and a sequential basis, reflecting solid market demand across the Company. Second quarter 2011 EBITDA increased 8% from second quarter 2010 and 13% from first quarter 2011. As anticipated, cost of services and general and administrative expenses combined were up modestly from first quarter 2011 levels. Depreciation and amortization expenses declined during second quarter 2011 while interest expense was down sharply from the year ago quarter. The Company generated strong net cash flow provided by operating activities of $37 million for second quarter 2011, up from $29 million in second quarter 2010. Additionally, as previously announced, the Company recently completed a new $400 million five-year, unsecured revolving credit facility.

Business Segment Highlights

Business Segment Second Quarter 2011 Financial Results (2)
Q2 2011 Q2 2010 Change Q1 2011 Change
Business Segment Revenues ($000)
Business Consulting Services $ 81,193 $ 71,756 13.2 % $ 79,627 2.0 %
Dispute and Investigative Services 73,117 63,867 14.5 % 72,006 1.5 %
Economic Consulting 19,889 18,622 6.8 % 18,539 7.3 %
International Consulting 20,209 18,078 11.8 % 18,627 8.5 %
Total Company $ 194,408 $ 172,323 12.8 % $ 188,799 3.0 %
Business Segment Revenues before Reimbursements ($000)
Business Consulting Services $ 71,710 $ 63,430 13.1 % $ 70,469 1.8 %
Dispute and Investigative Services 66,789 59,737 11.8 % 65,753 1.6 %
Economic Consulting 18,475 16,966 8.9 % 17,874 3.4 %
International Consulting 16,319 14,484 12.7 % 15,508 5.2 %
Total Company $ 173,293 $ 154,617 12.1 % $ 169,604 2.2 %
Business Segment Operating Profit ($000)
Business Consulting Services $ 23,453 $ 23,148 1.3 % $ 23,182 1.2 %
Dispute and Investigative Services 27,279 21,585 26.4 % 25,777 5.8 %
Economic Consulting 6,029 6,273 -3.9 % 5,757 4.7 %
International Consulting 3,549 3,663 -3.1 % 3,282 8.1 %
Total Company $ 60,310 $ 54,669 10.3 % $ 57,998 4.0 %

(2) A metrics summary including data by segment is available at www.navigant.com/investor_relations.

Navigant's Business Consulting Services segment generated RBR of $72 million in second quarter 2011, up 13% from second quarter 2010 and 2% from first quarter 2011. Segment utilization remained a steady 81% on both a year over year and a sequential basis, while average billable FTEs increased slightly to 905 in second quarter 2011, up from 899 in first quarter 2011. Year over year headcount comparisons reflect the Company's healthcare investments in October 2010. The segment's healthcare and energy practices represented a combined 74% of second quarter 2011 Business Consulting Services RBR and are expected to continue to drive year over year growth opportunities for the segment.

Navigant's Dispute and Investigative Services segment reported RBR of $67 million in second quarter 2011, up 12% from second quarter 2010 and 2% from first quarter 2011. Segment operating profit improved to 41% for second quarter 2011, up from 36% in second quarter 2010 and 39% in first quarter 2011. Segment utilization was a strong 81% for the quarter, an increase from 69% in second quarter 2010 and 76% in first quarter 2011. Average bill rate also improved to $314 for second quarter 2011 compared to $300 in second quarter 2010 and $308 in first quarter 2011. Average billable FTEs declined to 562 for second quarter 2011 compared to 642 in second quarter 2010 and 584 in first quarter 2011. Year over year headcount declines were primarily due to actions taken in late 2010 to realign the segment's construction disputes practice. Continued credit crisis engagement opportunities, combined with increasing regulatory pressure in the healthcare compliance marketplace and improving demand for construction related disputes services, are driving opportunities for this segment.

Navigant's Economic Consulting segment generated RBR of $18 million for second quarter 2011, up 9% from second quarter 2010 and 3% from first quarter 2011. Segment utilization was 88% for second quarter 2011 compared to 76% in second quarter 2010 and 79% in first quarter 2011. Average bill rate was $376 for second quarter 2011, down from $385 in second quarter 2010 due to billable hour mix, while up from $371 in first quarter 2011. Average billable FTEs were 121 for second quarter 2011, compared to 119 in second quarter 2010 and down slightly from 130 in first quarter 2011. Antitrust and credit crisis related matters favorably impacted second quarter 2011 results.

Navigant's International Consulting segment reported RBR of $16 million for second quarter 2011, up 13% from second quarter 2010 and 5% from first quarter 2011. Segment operating profit of $4 million for second quarter 2011 was down 3% from second quarter 2010 and up 8% from first quarter 2011. Consultant utilization was 62% for second quarter 2011, up from 60% in second quarter 2010 and down from 65% in first quarter 2011. Average bill rate was $303 for second quarter 2011 compared to $259 in second quarter 2010 and $313 in first quarter 2011. Improving demand in the global construction and global financial services practice areas drove second quarter 2011 results.

2011 Outlook

Based upon Navigant's first half performance and outlook for the balance of the year, estimated 2011 revenues, RBR and adjusted EPS are expected to be toward the higher end of previously communicated ranges. As originally stated, these estimated ranges include total 2011 revenues between $715 and $760 million, RBR between $650 and $690 million, and adjusted EPS between $0.70 and $0.77 per share. The outlook for adjusted EBITDA remains unchanged at between $95 and $105 million.

Conference Call Details

Goodyear will host a conference call to discuss the Company's second quarter 2011 financial results at 10:00 a.m. Eastern Time on Wednesday, July 27, 2011. The conference call may be accessed via the Navigant website (www.navigant.com/investor_relations) or by dialing 888.847.7597 (630.395.0268 for international callers) and referencing pass code "NCI." A replay of the web cast will be available for approximately 90 days.

About Navigant

Navigant (NYSE: 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 and timing of the Company's implementation of its strategic business assessment; the success of the Company's organizational changes and cost reduction actions; risks inherent in international operations, including foreign currency fluctuations; ability to make acquisitions; pace, timing and integration of acquisitions; 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; 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 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)
(Unaudited)
For the quarters ended June 30, For the six months ended June 30,
2011 2010 2011 2010
Revenues:
Revenues before reimbursements $ 173,293 $ 154,617 $ 342,897 $ 308,487
Reimbursements 21,115 17,706 40,310 37,386
Total revenues 194,408 172,323 383,207 345,873
Cost of Services:
Cost of services before reimbursable expenses 116,822 102,128 231,637 204,358
Reimbursable expenses 21,115 17,706 40,310 37,386
Total costs of services 137,937 119,834 271,947 241,744
General and administrative expenses 31,143 29,089 63,552 59,549
Depreciation expense 3,206 3,553 6,583 7,354
Amortization expense 2,163 2,962 4,464 5,758
Operating income 19,959 16,885 36,661 31,468
Interest expense 1,911 3,508 3,751 6,986
Interest income (429 ) (311 ) (796 ) (624 )
Other (income) expense, net 72 (44 ) 36 61
Income before income tax expense 18,405 13,732 33,670 25,045
Income tax expense 7,645 5,904 14,132 10,770
Net income $ 10,760 $ 7,828 $ 19,538 $ 14,275
Basic net income per share $ 0.21 $ 0.16 $ 0.39 $ 0.29
Shares used in computing income per basic share 50,820 49,205 50,498 48,948
Diluted net income per share $ 0.21 $ 0.16 $ 0.38 $ 0.28
Shares used in computing income per diluted share 51,270 50,264 51,153 50,180
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AND SELECTED DATA
(In thousands, except DSO data)
(Unaudited)
June 30, June 30, December 31,
2011 2010 2010
ASSETS
Current assets:
Cash and cash equivalents $ 384 $ 3,000 $ 1,981
Accounts receivable, net 190,730 162,227 179,058
Prepaid expenses and other current assets 26,293 19,243 19,697
Deferred income tax assets 13,425 13,130 18,749
Total current assets 230,832 197,600 219,485
Non-current assets:
Property and equipment, net 35,800 40,459 38,903
Intangible assets, net 19,533 29,851 23,194
Goodwill 566,213 521,859 561,002
Other assets 27,552 22,605 26,451
Total assets $ 879,930 $ 812,374 $ 869,035
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,821 $ 9,640 $ 10,900
Accrued liabilities 7,781 9,196 7,936
Accrued compensation-related costs 60,991 50,406 72,639
Income tax payable - - 2,306
Term loan current - 18,397 18,397
Other current liabilities 29,017 40,363 43,401
Total current liabilities 109,610 128,002 155,579
Non-current liabilities:
Deferred income tax liabilities 49,241 40,809 42,274
Other non-current liabilities 22,278 19,461 25,907
Bank debt non-current 205,221 24,094 33,695
Term loan non-current - 160,058 150,859
Total non-current liabilities 276,740 244,422 252,735
Total liabilities 386,350 372,424 408,314
Stockholders' equity:
Common stock 61 60 61
Additional paid-in capital 562,089 560,282 564,214
Treasury stock (194,519 ) (209,936 ) (206,162 )
Retained earnings 134,781 105,461 115,243
Accumulated other comprehensive loss (8,832 ) (15,917 ) (12,635 )
Total stockholders' equity 493,580 439,950 460,721
Total liabilities and stockholders' equity $ 879,930 $ 812,374 $ 869,035
Selected Data
Days sales outstanding, net (DSO) 82 79 81
NAVIGANT CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share data)
(Unaudited)
For the quarters ended For the six months ended
June 30, June 30,
2011 2010 2011 2010
Cash flows from operating activities:
Net income $ 10,760 $ 7,828 $ 19,538 $ 14,275
Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation expense 3,206 3,553 6,583 7,354
Amortization expense 2,163 2,962 4,464 5,758
Share-based compensation expense 2,433 1,963 4,133 2,938
Accretion of interest expense 221 196 529 401
Deferred income taxes 4,157 2,495 11,313 7,814
Allowance for doubtful accounts receivable 1,003 2,354 3,028 3,938
Changes in assets and liabilities:
Accounts receivable (5,589 ) 10,069 (13,962 ) (3,541 )
Prepaid expenses and other assets 139 (8,530 ) (4,745 ) (9,780 )
Accounts payable 73 406 889 1,561
Accrued liabilities (26 ) (943 ) (217 ) 1,203
Accrued compensation-related costs 19,512 11,296 (11,751 ) (19,120 )
Income tax payable 104 (1,173 ) (2,266 ) (1,782 )
Other liabilities (777 ) (3,870 ) (3,577 ) (3,370 )
Net cash provided by operating activities 37,379 28,606 13,959 7,649
Cash flows from investing activities:
Purchases of property and equipment (1,677 ) (2,423 ) (3,401 ) (5,479 )
Acquisitions of businesses, net of cash acquired (1,046 ) (29,870 ) (1,046 ) (33,870 )
Payments of acquisition liabilities (10,000 ) - (10,217 ) -
Other, net - - (225 ) -
Net cash used in investing activities (12,723 ) (32,293 ) (14,889 ) (39,349 )
Cash flows from financing activities:
Issuances of common stock 410 872 1,050 1,533
Payment upon termination of credit agreement (250,613 ) - (250,613 ) -
Proceeds from new credit agreement 250,613 - 250,613 -
Borrowings from banks, net of repayments (23,275 ) 5,734 6,432 25,049
Payments of term loan - (460 ) (4,599 ) (40,920 )
Payments of debt issuance costs (2,814 ) - (2,814 ) -
Other, net (163 ) 271 (839 ) (119 )
Net cash provided by (used in) financing activities (25,842 ) 6,417 (770 ) (14,457 )
Effect of exchange rate changes on cash and cash equivalents (62 ) (91 ) 103 13
Net increase (decrease) in cash and cash equivalents (1,248 ) 2,639 (1,597 ) (46,144 )
Cash and cash equivalents at beginning of the period 1,632 361 1,981 49,144
Cash and cash equivalents at end of the period $ 384 $ 3,000 $ 384 $ 3,000
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

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 measures calculated and presented in accordance with generally accepted accounting principles (GAAP) are included in this press release. In recent years, the Company incurred significant severance expense directly related to its strategic realignment, as well as substantial staffing reductions made to meet weaker market demand primarily during the recessionary period which began at the end of 2008. Adjusted EBITDA and adjusted operating income excludes severance and adjusted earnings per share excludes the net income impact of severance in all periods presented. Severance is not considered to be non-recurring, infrequent or unusual to our business, however, management believes providing investors with this information enhances the comparability of the company's operating performance across periods. While management believes that these non-GAAP financial measures are useful in evaluating Navigant's operations, this information should be considered as supplemental in nature and not as a substitute for or superior to, any measure prepared in accordance with GAAP.

EBITDA, Adjusted EBITDA, Adjusted operating income

EBITDA (earnings before interest, taxes, depreciation and amortization) is not a measure of financial performance under generally accepted accounting principles (GAAP). The Company believes EBITDA provides useful supplemental information for investors to evaluate financial performance. This data is also used by the Company for assessment of its operating and financial results, in addition to operating income, net income and other GAAP measures. Management believes EBITDA is a useful indicator of the Company's financial and operating performance and its ability to generate cash flows from operations that are available for interest, debt service, taxes and capital expenditures. Investors should recognize that EBITDA might not be comparable to similarly-titled measures of other companies. Adjusted EBITDA and adjusted operating income excludes the impact of severance as discussed above. This measure 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.
For the quarters ended June 30, For the six months ended June 30,
2011 2010 2011 2010
EBITDA reconciliation:
Operating income $ 19,959 $ 16,885 $ 36,661 $ 31,468
Depreciation 3,206 3,553 6,583 7,354
Amortization 2,163 2,962 4,464 5,758
EBITDA $ 25,328 $ 23,400 $ 47,708 $ 44,580
Adjusted EBITDA and operating income to exclude severance expense reconciliation to operating income:
Operating income $ 19,959 $ 16,885 $ 36,661 $ 31,468
Severance expense 243 1,007 1,479 1,843
Adjusted operating income to exclude severance expense $ 20,202 $ 17,892 $ 38,140 $ 33,311
Depreciation 3,206 3,553 6,583 7,354
Amortization 2,163 2,962 4,464 5,758
Adjusted EBITDA, excluding severance expense $ 25,571 $ 24,407 $ 49,187 $ 46,423

Adjusted earnings per share (adjusted to exclude the net income impact from severance expense)

The Company discloses adjusted earnings per share to exclude the net income impact from severance expense. Management believes the adjusted earnings per share information provides additional insights into Navigant's ongoing operating performance. This measure 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.
For the quarters ended June 30, For the six months ended June 30,
2011 2010 2011 2010
Severance expense $ 243 $ 1,007 $ 1,479 $ 1,843
Income tax (benefit) (1) (96 ) (371 ) (536 ) (693 )
Net income impact of severance expense $ 147 $ 636 $ 943 $ 1,150
Shares used in computing income per diluted share 51,270 50,264 51,153 50,180
Diluted income per share impact of severance expense $ - $ 0.01 $ 0.02 $ 0.02
Net income $ 10,760 $ 7,828 $ 19,538 $ 14,275
Net income impact of severance expense 147 636 943 1,150
Adjusted net income, excluding the net income impact of severance expense $ 10,907 $ 8,464 $ 20,481 $ 15,425
Shares used in computing income per diluted share 51,270 50,264 51,153 50,180
Adjusted earnings per share, excluding the net income impact of severance expense $ 0.21 $ 0.17 $ 0.40 $ 0.31
(1) Effective income tax (benefit) has been determined based on specific tax jurisdiction.

SOURCE: Navigant

Navigant
Jennifer Moreno Reddick
Executive Director, Investor Relations
312.573.5634
jennifer.morenoreddick@navigant.com

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