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Navigant (NCI) Surpasses Q2 Earnings and Revenue Estimates

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Navigant Consulting, Inc. reported solid second-quarter 2019 results wherein both earnings and revenues outpaced the Zacks Consensus Estimate.

Adjusted earnings per share (from continuing operations) of 29 cents beat the consensus estimate by 7 cents and came ahead of the year-ago figure by 11 cents. The bottom line benefited from strong operating performance, favorable net interest costs, lower depreciation and amortization and lower share count in the current year period.

Total revenues of $223.1 million increased 20.8% from the prior-year quarter. Revenues before reimbursements (RBR) of $196.6 million beat the consensus estimate by $10 million and improved 19% year over year. The top line benefited from robust growth in managed services (including solid performance at the Health System Solutions [HSS] venture, which started its operations in July 2018) and continued solid growth in Healthcare and Energy consulting. These were, however, partially offset by lower RBR within the Financial Services Advisory and Compliance (FSAC) segment.

Apart from releasing its earnings report, Navigant announced that it will be acquired by Guidehouse (a portfolio company of Veritas Capital) in a $1.1 billion all-cash transaction. Per the proposed merger, subject to shareholder and regulatory approval and fulfillment of other customary closing conditions, Navigant shareholders will receive $28.00 in cash for each Navigant share upon closing of the transaction.

So far this year, shares of Navigant have gained 16.3% compared with 27.1% rise of the industry it belongs to.

 

Let’s check out the numbers in detail.

Revenues by Segments

Healthcare segment’s RBR of $127.4 million increased 39.1% year over year, driven by improved demand for Healthcare consulting services and solid contributions from HSS.

Energy segment’s RBR of $40 million increased 9.3% year over year on the back of continued solid demand for Energy expertise from both commercial and government clients, particularly in North America.

The FSAC segment recorded RBR of $29.1 million, down 21.4% year over year due to slowdown of a large monitorship engagement and continued softness related to segment performance.

EBITDA Performance

Adjusted EBITDA from continuing operations in the second quarter of 2019 came in at $20.9 million, up 19% from the prior-year quarter. The upside was driven by robust performance of the HSS joint venture and solid margin expansion in Healthcare consulting.

Navigant Consulting, Inc. Price, Consensus and EPS Surprise

 

Navigant Consulting, Inc. Price, Consensus and EPS Surprise

Navigant Consulting, Inc. price-consensus-eps-surprise-chart | Navigant Consulting, Inc. Quote

Balance Sheet and Cash Flow

Navigant exited second-quarter 2019 with cash and cash equivalents of $90.63 million compared with $107.22 million at the end of the prior quarter.

The company generated $13.45 million of net cash from operating activities in the reported quarter. Adjusted free cash flow was $14.98 million. Capital expenditures were $5.45 million.

Share Repurchases & Dividend Payment

During the second quarter of 2019, Navigant repurchased 983,000 shares at an aggregate cost of $20.8 million and average price of $21.11 per share.

The company paid out $1.93 million in dividend in the quarter under review.

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 awaiting earnings of key players like Parsons (PSN - Free Report) , Repay Holdings (RPAY - Free Report) and H&R Block (HRB - Free Report) . While Parsons and Repay Holdings are slated to report second-quarter 2019 on Aug 13 and Aug 14, respectively, H&R Block is scheduled to release first-quarter fiscal 2020 results on Aug 28.

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