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| 8-K - FORM 8-K - FTI CONSULTING, INC | d447853d8k.htm |
 FTI Consulting
November 2012
Exhibit 99.1 |
 2
Cautionary Note About
Forward-Looking Statements
This
presentation
includes
"forward-looking
statements”
within
the
meaning
of
Section
27A
of
the
Securities
Act
of
1933,
as
amended,
and
Section
21E
of
the
Securities
Exchange
Act
of
1934,
as
amended,
which
involve
uncertainties
and
risks.
Forward-looking
statements
include
statements
concerning
our
plans,
objectives,
goals,
strategies,
future
events,
future
revenues,
future
results
and
performance,
expectations,
plans
or
intentions
relating
to
acquisitions
and
other
matters,
business
trends
and
other
information
that
is
not
historical,
including
statements
regarding
estimates
of
our
future
financial
results.
When
used
in
this
presentation,
words
such
as
“estimates,”
“expects,”
“anticipates,”
“projects,”
“plans,”
“intends,”
“believes,”
“forecasts”
and
variations
of
such
words
or
similar
expressions
are
intended
to
identify
forward-looking
statements.
All
forward-looking
statements,
including,
without
limitation,
estimates
of
our
future
financial
results,
are
based
upon
our
expectations
at
the
time
we
make
them
and
various
assumptions.
Our
expectations,
beliefs
and
projections
are
expressed
in
good
faith,
and
we
believe
there
is
a
reasonable
basis
for
them.
However,
there
can
be
no
assurance
that
management’s
expectations,
beliefs
and
estimates
will
be
achieved,
and
the
Company’s
actual
results
may
differ
from
our
expectations,
beliefs
and
estimates.
The
Company
has
experienced
fluctuating
revenues,
operating
income
and
cash
flow
in
prior
periods
and
expects
that
this
will
occur
from
time
to
time
in
the
future.
Other
factors
that
could
cause
such
differences
include
declines
in
demand
for,
or
changes
in,
the
mix
of
services
and
products
that
we
offer,
the
mix
of
the
geographic
locations
where
our
clients
are
located
or
where
services
are
performed,
adverse
financial,
real
estate
or
other
market
and
general
economic
conditions,
which
could
impact
each
of
our
segments
differently,
the
pace
and
timing
of
the
consummation
and
integration
of
past
and
future
acquisitions,
the
Company's
ability
to
realize
cost
savings
and
efficiencies,
competitive
and
general
economic
conditions,
retention
of
staff
and
clients
and
other
risks
described
under
the
heading
“Item
1A.
Risk
Factors”
in
the
Company’s
most
recent
Form
10-K
and
in
the
Company's
other
filings
with
the
Securities
and
Exchange
Commission,
including
the
risks
set
forth
under
“Risks
Related
to
Our
Business
Segments”
and
“Risks
Related
to
Our
Operations”.
We
are
under
no
duty
to
update
any
of
the
forward-looking
statements
to
conform
such
statements
to
actual
results
or
events
and
do
not
intend
to
do
so. |
  3
Investment Thesis
FTI Consulting
is a global
business
advisory firm
dedicated to
helping
organizations
protect and
enhance their
enterprise
value in an
increasingly
complex legal,
regulatory and
economic
environment
Scalable business model
–
Flexible and attractive business model with the opportunity to leverage
cross-practice engagements
Well positioned to benefit from key trends
–
Global regulatory activism, overhaul of financial and credit regulatory
markets and the overall complexity of doing business globally
Strong competitive position to capture market share in global
investigations –
LIBOR probe, FCPA investigations, whistleblower investigations and trading
probes Management of expenses and recent restructuring actions create
room for margin expansion
–
Expect these actions to result in approximately $14 million in cost savings in
2012 Executable growth strategy
–
Adding scale to established global infrastructure should yield higher
incremental margins Balanced approach to enhanced stockholder
value –
Capital deployment focused on value-enhancing initiatives
–
$250 million stock buyback program approved in June 2012
Healthy balance sheet, consistent cash flows and access to capital
|
  4
Critical Thinking At The Critical Time™
Corporate Finance/Restructuring is the world leader in restructuring and crisis
management
–
#1 crisis management firm in league tables of crisis management firms for 5
consecutive years (2007-2012)
Economic Consulting is unmatched in reputation and expertise
Forensic and Litigation Consulting is a pioneer of visual support in the
courtroom and the global leader in commercial arbitration
Technology
is a leading provider of E-Discovery software and services
Strategic Communications is the global leader in strategic business
communications
FTI Consulting
is an advisor
to 93 of the
world’s top
100 law firms,
64 of the
world’s 100
largest
companies
and 9 of the
world’s top 10
bank holding
companies
–
Named Leading Antitrust Economics Firm and 1 of the 20 Best Economics Firms in the
World by Global Competition Review for 7 consecutive years
(2005-2012) –
#1 on Who’s Who Legal List of most highly regarded firms for Commercial
Arbitration for 3 consecutive years (2010-2012)
–
Member of the “Challengers" Quadrant in Gartner's "Magic Quadrant for
E-Discovery Software" Report for 2012
–
Ringtail®
8.2 E-discovery Software Named to KMWorld magazine's 2012
Trend-Setting Products List
–
Named Corporate Agency of the Year by The Holmes Report in April
of 2012
–
#1 Communications Advisor in mergermarket League Tables of PR Advisers in Global
M&A by deal
volume
as
of
September
30th
,
2012 |
  5
Global Business with Diverse
Event-Driven Offering
FTI Consulting
has built a
balanced
portfolio of
global
businesses
that offer
event-driven
services and
solutions |
 BUSINESS SEGMENT OVERVIEW |
 7
Corporate Finance/Restructuring
Provides consulting and advisory services focused on strategic, operational,
financial and capital needs of businesses
–
#1 crisis management firm in league tables of crisis management firms for 5
consecutive years (2007-2012)
Focused on increasing market share and ability to leverage collaborative
segment, industry and geographic resources and expertise to deliver
higher convert rates Expect global economic volatility to continue in the
near-term despite improved availability of credit in the U.S., with
continued softness in demand for restructuring and bankruptcy services
Opportunities remain strong in Asia Pacific, Europe, Latin America and
Healthcare –
Shift to company-side work as companies are moving to preemptively structure
and restructure in anticipation of tougher credit and economic
environments –
Strengthened transaction support business in anticipation of a more vibrant
financing market |
 8
Economic Consulting
Provides law firms, corporations and government agencies with analyses related
to economics, finance and valuation
–
Critical insight and expert testimony in legal and regulatory proceedings,
strategic decision making and public policy debates
–
Deep expertise in antitrust issues, M&A, securities litigation and risk
management, valuation and international arbitration
Leader in antitrust reputation and expertise
–
Named Leading Antitrust Economics Firm and 1 of the 20 Best Economics Firms in
the World by Global
Competition
Review
for
7
consecutive
years
(2005-2012)
Expect sustained high rates of utilization in financial economics
business Pursuing
opportunities
to
increase
market
share
in
the
fast
growing
labor
litigation
market |
 9
Forensic and Litigation Consulting
Provides multidisciplinary, independent dispute advisory, investigative, data
acquisition/analysis and forensic accounting services
Pioneer
of
visual
support
in
the
courtroom
and
the
global
leader
in
commercial
arbitration
–
#1 on Who’s Who Legal List of most highly regarded firms for Commercial
Arbitration for 3 consecutive years (2010-2012)
Some short-term challenges related to lower volume of government driven
investigations, correlated to U.S. election cycle
Investments in global infrastructure position FTI Consulting to compete for
large, multi-jurisdictional global engagements
Strong pipeline of mortgage backed security engagements and recent uptick in
whistleblower generated activity and reactive and proactive FCPA
investigations |
 10
Technology
Provides electronic discovery (“e-discovery”) and information
management software and services to companies, law firms, courts and
government agencies Leading provider of e-discovery software and
services –
Member of the “Challengers" Quadrant in Gartner's "Magic Quadrant
for E-Discovery Software" Report for 2012
–
Ringtail®
8.2 E-discovery Software Named to KMWorld magazine's 2012
Trend-Setting Products List –
Recently launched Predictive Discovery, a complete and defensible solution
that significantly reduces the cost and time of legal review
–
As
of
September
30
th
,
2012,
year
to
date
the
number
of
new
matters
is
up
22%
and
the
number
of
new
clients
is
up
29%
compared
to
the
same
period
in
2011
Investments
in
sales
force
resulting
in
winning
more
matters
for
more
clients
Opportunity
to
target
corporations
as
buyers
driven
by
shift
in
demand
for
managed
services |
 11
Strategic Communications
Helps clients use communications assets to protect, enhance, develop and defend
their enterprise value One of the most highly regarded communications
consultancies with more than 25 years of experience advising management
teams in critical situations –
Named
Corporate
Agency
of
the
Year
by
The
Holmes
Report
in
April
of
2012
–
#1 Communications Advisor in mergermarket League Tables of PR Advisers in
Global M&A by deal volume
as
of
September
30
,
2012
The prolonged global economic downturn continues to challenge underlying
performance Growth opportunities remain broad-based ranging from
restructuring, crisis, capital markets and corporate communications
engagements to employee engagement assignments, particularly in Healthcare and
Energy, as these sectors improve
th |
 THE
VALUE
OF
FTI
CONSULTING |
  13
Our People
FTI Consulting’s most valuable asset is our people
–
Over 3,800 employees in 92 offices and 24 countries
–
364 Senior Managing Directors, 471 Managing
Directors and access to three Nobel Laureates
FTI Consulting is a global company with global
leaders and advisors
–
The FTI Consulting matrix establishes global leadership
–
Expanded Board of Directors offering global insights,
extensive experience and tenured leadership
Our collective expertise spans a wide range of
practices, business and industries and fuels our
ability to address even the most complex
challenges
We hire the best and continue to invest in their on-
going development
–
FTI Consulting employees are supported throughout
their career development through our educational and
thought leadership initiatives: New Hire Orientation,
New Director School, FTI Consulting University and
Executive Leadership Forums
FTI
Consulting’s
unique
integrated
approach to
protect and
enhance
enterprise
value requires
exceptional
talent |
   14
The FTI Consulting Matrix
FTI Consulting’s
matrix
organizational
structure
appropriately
emphasizes the
segment,
geographic and
industry drivers
of our
businesses,
allowing for
improved
understanding
and response to
our client’s
needs and
increased
leverage of
resources,
knowledge and
solutions in our
rapidly growing
markets
Three strategies that drive our
business:
Segment: Continue to build out
diverse platform of services and
solutions
Geography: Replicate North
American business model across
existing global platform
Industry: Develop integrated industry
focused solutions
Industry
Segment
Geography |
  15
The Globalization of FTI Consulting
FTI Consulting
will continue to
add scale and
expertise to the
company’s
global
infrastructure
The
increasingly
aggressive
regulatory and
enforcement
environment
should bode
very well for
large
consulting
firms with
global reach
and
reputations like
FTI Consulting
North America
–
Strong demand for Healthcare, Energy and
Insurance industry solutions
Europe, Middle East and Africa (EMEA)
–
Depressed valuations present M&A opportunities
–
Continue to invest based on pockets of demand –
Global Risk and Investigations Practice (GRIP),
Restructuring, and Anticorruption, Compliance and
Remediation Practice
Asia Pacific & Latin America
–
Continue to build out geographic presence and
capabilities
–
Restructuring and Global Risk and Investigations
Practice (GRIP) driven by rapid influx of capital
–
Strong demand for Healthcare, Energy and Real
Estate industry solutions |
  16
2013 Growth Catalysts
Improved post election regulatory environment
Uptick in the pace of M&A activity
–
Currently have a high level of M&A “first look”
retentions
–
M&A touches every business segment, with the potential to represent
approximately 10% of total company revenues
Restructuring and investigations activity in Europe, Asia Pacific and Latin
America
–
Demand in our Global Risk and Investigations Practice (GRIP),
Restructuring, and Anticorruption, Compliance and Remediation Practice
in Europe –
Opportunities in Restructuring and Global Risk and Investigations Practice
(GRIP) driven by rapid influx of capital in Asia Pacific and Latin
America Attractive macro drivers in Asia Pacific and Latin America
Industry solutions opportunities in Healthcare, Energy and Insurance
–
Need for business advisory in the ever-changing Healthcare industry
–
Demand globally for Energy services irrespective of macroeconomic
backdrop –
Insurance
expected
to
be
driven
by
increased
disputes
related
to
insurance
payments and adjudications
Demand for
FTI
Consulting’s
services and
expertise is
expected to
be driven by
multiple
catalysts in
2013 |
 17
Case Study: M&A Lifecycle and
FTI Consulting’s Integrated Service Offering
Testing, Design & Implementation of Internal Controls
Employee Outreach & Engagement
M&A Digital/Social Media Strategies
Media Relations
Investor Relations
First Look Services
Antitrust & Competition Economics
Investigative Due Diligence & Integrity Investigations
Emerging Market Entry Analysis, Political & Corruption Index
Assessments Merger
Integration
Services
Post-Acquisition
Disputes
Purchase
Price
Dispute
Services
Global
Risk
&
Investigation
Services
Compliance
Monitoring
&
Remediation
Services
Post-Merger
Communication
Implementation
Change
Management
Communications
Corporate Finance/Restructuring
Forensic Litigation and Consulting
Economic Consulting
Technology
Strategic Communications
Valuation Services
Buyer Services
Seller Services
Lender Services
M&A Fraud Services
Intellectual Property Valuation & Protection
Transactional Due Diligence
System Audits/IT Due Diligence
Compliance & Accounting Internal Controls Reviews
Foreign Bribery & Corruption Risk Assessments
Subsidiary, Joint Venture & Controlled Entity
Investigations
E-discovery
Tax Services
Second Requests
M&A Communications
Proxy Communications |
  18
Case Study: Cross –
Practice Engagements
–
This is an opportunity that is unique to FTI Consulting and a competitive
advantage that makes FTI Consulting much more powerful when our people
go-to-market –
Clients that face the most complex and critical situations want an integrated
FTI Consulting
team,
a
team
that
has
the
right
combination
of
skills
to
solve
all
of
their
problems
Expect cross-
segment
engagements
to bolster FTI
Consulting’s
organic
growth, brand
visibility and
reputation
FTI Consulting has established a global platform with deep expertise and broad
capabilities
FTI Consulting leverages this platform by presenting our full set of services
to current and potential clients as “one firm”
Our clients’
problems, more often than not, need to benefit from services provided by
more than one of our business practices
FTI
Consulting’s
biggest
and
most
profitable
projects
are
cross-practice
engagements |
  19
FTI Consulting’s Financial Position Is Strong
Long-term track record of industry-leading growth in revenue and
profitability
Significant cash flow generation
–
Consistent
and
strong
net
cash
provided
by
operating
activities
-
$173.8
million
in
2011 and $195.1 million in 2010
–
$126.9
million
in
cash
and
cash
equivalents
on
the
balance
sheet
as
of
September
30 , 2012
–
Leverage
as
of
September
30 ,
2012
–
less
than
3:1
Balanced capital deployment aimed at productive and value enhancing
initiatives for stockholders
–
Maintain
market
leadership
positions,
impressive
credentials
and
established
reputation by investing in talent
–
Investments in R&D and innovation should drive organic growth
–
Acquisition strategy focused on building attractive,
sustainable businesses –
$250 million stock buyback program authorized in June 2012
Recently announced debt offering resulting in decreased interest
expense,
longer maturity profile and increased access to capital
Portfolio
investments,
coupled with
continued
cash
generation
and
operational
discipline,
demonstrated
in financial
results
th
th |
  20
FTI Consulting Summary
FTI Consulting
is a global
business
advisory firm
dedicated to
helping
organizations
protect and
enhance their
enterprise
value in an
increasingly
complex legal,
regulatory and
economic
environment
Scalable business model
–
Flexible and attractive business model with the opportunity to leverage
cross-practice engagements
Well positioned to benefit from key trends
–
Global regulatory activism, overhaul of financial and credit regulatory
markets and the overall complexity of doing business globally
Strong competitive position to capture market share in global
investigations –
LIBOR probe, FCPA investigations, whistleblower investigations and trading
probes Management of expenses and recent restructuring actions create
room for margin expansion
–
Expect these actions to result in approximately $14 million in cost savings in
2012 Executable growth strategy
–
Adding scale to established global infrastructure should yield higher
incremental margins Balanced approach to enhanced stockholder
value –
Capital deployment focused on value-enhancing initiatives
–
$250 million stock buyback program approved in June 2012
Healthy balance sheet, consistent cash flows and access to capital
|
    21
Nine Months Ended September 30, 2012
($ in thousands, except per share data)
(1)
We
define
adjusted
earnings
per
diluted
share
as
earnings
per
diluted
share,
excluding
the
net
impact
of
special
charges
and
loss
on
early
extinguishment
of
debt
that
were
incurred
in
that
period.
$114,367
$137,243
Nine
Months
Ended
September
30,
2012
2011
$1,177,526
$1,176,055
$283,958
$280,364
$29,557
$15,212
($2,581)
$2,538
Unaudited
$4,503
$5,409
($43,607)
($44,129)
$75,263
$98,523
$26,372
$34,501
$48,891
$64,022
$1.17
$1.47
41,882
43,671
$1.62
$1.68
Revenues
Operating
expenses
Direct cost of revenues
Selling, general & administrative expense
Special charges
Operating
income
Other
income
(expense)
Interest expense
Income
before
income
tax
provision
Income tax provision
Net
income
Earnings
per
common
share
-
diluted
Adjusted
earnings
per
common
share
-
diluted
Interest income & other
$1,063,159
$1,038,812
$16,773
$16,795
Acquisition-related contingent consideration
$735,452
$723,903
Amortization of other intangible assets
Weighted average common shares outstanding -
diluted
(1) |
 22
YTD
Results:
Segment
Performance |
 APPENDIX |
 24
Reconciliation of non-GAAP Financial Measures
($ in thousands, except per share data)
Nine Months Ended September 30,
2012
2011
$19,115
$9,285
$1.17
$1.47
41,882
43,671
Net
income
Add
back:
Special
charges,
net
of
tax
effect
(1)
Adjusted
Net
income
Earnings per common share -
diluted
Adjusted
earnings
per
common
share
(2)
$68,006
$73,307
Add
back:
Special
charges,
net
of
tax
effect
(1)
$1.62
$1.68
Weighted
average
common
shares
outstanding
-
diluted
$48,891
$64,022
$0.45
$0.21
(1)
The
tax
effect
takes
into
account
the
tax
treatment
and
related
tax
rate(s)
that
apply
to
each
adjustment
in
the
applicable
tax
jurisdiction(s).
As
a
result,
the
effective
tax
rates
for
the
adjustments
for
the
nine
months
ended
September
30,
2012
was
35.3%
and
39.0%
for
the
nine
months
ended
September
30,
2011.
The
tax
expense
related
to
the
adjustments
for
the
nine
months
ended
September
30,
2012
was
$10.4
million
or
a
$0.25
impact
on
diluted
earnings
per
share.
The
tax
expense
related
to
the
adjustments
for
the
nine
months
ended
September
30,
2011
was$5.9million
or
a
$0.14
impact
on
diluted
earnings
per
share.
(2)
We
define
Adjusted
Net
Income
and
Adjusted
EPS
as
net
income
and
earnings
per
diluted
share,
respectively,
excluding
the
net
impact
of
any
special
charges
and
any
loss
on
early
extinguishment
of
debt
that
were
incurred
in
that
period. |
 25
Reconciliation of Operating Income and
Net Income to Adjusted EBITDA
($ in thousands)
Nine Months
Ended
Sept. 30, 2012
Corporate Finance
/ Restructuring
Forensic and
Litigation
Consulting
Economic
Consulting
Technology
Strategic
Communications
Unallocated
Corporate
Total
Net Income
$48,891
Interest Income and other
interest expense
Income tax provision
($4,503)
$43,607
$26,372
Operating
Income
$61,885
$30,963
$51,681
$23,403
$6,161
($59,726)
$114,367
Depreciation and amortization
Amortization of other intangible assets
Special charges
$2,528
$4,654
$11,936
$2,812
$1,469
$7,672
$2,131
$1,199
$991
$9,262
$5,960
$3,114
$1,913
$3,491
$4,712
$3,514
-
$1,132
$22,160
$16,773
$29,557
Adjusted EBITDA
(1)
$81,003
$42,916
$56,002
$41,739
$16,277
($55,080)
$182,857
Nine Months
Ended
Sept. 30, 2011
Corporate Finance
/ Restructuring
Forensic and
Litigation
Consulting
Economic
Consulting
Technology
Strategic
Communications
Unallocated
Corporate
Total
Net Income
$64,022
Interest Income and other
interest expense
Income tax provision
($5,409)
$44,129
$34,501
Operating
Income
$42,771
$47,746
$45,565
$44,026
$13,449
($56,314)
$137,243
Depreciation and amortization
Amortization of other intangible assets
Special charges
$2,617
$4,345
$9,440
$2,579
$1,852
$839
$1,883
$1,094
$2,093
$8,407
$5,929
-
$2,243
$3,575
-
$3,778
-
$2,840
$21,507
$16,795
$15,212
Adjusted
EBITDA
(1)
$59,173
$53,016
$50,635
$58,362
$19,267
($49,696)
$190,757
(1) We define Adjusted EBITDA as net income before income tax provision, other
income (expense), depreciation, amortization of intangible assets and special charges. Amounts presented in the Adjusted EBITDA column for each segment reflect the segments' respective Adjusted
segment
EBITDA.
Wedefine
Adjustedsegment
EBITDA
as
thesegments'share
ofconsolidatedoperatingincome
beforedepreciation,
amortization
of
intangibleassetsand
specialcharges.
AlthoughAdjustedEBITDAand
Adjustedsegment
EBITDA
arenotmeasures
of
financial
condition
or
performancedeterminedinaccordancewith
generally
acceptedaccounting
principles
("GAAP"),
we
believe
thatthesemeasures
can
be
auseful
operating
performance
measure
for
evaluating
our
results
of
operations
ascompared
from
period
to
periodand
as
compared
to
our
competitors.
Weuse
AdjustedEBITDA
andAdjusted
segmentEBITDAto
evaluateandcompare
the
operating
performance
ofoursegments.
We
defineAdjustedNet
Income
and
AdjustedEPS
as
netincome
and
earnings
per
dilutedshare,
respectively,excluding
the
net
impactof
any
specialcharges
and
any
loss
on
early
extinguishment
of
debt
that
wereincurredinthat
period.
Adjusted
EBITDA
andAdjustedPractice
EBITDA
arenotdefined
in
the
same
manner
by
allcompaniesand
maynotbecomparable
toother
similarly
titled
measures
of
othercompanies.
These non-GAAP measures should be considered in addition to, but not as a
substitute for or superior to, the information contained in our Condensed Consolidated Statements of Comprehensive Income (Loss). |
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