On Feb 18, 2010, Navigant Consulting, Inc. (NCI) reported its fourth quarter operating earnings per share of 18 cents that were flat compared to the Zacks Consensus Estimate. However, operating earnings per share fell short of the 25 cents recorded in the year-ago quarter. These excluded the office consolidation and severance expense of $4.3 million recorded in the reported quarter. Including this, GAAP net income was $4.8 million or 10 cents per share compared to $11.3 million or 23 cents per share. 

Results reflected the positive effects of realignment of cost structure, increase in average bill rates and modest utilization growth. However, these were partially offset by lower-than-expected top-line growth and higher office consolidation expense. 

Navigant’s total revenues declined 10.3% year-over-year to $174.0 million. Although reimbursements increased 7.2% year-over-year to $20.9 million, revenues before reimbursements declined 12.3% year-over-year to $153.1 million. Utilization declined marginally to 76.0% compared to 77.0% in the year-ago quarter, while average bill rate increased marginally to $260 from $257 in the year-ago quarter. Navigant’s average billable full time equivalent (FTE) headcount was 1,685, down 13.0% year-over-year, reflecting actions taken to realign staffing levels with reduced demand as a result of the recessionary environment.
 
Navigant’s total cost of services declined 1.5% year-over-year to $124.7 million. Moreover, general and administrative, depreciation and amortization expenses also experienced a year-over-year decline in the reported quarter, as a result of the cost structure realignment.
 
For full year 2009, total revenues declined 12.8% year-over-year to $707.2 million. Reimbursements decreased 15.7% over 2008 to $70.5 million. Revenues before reimbursements declined 12.4% year-over-year to $636.7 million due to decrease in discretionary spending in industries such as financial services and insurance and weakness in general litigation and investigations. Operating earnings per share were 44 cents compared to 83 cents in 2008. Including severance expense of $10.2 million in 2009, GAAP net income was $21.9 million or 68 cents per share compared to $40.1 million or 95 cents per share in 2008.
 
At Dec 31, 2009, Navigant’s cash and equivalents increased to $49.1 million from $23.1 million at Dec 31, 2008. Moreover, cost reduction efforts initiated in early 2009 exceeded original savings estimates and at Dec 31, 2009, total debt (net of cash) declined almost by $40 million from Dec 31, 2008.
 
Business Update 

On Jan 11, 2010 Navigant announced the acquisition of Summit Blue Consulting, a Boulder, Colorado based energy industry consulting firm specializing in energy efficiency, demand-side management, Smart Grid, and renewable energy. Additionally, on Jan 25, 2010 Navigant acquired Empiris LLC, a leading Washington, D.C. based economics consulting firm. Both the acquisitions make outstanding additions to Navigant’s existing portfolio of energy and economics services and facilitate the execution of the company’s strategic plans.
 
Management of Navigant has identified disputes, economics, healthcare and energy as key areas for long term growth and subsequently sharpened its investment focus within these practices.
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