Navigant Beats, Guides Higher

Navigant Consulting Inc. (NCI - Analyst Report) has reported third-quarter 2011 adjusted earnings per share of 21 cents, outpacing the Zacks Consensus Estimate of 19 cents. The better-than-expected results were driven by increased demand across the company’s key practice areas.

Adjusted earnings per share also beat the year-earlier earnings of 16 cents. GAAP net income per share was 20 cents per share compared with 18 cents per share in third quarter 2010.

Navigant’s total revenue climbed 16.9% year over year and 5.2% sequentially to $204.5 million. Revenues before reimbursements jumped 18.7% year over year and 4.9% sequentially to $181.8 million. Moreover, consultant utilization rate in the quarter improved 5% on a year-over-year basis to 78%. Average billable full time equivalents (FTEs) were 1,838 in third quarter 2011, up 11% year over year and 4% sequentially.

Inside The Headline Numbers

Segment wise, Business Consulting Services registered a solid year-over-year growth of 39.0% to $81.0 million, aided by strong performances by the healthcare and energy teams. Dispute and Investigative Services increased year over year to $67.0 million. This was driven by strong demand in the field of the credit crisis, anti-money laundering projects, healthcare compliance issues and international arbitration matters.

Moreover, International Consulting and Economic Consulting revenue also increased 21.1% and 2.2% year over year to $19.9 million and $18.6 million, respectively.

On a sequential basis, Business Consulting revenue climbed 14.1% and Dispute and Investigative Services nudged up 0.3%. The other two segments, Economic Consulting and International Consulting, declined 6.3% and 1.5%, respectively.

Financials

At quarter end, Navigant’s cash and equivalents decreased to $1.4 million from $5.4 million reported in the third quarter of 2010. The company generated net operating cash flow of $40.3 million, up from $6.5 million in the year-ago quarter. As of September 30, 2011, total stock holder equity was $503.4 million versus $457.1 million at September 30, 2010.

Outlook

For full-year 2011, the company expects to record total revenue in the range of $770 million and $780 million (previously $715 million and $760 million). The range for adjusted earnings per share has increased to 77–80 cents (previously 70–77 cents).

Our Take

We expect estimates to move up in the coming days given the solid performance by the company in the third quarter and increased guidance for the full year.

Navigant, which competes with FTI Consulting Inc. (FCN - Analyst Report) and CRA International Inc. (CRAI - Analyst Report), currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Outperform recommendation on the stock.

Read the full analyst report on NCI

Read the full analyst report on CRAI

Read the full analyst report on FCN