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Navigant Consulting Inc. (NCI - Analyst Report) reported second-quarter 2012 adjusted earnings per share of 21 cents, flat year over year but below the Zacks Consensus Estimate of 24 cents. GAAP net income per share came in at 18 cents compared with 21 cents in the year-ago quarter.

Navigant’s total revenue grew 5.2% year over year to $204.6 million, which fell short of the Zacks Consensus Estimate of $207.0 million. Revenues before reimbursements rose 4.7% year over year to $181.5 million. Consultant utilization rate in the quarter was 73% versus 80% in the year-ago period.

Segment Performance

In second quarter 2012, Navigant modified its business segments to Disputes, Investigations & Economics, Financial, Risk & Compliance Advisory, Healthcare and Energy. Its previous segments were Business Consulting services, Dispute and Investigative Services, Economic Consulting and International Consulting.

Financial, Risk & Compliance Advisory registered solid year-over-year growth of 41.3% to $52.8 million in the reported quarter, aided by strong performances in mortgage servicing area. The Healthcare segment rose 13.1% year over year to $40.8 million driven by strong demand in the field of healthcare as well as life science practices.

However, Disputes, Investigations & Economics segment revenue fell 9.0% year over year to $86.9 million due to weaker business from certain litigation related matters partially offset by stronger performance from technology and credit crisis related services. Energy segment revenue slipped 5.5% to $24.0 million due to late commencement of a few major engagements.

Financials

At quarter-end, Navigant had zero cash balance. The company’s total non-current debt balances stood at $247.4 million versus $205.2 million as of year-end 2011.

During second quarter 2012, the company repurchased over 300,000 shares.

Outlook

For full-year 2012, the company reiterated its guidance for total revenue in the range of $800–$860 million and adjusted earnings per share between 88–98 cents.

Our Take 
   
While NCI Consulting has been able to post strong results in some segments, other segments underperformed in the quarter. Moreover, the earnings as well as revenue miss remain a cause of concern.

Navigant, which competes with FTI Consulting Inc. (FCN - Analyst Report) and CRA International Inc. (CRAI - Analyst Report), currently retains a Zacks #3 Rank that translates into a short-term Hold rating. We are maintaining our long-term Neutral recommendation on the stock.
 

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