nci-8k_20190725.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 2, 2019

 

 

NAVIGANT CONSULTING, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

 

Delaware

 

001-12173

 

36-4094854

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

150 North Riverside Plaza, Suite 2100, Chicago, Illinois 60606

(Address of principal executive offices including zip code)

(312) 573-5600

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par
value per share

 

NCI

 

New York Stock Exchange

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

Item 2.02.

Results of Operations and Financial Condition.

On August 2, 2019, Navigant Consulting, Inc. issued a press release announcing its financial results for the second quarter ended June 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 9.01.

Financial Statements and Exhibits.

 

 

(d)

Exhibits.

 

 

 

 

Exhibit No.

 

 

99.1

  

Press Release dated August 2, 2019.

 

2


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NAVIGANT CONSULTING, INC.

 

 

 

 

Date: August 2, 2019

 

 

 

By:

 

/s/ Stephen R. Lieberman

 

 

 

 

 

 

Name:

 

Stephen R. Lieberman

 

 

 

 

 

 

Title:

 

Executive Vice President and Chief Financial Officer

 

3

 

nci-ex991_6.htm

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

For more information, contact:

Kyle Bland

Navigant Investor Relations

312.573.5624

kyle.bland@navigant.com

 

Tim Blair

Navigant Corporate Communications

303.383.7344

timothy.blair@navigant.com

 

NAVIGANT REPORTS SECOND QUARTER 2019 FINANCIAL RESULTS

 

CHICAGO, August 2, 2019 – Navigant (NYSE: NCI) today reported financial results for the quarter ended June 30, 2019.

Second quarter 2019 highlights:

 

Revenues and revenues before reimbursements (RBR) were $223.1 and $196.6 million respectively, up 21% and 19% compared to second quarter 2018

 

Adjusted EBITDA from continuing operations for the second quarter 2019 of $20.9 million was up $3.3 million, or 19%, compared to the prior year period

 

Net income from continuing operations attributable to Navigant Consulting, Inc. of $8.6 million, or $0.22 per share, was up $2.5 million or 40% compared to the second quarter 2018

 

Adjusted Earnings per Share (EPS) from continuing operations of $0.29, which includes per share income attributable to non-controlling interest, net of tax, increased $0.11 compared to second quarter 2018

MERGER AGREEMENT

In a separate announcement, today, Guidehouse, a portfolio company of Veritas Capital, agreed to acquire Navigant in an all-cash transaction valued at $1.1 billion (“Proposed Merger”).  Under the terms of the Proposed Merger, which is subject to shareholder and regulatory approval, as well as other customary closing conditions, Navigant shareholders will receive $28.00 per share in cash for each Navigant share owned upon closing of the transaction.  Due to this announcement, the Company’s earnings conference call previously scheduled for August 8, 2019 has been canceled, and the Company does not intend to update its outstanding 2019 financial guidance.  For further information on the Proposed Merger, please refer to the Company’s current report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 2, 2019.

SECOND QUARTER 2019 FINANCIAL RESULTS

 

 

 

 

For the quarter ended June 30,

 

(Dollars in millions, excluding per share data)

 

 

2019

 

 

 

2018

 

 

 

Increase

 

Revenue

 

$

 

223.1

 

 

$

 

184.7

 

 

$

 

38.4

 

RBR

 

$

 

196.6

 

 

$

 

165.2

 

 

$

 

31.4

 

Net income from cont. ops. attrib. to Navigant Consulting, Inc.

 

$

 

8.6

 

 

$

 

6.1

 

 

$

 

2.5

 

Adjusted EBITDA (1)

 

$

 

20.9

 

 

$

 

17.6

 

 

$

 

3.3

 

Adjusted Earnings per Share (1)

 

$

 

0.29

 

 

$

 

0.18

 

 

$

 

0.11

 

(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 second quarter 2019 revenues and RBR of $223.1 million and $196.6 million respectively, up 21% and 19% compared to the second quarter 2018.  The quarter benefited from robust growth in managed services, including strong performance at the Health System Solutions (HSS) venture, which commenced operations in July of 2018, as well as continued strong growth in both Healthcare and Energy consulting.  These items were partially offset by lower RBR within the Financial Services Advisory and Compliance (FSAC) segment.

Adjusted EBITDA from continuing operations in the second quarter 2019 was $20.9 million, up 19% from the prior year period primarily due to continued strong performance from HSS and solid margin flow through in Healthcare consulting.


Net income from continuing operations attributable to Navigant Consulting, Inc. of $8.6 million, or $0.22 per share, was up $2.5 million compared to the second quarter 2018 as the operating performance discussed above was further aided by favorable net interest costs, lower depreciation and amortization, as well as a lower share count in the current year period.  These items were partially offset by higher income attributable to non-controlling interest, net of tax, in the current year period due to the first-year contributions from HSS.  Net income attributable to Navigant Consulting, Inc., which includes results from discontinued operations, was down compared to the prior year period reflecting the divestiture of the Company’s former Disputes, Forensics and Legal Technology segment and transaction advisory services practice completed in the third quarter 2018.

Second quarter 2019 Adjusted EPS from continuing operations of $0.29, which includes $0.06 per share of income attributable to non-controlling interest, net of tax, increased $0.11 compared to the second quarter 2018 driven by the items discussed above.

SECOND QUARTER 2019 SEGMENT RESULTS

 

 

 

For the quarter ended June 30,

 

(Dollars in millions, numbers may not foot due to rounding)

 

2019

 

 

2018

 

 

Increase / (Decrease)

 

RBR

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

$

127.4

 

 

$

91.6

 

 

$

35.8

 

Energy

 

 

40.0

 

 

 

36.6

 

 

 

3.4

 

Financial Services Advisory and Compliance

 

 

29.1

 

 

 

37.0

 

 

 

(7.9

)

Total Company

 

$

196.6

 

 

$

165.2

 

 

$

31.4

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

$

136.5

 

 

$

100.3

 

 

$

36.2

 

Energy

 

 

55.5

 

 

 

44.2

 

 

 

11.3

 

Financial Services Advisory and Compliance

 

 

31.1

 

 

 

40.3

 

 

 

(9.2

)

Total Company

 

$

223.1

 

 

$

184.7

 

 

$

38.4

 

Segment Operating Profit

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

$

40.1

 

 

$

27.4

 

 

$

12.8

 

Energy

 

 

13.1

 

 

 

12.7

 

 

 

0.5

 

Financial Services Advisory and Compliance

 

 

6.4

 

 

 

13.4

 

 

 

(7.0

)

Total Company

 

$

59.7

 

 

$

53.4

 

 

$

6.3

 

Segment Operating Margin (% of RBR)

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

31.5

%

 

 

29.9

%

 

 

1.6

%

Energy

 

 

32.8

%

 

 

34.6

%

 

 

-1.8

%

Financial Services Advisory and Compliance

 

 

21.9

%

 

 

36.2

%

 

 

-14.3

%

Total Company

 

 

30.4

%

 

 

32.3

%

 

 

-1.9

%

 

Healthcare segment RBR of $127.4 million increased 39% for second quarter 2019 compared to the same prior year period driven by improved demand for Healthcare consulting services and stronger-than-expected contributions from HSS.  Segment operating profit of $40.1 million increased $12.8 million in second quarter 2019 compared to second quarter 2018 driven by the first-year contributions from HSS, as well as strong demand in Healthcare consulting supporting increased headcount and driving improved consulting utilization.

Energy segment RBR for second quarter 2019 of $40.0 million increased 9% compared to second quarter 2018, driven by continued robust demand for Energy expertise from both commercial and government clients, particularly in North America.  Segment operating profit of $13.1 million for the quarter was up 3% compared to the second quarter 2018 as revenue growth in North America was offset by muted demand for research and subscription services, as well as softer demand for consulting services in Europe.

Financial Services Advisory and Compliance segment RBR for the second quarter 2019 finished at $29.1 million, down 21% compared to second quarter 2018 primarily due to the wind-down of a large monitorship engagement coupled with continued softness as segment leadership works to rebuild and convert the sales pipeline.  Segment operating profit of $6.4 million decreased $7.0 million compared to the prior year period driven by the aforementioned top-line challenges.

 

CASH FLOW AND BALANCE SHEET


Second quarter 2019 net cash provided by operating activities, which includes results from discontinued operations, was $13.5 million compared to $53.5 million in the second quarter 2018 driven by lower net income in the current year period due to the contribution of discontinued operations in second quarter 2018, as well as unfavorable working capital in the current year period.  Days Sales Outstanding for continuing operations was 72 days as of June 30, 2019, down 1 day compared to March 31, 2019.  At the end of the second quarter 2019, the Company’s $350 million credit facility remained undrawn and cash and cash equivalents were $90.6 million.

 

Navigant continued executing its share buyback program by repurchasing 983 thousand shares of common stock during the second quarter of 2019 at an aggregate cost of $20.8 million and an average price of $21.11 per share.

BASIS OF PRESENTATION

In August 2018, the Company sold its former Disputes, Forensics and Legal Technology segment and its transaction advisory services practice within the FSAC segment and, as such, the results have been reclassified to discontinued operations to reflect this transaction for all periods presented in this release. In July 2018, the Company commenced operation of HSS with Baptist Health South Florida. Navigant has a 60% financial and controlling interest in the venture and as such fully consolidates its operations. As a result, the Company reports income attributable to non-controlling interests, net of tax in its consolidated statements of comprehensive income as well as non-controlling interest included in its balance sheet.

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, 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

Due to announcement of the Proposed Merger, the Company’s earnings conference call previously scheduled for August 8, 2019 has been canceled.

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 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 and uncertainties that could cause actual results to differ materially from those contained in or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to: the satisfaction of the conditions precedent to the consummation of the proposed merger, including, without limitation, the receipt of stockholder and regulatory approvals; unanticipated difficulties or expenditures relating to the proposed merger; legal proceedings, judgments or settlements, including those that may be instituted against the Company, the Company’s board of directors, executive officers and others following the announcement of the proposed merger; disruptions of current plans and operations caused by the announcement and pendency of the proposed merger; potential difficulties in employee retention due to the announcement and pendency of the proposed merger; the response of customers, suppliers, business partners and regulators to the announcement of the proposed merger; 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 December 31, 2018,, 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 six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursements

 

$

196,567

 

 

$

165,224

 

 

$

382,696

 

 

$

326,669

 

Reimbursements

 

 

26,489

 

 

 

19,489

 

 

 

43,222

 

 

 

36,112

 

Total revenues

 

 

223,056

 

 

 

184,713

 

 

 

425,918

 

 

 

362,781

 

Cost of services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services before reimbursable expenses

 

 

140,405

 

 

 

113,121

 

 

 

275,761

 

 

 

230,057

 

Reimbursable expenses

 

 

26,489

 

 

 

19,489

 

 

 

43,222

 

 

 

36,112

 

Total cost of services

 

 

166,894

 

 

 

132,610

 

 

 

318,983

 

 

 

266,169

 

General and administrative expenses

 

 

35,968

 

 

 

34,912

 

 

 

71,135

 

 

 

71,991

 

Depreciation expense

 

 

4,262

 

 

 

4,943

 

 

 

8,848

 

 

 

9,940

 

Amortization expense

 

 

1,393

 

 

 

1,665

 

 

 

2,765

 

 

 

3,417

 

Other operating costs

 

 

-

 

 

 

2,295

 

 

 

32

 

 

 

3,278

 

Operating income

 

 

14,539

 

 

 

8,288

 

 

 

24,155

 

 

 

7,986

 

Interest expense

 

 

317

 

 

 

911

 

 

 

635

 

 

 

1,739

 

Interest income

 

 

(375

)

 

 

(77

)

 

 

(1,064

)

 

 

(196

)

Other expense, net

 

 

(10

)

 

 

(183

)

 

 

122

 

 

 

178

 

Income from continuing operations before income tax expense

 

 

14,607

 

 

 

7,637

 

 

 

24,462

 

 

 

6,265

 

Income tax expense

 

 

3,682

 

 

 

1,509

 

 

 

6,729

 

 

 

1,734

 

Net income from continuing operations

 

 

10,925

 

 

 

6,128

 

 

 

17,733

 

 

 

4,531

 

Income from discontinued operations, net of tax

 

 

523

 

 

 

22,698

 

 

 

34

 

 

 

36,148

 

Net income

 

 

11,448

 

 

 

28,826

 

 

 

17,767

 

 

 

40,679

 

Income attributable to non-controlling interest, net of tax

 

 

(2,369

)

 

 

-

 

 

 

(4,407

)

 

 

-

 

Net income attributable to Navigant Consulting, Inc.

 

$

9,079

 

 

$

28,826

 

 

$

13,360

 

 

$

40,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to Navigant Consulting, Inc.

 

$

0.22

 

 

$

0.14

 

 

$

0.34

 

 

$

0.10

 

Income from discontinued operations, net of tax

 

$

0.01

 

 

$

0.50

 

 

$

-

 

 

$

0.80

 

Net income attributable to Navigant Consulting, Inc.

 

$

0.23

 

 

$

0.64

 

 

$

0.34

 

 

$

0.90

 

Shares used in computing basic per share data

 

 

38,654

 

 

 

45,106

 

 

 

39,436

 

 

 

45,113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to Navigant Consulting, Inc.

 

$

0.22

 

 

$

0.13

 

 

$

0.33

 

 

$

0.10

 

Income from discontinued operations, net of tax

 

$

0.01

 

 

$

0.49

 

 

$

-

 

 

$

0.77

 

Net income attributable to Navigant Consulting, Inc.

 

$

0.23

 

 

$

0.62

 

 

$

0.33

 

 

$

0.87

 

Shares used in computing diluted per share data

 

 

39,616

 

 

 

46,549

 

 

 

40,512

 

 

 

46,692

 


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AND SELECTED DATA

(In thousands, except DSO data)

(Unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

90,626

 

 

$

206,920

 

Accounts receivable, net and contract assets

 

 

200,820

 

 

 

179,923

 

Prepaid expenses and other current assets

 

 

25,199

 

 

 

22,512

 

Total current assets

 

 

316,645

 

 

 

409,355

 

Non-current assets:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

62,672

 

 

 

63,025

 

Operating lease right-of-use asset

 

 

80,780

 

 

 

-

 

Intangible assets, net

 

 

14,129

 

 

 

14,166

 

Goodwill

 

 

426,060

 

 

 

422,357

 

Other assets

 

 

7,945

 

 

 

8,644

 

Total assets

 

$

908,231

 

 

$

917,547

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

15,219

 

 

$

13,302

 

Accrued liabilities

 

 

17,641

 

 

 

15,558

 

Accrued compensation-related costs

 

 

46,316

 

 

 

69,555

 

Income tax payable

 

 

3,362

 

 

 

13,357

 

Operating lease liabilities

 

 

22,735

 

 

 

-

 

Other current liabilities

 

 

23,879

 

 

 

34,044

 

Total current liabilities

 

 

129,152

 

 

 

145,816

 

Non-current liabilities:

 

 

 

 

 

 

 

 

Deferred income tax liabilities

 

 

39,258

 

 

 

33,901

 

Operating lease liabilities

 

 

81,166

 

 

 

-

 

Other non-current liabilities

 

 

2,818

 

 

 

25,277

 

Total non-current liabilities

 

 

123,242

 

 

 

59,178

 

Total liabilities

 

 

252,394

 

 

 

204,994

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

50

 

 

 

49

 

Additional paid-in capital

 

 

671,153

 

 

 

664,473

 

Treasury stock

 

 

(235,216

)

 

 

(160,972

)

Retained earnings

 

 

220,983

 

 

 

211,543

 

Accumulated other comprehensive loss

 

 

(5,929

)

 

 

(6,529

)

Total Navigant Consulting Inc. stockholders' equity

 

 

651,041

 

 

 

708,564

 

Non-controlling interest

 

 

4,796

 

 

 

3,989

 

Total stockholders' equity

 

 

655,837

 

 

 

712,553

 

Total liabilities and stockholders' equity

 

$

908,231

 

 

$

917,547

 

 

 

 

 

 

 

 

 

 

Days sales outstanding, net (DSO)

 

 

72

 

 

 

70

 


NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the quarter ended

 

 

For the six months ended

 

 

 

 

June 30,

 

 

June 30,

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

11,448

 

 

$

28,826

 

 

$

17,767

 

 

$

40,679

 

Adjustments to reconcile net income to net cash used in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

 

 

4,262

 

 

 

6,768

 

 

 

8,848

 

 

 

13,613

 

Amortization expense

 

 

 

1,393

 

 

 

1,772

 

 

 

2,765

 

 

 

3,628

 

Share-based compensation expense

 

 

 

4,212

 

 

 

2,089

 

 

 

6,981

 

 

 

5,466

 

Deferred income taxes

 

 

 

(278

)

 

 

(6,601

)

 

 

4,808

 

 

 

(5,633

)

Allowance for doubtful accounts receivable

 

 

 

719

 

 

 

3,764

 

 

 

1,167

 

 

 

6,894

 

Loss from disposition of discontinued operations

 

 

 

(721

)

 

 

-

 

 

 

(49

)

 

 

-

 

Other, net

 

 

 

112

 

 

 

(968

)

 

 

297

 

 

 

39

 

Changes in assets and liabilities (net of acquisitions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net and contract assets

 

 

 

(14,960

)

 

 

5,423

 

 

 

(21,974

)

 

 

(18,192

)

Prepaid expenses and other assets

 

 

 

1,874

 

 

 

3,088

 

 

 

(2,431

)

 

 

2,372

 

Accounts payable

 

 

 

2,339

 

 

 

593

 

 

 

1,916

 

 

 

(1,507

)

Accrued liabilities

 

 

 

2,264

 

 

 

1,886

 

 

 

2,145

 

 

 

4,086

 

Accrued compensation-related costs

 

 

 

5,502

 

 

 

9,334

 

 

 

(23,270

)

 

 

(27,124

)

Income taxes payable

 

 

 

(6,120

)

 

 

(602

)

 

 

(9,476

)

 

 

2,324

 

Lease liabilities and right-of-use assets

 

 

 

(585

)

 

 

 

 

 

 

(1,410

)

 

 

 

 

Other liabilities

 

 

 

1,993

 

 

 

(1,829

)

 

 

(5,769

)

 

 

(7,949

)

Net cash provided by (used in) operating activities

 

 

 

13,454

 

 

 

53,543

 

 

 

(17,685

)

 

 

18,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 

(5,447

)

 

 

(1,705

)

 

 

(8,454

)

 

 

(7,455

)

Acquisitions of businesses, net of cash acquired

 

 

 

(120

)

 

 

-

 

 

 

(6,120

)

 

 

-

 

Other, net

 

 

 

 

 

 

 

(19

)

 

 

-

 

 

 

(19

)

Net cash used in investing activities

 

 

 

(5,567

)

 

 

(1,724

)

 

 

(14,574

)

 

 

(7,474

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuances of common stock

 

 

 

608

 

 

 

936

 

 

 

1,464

 

 

 

2,174

 

Repurchases of common stock

 

 

 

(20,751

)

 

 

(7,490

)

 

 

(74,244

)

 

 

(18,847

)

Dividend payments

 

 

 

(1,926

)

 

 

-

 

 

 

(3,920

)

 

 

-

 

Repayments to banks

 

 

 

-

 

 

 

(93,335

)

 

 

-

 

 

 

(172,479

)

Borrowings from banks

 

 

 

-

 

 

 

57,571

 

 

 

-

 

 

 

187,248

 

Distributions to non-controlling interest holder

 

 

 

-

 

 

 

-

 

 

 

(3,600

)

 

 

-

 

Other, net

 

 

 

(2,541

)

 

 

(4,622

)

 

 

(3,847

)

 

 

(6,218

)

Net cash used in financing activities

 

 

 

(24,610

)

 

 

(46,940

)

 

 

(84,147

)

 

 

(8,122

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

 

132

 

 

 

(385

)

 

 

112

 

 

 

(409

)

Net (decrease) increase in cash and cash equivalents

 

 

 

(16,591

)

 

 

4,494

 

 

 

(116,294

)

 

 

2,691

 

Cash and cash equivalents at beginning of the period

 

 

 

107,217

 

 

 

6,646

 

 

 

206,920

 

 

 

8,449

 

Cash and cash equivalents at end of the period

 

 

$

90,626

 

 

$

11,140

 

 

$

90,626

 

 

$

11,140

 


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 six months ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

 

2019

 

 

2018

 

Adjusted items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Severance expense

 

$

663

 

 

$

374

 

 

 

$

1,340

 

 

$

2,157

 

Income tax benefit (3)

 

 

(168

)

 

 

(99

)

 

 

 

(353

)

 

 

(574

)

Tax-effected impact of severance expense

 

$

495

 

 

$

275

 

 

 

$

987

 

 

$

1,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other operating costs -other costs (4)

 

$

-

 

 

$

2,295

 

 

 

$

32

 

 

$

3,278

 

Income tax benefit (3)

 

 

-

 

 

 

(625

)

 

 

 

(9

)

 

 

(893

)

Tax-effected impact of other operating costs - other costs

 

$

-

 

 

$

1,670

 

 

 

$

23

 

 

$

2,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA reconciliation: