Navigant Beats on Q4 Earnings

Zacks

Navigant Consulting Inc. (NCI) reported fourth-quarter 2013 net income from continuing operations of $14.2 million or 28 cents per share versus $13.2 million or 26 cents per share in the year-ago quarter. The improvement in earnings was driven by a decrease in operating costs.

Adjusted earnings per share were 25 cents in fourth-quarter 2013 versus 29 cents in the year-ago quarter. Adjusted earnings for the reported quarter beat the Zacks Consensus Estimate of 22 cents.

For full-year 2013, net income from continuing operations stood at $55.1 million or $1.08 per share versus $44.2 million or 86 cents per share in the previous year.  The improvement in earnings was driven by increase in revenues. Adjusted earnings per share for full-year 2013 stood at $1.06 versus 93 cents in the year-ago period. Adjusted earnings for full-year 2013 beat the Zacks Consensus Estimate by a couple of cents.

Total revenue was down 6.4% year over year to $204.8 million in the reported quarter while revenues before reimbursements (:RBR) decreased 6.1% to $177.8 million. The decrease in fourth-quarter 2013 revenues was attributable to lower RBR in the Disputes, Investigations & Economics segment; Financial, Risk & Compliance; and Energy segment. Total reported revenue, however, exceeded the Zacks Consensus Estimate of $199 million.

For full-year 2013, total revenue was up 2.1 % year over year to $835.6 million, while RBR inched up 1.7% to $734.4 million. The increase in revenues was driven by healthy performance in all segments, partially offset by a decline in Disputes, Investigation & Economics. Total reported revenue exceeded the Zacks Consensus Estimate of $818 million.

Earnings before interest, tax, depreciation and amortization (:EBITDA) for the reported quarter stood at $32.8 million, compared with $29.8 million in the year-ago quarter. Adjusted EBITDA declined to $29.8 million from $33.0 million in the prior-year quarter due to some non-recurring items.

Segment Performance

The Healthcare segment's RBR increased 6.0% year over year to $44.3 million in fourth quarter 2013, driven by organic growth. Operating profit for the segment was up 0.7% year over year to $15.8 million. The Energy segment’s RBR was down 4.4% to $22.9 million due to lower contribution from energy research services and adverse impact from the report issued by the Moreland Commission in New York State. The segment operating profit declined 18.7% year over year to $7.4 million.

Disputes, Investigations & Economics segment RBR decreased 14.4% year over year to $72.9 million primarily due to the divestiture of a portion of Economics business and lower contribution from forensic accounting engagements. The segment operating profit was down 28.8% year over year to $22.9 million. Financial, Risk & Compliance Advisory segment registered a 1.8 % year-over-year decrease in RBR to $37.7 million owing to reduced contribution from the mortgage servicing review engagements, partially offset by strength from services related to anti-money laundering regulatory compliance. Operating profit for the segment was down 9.2% year over year to $14.6 million.

Liquidity

At year-end 2013, Navigant had $2.0 million in cash and cash equivalents compared with $1.0 million in the prior year period. Free cash flow stood at $78.8 million for full year 2013 versus $57.3 million in 2012, while debt levels were down 58% from year-earlier figure to $56.7 million.  

Navigant repurchased 339,315 shares of common stock during fourth quarter 2013 at an average price of $17.69 per share for $6.0 million. For full year 2013, the company repurchased approximately 2.1 million shares for $28.3 million at an average price of $13.76 per share. The company extended its share repurchase authorization to repurchase up to $100 million worth of shares during the two year period ending Dec 31, 2015. Leverage (debt divided by trailing twelve-month adjusted EBITDA) improved to 0.46 at year-end 2013 compared with 1.23 as of Dec 31, 2012.

Outlook

For full-year 2014, Navigant expects RBR to be in the range of $735 million and $775 million, while total revenue is expected to be in the range of $810 million and $850 million. Adjusted EBITDA is expected to be within $120 million and $130 million and adjusted earnings per share are expected to be between $1.03 and $1.13.
    
Navigant continues to strengthen its Healthcare segment and has strong demand drivers in place and a robust pipeline of investment opportunities aligned to its growth strategy. Also, the company aims to strengthen its balance sheet and consistently return capital to its shareholders through its share repurchase program.

Navigant currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look include Accenture plc (ACN), Huron Consulting Group Inc. (HURN) and Bureau Veritas SA (BVRDF), each of which have a Zacks Rank #2 (Buy).

Read the Full Research Report on ACN
Read the Full Research Report on NCI
Read the Full Research Report on HURN
Read the Full Research Report on BVRDF


Zacks Investment Research

View Comments (0)