Tuesday, October 25, 2016

3Q Earnings Release (NCI)

Navigant reported revenue and EPS beats over the street's estimates.

Key highlights include:
Revenue before reimbursements increased 13%, with 10% organic growth y/y
Net income was $17.2M, compared to $14.2M y/y (21% increase)

Majority of the revenue increase stemmed from the Healthcare and Financial Services Advisory segments. Financial services advisory experienced a 49.3% organic increase in segment revenue y/y, and the health care segment posted 23.8% increase in revenue y/y, which is a combination of acquisition and organic growth. Company operating margin increased to 35.4% which is a 170 bps increase from last year.

Cash flow was again positive, and free cash flow was $25.5M for the quarter. Bank debt decreased by $28M sequentially..

As a result of the positive results, NCI also increased guidance to the higher end of their previously recorded guidance.

As a result of the earnings release, the market responded very favorably with an 12% increase in share price at the time of writing this report. At this time, the positive is above price target and I recommend that we sell the position to secure upside.

Michael Lorka

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