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Navigant Tops EPS, Revenue Misses

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Navigant Consulting Inc.(NCI - Free Report) reported first quarter 2011 adjusted earnings per share of 19 cents, outpacing the Zacks Consensus Estimate of 16 cents. The better-than-expected results were driven by increased demand for business consulting services.

Adjusted earnings per share also beat the last quarter and year-earlier quarter earnings of 14 cents and 15 cents, respectively. Adjusted earnings exclude the impact of severance expense and non-recurring tax benefit.

GAAP net income was $8.8 million or 17 cents per share compared with $0.6 million or 1 cents in fourth quarter 2010 and $6.4 million or 13 cents per share in the year-ago quarter.

Navigant’s total revenue climbed 8.8% year over year and 3.2% sequentially to $188.8 million. Quarterly revenues, however, fell short of the Zacks Consensus Estimate of $179.0 million.

Revenues before reimbursements jumped 10.2% year over year and 4.9% sequentially to $169.6 million. Moreover, consultant utilization rate improved 5.4% sequentially and 1.3% on a year-over-year basis to 78% during the quarter. Average bill rate rose 3.8% year over year and 2.6% sequentially to $274.

Inside The Headline Numbers

Segment-wise, Business Consulting Services registered a robust growth of 5.3% year over year to $79.6 million, aided by strong performances at the healthcare and energy teams. Dispute and Investigative Services revenues also leaped 6.1% year over year to $72.0 million driven by strong demand in the field of credit crisis litigation, anti-corruption compliance and investigations.

However, revenues from International Consulting and Economic Consulting plunged 10.4% and 0.4% year over year to $18.6 million and $18.5 million, respectively, due to tough comparisons. However, Economic Consulting revenue before reimbursement was up 5% year over year and 7% sequentially due to the continous senior hires in 2010, which in turn drove higher growth in client base and expertise.

Sequentially, all the segments’ revenues increased, with International Consulting revenue witnessing double-digit growth of 16.1%. Additionally, all the other three segments, Business Consulting Services, Dispute and Investigative Services and Economic Consulting, rose 1.8%, 2% and 2.5%, respectively.

Navigant’s total cost of services spiked 9.9% from the prior-year quarter to $134 million. Navigant's average billable full-time equivalent (FTE) headcount jumped 6.1% from the prior-year quarter to 1,782, reflecting the recruitment of senior economists.  


At quarter end, Navigant’s cash and equivalents decreased to $1.6 million from $2.0 million reported in fourth quarter of 2010. At the end of March 2011, total non-current liabilities increased to $277.8 million from $252.7 million at December 31, 2010.


The company reaffirmed its 2011 revenue guidance in the range of $715 million to $760 million and adjusted EPS in the band of 70 cents to 77 cents.

Our Take

Navigant’s first quarter results were above expectations and with economic conditions improving resulting in higher demand and client growth; we expect estimates to move up in the coming days.

One of Navigant’s primary competitors, FTI Consulting Inc (FCN - Free Report) , is expected to release its first quarter earnings on May 4, 2011, while another competitor CRA International Inc. (CRAI - Free Report) reported first quarter 2011 pro forma earnings of 40 cents per share, above the Zacks Consensus Estimate of 21 cents on the back of active pipelines for both litigation and management consulting businesses.

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