Navigant Consulting, Inc. Announces First Quarter 2007 Financial Results
Navigant Consulting, Inc. (NYSE:NCI):
First quarter 2007 revenues increased 10 percent, year over year, from $166.3 million to $183.3 million, and increased from $179.2 million in the fourth quarter of 2006.
EBITDA for the first quarter of 2007 was $27.9 million, compared to $30.7 million in the first quarter of 2006 and $36.0 million in the fourth quarter of 2006.
Net income per diluted share for the first quarter of 2007 was $0.20, compared to $0.26 in the 2006 first quarter and $0.30 in the fourth quarter of 2006.
The Company’s Board of Directors has approved a $300 million share repurchase authority, of which the Company plans to utilize the majority to launch a “Dutch Auction” tender offer to repurchase up to $250 million of the Company’s shares.
Navigant Consulting, Inc. (NYSE:NCI), a global consulting firm providing dispute, investigative, operational, risk management and financial advisory solutions to legal counsel, government agencies and companies experiencing regulatory or structural challenges, today announced financial results for the first quarter 2007.
“Despite a slower than anticipated start to the year, the Company experienced growth across most of our practices during the first quarter, including solid performance by our financial and insurance services practices, as well as continued strong momentum in our international expansion efforts,” stated William M. Goodyear, Chairman and CEO. “First quarter results were negatively impacted by softness in the provider operations service offering of our healthcare practice, and a pause in the intensity of several dispute channel engagements, which impacted resource deployment and utilization. Action steps have been taken, and will continue to be taken during the second quarter, to realign the impacted teams with current market opportunities.”
“We remain optimistic about our ability to meet our objectives for the full year 2007,” added Mr. Goodyear. “The Company is actively engaged in targeted recruiting and acquisition opportunities, which are aligned with our strategic growth initiatives. We expect these efforts to have a favorable impact in several of the Company’s high priority areas and to benefit our performance as 2007 progresses.”
First Quarter 2007 Financial Results
Revenues for the first quarter of 2007 were $183.3 million, a 10 percent increase compared to first quarter 2006 revenues of $166.3 million, and up from fourth quarter 2006 revenues of $179.2 million.
EBITDA in the first quarter of 2007 was $27.9 million, compared to $30.7 million in the first quarter of 2006 and $36.0 million in the fourth quarter of 2006. Net income per diluted share in the first quarter of 2007 was $0.20, compared to $0.26 per share in the first quarter of 2006 and $0.30 per share in the fourth quarter of 2006.
Business Metrics
Average billable full time equivalent (FTE) consultant headcount for the first quarter was 1,933, compared to 1,821 in the fourth quarter of 2006, and 1,733 in the first quarter of 2006. FTE billable consultants as of March 31, 2007 were 1,928, up from 1,871 at the end of the fourth quarter of 2006. Company-wide consultant utilization, based on a 2,080 hour base, in the first quarter of 2007 was 69 percent, compared to 71 percent in the first quarter of 2006 and 68 percent for the fourth quarter of 2006. Calculated on an industry standard 1,850 hour base, utilization for the first quarter of 2007 was 78 percent. Trailing 12-month attrition was 23 percent at first quarter end 2007, an increase from 21 percent at fourth quarter end of 2006.
Annualized revenue per consultant in the first quarter of 2007 was $381,000, consistent with $384,000 in the first quarter of 2006. Days sales outstanding as of March 31, 2007 was 81 days, compared to 78 days at the end of the 2006 fourth quarter and consistent with March 31, 2006. The Company ended the quarter with $63.5 million in borrowings under its $200 million unsecured, multi-bank credit facility, reflecting typical working capital seasonality and March funding of 2006 bonuses.
“The market for experienced professional consultants remains very competitive,” stated Julie M. Howard, President and Chief Operating Officer. “We continue to be an active participant in markets where we feel the investments are aligned with our strategic priorities. The increase in our billable consultant base during the first quarter was supported by several strategic hires and ongoing investments in expanding our global footprint. These new professionals have added strong credentials and expanded our solution expertise, including finance and project management, and global investigations. While we continue to pursue complementary additions to our team, we remain focused on lowering our overall attrition rates and increasing utilization.”
Share Repurchase
The Company’s Board of Directors has approved a $300 million share repurchase authority. The Company intends to utilize the majority of this authorization to conduct a “Dutch Auction” tender offer to purchase up to $250 million of its common shares. The balance of the authority will be available for the purchase of additional shares, from time to time, including through open-market or private transactions. The Company plans to commence the tender offer and announce the price range in early May.
“Given our conservative balance sheet, attractive cash flow, and the liquidity in and flexibility of the capital markets, we feel this is an opportune time to increase our participation in the debt markets, lower our cost of capital, and return equity capital to our shareholders,” stated Mr. Goodyear. “After thorough analysis and discussion with our Board and outside advisers, we have targeted investment levels that are prudent, preserve our flexibility, and support our longer term growth priorities. This initiative, in combination with the financing discussed below, reflects our confidence in the Company’s long term opportunities and gives us an avenue to increase the relative stock ownership position of our employee base.”
Financing
To support the repurchase authority, as well as the Company’s ongoing growth initiatives, management is in the process of increasing the Company’s unsecured multi-bank credit facility from $200 million to $450 million, and extending the maturity to five years. Bank of America has been designated the lead arranger, and LaSalle Bank, N.A., a subsidiary of ABN AMRO Bank N.V., will be the joint lead arranger. Borrowings under this new facility would result in leverage levels well within existing market standards.
Outlook
The Company is providing an update to its previous full year 2007 guidance.
The Company anticipates 2007 revenues to be in the $770 million to $790 million range, unchanged from previous guidance. EBITDA is projected to be in the range of $135 million to $140 million. Exclusive of the impact of the previously described stock repurchase initiative and associated financing costs, the Company anticipates that 2007 net income per diluted share would be in the $1.02 to $1.07 range.
Webcast of the Company’s Announcement of First Quarter 2007 Results
A webcast of management’s presentation of the Company’s first quarter financial results will be available on the Company’s website, www.navigantconsulting.com. To access the call, click the Investor Relations section and select “Conference Calls.” This webcast will be available until 5:00 p.m., ET, July 25, 2007.
About Navigant Consulting
Navigant Consulting, Inc. (NYSE: NCI) is a specialized independent consulting firm providing dispute, financial, regulatory and operational advisory services 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 NCI’s use of “Navigant” is made under license from Navigant International, Inc. More information about Navigant Consulting can be found at www.navigantconsulting.com.
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