[February 20, 2018] |
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Navigant Reports Fourth Quarter and Full Year 2017 Financial Results; Provides 2018 Outlook
Navigant (NYSE: NCI) today announced financial results for the quarter
and full year ended Dec. 31, 2017.
Fourth quarter 2017 financial summary:
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Revenues and revenues before reimbursements (RBR) of $255.4 million
and $230.7 million, respectively, were both down 4% compared to fourth
quarter 2016
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Net income was $43.1 million, or $0.91 per share, compared to $13.5
million, or $0.28 per share, for fourth quarter 2016, reflecting a
$29.7 million, or $0.63 per share, after-tax benefit from the 2017 Tax
Cuts and Jobs Act (Tax Reform)
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Adjusted Earnings per Share (EPS) of $0.29 decreased $0.01 compared to
fourth quarter 2016
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Repurchased $15.0 million of common stock compared to $6.3 million in
the prior year period
Full year 2017 financial summary and 2018 Outlook:
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Revenues and RBR of $1,032.3 million and $939.6 million, respectively,
were comparable to full year 2016
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Net income was up $16.9 million, or $0.36 per share, to $75.0 million,
or $1.55 per share, reflecting the impact of Tax Reform
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Adjusted EPS of $1.09 decreased $0.18 from the prior year
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Repurchased $43.0 million of common stock in 2017, an increase of 72%
compared to the prior year
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Management provides full year 2018 financial outlook including RBR
guidance of between $940 million and $975 million and Adjusted EPS
range of between $1.26 and $1.44. The company also anticipates
allocating a minimum $50 million toward share repurchases in 2018.
"While we are disappointed by our 2017 financial results, which reflect
a myriad of demand-side factors that impacted performance in each of our
segments, we have taken actions to improve our operating performance by
managing our cost structure and repositioning certain services to better
align with emerging client needs," said Julie Howard, Chairman and CEO
of Navigant. "We continue to make progress in executing our long-term
strategy while working to pivot our resources to address the short-term
challenges impacting our business. With this backdrop, we expect
moderate top-line growth in 2018, but anticipate that margin expansion
and the benefit of Tax Reform will meaningfully improve our
profitability and free cash flow. We continue to believe in the
long-term growth prospects of our business and remain steadfast in our
commitment to deliver value to our clients and to our shareholders."
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CONSOLIDATED RESULTS
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Three months ended December 31,
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Year ended December 31,
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(Dollars in millions, excluding per share data)
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2017
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2016
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Increase / (Decrease)
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2017
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2016
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Increase / (Decrease)
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Revenue
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$
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255.4
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$
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266.1
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$
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(10.7
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$
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1,032.3
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$
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1,034.5
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$
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(2.2
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RBR
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$
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230.7
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$
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239.7
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$
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(9.0
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$
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939.6
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$
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938.7
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$
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0.9
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Net Income
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$
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43.1
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$
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13.5
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$
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29.6
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$
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75.0
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$
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58.1
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$
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16.9
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Adjusted EBITDA (1)
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$
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32.3
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$
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34.8
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$
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(2.5
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$
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125.8
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$
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142.3
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$
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(16.5
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Adjusted EPS (1)
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$
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0.29
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$
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0.30
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($0.01
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$
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1.09
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$
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1.27
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($0.18
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(1) See definition and reconciliation of non-GAAP measures
elsewhere in this release.
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Navigant reported fourth quarter 2017 revenues and RBR of $255.4 million
and $230.7 million, respectively, down 4% compared to the fourth quarter
2016, reflecting lower revenue across each of our segments, including
lower-than-anticipated results in our Healthcare segment. Adjusted
EBITDA for the quarter was $32.3 million, down $2.5 million from the
same prior year period as lower revenue was partially offset by lower
incentive-based compensation and general and administrative expense.
Fourth quarter 2017 net income of $43.1 million was up $29.6 million
compared to fourth quarter 2016, largely due to the $29.7 million net
impact of Tax Reform. This was primarily driven by the re-valuation of
our deferred tax obligations to reflect the lower corporate tax rate, as
well as other provisional adjustments resulting from Tax Reform.
Adjusted EPS was $0.29 for fourth quarter 2017, $0.01 lower than the
prior year period.
Full year 2017 revenues and RBR of $1,032.3 million and $939.6 million,
respectively, were both comparable to the prior year period. Results
reflect the full year contribution from the Ecofys acquisition and
growth in the Healthcare segment, primarily due to increased life
science and managed services engagements. These contributions were
offset by lower revenue from U.S. Federal Government engagements in the
Energy segment, as well as decreased activity from regulatory
uncertainty in the Financial Services Advisory and Compliance and
Disputes, Forensics and Legal Technology segments. Full year 2017
Adjusted EBITDA was $125.8, down $16.5 million from full year 2016
driven by higher cost of service including absorbed costs from the
Ecofys acquisition.
Full year 2017 net income of $75.0 million was up $16.9 million compared
to full year 2016 as the impact of Tax Reform more than offset higher
operating costs. Adjusted EPS was $1.09 for full year 2017, $0.18 lower
than the prior year.
CASH FLOW
Fourth quarter 2017 net cash provided by operating activities was $70.7
million compared to $54.4 million for fourth quarter 2016, driven by
higher income, net of deferred taxes and lower working capital in the
fourth quarter 2017. Free Cash Flow increased to $24.6 million for
fourth quarter 2017 compared to $7.9 million for the same period in
2016, due to higher operating cash flow as discussed above, and lower
capital expenditures.
Full year 2017 net cash provided by operating activities was $104.2
million compared to $110.0 million for full year 2016, driven primarily
by increased working capital requirements in the current year period.
Free Cash Flow decreased to $65.7 million for full year 2017 compared to
$78.8 million for the same period in 2016, due to lower operating cash
flow as discussed above, and higher capital expenditures.
Days Sales Outstanding on Dec. 31, 2017 was 85 days, a 9-day improvement
compared to Sept. 30, 2017, but was 4 days higher compared to Dec. 31,
2016. Bank debt outstanding on Dec. 31, 2017 was $132.9 million, down
slightly compared to $135.0 million at year end 2016. Leverage (bank
debt divided by trailing twelve month Adjusted EBITDA) was 1.06 times at
Dec. 31, 2017.
Navigant continued executing its share repurchase program with an
additional 838 thousand shares of common stock repurchased during the
fourth quarter 2017 at an aggregate cost of $15.0 million and an average
price of $17.89 per share. For the full year 2017, Navigant repurchased
over 2.3 million shares of common stock at an aggregate cost of $43.0
million and an average price of $18.52 per share. As of Dec. 31, 2017,
the company had $63.6 million remaining under its stock repurchase
authorization which expires on Dec. 31, 2019.
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FOURTH QUARTER 2017 SEGMENT RESULTS
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Three months ended December 31,
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Increase /
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(Dollars in millions, numbers may not foot due to rounding)
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2017
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2016
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(Decrease)
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RBR
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Healthcare
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$
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89.7
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$
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91.7
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$
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(2.0
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Energy
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30.7
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31.3
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(0.6
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Financial Services Advisory and Compliance
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35.7
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38.3
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(2.6
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Disputes, Forensics and Legal Technology
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74.6
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78.4
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(3.8
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Total Company
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$
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230.7
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$
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239.7
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$
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(9.0
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Total Revenues
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Healthcare
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$
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98.2
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$
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100.7
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$
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(2.5
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Energy
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37.0
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37.4
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(0.4
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Financial Services Advisory and Compliance
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40.7
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44.7
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(4.0
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Disputes, Forensics and Legal Technology
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79.4
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83.3
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(3.9
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Total Company
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$
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255.4
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$
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266.1
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$
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(10.7
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Segment Operating Profit
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Healthcare
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$
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25.8
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$
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30.1
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$
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(4.3
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Energy
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8.3
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9.2
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(0.9
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Financial Services Advisory and Compliance
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13.9
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14.8
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(0.9
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Disputes, Forensics and Legal Technology
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25.3
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24.9
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0.4
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Total Company
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$
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73.3
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$
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79.0
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$
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(5.7
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Segment Operating Margin (% of RBR)
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Healthcare
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28.8
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%
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32.8
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%
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-4.0
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%
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Energy
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27.0
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%
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29.4
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%
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-2.4
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%
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Financial Services Advisory and Compliance
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38.9
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%
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38.6
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%
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0.3
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%
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Disputes, Forensics and Legal Technology
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33.9
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%
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31.8
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%
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2.1
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%
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Total Company
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31.8
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%
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33.0
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%
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-1.2
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%
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Healthcare segment RBR of $89.7 million decreased 2%, or 3% on an
organic basis, for fourth quarter 2017 compared to the same prior year
period. Unanticipated delays in the timing of certain engagements and
the smaller scope of new project work impacted results. Segment
operating profit of $25.8 million declined 15% in fourth quarter 2017
compared to the same period in 2016, primarily due to lower revenue and
increased headcount in revenue cycle managed services.
Energy segment RBR for fourth quarter 2017 was in line with
expectations, but decreased 2% to $30.7 million compared to fourth
quarter 2016. RBR was up 4% sequentially versus third quarter 2017.
Contributions from the November 2016 Ecofys acquisition helped offset
continued depressed demand from U.S. Federal Government engagements.
Segment operating profit was down slightly compared to fourth quarter
2016 due to lower revenue.
Financial Services Advisory and Compliance segment RBR for fourth
quarter 2017 was $35.7 million, a 7% decrease compared to fourth quarter
2016. RBR was driven by short-term delays with certain engagements which
more than offset improving demand from financial services clients for
non-regulatory related engagements. Segment operating profit was down
$0.9 million as lower revenue was mostly offset by lower personnel costs.
Disputes, Forensics and Legal Technology segment RBR for fourth quarter
2017 was in line with expectations, but decreased $3.8 million to $74.6
million compared to the prior year period. Reduced processing activities
in the legal technology solutions business and lower mass tort claims
volume were only partially offset by strong performance in the global
construction disputes practice. Segment operating profit was up $0.4
million in fourth quarter 2017 compared to fourth quarter 2016, as lower
revenue was more than offset by lower personnel costs.
2018 OUTLOOK
Management provides its full year 2018 financial outlook:
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Total revenues estimated to be between $1.030 billion and $1.065
billion
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RBR expected to range between $940 million and $975 million
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Adjusted EBITDA expected to range between $125 million and $137 million
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Adjusted EPS estimated to be between $1.26 and $1.44
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Capital expenditures estimated to be approximately $25 million
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Free Cash Flow expected to range between $75 million and $90 million
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 and Adjusted
Earnings Per Share, both of which exclude the impact of severance
expense and other operating costs (benefit). Navigant is not able to
accurately forecast the excluded items at the level of precision that
would be required to be included in the most directly comparable GAAP
financial measure without unreasonable efforts.
CONFERENCE CALL DETAILS
Navigant will host a conference call to discuss the company's fourth
quarter and full year 2017 results at 10 a.m. Eastern Time (9 a.m.
Central Time) on Tuesday, Feb. 20, 2018. The conference call may be
accessed via the Navigant website (investors.navigant.com)
or by dialing 888.455.9733 (630.395.0358 for international callers) and
referencing pass code "NCI." An archived version of the webcast will
also be available via the Navigant website. A report of financial and
related supplemental information is also available via the Navigant
website.
DEFINITIONS
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Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per
Share (EPS) Adjusted EBITDA is EBITDA - earnings from continuing
operations before interest, taxes, depreciation, and amortization -
excluding the impact of severance expense and other operating costs
(benefit). 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 the benefit recognized in the
fourth quarter 2017 related to the 2017 Tax Cuts and Jobs Act.
Severance expense and other operating costs (benefit) are not
considered to be non-recurring, infrequent or unusual to our business.
Management believes that these non-GAAP financial measures provide
investors with enhanced comparability of Navigant's results of
operations across periods.
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Free Cash Flow is calculated as net cash provided by (used in)
operations excluding the change in asset, liabilities and allowance
for doubtful accounts less cash payment for property, equipment and
deferred acquisition liabilities. Free Cash Flow does not represent
cash available for spending as it excludes certain contractual
obligations such as debt repayment. However, management believes that
Free Cash Flow provides investors with an indicator of cash available
for on-going business operations and long-term value creation.
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 press release 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," "could," "intend," "estimate," "expect," "plan,"
"outlook" 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 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; pace, timing and integration of
acquisitions and separation of divestitures; 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 financial results are included under the "Risk Factors"
section of the Company's Annual Report on Form 10-K for the year ended
December 31, 2016, 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.
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NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
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(In thousands, except per share data(1))
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(Unaudited)
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For the quarter ended
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For the year ended
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December 31,
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December 31,
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2017
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2016
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2017
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2016
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Revenues:
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|
|
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Revenues before reimbursements
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$
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230,685
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$
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239,671
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$
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939,639
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$
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938,746
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Reimbursements
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24,683
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26,430
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|
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92,688
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|
|
|
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95,734
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Total revenues
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|
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255,368
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|
|
|
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266,101
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|
|
|
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1,032,327
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|
|
|
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1,034,480
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Cost of services:
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|
|
|
|
|
|
|
|
|
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Cost of services before reimbursable expenses
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|
|
|
159,216
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|
|
|
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163,968
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|
|
|
|
654,586
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|
|
|
|
631,935
|
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Reimbursable expenses
|
|
|
|
24,683
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|
|
|
|
26,430
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|
|
|
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92,688
|
|
|
|
|
95,734
|
|
Total cost of services
|
|
|
|
183,899
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|
|
|
|
190,398
|
|
|
|
|
747,274
|
|
|
|
|
727,669
|
|
General and administrative expenses
|
|
|
|
39,532
|
|
|
|
|
42,490
|
|
|
|
|
166,922
|
|
|
|
|
168,954
|
|
Depreciation expense
|
|
|
|
6,785
|
|
|
|
|
7,197
|
|
|
|
|
28,826
|
|
|
|
|
27,742
|
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Amortization expense
|
|
|
|
2,247
|
|
|
|
|
2,790
|
|
|
|
|
8,960
|
|
|
|
|
11,507
|
|
Other operating costs (benefit):
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent acquisition liability adjustments, net
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,213
|
|
|
|
|
1,330
|
|
Office consolidation, net
|
|
|
|
280
|
|
|
|
|
368
|
|
|
|
|
242
|
|
|
|
|
542
|
|
Deferred debt issuance costs write off
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
145
|
|
|
|
|
-
|
|
Other costs
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1,620
|
|
|
|
|
-
|
|
Operating income
|
|
|
|
22,625
|
|
|
|
|
22,858
|
|
|
|
|
76,125
|
|
|
|
|
96,736
|
|
Interest expense
|
|
|
|
1,254
|
|
|
|
|
1,236
|
|
|
|
|
4,970
|
|
|
|
|
5,235
|
|
Interest income
|
|
|
|
(109
|
)
|
|
|
|
(31
|
)
|
|
|
|
(345
|
)
|
|
|
|
(141
|
)
|
Other expense (income), net
|
|
|
|
430
|
|
|
|
|
(635
|
)
|
|
|
|
919
|
|
|
|
|
(1,769
|
)
|
Income before income tax expense
|
|
|
|
21,050
|
|
|
|
|
22,288
|
|
|
|
|
70,581
|
|
|
|
|
93,411
|
|
Income tax (benefit) expense
|
|
|
|
(22,070
|
)
|
|
|
|
8,784
|
|
|
|
|
(4,371
|
)
|
|
|
|
35,313
|
|
Net income
|
|
|
$
|
43,120
|
|
|
|
$
|
13,504
|
|
|
|
$
|
74,952
|
|
|
|
$
|
58,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
0.94
|
|
|
|
$
|
0.29
|
|
|
|
$
|
1.61
|
|
|
|
$
|
1.23
|
|
Shares used in computing basic per share data
|
|
|
|
45,708
|
|
|
|
|
47,026
|
|
|
|
|
46,593
|
|
|
|
|
47,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
0.91
|
|
|
|
$
|
0.28
|
|
|
|
$
|
1.55
|
|
|
|
$
|
1.19
|
|
Shares used in computing diluted per share data
|
|
|
|
47,223
|
|
|
|
|
48,618
|
|
|
|
|
48,226
|
|
|
|
|
48,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS AND SELECTED DATA
|
(In thousands, except DSO data)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
8,449
|
|
|
|
$
|
8,291
|
|
Accounts receivable, net
|
|
|
|
267,841
|
|
|
|
|
261,755
|
|
Prepaid expenses and other current assets
|
|
|
|
32,921
|
|
|
|
|
29,762
|
|
Total current assets
|
|
|
|
309,211
|
|
|
|
|
299,808
|
|
Non-current assets:
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
89,169
|
|
|
|
|
82,953
|
|
Intangible assets, net
|
|
|
|
21,053
|
|
|
|
|
28,727
|
|
Goodwill
|
|
|
|
637,287
|
|
|
|
|
625,027
|
|
Other assets
|
|
|
|
23,544
|
|
|
|
|
18,282
|
|
Total assets
|
|
|
$
|
1,080,264
|
|
|
|
$
|
1,054,797
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
12,398
|
|
|
|
$
|
11,871
|
|
Accrued liabilities
|
|
|
|
13,895
|
|
|
|
|
16,144
|
|
Accrued compensation-related costs
|
|
|
|
96,773
|
|
|
|
|
106,779
|
|
Income tax payable
|
|
|
|
4,720
|
|
|
|
|
1,564
|
|
Other current liabilities
|
|
|
|
38,895
|
|
|
|
|
38,616
|
|
Total current liabilities
|
|
|
|
166,681
|
|
|
|
|
174,974
|
|
Non-current liabilities:
|
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
|
61,131
|
|
|
|
|
77,737
|
|
Other non-current liabilities
|
|
|
|
32,174
|
|
|
|
|
32,579
|
|
Bank debt non-current
|
|
|
|
132,944
|
|
|
|
|
135,030
|
|
Total non-current liabilities
|
|
|
|
226,249
|
|
|
|
|
245,346
|
|
Total liabilities
|
|
|
|
392,930
|
|
|
|
|
420,320
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
|
58
|
|
|
|
|
57
|
|
Additional paid-in capital
|
|
|
|
659,825
|
|
|
|
|
644,519
|
|
Treasury stock
|
|
|
|
(224,366
|
)
|
|
|
|
(181,361
|
)
|
Retained earnings
|
|
|
|
270,995
|
|
|
|
|
196,468
|
|
Accumulated other comprehensive loss
|
|
|
|
(19,178
|
)
|
|
|
|
(25,206
|
)
|
Total stockholders' equity
|
|
|
|
687,334
|
|
|
|
|
634,477
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
1,080,264
|
|
|
|
$
|
1,054,797
|
|
|
|
|
|
|
|
|
Selected Data (unaudited)
|
|
|
|
|
|
|
Days sales outstanding, net (DSO)
|
|
|
|
85
|
|
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
|
For the year ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
43,120
|
|
|
|
$
|
13,504
|
|
|
|
$
|
74,952
|
|
|
|
$
|
58,098
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
|
6,785
|
|
|
|
|
7,197
|
|
|
|
|
28,826
|
|
|
|
|
27,742
|
|
Amortization expense
|
|
|
|
2,247
|
|
|
|
|
2,790
|
|
|
|
|
8,960
|
|
|
|
|
11,507
|
|
Share-based compensation expense
|
|
|
|
2,623
|
|
|
|
|
3,626
|
|
|
|
|
13,037
|
|
|
|
|
13,071
|
|
Deferred income taxes
|
|
|
|
(23,517
|
)
|
|
|
|
(2,779
|
)
|
|
|
|
(16,463
|
)
|
|
|
|
(2,154
|
)
|
Allowance for doubtful accounts receivable
|
|
|
|
1,411
|
|
|
|
|
1,809
|
|
|
|
|
7,755
|
|
|
|
|
8,815
|
|
Contingent acquisition liability adjustments, net
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,213
|
|
|
|
|
1,330
|
|
Other, net
|
|
|
|
1,286
|
|
|
|
|
(1,244
|
)
|
|
|
|
3,113
|
|
|
|
|
(159
|
)
|
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
28,160
|
|
|
|
|
13,945
|
|
|
|
|
(11,773
|
)
|
|
|
|
(49,972
|
)
|
Prepaid expenses and other assets
|
|
|
|
(5,677
|
)
|
|
|
|
(1,126
|
)
|
|
|
|
(6,712
|
)
|
|
|
|
4,189
|
|
Accounts payable
|
|
|
|
152
|
|
|
|
|
671
|
|
|
|
|
1,058
|
|
|
|
|
1,630
|
|
Accrued liabilities
|
|
|
|
89
|
|
|
|
|
(210
|
)
|
|
|
|
1,158
|
|
|
|
|
874
|
|
Accrued compensation-related costs
|
|
|
|
7,354
|
|
|
|
|
14,151
|
|
|
|
|
(10,589
|
)
|
|
|
|
14,447
|
|
Income taxes payable
|
|
|
|
3,281
|
|
|
|
|
(11,167
|
)
|
|
|
|
3,248
|
|
|
|
|
5,773
|
|
Other liabilities
|
|
|
|
3,402
|
|
|
|
|
13,229
|
|
|
|
|
5,452
|
|
|
|
|
14,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
70,716
|
|
|
|
|
54,396
|
|
|
|
|
104,235
|
|
|
|
|
110,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(7,921
|
)
|
|
|
|
(15,201
|
)
|
|
|
|
(38,650
|
)
|
|
|
|
(28,665
|
)
|
Acquisitions of businesses, net of cash acquired
|
|
|
|
(5,000
|
)
|
|
|
|
(7,431
|
)
|
|
|
|
(5,000
|
)
|
|
|
|
(15,426
|
)
|
Other acquisition payments
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(5,500
|
)
|
Payments of acquisition liabilities
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(1,165
|
)
|
Other, net
|
|
|
|
(121
|
)
|
|
|
|
(311
|
)
|
|
|
|
(812
|
)
|
|
|
|
(770
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
(13,042
|
)
|
|
|
|
(22,943
|
)
|
|
|
|
(44,462
|
)
|
|
|
|
(51,526
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances of common stock
|
|
|
|
708
|
|
|
|
|
731
|
|
|
|
|
3,919
|
|
|
|
|
4,299
|
|
Repurchases of common stock
|
|
|
|
(14,993
|
)
|
|
|
|
(6,256
|
)
|
|
|
|
(43,005
|
)
|
|
|
|
(25,057
|
)
|
Payments of contingent acquisition liabilities
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(10,330
|
)
|
|
|
|
(828
|
)
|
Repayments to banks
|
|
|
|
(108,036
|
)
|
|
|
|
(101,471
|
)
|
|
|
|
(457,200
|
)
|
|
|
|
(410,197
|
)
|
Borrowings from banks
|
|
|
|
64,066
|
|
|
|
|
76,861
|
|
|
|
|
452,524
|
|
|
|
|
375,708
|
|
Payments of debt issuance costs
|
|
|
|
(5
|
)
|
|
|
|
-
|
|
|
|
|
(1,297
|
)
|
|
|
|
-
|
|
Other, net
|
|
|
|
(122
|
)
|
|
|
|
79
|
|
|
|
|
(5,009
|
)
|
|
|
|
(2,723
|
)
|
Net cash used in financing activities
|
|
|
|
(58,382
|
)
|
|
|
|
(30,056
|
)
|
|
|
|
(60,398
|
)
|
|
|
|
(58,798
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
152
|
|
|
|
|
(150
|
)
|
|
|
|
783
|
|
|
|
|
(307
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
(556
|
)
|
|
|
|
1,247
|
|
|
|
|
158
|
|
|
|
|
(604
|
)
|
Cash and cash equivalents at beginning of the period
|
|
|
|
9,005
|
|
|
|
|
7,044
|
|
|
|
|
8,291
|
|
|
|
|
8,895
|
|
Cash and cash equivalents at end of the period
|
|
|
$
|
8,449
|
|
|
|
$
|
8,291
|
|
|
|
$
|
8,449
|
|
|
|
$
|
8,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
(In thousands, except per share data and percentages)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This press release includes certain non-GAAP financial measures as
defined by the Securities and Exchange Commission. Below are the
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).
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. Management uses these non-GAAP
financial measures in addition to GAAP financial measures to assess
the Company's operations and financial results and believes they are
useful indicators of operating performance and the Company's ability
to generate cash flows from operations that are available for
interest, debt service, taxes and capital expenditures. Investors
should recognize that these non-GAAP financial measures may not be
comparable to similarly-titled measures of other companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, Adjusted EBITDA, Adjusted Net
Income and Adjusted Earnings Per Share (2)
|
|
|
For the quarter ended
|
|
|
|
|
|
For the year ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Severance expense
|
|
|
$
|
380
|
|
|
|
$
|
1,557
|
|
|
|
|
|
|
$
|
7,707
|
|
|
|
$
|
4,433
|
|
|
|
|
Income tax benefit (3)
|
|
|
|
(140
|
)
|
|
|
|
(594
|
)
|
|
|
|
|
|
|
(2,975
|
)
|
|
|
|
(1,622
|
)
|
|
|
|
Tax-effected impact of severance expense
|
|
|
$
|
240
|
|
|
|
$
|
963
|
|
|
|
|
|
|
$
|
4,732
|
|
|
|
$
|
2,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating costs - contingent acquisition liability adjustment,
net
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
2,213
|
|
|
|
$
|
1,330
|
|
|
|
|
Income tax benefit (3)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
(888
|
)
|
|
|
|
(534
|
)
|
|
|
|
Tax-effected impact of other operating costs - contingent
acquisition liability adjustment, net
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
1,325
|
|
|
|
$
|
796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating cost (benefit) - office consolidation, net
|
|
|
$
|
280
|
|
|
|
$
|
368
|
|
|
|
|
|
|
$
|
242
|
|
|
|
$
|
542
|
|
|
|
|
Income tax (benefit) expense (3)
|
|
|
|
(112
|
)
|
|
|
|
(147
|
)
|
|
|
|
|
|
|
(97
|
)
|
|
|
|
(217
|
)
|
|
|
|
Tax-effected impact of other operating cost (benefit) - office
consolidation, net
|
|
|
$
|
168
|
|
|
|
$
|
221
|
|
|
|
|
|
|
$
|
145
|
|
|
|
$
|
325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating costs - deferred debt issuance costs write off
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
145
|
|
|
|
$
|
-
|
|
|
|
|
Income tax benefit (3)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
(58
|
)
|
|
|
|
-
|
|
|
|
|
Tax-effected impact of other operating costs - deferred debt
issuance costs write off
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
87
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating costs - other costs
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
1,620
|
|
|
|
$
|
-
|
|
|
|
|
Income tax benefit (3)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
(650
|
)
|
|
|
|
-
|
|
|
|
|
Tax-effected impact of other operating costs - other costs
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
970
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
$
|
43,120
|
|
|
|
$
|
13,504
|
|
|
|
|
|
|
$
|
74,952
|
|
|
|
$
|
58,098
|
|
|
|
|
Interest expense
|
|
|
|
1,254
|
|
|
|
|
1,236
|
|
|
|
|
|
|
|
4,970
|
|
|
|
|
5,235
|
|
|
|
|
Interest income
|
|
|
|
(109
|
)
|
|
|
|
(31
|
)
|
|
|
|
|
|
|
(345
|
)
|
|
|
|
(141
|
)
|
|
|
|
Other expense (income), net
|
|
|
|
430
|
|
|
|
|
(635
|
)
|
|
|
|
|
|
|
919
|
|
|
|
|
(1,769
|
)
|
|
|
|
Income tax expense
|
|
|
|
(22,070
|
)
|
|
|
|
8,784
|
|
|
|
|
|
|
|
(4,371
|
)
|
|
|
|
35,313
|
|
|
|
|
Depreciation expense
|
|
|
|
6,785
|
|
|
|
|
7,197
|
|
|
|
|
|
|
|
28,826
|
|
|
|
|
27,742
|
|
|
|
|
Accelerated depreciation - office consolidation (included in other
operating costs - office consolidation, net)
|
|
|
|
101
|
|
|
|
|
-
|
|
|
|
|
|
|
|
101
|
|
|
|
|
33
|
|
|
|
|
Amortization expense
|
|
|
|
2,247
|
|
|
|
|
2,790
|
|
|
|
|
|
|
|
8,960
|
|
|
|
|
11,507
|
|
|
|
|
EBITDA
|
|
|
$
|
31,758
|
|
|
|
$
|
32,845
|
|
|
|
|
|
|
$
|
114,012
|
|
|
|
$
|
136,018
|
|
|
|
|
Severance expense
|
|
|
|
380
|
|
|
|
|
1,557
|
|
|
|
|
|
|
|
7,707
|
|
|
|
|
4,433
|
|
|
|
|
Other operating costs - contingent acquisition liability adjustment,
net
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
2,213
|
|
|
|
|
1,330
|
|
|
|
|
Other operating cost (benefit) - office consolidation, net
|
|
|
|
179
|
|
|
|
|
368
|
|
|
|
|
|
|
|
141
|
|
|
|
|
509
|
|
|
|
|
Other operating costs - deferred debt issuance costs write off
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
145
|
|
|
|
|
-
|
|
|
|
|
Other operating costs - other costs
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
1,620
|
|
|
|
|
-
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
32,317
|
|
|
|
$
|
34,770
|
|
|
|
|
|
|
$
|
125,838
|
|
|
|
$
|
142,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
43,120
|
|
|
|
$
|
13,504
|
|
|
|
|
|
|
$
|
74,952
|
|
|
|
$
|
58,098
|
|
|
|
|
Tax-effected impact of severance expense
|
|
|
|
240
|
|
|
|
|
963
|
|
|
|
|
|
|
|
4,732
|
|
|
|
|
2,811
|
|
|
|
|
Tax-effected impact of other operating costs - contingent
acquisition liability adjustment, net
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
1,325
|
|
|
|
|
796
|
|
|
|
|
Tax-effected impact of other operating cost (benefit) - office
consolidation, net
|
|
|
|
168
|
|
|
|
|
221
|
|
|
|
|
|
|
|
145
|
|
|
|
|
325
|
|
|
|
|
Tax-effected impact of other operating costs - deferred debt
issuance costs write off
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
87
|
|
|
|
|
-
|
|
|
|
|
Tax-effected impact of other operating costs - other costs
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
970
|
|
|
|
|
-
|
|
|
|
|
Impact of 2017 Tax Cuts and Jobs Act ("Tax Reform") (4)
|
|
|
|
(29,691
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
(29,691
|
)
|
|
|
|
-
|
|
|
|
|
Adjusted net income
|
|
|
$
|
13,837
|
|
|
|
$
|
14,688
|
|
|
|
|
|
|
$
|
52,520
|
|
|
|
$
|
62,030
|
|
|
|
|
Shares used in computing adjusted per diluted share data
|
|
|
|
47,223
|
|
|
|
|
48,618
|
|
|
|
|
|
|
|
48,226
|
|
|
|
|
48,813
|
|
|
|
|
Adjusted earnings per share
|
|
|
$
|
0.29
|
|
|
|
$
|
0.30
|
|
|
|
|
|
|
$
|
1.09
|
|
|
|
$
|
1.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
|
|
|
|
For the year ended
|
|
|
|
Free Cash Flow (5)
|
|
|
December 31,
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Net cash provided by operating activities
|
|
|
$
|
70,716
|
|
|
|
$
|
54,396
|
|
|
|
|
|
|
$
|
104,235
|
|
|
|
$
|
110,027
|
|
|
|
|
Changes in assets and liabilities
|
|
|
|
(36,761
|
)
|
|
|
|
(29,493
|
)
|
|
|
|
|
|
|
18,158
|
|
|
|
|
8,223
|
|
|
|
|
Allowance for doubtful accounts receivable
|
|
|
|
(1,411
|
)
|
|
|
|
(1,809
|
)
|
|
|
|
|
|
|
(7,755
|
)
|
|
|
|
(8,815
|
)
|
|
|
|
Purchases of property and equipment
|
|
|
|
(7,921
|
)
|
|
|
|
(15,201
|
)
|
|
|
|
|
|
|
(38,650
|
)
|
|
|
|
(28,665
|
)
|
|
|
|
Payments of acquisition liabilities
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
(1,165
|
)
|
|
|
|
Payments of contingent acquisition liabilities
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
(10,330
|
)
|
|
|
|
(828
|
)
|
|
|
|
Free Cash Flow
|
|
|
$
|
24,623
|
|
|
|
$
|
7,893
|
|
|
|
|
|
|
$
|
65,658
|
|
|
|
$
|
78,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage Ratio (6)
|
|
|
At December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA for prior twelve-month period
|
|
|
$
|
125,838
|
|
|
|
$
|
142,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank debt
|
|
|
$
|
132,944
|
|
|
|
$
|
135,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio
|
|
|
|
1.06
|
|
|
|
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended
|
|
|
|
|
|
For the year ended
|
|
|
|
Organic Growth (7)
|
|
|
December 31,
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Growth
|
|
|
2017
|
|
|
2016
|
|
|
Growth
|
Revenues before reimbursements
|
|
|
$
|
230,685
|
|
|
|
$
|
239,671
|
|
|
|
-3.7
|
%
|
|
|
$
|
939,639
|
|
|
|
$
|
938,746
|
|
|
|
0.1
|
%
|
Pro forma acquisition adjustment
|
|
|
|
474
|
|
|
|
|
3,172
|
|
|
|
|
|
|
|
4,752
|
|
|
|
|
23,382
|
|
|
|
|
Currency impact
|
|
|
|
(664
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
3,184
|
|
|
|
|
-
|
|
|
|
|
Organic RBR
|
|
|
$
|
230,495
|
|
|
|
$
|
242,843
|
|
|
|
-5.1
|
%
|
|
|
$
|
947,575
|
|
|
|
$
|
962,128
|
|
|
|
-1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes
|
(1) Per share data may not sum due to rounding.
|
(2) EBITDA is earnings before interest, taxes, depreciation and
amortization. Adjusted EBITDA excludes the impact of severance
expense and other operating costs (benefit). Adjusted Net Income and
Adjusted Earnings per Share exclude net income and per share net
income impact of severance expense, other operating costs (benefit),
and the benefit recognized in the fourth quarter 2017 related to the
2017 Tax Cuts and Jobs Act. Severance expense and other operating
costs (benefit) are not considered to be non-recurring, infrequent
or unusual to our business. Management believes that these non-GAAP
financial measures provide investors with enhanced comparability of
Navigant's results of operations across periods.
|
(3) Effective income tax expense (benefit) has been determined based
on specific tax jurisdiction.
|
(4) In Q4 2017, we recorded adjustments to our deferred income tax
liabilities related to the impact of 2017 Tax Cuts and Jobs Act m
that resulted in an income tax benefit.
|
(5) Free Cash Flow is calculated as net cash provided from
operations excluding changes in assets and liabilities and allowance
for doubtful accounts receivable less cash payments for property and
equipment and deferred acquisition related payments. Free cash flow
does not represent discretionary cash available for spending as it
excludes certain contractual obligations such as debt repayment.
However, management believes that it provides investors with an
indicator of cash flows available for on-going business operations
and long term value creation.
|
(6) Leverage ratio is calculated as bank debt at the end of the
period divided by Adjusted EBITDA for the prior twelve-month period.
Management believes that leverage ratio provides investors with an
indicator of the cash flows available to repay the Company's debt
obligations.
|
(7) Organic growth represents revenues before reimbursements
adjusted to include the impact of our acquisitions as if we owned
them from the beginning of each comparable period and adjusted to
exclude the impact of foreign currency exchange rate fluctuations.
Management believes that organic growth reflects the growth of our
existing business and is, therefore, useful in analyzing the
Company's financial condition and results of operations.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180220005533/en/
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