Navigant Beats on Adjusted Q3 Earnings

Zacks

Navigant Consulting Inc.’s (NCI) third-quarter 2013 adjusted earnings (excluding non-recurring items) increased to $12.5 million or 25 cents in the reported quarter from $11.6 million or 23 cents in the year-ago quarter. Adjusted earnings for the reported quarter beat the Zacks Consensus Estimate by 3 cents.

However, the company’s reported net income dropped to $10.2 million or 20 cents per share from $11.4 million or 22 cents in the year-earlier quarter.

Total revenue was up 4.7% year over year to $211.6 million, while revenues before reimbursements (:RBR) increased 5.7% to $186.4 million. The growth in third quarter 2013 RBR was attributable to a 31% increase in the Healthcare segment and a 17% growth in the Financial, Risk & Compliance segment, partially offset by lower RBR in the Disputes, Investigations & Economics segment. Total reported revenue exceeded the Zacks Consensus Estimate of $203 million.

EBITDA (earnings before interest, tax, depreciation and amortization) for the reported quarter stood at $32.5 million compared with $25.4 million in the year-ago quarter. Adjusted EBITDA was up to $30.8 million from $26.0 million in the prior-year quarter, driven by increased operating profit from segments and a 100 bps improvement in general and administrative expenses as a percentage of RBR.

Segment Performance

The Healthcare segment's revenues rose 31.2% year over year to $53.7 million in third quarter 2013, driven by organic growth and strength in strategy consulting and expertise across industry disciplines. Operating profit for the segment was up 45.9% year over year to $18.0 million. The Energy segment revenues grew 0.9% to $28.1 million, aided by solid demands for energy-efficiency solutions from utility clients and smart meter-related products for reducing energy consumption. The segment operating profit, however, declined 11.1% year over year to $7.0 million.

Disputes, Investigations & Economics segment revenues decreased 8.8% year over year to $81.1 million, primarily due to the divestiture of a portion of Economics business. The segment operating profit was down 11.2% year over year to $25.7 million. Financial, Risk & Compliance Advisory segment registered a 9.7% year-over-year increase in revenues to $48.7 million owing to a large compliance engagement related to anti-money laundering regulatory requirements. Operating profit for the segment was up 33.4% year over year to $17.0 million.

Liquidity

At quarter-end, Navigant had $3.5 million in cash and cash equivalents. Free cash flow remained flat year over year at $17.3 million, while debt levels were down 29% from year-earlier levels to $110.0 million.  In addition, Navigant had approximately $265 million additional borrowing capacity available under its credit facility.

The company repurchased 627,011 shares during third quarter 2013 for $8.7 million at an average price of $13.84 per share. Leverage (debt divided by trailing twelve month adjusted EBITDA) improved to 0.86 as of Sep 30, 2013 versus 1.55 in the year-ago period

Outlook

For full year 2013, Navigant narrowed total revenue guidance to the range of $825 million to $840 million from the range of $820 million to $850 million. RBR is expected in the range of $735 million to $745 million. Adjusted earnings per share are expected in the range of $1.00 to $1.05. Adjusted EBITDA is expected to range between $115 and $120 million.

Navigant continues to strengthen its leadership in financial services, healthcare, and energy sectors, while optimizing the portfolio for sustainable and profitable growth.

Navigant currently has a Zacks Rank #3 (Hold). Other stocks that look promising in the industry and are worth a look include CBIZ, Inc. (CBZ), Huron Consulting Group Inc. (HURN), both carrying a Zacks Rank #2 (Buy), and Exponent Inc. (EXPO) that retains a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on NCI
Read the Full Research Report on HURN
Read the Full Research Report on CBZ
Read the Full Research Report on EXPO


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