Navigant International released its fourth-quarter earnings statement yesterday, showing a small profit for the beleaguered travel management company, though the Securities and Exchange Commission account review and expenses related to relisting on Nasdaq had an impact on the Englewood, Colo.-based company's financials.
For the 2005 fiscal year, Navigant's net revenue increased 9 percent to $492 million from $451.4 million in 2004. Net income for 2005 was $16.7 million, 11.9 percent lower than 2004. Edward Adams, chairman and CEO, attributed the slip to higher interest rates and borrowing that resulted in a 29.4 percent year-over-year increase in net interest expenses.
"Our focus is on achieving further organic growth and to improve the level of cash generated by operations throughout 2006," Adams said. "We plan to use cash flow of operations to reduce debt throughout the year."
Navigant encountered trouble in early 2005 when it was delisted from Nasdaq after SEC required the company to refile its numbers for 2004. After spending about $2.5 million on settling its accounting statement and relisting on the stock exchange, Navigant's long-term debt stands at about $213 million, said John Coffman, corporate controller at Navigant. "Right now, we have $4 million in cash that will go to pay down debt," he said.
David Gold, an analyst with New York-based Sidoti & Co., said though the company is not without issues, it's headed in the right direction but questions remain following last month's dissolution of its TQ3 joint venture
(BTN, Jan. 23). "From a cost perspective, the issue is getting those costs in line," he said. "If they can bring the costs in and some of that call center management, they can increase profitability. From an agency perspective, a big piece of the story is going to be filling out the TQ3 network. There are some holes in Europe that were left when their partner sold out. It can certainly create some opportunity for them if they can fill that out."
Gold said Navigant isn't out of the woods just yet, but has made a lot of headway in getting the business back on track. "I think '06 should be a good year—certainly a better year than '05 was," he said.