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Navigant (NCI) Earnings and Revenues Lag Estimates in Q4

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Navigant Consulting, Inc. reported fourth-quarter 2018 adjusted earnings per share (from continuing operations) of 10 cents lagged the consensus mark by 3 cents but came ahead of the year-ago figure by a penny. The bottom line benefited from lower net interest costs and lower share count, which offset lower operating profitability.

Total revenues of $193.21 million increased 9.1% from the prior-year quarter. Revenues before reimbursements (RBR) of $174.63 million missed estimates by $0.3 million but improved 11.5% year over year. The top line benefitted from robust performance of the Health System Solutions (“HSS”) joint venture and continued solid demand in the Energy segment, which partially offset, slower conversion of engagements in Healthcare consulting.

Revenues by Segments

Energy segment’s RBR increased 12.7% year over year to $34.6 million on the back of strong demand across the segment.

Financial Services Advisory and Compliance’s (“FSAC”) RBR increased 7.1% year over year to $34.5 million. The segment benefitted from the ramp-up of the new managed services engagement, which began in the third quarter of 2018.

Healthcare segment’s RBR increased 12.5% year over year to $105.5 million, driven by contribution from the HSS joint venture with Baptist Health South Florida, which partially offset prolonged softness in certain areas of Healthcare consulting.

EBITDA Performance

Adjusted EBITDA from continuing operations in the fourth quarter was $12.8 million compared with $15.2 million in the prior-year quarter. The decline was due to higher-than-usual year-end pause in the FSAC segment, weak results in Healthcare consulting, and higher general and administrative costs.

Balance Sheet and Cash Flow

Navigant exited fourth-quarter 2018 with cash and cash equivalents of $206.92 million compared with $277.43 million at the end of the prior quarter.

The company used $5.8 million of net cash in operating activities in the reported quarter. Adjusted free cash flow was $9.62 million.

During fourth-quarter 2018, Navigant repurchased 2.5 million shares at aggregate costs of $57.1 million and average price of $22.83 per share.

2019 Guidance

Navigant provided its guidance for 2019. It expects revenues to be $810-$840 million. RBR is expected to be between $735 million and $765 million. The Zacks Consensus Estimate of $737.82 million lies within the currently guided range.

Adjusted earnings per share are expected to be between 85 cents and $1.00.The Zacks Consensus Estimate of 95 cents lies within the currently guided range.

Adjusted EBITDA is anticipated to be $70-$80 million. Adjusted free cash flow is anticipated between $43 million and $53 million. Capital expenditure is estimated to be around $20 million.

Zacks Rank & Upcoming Releases

Navigant currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are keenly awaiting reports of key players like Charles River Associates CRAI, Stericycle SRCL and FactSet FDS. While Charles River Associates and Stericycle will report fourth-quarter 2018 results on Feb 28, FactSet will release second-quarter fiscal 2019 results on Mar 26.

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