U.S. Markets open in 4 hrs 21 mins

Navigant Beats on Adjusted Q3 Earnings

Zacks Equity Research

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.


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


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

Zacks Investment Research