Navigant Consulting Announces Third Quarter 2003 and Year-to-Date Financial Results.Business Editors CHICAGO--(BUSINESS WIRE)--Oct. 21, 2003 Navigant Consulting, Inc. (NYSE NYSE See: New York Stock Exchange :NCI See Liberate. ): Third quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. highlights -- Quarterly revenues of $81.4 million, an increase of 22 percent compared to the third quarter of 2002, and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $12.7 million, an increase of 43 percent compared to the third quarter of 2002. -- Third quarter EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.13 per share compared to $0.09 per share in both the third quarter of 2002 and the second quarter of 2003. EPS for the nine months was $0.29, an increase of 71 percent from $0.17 per share for the same period of 2002. -- Nine-month revenues of $236.6 million, a 26 percent increase over the comparable 2002 period, and EBITDA for the nine-month period of $30.2 million, a 62 percent increase over the comparable 2002 period. Navigant Consulting, Inc. (NYSE:NCI), an independent consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a providing specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. to assist clients in identifying practical solutions to the challenges of uncertainty and risk, today announced third quarter 2003 and nine-month year-to-date financial results. Financial Results Revenues for the third quarter of 2003 were $81.4 million, consistent with revenues during the second quarter of 2003, and a 22 percent increase from $66.6 million in the third quarter of 2002. Third quarter revenues in the Financial & Claims practice were $62.6 million, an increase of 36 percent from $46.2 million in the third quarter of 2002. Third quarter revenues in the Energy practice were $18.8 million, essentially level with the second quarter's $19.1 million and down from $20.4 million in the third quarter of 2002. EBITDA in the third quarter of 2003 was $12.7 million, a 43 percent increase from $8.9 million in the third quarter of 2002, and an increase of 33 percent from $9.5 million in the second quarter of 2003. Third quarter 2003 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS was $0.13 per share, up from $0.09 per share in the both the third quarter of 2002 and the second quarter of 2003. "We were very pleased with our third quarter results," stated William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack M. Goodyear, Chairman and Chief Executive Officer of Navigant Consulting. "Our financial results reflect excellent breadth Breadth The percentage of assets or stocks advancing relative to those unchanged or declining. Also the number of independent forecasts available per year. A stock picker forecasting returns to 100 stocks every quarter exhibits a breadth of 400, assuming each forecast is and depth across all the Company's service offerings and industry verticals. We expect that diversity to continue to benefit the Company's results." Nine-Month Financial Results Revenues for the nine months ended September September: see month. 30, 2003 were $236.6 million, a 26 percent increase compared to 2002 nine-month revenues of $188.2 million. EBITDA for the nine-month period was $30.2 million, up 62 percent from $18.7 million for the comparable 2002 period. EPS for the nine months was $0.29 per share, an increase of 71 percent from $0.17 per share for the same period in 2002. Business Metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. Company-wide consulting personnel utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be in the third quarter was 70 percent, up from 66 percent in the third quarter of 2002 and down from 75 percent during the second quarter of 2003. The quarter-to-quarter decrease reflects normal seasonality and the combined impact of Hurricane Isabel This article is about the 2003 hurricane; there was also a Tropical Storm Isabel during the 1985 Atlantic hurricane season Hurricane Isabel was the costliest and deadliest hurricane in the 2003 Atlantic hurricane season. and the August blackout A complete loss of power. See brownout. in the Northeast “Northeastern” redirects here. For the Boston college, see Northeastern University, Boston. Northeast or north east is the ordinal direction halfway between north and east. It is the opposite of southwest. See boxing the compass. . Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue per consultant continued its year over year improvement, increasing to $342,000 from $255,000 in the second quarter of 2002. Average billable consultant headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. for the 2003 third quarter was 939, compared to 940 for the second quarter of 2003. Year-to date voluntary attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: was 17.6 percent as compared to 15.9 percent in the first half of 2003. The Company ended the quarter with $12.7 million in cash, with no borrowings under its recently amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. $75.0 million unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). as of September 30, 2003 were 79 days, compared to 77 days as of June June: see month. 30, 2003, and 87 days as of September 30, 2002. Bookman-Edmonston Divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). On September 26, 2003, the Company completed the divestiture of Bookman-Edmonston, the Company's water resources practice, to GEI GEI - A German software engineering company. Consultants. As part of the agreement, Navigant Consulting and GEI Consultants have signed a co-marketing Co-marketing is a marketing practice where two companies cooperate with separate distribution channels, sometimes including profit sharing. It is frequently confused with Co-promotion See also Marketing co-operation agreement to leverage the expert services from both companies to jointly pursue opportunities to assist energy and water resource clients in addressing their business and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. issues. Enhancement of Bank Line of Credit As announced on October October: see month. 7, the Company executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. an amendment to its revolving credit agreement Revolving credit agreement A legal commitment in which a bank promises to lend a customer up to a specified maximum amount during a specified period. revolving credit agreement See line of credit. , increasing its line of credit from $50 million to $75 million, with the option to increase the line of credit amount up to $100 million over the term of the commitment. The facility, which is with LaSalle Bank LaSalle Bank Corporation is the holding company for LaSalle Bank N.A. and LaSalle Bank Midwest N.A. With $116 billion in assets, it is headquartered at 135 South LaSalle Street in Chicago, Illinois. , N.A., a subsidiary of ABN AMRO ABN AMRO Algemene Bank Nederland-Amsterdam Roterdam Bank (Dutch bank) Bank N.V., and U.S. Bank, is unsecured and expires in October 2005, but can be extended an additional two years. "Considering the growth of the Company's operations, as well as our desire to have the financial flexibility to pursue selective acquisitions, it was important to expand our borrowing capacity and access to additional funding sources," stated Ben W. Perks perk 1 v. perked, perk·ing, perks v.intr. 1. To stick up or jut out: dogs' ears that perk. 2. To carry oneself in a lively and jaunty manner. , Executive Vice President and Chief Financial Officer. Webcast of the Management's presentation of Third Quarter 2003 Results A live webcast of management's presentation of the Company's third quarter results will be available on the Company's website, www.navigantconsulting.com. To access the call, click the Investor Relations Investor relations The process by which the corporation communicates with its investors. section and select Conference Calls. This webcast will be available until 5:00 p.m., ET, February February: see month. 11, 2004. About Navigant Consulting Navigant Consulting, Inc. (NYSE:NCI) is a specialized independent consulting firm providing litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , financial, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , energy and operational consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and 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 af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: , 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 obtained on the Company's website address, www.navigantconsulting.com. Except as set forth below, statements included in this press release, which are not historical in nature, are intended to be, and are hereby identified as, "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined within the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements may be identified by words including "anticipate," "believe," "intends," "estimates," "expect" and similar expressions. The Company cautions readers that forward-looking statements, including without limitation, those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's future business prospects, revenues, working capital, liquidity, income and margins, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to several important factors, including those identified from time to time in the Company's reports filed with the SEC. Such risk factors include, but are not limited to: acquisitions and acquisitions under consideration, follow-on offerings Follow-On Offering An offering of additional shares after a company has had an initial public offering. Notes: This sometimes means the company is strapped for cash. So they need to issue more shares to pay bills or finance a new project. , revenues and financial estimates, significant client assignments, recruiting, attrition and new business solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual efforts, judicial proceedings judicial proceedings n. any action by a judge re: trials, hearings, petitions, or other matters formally before the court. (See: judicial) , regulatory changes and general economic conditions.
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For the three months ended
------------------------------------
September 30, June 30, September 30,
2003 2003 2002
------------------------------------
Revenues before reimbursements $70,807 $69,882 $58,160
Reimbursements 10,569 11,567 8,441
------------------------------------
Total revenues 81,376 81,449 66,601
Cost of services before
reimbursable expenses 40,326 39,078 34,954
Reimbursable expenses 10,569 11,567 8,441
------------------------------------
Cost of services 50,895 50,645 43,395
Stock-based compensation expense
(credit) 1,860 4,527 (1,527)
General and administrative
expenses 15,890 16,737 15,794
------------------------------------
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 12,731 9,540 8,939
Depreciation 1,642 2,291 1,916
Amortization 495 495 449
------------------------------------
Operating income 10,594 6,754 6,574
Other income (expense), net 87 (70) (43)
------------------------------------
Income before income tax expense 10,681 6,684 6,531
Income tax expense 4,559 2,680 2,592
------------------------------------
Net income $6,122 $4,004 $3,939
====================================
Net income per diluted share $0.13 $0.09 $0.09
====================================
Shares used in computing net
income per diluted share 47,330 46,550 42,583
% of revenues before
reimbursements
----------------------------------
Consulting service expenses before
reimbursable expenses 57.0% 55.9% 60.1%
Reimbursable expenses 14.9% 16.6% 14.5%
General and administrative
expenses 22.4% 24.0% 27.2%
EBITDA 18.0% 13.7% 15.4%
Operating income 15.0% 9.7% 11.3%
Net income 8.6% 5.7% 6.8%
Total revenues by business
segment:
----------------------------------
Financial & Claims $62,558 $62,384 $46,187
Energy & Water 18,818 19,065 20,414
------------------------------------
Total revenues $81,376 $81,449 $66,601
====================================
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For the nine months ended
---------------------------
September 30, September 30,
2003 2002
---------------------------
Revenues before reimbursements $204,713 $165,607
Reimbursements 31,876 22,579
---------------------------
Total revenues 236,589 188,186
Cost of services before reimbursable
expenses 117,838 100,405
Reimbursable expenses 31,876 22,579
---------------------------
Cost of services 149,714 122,984
Stock-based compensation expense 8,099 1,669
General and administrative expenses 48,553 44,827
---------------------------
Earnings before interest, taxes,
depreciation and amortization (EBITDA) 30,223 18,706
Depreciation 5,634 5,754
Amortization 1,485 1,235
---------------------------
Operating income 23,104 11,717
Other income, net 189 63
---------------------------
Income before income tax expense 23,293 11,780
Income tax expense 9,661 4,721
---------------------------
Net income $13,632 $7,059
===========================
Net income per diluted share $0.29 $0.17
===========================
Shares used in computing net income per
diluted share 46,710 41,690
% of revenues before reimbursements:
-------------------------------------------
Consulting service expenses before
reimbursable expenses 57.6% 60.6%
Reimbursable expenses 15.6% 13.6%
General and administrative expenses 23.7% 27.1%
EBITDA 14.8% 11.3%
Operating income 11.3% 7.1%
Net income 6.7% 4.3%
Total revenues by business segment:
-------------------------------------------
Financial & Claims $181,427 $133,519
Energy & Water 55,162 54,667
---------------------------
Total revenues $236,589 $188,186
===========================
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AND SELECTED DATA
(In thousands, except DSO data)
(Unaudited)
September 30, June 30, December 31, September 30,
Assets 2003 2003 2002 2002
----------------------------------------------------------------------
Cash and cash
equivalents $12,697 $7,417 $8,109 $6,607
Trade accounts
receivable, net 73,892 73,671 61,693 66,037
Prepaid and other
assets 6,041 7,966 8,599 10,652
------------------------------------------------
Total current assets 92,630 89,054 78,401 83,296
Property and
equipment, net 19,308 19,242 18,124 19,881
Intangible assets, net 97,230 97,724 97,372 92,800
Other non-current
assets, net 8,087 8,080 7,307 4,280
------------------------------------------------
Total assets $217,255 $214,100 $201,204 $200,257
================================================
Liabilities and
Stockholders' equity
----------------------
Bank borrowings $0 $8,500 $6,500 $11,100
Current liabilities 42,779 44,738 45,991 44,373
Other liabilities 1,258 4,583 4,418 2,178
Stockholders' equity 173,218 156,279 144,295 142,606
------------------------------------------------
Total liabilities
and stockholders'
equity $217,255 $214,100 $201,204 $200,257
================================================
Selected Data
Days sales
outstanding, net
(DSO)(a) 79 days 77 days 77 days 87 days
================================================
(a) Includes deferred revenue.
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
SELECTED PRO FORMA OPERATING INFORMATION
(In thousands, except per share data)
(Unaudited)
For the three months ended
------------------------------------
September 30, June 30, September 30,
2003 2003 2002
------------------------------------
Operating income $10,594 $6,754 $6,574
Add back:
----------------------------------
Depreciation 1,642 2,291 1,916
Amortization 495 495 449
------------------------------------
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) $12,731 $9,540 $8,939
Add (deduct):
----------------------------------
Stock-based compensation expense
----------------------------------
Restricted stock / units expense 1,598 1,797 (73)
Variable accounting option expense 262 2,730 (1,454)
------------------------------------
Pro forma EBITDA $14,591 $14,067 $7,412
====================================
Pro forma EBITDA as a percentage
of revenues before reimbursements 20.6% 20.1% 12.7%
Net income per diluted share $0.13 $0.09 $0.09
Add (deduct):
----------------------------------
Impact on diluted EPS of stock-
based compensation expense, net
of tax $0.02 $0.05 ($0.02)
------------------------------------
Pro forma net income per diluted
share $0.15 $0.14 $0.07
====================================
For the nine months ended
---------------------------
September 30, September 30,
2003 2002
---------------------------
Operating income $23,104 $11,717
Add back:
-------------------------------------------
Depreciation 5,634 5,754
Amortization 1,485 1,235
---------------------------
Earnings before interest, taxes,
depreciation and amortization (EBITDA) $30,223 $18,706
Add (deduct):
-------------------------------------------
Stock-based compensation expense
-------------------------------------------
Restricted stock / units expense 5,292 1,307
Variable accounting option expense 2,807 362
---------------------------
Pro forma EBITDA $38,322 $20,375
===========================
Pro forma EBITDA as a percentage of
revenues before reimbursements 18.7% 12.3%
Net income per diluted share $0.29 $0.17
Add (deduct):
-------------------------------------------
Impact on diluted EPS of stock-based
compensation expense, net of tax $0.11 $0.02
---------------------------
Pro forma net income per diluted share $0.40 $0.19
===========================
NAVIGANT CONSULTING, INC.
STOCK-BASED COMPENSATION EXPENSE FOR THE PERIODS
Estimates as of September 30, 2003
(in millions)
----------------------------- Act. Act. Act.
2002 Actual Year 2003 2003 2003
------------------------
Q1 Q2 Q3 Q4 2002 Q1 Q2 Q3
---------------------------------------------
Value Sharing Retention
Program ("VSRP")
(Note 1) $0.7 $0.7 ($0.1) $0.5 $1.8 $0.5 $0.5 $0.3
Management Stock Purchase
Program ("MSPP")
(Note 2) N/A N/A N/A 0.4 0.4 0.7 0.7 0.7
Tender offer (Note 3) 0.0 0.0 0.0 0.4 0.4 0.6 0.6 0.6
---------------------------------------------
Total restricted stock /
units expense $0.7 $0.7 ($0.1) $1.3 $2.6 $1.8 $1.8 $1.6
Variable accounting
option expense (Note 4) 1.2 0.6 (1.4) 0.2 0.6 (0.1) 2.7 0.3
Cash repurchase of
options 0.0 0.0 0.0 0.2 0.2 0.0 0.0 0.0
---------------------------------------------
Total stock-based
compensation expense $1.9 $1.3 ($1.5) $1.7 $3.4 $1.7 $4.5 $1.9
=============================================
Est. Est. Est. Est.
------------------
2003 Year Year Year
Q4 2003 2004 2005
------------------------
Value Sharing Retention Program ("VSRP")
(Note 1) $0.0 $1.3 $0.0 $0.0
Management Stock Purchase Program ("MSPP")
(Note 2) 0.7 2.8 2.8 1.8
Tender offer (Note 3) 0.3 2.1 0.8 0.5
------------------------
Total restricted stock / units expense $1.0 $6.2 $3.6 $2.3
Variable accounting option expense (Note 4) TBD TBD TBD TBD
Cash repurchase of options 0.0 0.0 0.0 0.0
------------------------
Total stock-based compensation expense TBD TBD TBD TBD
========================
Note 1 Restricted shares granted as a part of the Value Sharing
Retention Program (VSRP), which was initiated in 2000.
Note 2 These amounts represent the expense related to restricted
shares and restricted share units to be issued in future
accounting periods. These shares are a part of the Management
Stock Purchase Program (MSPP), which was initiated in the
fourth quarter of 2002. There are certain business performance
events, which occurred in the third quarter of 2003, resulting
in accelerating the vesting of a 20% installment of the shares
included in the matching provision of the employee agreements.
Note 3 This expense relates to restricted shares granted as a part of
a tender offer in the third quarter of 2002. These restricted
shares replace options, which were subject to variable
accounting. This variable accounting treatment resulted in the
Company recording income or (expense) on the options equal to
the difference between the grant price and the market price as
of the quarter end.
Note 4 Certain shares issued in the second and third quarters of 2000
are subject to variable accounting expense. As such, the
Company records an expense for the difference between the grant
price and the quarter end stock price. As of September 30,
2003, there are approximately 311,000 shares subject to
variable accounting expense. The Company's stock price as of
September 30, 2003 was $12.31.
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