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Technology Stocks : Navigant International (FLYR) -- Ignore unavailable to you. Want to Upgrade?

To: Daytek77 who wrote (400)	1/11/1999 4:25:00 PM
From: RAVEL	Respond to of 725

MORE...(Last of 3 part interview)=Navigant Interview -3: Internal Rev Growth Seen Flat Dow Jones News Service via Dow Jones The move to fee-based service in the travel business has been under way since 1995, when major airlines that paid 10% commission to travel agencies capped domestic round-trip tickets at $50 and one-way tickets at $25. Then in 1997, they lowered commissions to 8% from 10% on domestic flights. And in November, they capped commissions for international flights at $100 round-trip, $50 one-way. After the 1995 airlines change, Navigant CEO Adams, then-chief executive of Navigant's predecessor, Professional Travel Corp., figured he needed to "position his company for survival," he said. So he hired an investment banker to find a buyer with capital to make acquisitions and create a bigger company with a stronger competitive position. Since founding Metro Travel in Denver in 1979, Adams had long been a believer that "bigger is better." In 1983, he merged Metro Travel with three other companies to form Professional Travel, and by 1986 he had bought out the other owners of Professional Travel. He built the company to $22 million in annual revenue. But he felt he needed a big-pocketed partner to get even bigger, and in January 1997 he sold Professional Travel to U.S. Office, staying on to run its new travel business. In the first six months under U.S. Office, 10 more travel agencies were bought, and since then, nine more have been bought by Professional Travel or Navigant. While acquisitions have been fueling growth, internal revenue increases lately haven't. In his December report, NationsBanc Montgomery Securities analyst Scharf said that he had revised his Navigant model to reflect flat internal revenue growth over the next six quarters, down from 4%. Adams attributed the flat internal growth partly to churn of customers, with Navigant gaining some customers and losing others as a result of a switch to fee-based services. The low internal growth is also partly due to the executive focus on acquisitions, Adams said, making it difficult to concentrate on operations. That acquisition focus will probably continue for another two years. "We still have a very robust acquisition backlog," he said. Adams said the company would "love to get back to an 8% organic (internal) growth per year," but he isn't sure when that will happen. Despite that uncertainty, he thinks Navigant's stock price is undeservedly low and points to the company's run rate for EBITDA (earnings before interest, taxes, depreciation and amortization) of $35 million a year, or $2.69 per share a year. Navigant won't be using stock for making acquisitions until the price is at least around 12 or 14, said Adams. "We just think that it's tremendously undervalued." But the low stock price - it recently traded at 7 9/16 - doesn't have to hurt the company's acquisition strategy. If Navigant gets the $100 million high-yield debt offering it wants, it can go ahead with its buying plans. "It's our highest priority," said financial chief Griffith. - Tom Locke; 303-293-9294 (END) DOW JONES NEWS 01-11-99