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8-K - FORM 8-K - NAVIGANT CONSULTING INC | c59409e8vk.htm |
EX-99.2 - EX-99.2 - NAVIGANT CONSULTING INC | c59409exv99w2.htm |
Exhibit 99.1
For more information contact:
Jennifer Moreno
Executive Director, Investor Relations
312.573.5634
jmoreno@navigantconsulting.com
Jennifer Moreno
Executive Director, Investor Relations
312.573.5634
jmoreno@navigantconsulting.com
NAVIGANT CONSULTING, INC. REPORTS SECOND QUARTER 2010 RESULTS
| Earnings per share of $0.16 on a GAAP basis, up from $0.13 in first quarter 2010 and $0.07 in second quarter 2009. Adjusted earnings per share (excluding the net income impact from office consolidation and severance expenses) of $0.17, up from $0.14 in both first quarter 2010 and second quarter 2009. | ||
| Revenue before reimbursements (RBR) of $155 million, up slightly from $154 million in first quarter 2010 and down slightly from $157 million in second quarter 2009. | ||
| Utilization of 73%, down from 77% in first quarter 2010 while consistent with second quarter 2009. Average bill rate of $266, up from $264 in first quarter 2010 and up from $250 in second quarter 2009. | ||
| Strong cash flow funded sizeable second quarter growth investments; debt outstanding totaled $203 million as of June 30, 2010 compared to $197 million as of March 31, 2010. | ||
| Previously discussed 2010 outlook affirmed. |
CHICAGO, July 29, 2010 Navigant Consulting, Inc. (NYSE:NCI), a global consulting firm providing
dispute, investigative, operational, risk management and financial and regulatory advisory
solutions, today announced financial results for the second quarter ended June 30, 2010.
Over the course of the second quarter we made significant progress toward advancing our strategic
agenda, as evidenced by the acquisition of Daylight Forensic & Advisory and the addition of senior
practitioner talent in several of our key growth areas, stated William M. Goodyear, Chairman and
Chief Executive Officer. Despite the continuing challenging business environment, our second
quarter financial results improved over both first quarter and last year. Additionally, strong
cash flow aided by outstanding working capital management enabled us to maintain comfortable debt
levels during the quarter while at the same time adding significant new capabilities to the
Company.
Second Quarter 2010 Results
The Companys second quarter 2010 results are summarized as follows:
Total Company Second Quarter Financial Results (1)
Q2 2010 | Q2 2009 | Change | Q1 2010 | Change | ||||||||||||||||
Revenue Before Reimbursements ($000) |
$ | 154,617 | $ | 157,332 | -1.7 | % | $ | 153,870 | 0.5 | % | ||||||||||
Total Revenue ($000) |
$ | 172,323 | $ | 173,556 | -0.7 | % | $ | 173,550 | -0.7 | % | ||||||||||
Adjusted EBITDA excluding office
consolidation and severance expenses
($000) |
$ | 24,407 | $ | 23,192 | 5.2 | % | $ | 22,016 | 10.9 | % | ||||||||||
EBITDA ($000) |
$ | 23,400 | $ | 17,627 | 32.8 | % | $ | 21,180 | 10.5 | % | ||||||||||
Net Income ($000) |
$ | 7,828 | $ | 3,385 | 131.3 | % | $ | 6,447 | 21.4 | % | ||||||||||
Earnings Per Share |
$ | 0.16 | $ | 0.07 | 128.6 | % | $ | 0.13 | 23.1 | % | ||||||||||
Adjusted Earnings Per Share excluding the
net income impact from office
consolidation and severance expenses |
$ | 0.17 | $ | 0.14 | 21.4 | % | $ | 0.14 | 21.4 | % | ||||||||||
Average Billable FTEs |
1,660 | 1,832 | -9.4 | % | 1,679 | -1.1 | % | |||||||||||||
End of Period Billable FTEs |
1,668 | 1,778 | -6.2 | % | 1,661 | 0.4 | % | |||||||||||||
Consultant Utilization (1,850 base) |
73 | % | 73 | % | 0.0 | % | 77 | % | -5.2 | % | ||||||||||
Average Bill Rate (excluding success fees) |
$ | 266 | $ | 250 | 6.4 | % | $ | 264 | 0.8 | % | ||||||||||
DSO |
79 | 91 | -13.2 | % | 83 | -4.8 | % |
(1) | See the attached financial schedules for a reconciliation of EBITDA, Adjusted EBITDA and Adjusted Earnings per Share, excluding the net income impact from office consolidation and severance expenses, to the closest GAAP measure. |
Navigants second quarter 2010 RBR was $155 million, up slightly from $154 million in first
quarter 2010 and down slightly from $157 million in second quarter 2009. The Companys energy,
healthcare and economics practices each achieved notable year over year growth, which was partially
offset by the impact of previously discussed wind downs and practitioner departures. Continued
softness in the disputes environment in the second quarter also adversely impacted year over year
comparisons. Companywide utilization for second quarter 2010 was 73%, down from 77% in first
quarter 2010 while consistent with second quarter 2009 utilization of 73%. Average bill rate was
$266 for second quarter 2010 compared to $264 for first quarter 2010 and $250 for second quarter
2009. Second quarter 2010 bill rate improvements were driven by rate increases in certain markets
as well as the engagement and consulting mix for the period. Period end companywide headcount was
up slightly from first quarter 2010 and is expected to continue to increase modestly over the
remaining two quarters of the year.
Navigant continued its ongoing focus on cost management as reflected by the Companys second
quarter results. Cost of services (before reimbursements) was $102 million for second quarter
2010, on par with second quarter 2009. General and administrative expenses were $29 million for
second quarter 2010, down 13% from $34 million for the same period in 2009. Continuing improvements
in operating leverage were driven by lower facility, operations, compensation and bad debt costs.
Days sales outstanding also improved year over year to 79 at June 30, 2010 from 91 at June 30,
2009.
Business Segment Highlights
Second quarter 2010 financial results for the Companys four business segments are summarized as
follows:
2
Business Segment Second Quarter Financial Results (2)
Q2 2010 | Q2 2009 | Change | Q1 2010 | Change | ||||||||||||||||
Business Segment Revenues ($000) |
||||||||||||||||||||
Dispute and Investigative Services |
$ | 63,867 | $ | 76,758 | -16.8 | % | $ | 67,894 | -5.9 | % | ||||||||||
Business Consulting Services |
71,756 | 63,393 | 13.2 | % | 66,250 | 8.3 | % | |||||||||||||
International Consulting |
18,078 | 19,250 | -6.1 | % | 20,797 | -13.1 | % | |||||||||||||
Economic Consulting |
18,622 | 14,155 | 31.6 | % | 18,609 | 0.1 | % | |||||||||||||
Total Company |
$ | 172,323 | $ | 173,556 | -0.7 | % | $ | 173,550 | -0.7 | % | ||||||||||
Business Segment Revenues before Reimbursements ($000) |
||||||||||||||||||||
Dispute and Investigative Services |
$ | 59,737 | $ | 70,124 | -14.8 | % | $ | 63,338 | -5.7 | % | ||||||||||
Business Consulting Services |
63,430 | 57,883 | 9.6 | % | 57,399 | 10.5 | % | |||||||||||||
International Consulting |
14,484 | 16,067 | -9.9 | % | 16,145 | -10.3 | % | |||||||||||||
Economic Consulting |
16,966 | 13,258 | 28.0 | % | 16,988 | -0.1 | % | |||||||||||||
Total Company |
$ | 154,617 | $ | 157,332 | -1.7 | % | $ | 153,870 | 0.5 | % | ||||||||||
Segment Operating Profit ($000) |
||||||||||||||||||||
Dispute and Investigative Services |
$ | 21,585 | $ | 28,369 | -23.9 | % | $ | 25,408 | -15.0 | % | ||||||||||
Business Consulting Services |
23,148 | 20,332 | 13.9 | % | 19,017 | 21.7 | % | |||||||||||||
International Consulting |
3,663 | 4,406 | -16.9 | % | 3,740 | -2.1 | % | |||||||||||||
Economic Consulting |
6,273 | 4,888 | 28.3 | % | 6,296 | -0.4 | % | |||||||||||||
Total Company |
$ | 54,669 | $ | 57,995 | -5.7 | % | $ | 54,461 | 0.4 | % | ||||||||||
(2) | In first quarter 2010 the Company repositioned certain service offerings within its four reporting segments. Prior year comparative segment data has been restated to be consistent with the current presentation. A company metrics summary including data by segment is available at www.navigantconsulting.com/investor_relations. |
Navigants Dispute and Investigative Services segment reported RBR of $60 million for second
quarter 2010, down 6% from first quarter 2010 and down 15% from second quarter 2009. Attrition and
headcount reductions impacted the segment during the first half of 2010 and, as a result, second
quarter 2010 average billable FTEs declined 16% from the year ago period. Despite continued solid
credit crisis related work, large scale investigations, construction disputes and general
litigation continue to be slower than anticipated. The Companys recent acquisition of Daylight
Forensic & Advisory, completed on May 14, 2010, has been integrated into the firm and is exceeding
original expectations.
Navigants Business Consulting Services segment delivered a strong performance in second quarter
2010 with RBR of $63 million, up 11% from first quarter 2010 and up 10% from second quarter 2009.
Utilization was 81% for second quarter 2010 compared to 75% for the year ago period, while average
bill rate was $217 for second quarter 2010 compared to $210 for second quarter 2009. The segments
healthcare and energy teams represented 72% of second quarter 2010 Business Consulting Services
revenues, compared to 68% for second quarter 2009. Navigants healthcare team experienced broad
based demand for its services, fueled by concerns related to the impact of healthcare reform and
providers seeking to improve cost structures. Navigants energy expertise is also being sought as
renewables, energy efficiency and Smart Grid related projects continue to increase in importance to
the marketplace. Additionally, the Companys restructuring and valuations teams performed very
well during the period.
Navigants International Consulting segment reported RBR of $14 million for second quarter 2010,
down 10% from both first quarter 2010 and second quarter 2009. While second quarter 2010 average
bill rate improved to $259 from $239 one year ago, average billable FTEs declined to 200 in second
quarter 2010 from 233 in second quarter 2009. Declines in segment results for second quarter 2010
generally resulted from the impacts of a weakened European economy combined with the wind down of
certain large infrastructure engagements in the construction practice.
3
Navigants Economic Consulting segment achieved RBR of $17 million for second quarter 2010,
matching its record first quarter 2010 and up 28% from second quarter 2009. Average bill rate was
$385 for second quarter 2010, an increase of 12% from the same period in 2009. Reflecting both the
acquisition of Washington, D.C. based Empiris on January 20, 2010 and recent senior level
recruiting efforts within the segment, average billable FTEs grew to 119 in second quarter 2010
from 100 in second quarter 2009 and are expected to grow further as the year progresses. Recent
senior hires have enabled the segment to expand their expertise in areas such as intellectual
property disputes, pharmaceuticals, telecommunications and technology. Ongoing strength in
structured finance related litigation matters positively affected second quarter results.
2010 Outlook
Navigant affirmed its 2010 guidance ranges as originally issued on February, 18, 2010. Revenue is
estimated to be between $700 and $750 million, and adjusted earnings per share (excluding the net
income impact from office consolidation and severance expenses) is estimated to range between $0.75
and $0.85.
Our outlook continues to assume a stronger second half of the year that reflects Navigants
existing momentum in its key practice areas, traction from first half senior hire investments and
building contributions from our recent acquisitions, commented Mr. Goodyear. Although we are not
immune to choppy economic conditions, we feel confident that continued improvements are attainable
for the firm over the balance of 2010 and into 2011.
Second Quarter 2010 Earnings Conference Call
Mr. Goodyear will host a conference call to discuss the Companys second quarter 2010 financial
results and full year 2010 outlook at 10:00 a.m. Eastern Time on Thursday, July 29, 2010. The web
cast may be accessed at www.navigantconsulting.com/investor_relations. A replay of the web
cast will be available for approximately 90 days.
About Navigant Consulting
Navigant Consulting, Inc. (NYSE: NCI) is a global consulting firm providing dispute, investigative,
operational, risk management and financial and regulatory advisory solutions to government
agencies, legal counsel and large companies facing the challenges of uncertainty, risk, distress
and significant change. The Company focuses on industries undergoing substantial regulatory or
structural change and on the issues driving these transformations. Navigant is
a service mark of Navigant International, Inc. Navigant Consulting, Inc. (NCI) is not affiliated,
associated, or in any way connected with Navigant International, Inc. and NCIs use of Navigant
is made under license from Navigant International, Inc. More information about Navigant Consulting
can be found at www.navigantconsulting.com.
Except as set forth below, statements included in this press release which are not historical in
nature are forward-looking statements as defined within the Private Securities Litigation Reform
Act of 1995. Forward-looking statements may be identified by words including plans, goals,
anticipates, believes, intends, estimates, expects and similar expressions. These
statements are based upon managements current expectations 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 indicated in the forward-looking statements including, without limitation:
the success and timing of the Companys strategy implementation of the Companys strategic business
assessment; the success of the Companys organizational changes and cost reduction actions; risks
inherent in international operations, including foreign currency fluctuations; ability to make
acquisitions; pace, timing and integration of acquisitions; impairment charges; management of
professional staff, including dependence on key personnel, recruiting, attrition and the ability to
successfully integrate new consultants into the Companys practices; utilization rates; conflicts
of interest; potential loss of clients; clients financial condition and their ability to make
payments to the Company; risks inherent with litigation; higher risk client assignments;
professional liability; potential legislative and regulatory changes; continued access to capital;
and general economic conditions. Further information on these and other potential factors that
could affect the Companys
4
financial results are included in the Companys filings with the SEC under the Risk Factors
section and elsewhere in those filings. 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 after the date of this press release.
###
5
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
For the quarters ended June 30, | For the six months ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Revenues before reimbursements |
$ | 154,617 | $ | 157,332 | $ | 308,487 | $ | 324,544 | ||||||||
Reimbursements |
17,706 | 16,224 | 37,386 | 31,374 | ||||||||||||
Total revenues |
172,323 | 173,556 | 345,873 | 355,918 | ||||||||||||
Cost of Services: |
||||||||||||||||
Cost of services before reimbursable expenses |
102,128 | 101,967 | 204,358 | 212,234 | ||||||||||||
Reimbursable expenses |
17,706 | 16,224 | 37,386 | 31,374 | ||||||||||||
Total costs of services |
119,834 | 118,191 | 241,744 | 243,608 | ||||||||||||
General and administrative expenses |
29,089 | 33,513 | 59,549 | 68,406 | ||||||||||||
Depreciation expense |
3,553 | 4,320 | 7,354 | 8,960 | ||||||||||||
Amortization expense |
2,962 | 3,392 | 5,758 | 7,012 | ||||||||||||
Other operating costs: |
||||||||||||||||
Office consolidation |
| 4,612 | | 5,520 | ||||||||||||
Operating income |
16,885 | 9,528 | 31,468 | 22,412 | ||||||||||||
Interest expense |
3,508 | 3,952 | 6,986 | 7,920 | ||||||||||||
Interest income |
(311 | ) | (312 | ) | (624 | ) | (608 | ) | ||||||||
Other (income) expense, net |
(44 | ) | (87 | ) | 61 | (408 | ) | |||||||||
Income before income tax expense |
13,732 | 5,975 | 25,045 | 15,508 | ||||||||||||
Income tax expense |
5,904 | 2,590 | 10,770 | 6,690 | ||||||||||||
Net income |
$ | 7,828 | $ | 3,385 | $ | 14,275 | $ | 8,818 | ||||||||
Basic net income per share |
$0.16 | $ | 0.07 | $ | 0.29 | $ | 0.18 | |||||||||
Shares used in computing income per basic share |
49,205 | 48,213 | 48,948 | 47,828 | ||||||||||||
Diluted net income per share |
$0.16 | $ | 0.07 | $ | 0.28 | $ | 0.18 | |||||||||
Shares used in computing income per diluted share |
50,264 | 49,756 | 50,180 | 49,604 |
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AND SELECTED DATA
(In thousands, except DSO data)
(Unaudited)
CONSOLIDATED BALANCE SHEETS AND SELECTED DATA
(In thousands, except DSO data)
(Unaudited)
June 30, | June 30, | December 31, | ||||||||||
2010 | 2009 | 2009 | ||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 3,000 | $ | 5,132 | $ | 49,144 | ||||||
Accounts receivable, net |
162,227 | 187,201 | 163,608 | |||||||||
Prepaid expenses and other current assets |
19,243 | 15,617 | 16,374 | |||||||||
Deferred income tax assets |
13,130 | 19,367 | 19,052 | |||||||||
Total current assets |
197,600 | 227,317 | 248,178 | |||||||||
Non-current assets: |
||||||||||||
Property and equipment, net |
40,459 | 47,045 | 42,975 | |||||||||
Intangible assets, net |
29,851 | 33,956 | 30,352 | |||||||||
Goodwill |
521,859 | 475,777 | 485,101 | |||||||||
Other assets |
22,605 | 15,592 | 13,639 | |||||||||
Total assets |
$ | 812,374 | $ | 799,687 | $ | 820,245 | ||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable |
$ | 9,640 | $ | 9,545 | $ | 8,203 | ||||||
Accrued liabilities |
9,196 | 9,404 | 8,664 | |||||||||
Accrued compensation-related costs |
50,406 | 43,602 | 69,751 | |||||||||
Income taxes payable |
| 557 | | |||||||||
Notes payable |
| 4,170 | | |||||||||
Term loan current |
18,397 | 2,250 | 12,375 | |||||||||
Other current liabilities |
40,363 | 37,106 | 34,441 | |||||||||
Total current liabilities |
128,002 | 106,634 | 133,434 | |||||||||
Non-current liabilities: |
||||||||||||
Deferred income taxes |
40,809 | 30,121 | 37,096 | |||||||||
Other non-current liabilities |
19,461 | 25,022 | 23,923 | |||||||||
Bank debt non-current |
24,094 | 19,217 | | |||||||||
Term loan non-current |
160,058 | 218,250 | 207,000 | |||||||||
Total non-current liabilities |
244,422 | 292,610 | 268,019 | |||||||||
Total liabilities |
372,424 | 399,244 | 401,453 | |||||||||
Stockholders equity: |
||||||||||||
Common stock |
60 | 60 | 60 | |||||||||
Additional paid-in capital |
560,282 | 556,036 | 559,368 | |||||||||
Treasury stock |
(209,936 | ) | (218,798 | ) | (218,798 | ) | ||||||
Retained earnings |
105,461 | 78,057 | 91,186 | |||||||||
Accumulated other comprehensive loss |
(15,917 | ) | (14,912 | ) | (13,024 | ) | ||||||
Total stockholders equity |
439,950 | 400,443 | 418,792 | |||||||||
Total liabilities and stockholders equity |
$ | 812,374 | $ | 799,687 | $ | 820,245 | ||||||
Selected Data |
||||||||||||
Days sales outstanding, net (DSO) |
79 | 91 | 78 | |||||||||
NAVIGANT CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share data)
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share data)
(Unaudited)
For the quarters ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net income |
$ | 7,828 | $ | 3,385 | $ | 14,275 | $ | 8,818 | ||||||||
Adjustments
to reconcile net income to net cash provided by operating activities, net of acquisitions: |
||||||||||||||||
Depreciation expense |
3,553 | 4,320 | 7,354 | 8,960 | ||||||||||||
Depreciation expense- office consolidation |
| 387 | | 995 | ||||||||||||
Amortization expense |
2,962 | 3,392 | 5,758 | 7,012 | ||||||||||||
Share-based compensation expense |
1,963 | 1,959 | 2,938 | 4,465 | ||||||||||||
Accretion of interest expense |
196 | 221 | 401 | 499 | ||||||||||||
Deferred income taxes |
2,495 | (1,306 | ) | 7,814 | 1,472 | |||||||||||
Allowance for doubtful accounts receivable |
2,354 | 4,356 | 3,938 | 8,110 | ||||||||||||
Changes in assets and liabilities: |
||||||||||||||||
Accounts receivable |
10,069 | 1,294 | (3,541 | ) | (21,358 | ) | ||||||||||
Prepaid expenses and other assets |
(8,530 | ) | 2,196 | (9,780 | ) | (74 | ) | |||||||||
Accounts payable |
406 | (1,223 | ) | 1,561 | 932 | |||||||||||
Accrued liabilities |
(943 | ) | (257 | ) | 1,203 | (591 | ) | |||||||||
Accrued compensation-related costs |
11,296 | 2,319 | (19,120 | ) | (29,523 | ) | ||||||||||
Income taxes payable |
(1,173 | ) | 2,723 | (1,782 | ) | 902 | ||||||||||
Other liabilities |
(3,870 | ) | 3,611 | (3,370 | ) | 2,147 | ||||||||||
Net cash provided by (used in) operating activities |
28,606 | 27,377 | 7,649 | (7,234 | ) | |||||||||||
Cash flows from investing activities: |
||||||||||||||||
Purchases of property and equipment |
(2,423 | ) | (6,644 | ) | (5,479 | ) | (12,352 | ) | ||||||||
Acquisitions of businesses, net of cash acquired |
(29,870 | ) | | (33,870 | ) | (1,875 | ) | |||||||||
Payments of acquisition liabilities |
| | | (2,821 | ) | |||||||||||
Other, net |
| (69 | ) | | (109 | ) | ||||||||||
Net cash used in investing activities |
(32,293 | ) | (6,713 | ) | (39,349 | ) | (17,157 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||||||
Issuances of common stock |
872 | 645 | 1,533 | 2,317 | ||||||||||||
Payments of notes payable |
| | | (355 | ) | |||||||||||
Borrowings from banks, net of repayments |
5,734 | (22,689 | ) | 25,049 | 6,113 | |||||||||||
Payments of term loan |
(460 | ) | (563 | ) | (40,920 | ) | (1,125 | ) | ||||||||
Other, net |
271 | (108 | ) | (119 | ) | (814 | ) | |||||||||
Net cash (used in) provided by financing activities |
6,417 | (22,715 | ) | (14,457 | ) | 6,136 | ||||||||||
Effect of exchange rate changes on cash |
(91 | ) | 440 | 13 | 253 | |||||||||||
Net decrease in cash and cash equivalents |
2,639 | (1,611 | ) | (46,144 | ) | (18,002 | ) | |||||||||
Cash and cash equivalents at beginning of the period |
361 | 6,743 | 49,144 | 23,134 | ||||||||||||
Cash and cash equivalents at end of the period |
$ | 3,000 | $ | 5,132 | $ | 3,000 | $ | 5,132 | ||||||||
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Non-GAAP Financial Information
This press release includes certain non-GAAP financial information as defined by Securities
and Exchange Commission Regulation G. Pursuant to the requirements of this regulation,
reconciliations of this non-GAAP financial information to the Companys financial statements as
prepared under generally accepted accounting principles (GAAP) are included in this press release.
During 2009, the Company incurred significant severance expense as staffing levels were adjusted to
market demand and Navigant executed its strategic refresh initiative involving the redeployment of
certain resources. The Company also continues to be impacted by office consolidation expense due
to its real estate initiatives including the impact of closing certain offices and changes in
market conditions associated with expected sublease proceeds. Adjusted EBITDA and adjusted
operating income excludes the impact of severance and office consolidation expense and adjusted
earnings per share excludes the net income impact of severance and office consolidation expense in
all periods presented. Severance and office consolidation expense are not considered to be
non-recurring, infrequent or unusual to our business, however, management believes providing
investors with this information gives additional insights into Navigants operating performance.
While management believes that these non-GAAP financial measures are useful in evaluating
Navigants operations, this information should be considered as supplemental in nature and not as a
substitute for or superior to, any measure prepared in accordance with GAAP.
EBITDA, Adjusted EBITDA, Adjusted operating income
EBITDA (earnings before interest, taxes, depreciation and amortization) is not a measure of
financial performance under generally accepted accounting principles (GAAP). The Company believes
EBITDA provides useful supplemental information for investors to evaluate financial performance.
This data is also used by the Company for assessment of its operating and financial results, in
addition to operating income, net income and other GAAP measures. Management believes EBITDA is a
useful indicator of the Companys financial and operating performance and its ability to generate
cash flows from operations that are available for interest, debt service, taxes and capital
expenditures. Investors should recognize that EBITDA might not be comparable to similarly-titled
measures of other companies. Adjusted EBITDA and adjusted operating
income excludes the impact of severance and office consolidation expense as discussed above. This
measure 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.
For the quarters ended June 30, | For the six months ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
EBITDA reconciliation: |
||||||||||||||||
Operating income |
$ | 16,885 | $ | 9,528 | $ | 31,468 | $ | 22,412 | ||||||||
Depreciation |
3,553 | 4,320 | 7,354 | 8,960 | ||||||||||||
Accelerated depreciation office consolidation |
| 387 | | 995 | ||||||||||||
Amortization |
2,962 | 3,392 | 5,758 | 7,012 | ||||||||||||
EBITDA |
$ | 23,400 | $ | 17,627 | $ | 44,580 | $ | 39,379 | ||||||||
Adjusted EBITDA and operating income to exclude office consolidation and
severance expense reconciliation to operating income: |
||||||||||||||||
Operating income |
$ | 16,885 | $ | 9,528 | $ | 31,468 | $ | 22,412 | ||||||||
Other operating costs office consolidation |
| 4,612 | | 5,520 | ||||||||||||
Severance expense |
1,007 | 1,340 | 1,843 | 4,347 | ||||||||||||
Adjusted operating income to exclude office consolidation and severance expense |
$ | 17,892 | $ | 15,480 | $ | 33,311 | $ | 32,279 | ||||||||
Depreciation |
3,553 | 4,320 | 7,354 | 8,960 | ||||||||||||
Amortization |
2,962 | 3,392 | 5,758 | 7,012 | ||||||||||||
Adjusted EBITDA, excluding office consolidation and severance expense |
$ | 24,407 | $ | 23,192 | $ | 46,423 | $ | 48,251 | ||||||||
Adjusted earnings per share (adjusted to exclude the net income impact from office
consolidation and severance expense)
The Company discloses adjusted earnings per share to exclude the net income impact from
severance and office consolidation expense as discussed above. Management believes the adjusted
earnings per share information provides additional insights into Navigants ongoing operating
performance. This measure 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.
For the quarters ended June 30, | For the six months ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Office consolidation expense |
$ | | $ | 4,612 | $ | | $ | 5,520 | ||||||||
Tax benefit (1) |
| (1,860 | ) | | (2,226 | ) | ||||||||||
Net income impact of office consolidation expense |
$ | | $ | 2,752 | $ | | $ | 3,294 | ||||||||
Shares used in computing income per diluted share |
50,264 | 49,756 | 50,180 | 49,604 | ||||||||||||
Diluted income per share impact of office consolidation expense |
$ | | $ | 0.06 | $ | | $ | 0.07 | ||||||||
Severance expense |
$ | 1,007 | $ | 1,340 | $ | 1,843 | $ | 4,347 | ||||||||
Tax benefit (1) |
(371 | ) | (497 | ) | (693 | ) | (1,667 | ) | ||||||||
Net income impact of severance expense |
$ | 636 | $ | 843 | $ | 1,150 | $ | 2,680 | ||||||||
Shares used in computing income per diluted share |
50,264 | 49,756 | 50,180 | 49,604 | ||||||||||||
Diluted income per share impact of severance expense |
$ | 0.01 | $ | 0.02 | $ | 0.02 | $ | 0.05 | ||||||||
Net income |
$ | 7,828 | $ | 3,385 | $ | 14,275 | $ | 8,818 | ||||||||
Net income impact of office consolidation expense |
| 2,752 | | 3,294 | ||||||||||||
Net income impact of severance expense |
636 | 843 | 1,150 | 2,680 | ||||||||||||
Adjusted net income, excluding the net income impact of office
consolidation and severance expense |
$ | 8,464 | $ | 6,980 | $ | 15,425 | $ | 14,792 | ||||||||
Shares used in computing income per diluted share |
50,264 | 49,756 | 50,180 | 49,604 | ||||||||||||
Adjusted earnings per share, excluding the net income impact
of office consolidation and severance expense |
$ | 0.17 | $ | 0.14 | $ | 0.31 | $ | 0.30 | ||||||||
(1) | Effective tax benefit has been determined based on specific tax jurisdiction. |