Financial Statement Summary of Navigant Consulting (Ticker: NCI)


Segment Overview

The financials of Navigant Consulting are derived from four separate operating segments. These segments include consulting income generated from 1. North American Dispute and Investigative Services, 2. North American Business Consulting Services, 3. International Consulting Services, and 4. Economic Consulting Services. Within the past three years (2008 – 2006), almost 90% of revenues and profits have been generated solely based on activities pertaining to North American services.

Concentration of Revenues

Navigant’s revenues are reliant on a select basis of clients and thus create potential risk. During the past three 10K filings (2006 – 2008), almost 23% of total revenues were attributed to 20 clients. Furthermore, Navigant’s top 10 clients amount to 15% of total revenues in the same filing period. Between 2006 and 2008, there were no clients that accounted for more than 5 percent of total revenues.


Financial Data

Although Navigant has seen consecutive revenue growth each year since 2004, the last five quarters have produced opposite results. Since the 1st quarter of 2008 until the most recent 1st quarter of 2009, revenues have decreased in 5 consecutive quarters. Various red flags can be derived from the financial data associated with the past 5 quarters:

1. The company has added an additional 1.5% of staff, yet revenues have decreased by 12%.

2. Net income has decreased by 50%, yet billing utilizations have only decreased by 8%.

3. Cash and cash equivalents have decreased by 12%, yet company debt has only decreased by 2%.

4. Receivables have decreased by 9%, yet average days outstanding for receivables have increased by 5%.

In short, the last five reporting quarters of Navigant Consulting have been adversely impacted by the recent economic downturn. Although Navigant has acquired almost 10 reputable businesses since 2006, the financial returns have yet to justify this acquisition.

By: Mulham Shbeib
July 2009