Navigant Consulting, Inc. (NCI) reported its first quarter operating earnings per share of 14 cents, a penny less than the Zacks Consensus Estimate. Furthermore, operating earnings per share came in a couple of cents short of last year’s profit of 16 cents. These excluded the office consolidation and severance expense of $4.3 million recorded in the reported quarter. Including this, GAAP net income was $6.4 million or 13 cents per share, compared to $5.4 million or 11 cents per share.
Results reflected the positive effects of realigning cost structure, increase in average bill rates and modest utilization growth. However, these were partially offset by lower-than-expected top-line growth.
Navigant’s total revenue declined 4.8% year over year to $173.6 million. Although reimbursements increased 29.6% year over year to $19.7 million, revenues before reimbursements declined 8.0% year over year to $153.7 million. However, utilization improved marginally to 77% compared to 75% in the year-ago quarter, while average bill rate increased to $264 from $252 in the year-ago quarter.
Navigant’s average billable full time equivalent (FTE) headcount was 1,679, down 13.5% year over year, reflecting actions taken to realign staffing levels with reduced demand as a result of the recessionary environment.
Taking an account of Navigant’s revenue segment in the reported quarter, revenue from Dispute and Investigative Services declined 12.4% year over year to $67.9 million and that of Business Consulting Services declined 9.9% year over year to $66.3 million. However, International Consulting revenue increased 20.2% year over year to $20.8 million and Economic Consulting revenue grew 32.5% year over year to $18.6 million in the reported quarter.
Navigant’s total cost of services declined 2.8% year over year to $121.9 million. Moreover, general and administrative (down 12.6% year over year), depreciation and amortization expenses (down 20.5% year over year) also experienced a year-over-year decline in the reported quarter, as a result of the cost structure realignment.
At Mar 31, 2010, Navigant’s cash and equivalents decreased to $0.4 million from $49.1 million at Dec 31, 2009. Moreover, at Mar 31, 2010, total debt (net of cash) declined to $197 million (32% of capitalization) from $254 million (41% of capitalization) at Mar 31, 2009.
Guidance
Management reiterated its outlook for 2010. Accordingly, total revenue is projected in the range of $700-$750 million. As well, operating earnings per share is expected to be in the range of 75-85 cents. This excludes any potential impact from significant acquisitions or from further redeployment of lower growth service lines. Navigant expects modest headcount growth over the remainder of 2010.
Management 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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