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Navigant (NCI) Beats Q3 Earnings and Revenue Estimates

Zacks

Navigant Consulting, Inc. NCI reported strong third-quarter 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share (from continuing operations) of 15 cents beat the consensus mark by 4 cents and came ahead of the year-ago figure by a penny. The bottom line in the reported quarter benefited from lower net interest cost and lower share count.

Total revenues of $187.62 million increased 1.1% from the prior-year quarter. Revenues before reimbursements (RBR) of $171.39 million beat the consensus estimate by 2.1 million and improved 4.2% year over year. The top line benefitted from robust performance of the company’s Energy segment, solid demand in Financial Services Advisory and Compliance (FSAC) segment and contribution from the start of the Health System Solutions (HSS) joint-venture with Baptist Health South Florida.

Navigant Consulting, Inc. Price, Consensus and EPS Surprise


Navigant Consulting, Inc. Price, Consensus and EPS Surprise | Navigant Consulting, Inc. Quote

Revenues by Segment

Energy segment RBR increased 16.9% year over year to $34.6 millionon the back of strong demand across the segment.

FSAC segment RBR increased 1.2% year over year to $35 million. Solid demand across specialties such as financial crime and operational efficiency engagements drove segmental revenues.

Healthcare segment’s RBR increased 1.5% from the prior-year quarter to $101.8 million, driven by the start of the HSS joint venture with Baptist Health South Florida, which more than offset some softness in Healthcare consulting.

EBITDA Performance

Adjusted EBITDA from continuing operations in the third quarter came in at $17.5 million compared with $18.5 million in the prior-year quarter. The decline was due to higher costs associated with the maintenance of resources in Healthcare consulting and headcount and technology investments in the FSAC segment.

Balance Sheet and Cash Flow

Navigant exited third-quarter 2018 with cash and cash equivalents of $277.43 million compared with $11.14 million at the end of the prior quarter. Bank debt was repaid in full as of Sep 30, 2018.

The company generated $24.69 million of net cash from operating activities in the reported quarter. Free cash flow was $30.72 million.

Share Repurchase & Dividend Payments

Navigant expanded its share repurchase program and repurchased 1.54 million additional shares during the third quarter of 2018 at an aggregate cost of $36.6 million and an average price of $23.76 per share.

Concurrent with the earnings release, Navigant initiated its first-ever quarterly dividend. The company’s board of directors declared a quarterly cash dividend of 5 cents per share, payable on Dec14, 2018 to shareholders of record on Nov 30, 2018. In the reported quarter, the company paid dividend worth $2.22 million.

2018 Guidance

Navigant reaffirmed its 2018 guidance for continuing operations. It expects revenues to be in the range of $740-$765 million. RBR is expected to be between $660 million and $685 million. The Zacks Consensus Estimate of $668.51 million is below the midpoint of the guided range.

Adjusted earnings per share are expected to be between 40 cents and 50 cents.The Zacks Consensus Estimate of 43 cents lags the midpoint of the currently guided range by 2 cents.

Adjusted EBITDA is anticipated in the $52-$59 million band.

Zacks Rank & Stocks to Consider

Navigant currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader Business Services sector include Paychex, Inc. PAYX, Genpact Limited G and WEX Inc. WEX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected EPS (three to five years) growth rate for Paychex, Genpact and WEX is 8.5%, 10% and 15%, respectively.

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