Tuesday, Hewitt Associates, Inc. (HEW), a provider of human resource benefits, outsourcing, and consulting services, reported a rise in profit for the third quarter, despite a decline in revenue, reflecting lower reimbursements and selling, general and administrative expenses.
Net income for the third quarter increased 42% to $68.40 million or $0.71 per share from $48.15 million or $0.48 per share in the previous year. Underlying profit for the prior year was $53.37 million or $0.53 per share.
The company said its current-quarter result includes a $2.9 million pretax charge related to ongoing real estate optimization initiatives.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.60 per share. Analysts' estimates typically exclude special items.
Net revenues for the quarter decreased 6.3% to $729 million from $777.8 million last year. Ten analysts had a consensus revenue estimate of $738.58 million for the company.
By segment, Benefits Outsourcing revenues before reimbursements increased to $377.58 million from $374.99 million last year. Revenue from HR BPO segment declined to $115.68 million from $131.00 million a year ago. Consulting segment reported revenues of $244.29 million, down 13.8% from $283.50 million in the previous year.
Total operating expenses declined 11% to $634.66 million from $713.40 million in the previous year. Selling, general and administrative expenses declined 41.9% to $30.26 million from $52.12 million a year ago. Reimbursable expenses declined 12.5% to $14.71 million from $16.82 million.
Year-to-date, net income improved 28.2% to $200.70 million or $2.10 per share, compared to $156.59 million or $1.51 per share in the same period of the previous year. Total revenues for the period declined 4% to $2.25 billion from $2.34 billion a year ago.
Looking forward, Hewitt expects low-to mid-single digit percentage decline in consolidated net revenue for the fiscal 2009, unchanged from prior guidance. The company raised its earnings outlook to a range of $2.55 to $2.65 per share from the previous range of $2.45 to $2.55 per share for the full year. Analysts expects the company to report earnings of $2.50 for the fiscal 2009.
HEW is currently trading at $31.31, up 1.07 or 3.51%, on a volume of 2.03 billion shares on the NYSE.
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