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8-K - 8-K - FTI CONSULTING, INCd476702d8k.htm

Exhibit 99.1

 

LOGO

FTI Consulting, Inc.

555 12th Street NW

Washington, DC 20004

+1.202.312.9100

Investor & Media Contact:

Mollie Hawkes

+1.617.747.1791

mollie.hawkes@fticonsulting.com

FTI Consulting Reports Third Quarter 2017 Financial Results

Revenues of $449.0 Million, up 2.5% over Prior Year

Fully Diluted EPS of $0.85, up 63.5% over Prior Year; Adjusted EPS of $0.83, up 59.6% over Prior Year

$52.7 Million Returned through Share Repurchases during Third Quarter

Washington, D.C., Oct. 26, 2017 — FTI Consulting, Inc. (NYSE: FCN) today released its financial results for the quarter ended September 30, 2017.

For the quarter, revenues of $449.0 million increased $10.9 million, or 2.5%, compared to revenues of $438.0 million in the prior year quarter. The increase in revenues was primarily driven by higher revenues in the Corporate Finance & Restructuring segment. Third quarter 2017 net income of $32.2 million increased $10.5 million, or 48.5% compared to net income of $21.7 million in the prior year quarter. Adjusted EBITDA was $57.4 million, or 12.8% of revenues, compared to $47.2 million, or 10.8% of revenues, in the prior year quarter. The increase in Adjusted EBITDA was due to an increase in higher margin revenues, including success fees, improved utilization, and lower selling, general and administrative expenses. Fully diluted earnings per share (“EPS”) of $0.85 and Adjusted EPS were $0.83, compared to EPS and Adjusted EPS of $0.52 in the prior year quarter. Both EPS and Adjusted EPS were benefited by a lower effective tax rate, which included the benefits of reduced foreign net operating losses and related valuation allowances resulting from intercompany service fees and an increase in the projected mix of lower taxed foreign earnings.

Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “We are the leader in many of our practices across the world. This quarter’s results reflect those leadership positions coupled with prudent cost management and the significant progress we have made growing and adding talent in the areas in which we have a right to win.”

Cash Position and Capital Allocation

Net cash provided by operating activities of $106.2 million for the three months ended September 30, 2017, compared to $70.9 million for the three months ended September 30, 2016. The improvement in operating cash flow was due to higher cash collections, lower income tax payments, and the timing of certain operating expenses and payroll.

During the quarter, the Company repurchased 1,599,400 shares of its common stock at an average price of $32.98 for a total cost of $52.7 million. As of September 30, 2017, $26.1 million remained available under the Company’s $200.0 million share repurchase authorization.


Total debt of $465.0 million at September 30, 2017, compared to $475.0 million at September 30, 2016. Cash and cash equivalents were $158.0 million at September 30, 2017, compared to $225.2 million at September 30, 2016. Total debt, net of cash, of $307.0 million at September 30, 2017, compared to $249.8 million at September 30, 2016.

Third Quarter 2017 Segment Results

Corporate Finance & Restructuring

Revenues in the Corporate Finance & Restructuring segment increased $17.5 million, or 15.8%, to $128.1 million in the quarter, compared to $110.6 million in the prior year quarter. Revenues increased primarily due to higher demand for restructuring services globally and an increase in success fees. Adjusted Segment EBITDA was $26.7 million, or 20.9% of segment revenues, compared to $17.8 million, or 16.1% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased $3.6 million, or 3.1%, to $118.6 million in the quarter, compared to $115.0 million in the prior year quarter. The increase in revenues was primarily due to higher demand for forensic accounting and advisory services and construction solutions offerings, which was partially offset by lower success fees in health solutions. Adjusted Segment EBITDA was $22.5 million, or 19.0% of segment revenues, compared to $16.6 million, or 14.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.

Economic Consulting

Revenues in the Economic Consulting segment decreased $10.7 million, or 8.8%, to $111.8 million in the quarter, compared to $122.5 million in the prior year quarter. The decrease in revenues was primarily due to lower demand for antitrust and financial economics services in North America. Adjusted Segment EBITDA was $12.1 million, or 10.8% of segment revenues, compared to $18.4 million, or 15.0% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues with lower utilization, which was partially offset by lower compensation costs.

Technology

Revenues in the Technology segment decreased $1.8 million, or 4.1%, to $42.3 million in the quarter, compared to $44.1 million in the prior year quarter. The decrease in revenues was primarily driven by lower demand for managed review and lower pricing for hosting services, which was partially offset by higher demand for consulting services. This shift was largely related to the wind down of large cross-border investigations, which was partially offset by increased M&A-related “second request” activity. Adjusted Segment EBITDA was $6.0 million, or 14.1% of segment revenues, compared to $7.4 million, or 16.8% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to a decline in higher margin hosting-related revenues.

Strategic Communications

Revenues in the Strategic Communications segment increased $2.3 million, or 5.1%, to $48.2 million in the quarter, compared to $45.8 million in the prior year quarter. The increase in revenues was primarily driven by an increase in retainer-based revenues, which was partially offset by lower pass-through revenues. Adjusted Segment EBITDA was $8.1 million, or 16.8% of segment revenues, compared to $7.5 million, or 16.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to the increase in revenues.


2017 Guidance

The Company revised its full year 2017 guidance for revenues to be between $1.775 billion and $1.800 billion. This compares to the previous range of between $1.775 billion and $1.875 billion. The Company reaffirmed full year 2017 guidance for EPS and Adjusted EPS to be between $1.37 and $1.67 and $1.90 and $2.20, respectively. The variance between EPS and Adjusted EPS guidance is related to the second quarter of 2017 special charge of $30.1 million, or $0.52 per share, resulting from headcount reductions, the Company’s Washington, D.C., office relocation and other costs related to the disposal or closure of several small international offices.

Third Quarter 2017 Conference Call

FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2017 financial results at 9:00 a.m. Eastern Time on October 26, 2017. The call can be accessed live and will be available for replay over the Internet for 90 days by logging on to the Company’s investor relations website here.

Investor Day

FTI Consulting will host an investor day on Monday, November, 13, 2017, from 10:00 a.m. to 2:30 p.m. Eastern Time. Presentations will be presented by members of FTI Consulting’s executive committee. The event will take place at 10 on the Park at the Time Warner Center, located at 60 Columbus Circle, New York, NY 10019, and is open to institutional investors and analysts. Visit the Company’s Investor Day website here to RSVP for this event.

About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 4,600 employees located in 28 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $1.81 billion in revenues during fiscal year 2016. More information can be found at www.fticonsulting.com.

Use of Non-GAAP Measures

In the accompanying analysis of financial information, we sometimes use information derived from consolidated and segment financial information that may not be presented in our financial statements or prepared in accordance with GAAP. Certain of these measures are considered “non-GAAP financial measures” under the SEC rules. Specifically, we have referred to the following non-GAAP measures:

 

    Total Segment Operating Income

 

    Adjusted EBITDA

 

    Total Adjusted Segment EBITDA

 

    Adjusted EBITDA Margin/Adjusted Segment EBITDA Margin

 

    Adjusted Net Income

 

    Adjusted Earnings per Diluted Share

 

    Free Cash Flow

We have included the definitions of Segment Operating Income and Adjusted Segment EBITDA below in order to more fully define the components of certain non-GAAP financial measures presented in this earnings release. We define Segment Operating Income as a segment’s share of Consolidated Operating Income. We define Total Segment Operating Income, which is a non-GAAP financial measure, as the total of Segment Operating Income for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of Consolidated Operating Income before depreciation, amortization of intangible assets,


remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We use Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of our segments because we believe it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash. We define Adjusted Segment EBITDA Margin as Adjusted Segment EBITDA as a percentage of a segment’s revenues.

We define Total Adjusted Segment EBITDA, which is a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We define Adjusted EBITDA, which is a non-GAAP financial measure, as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. We believe that the non-GAAP financial measures, which exclude the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges, when considered together with our GAAP financial results and GAAP measures, provide management and investors with a more complete understanding of our operating results, including underlying trends. In addition, EBITDA is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results with the operating results of other companies.

We define Adjusted Net Income and Adjusted Earnings per Diluted Share (“Adjusted EPS”), which are non-GAAP financial measures, as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that this non-GAAP financial measure, which excludes the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt, when considered together with our GAAP financial results, provides management and investors with an additional understanding of our business operating results, including underlying trends.

We define Free Cash Flow as net cash provided by operating activities less cash payments for purchases of property and equipment. We believe this non-GAAP financial measure, when considered together with our GAAP financial results, provides management and investors with an additional understanding of the Company’s ability to generate cash for ongoing business operations and other capital deployment.

Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable with other similarly titled measures of other companies. Non-GAAP financial 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. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.

Safe Harbor Statement

This press release 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, share repurchases 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 press release, 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 materially from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flows 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, fluctuations in the price per share of our common stock, other market and general economic conditions and other future events, which could impact each of our segments differently and could be outside of our control, the pace and timing of the consummation and integration of 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 quarterly report on the Form 10-Q for the quarter ended June 30, 2017 filed with the SEC, including the risks set forth under “Risks Related to Our Reportable Segments” and “Risks Related to Our Operations,” and in the Company’s other filings with the SEC. 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.

FINANCIAL TABLES FOLLOW

# # #


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     September 30,     December 31,  
     2017     2016  
     (Unaudited)        
Assets     

Current assets

    

Cash and cash equivalents

   $ 157,961     $ 216,158  

Accounts receivable:

    

Billed receivables

     415,090       365,385  

Unbilled receivables

     328,526       288,331  

Allowance for doubtful accounts and unbilled services

     (196,484     (178,819
  

 

 

   

 

 

 

Accounts receivable, net

     547,132       474,897  

Current portion of notes receivable

     23,924       31,864  

Prepaid expenses and other current assets

     59,196       60,252  
  

 

 

   

 

 

 

Total current assets

     788,213       783,171  

Property and equipment, net of accumulated depreciation

     70,982       61,856  

Goodwill

     1,204,164       1,180,001  

Other intangible assets, net of amortization

     46,788       52,120  

Notes receivable, net of current portion

     106,462       104,524  

Other assets

     43,984       43,696  
  

 

 

   

 

 

 

Total assets

   $ 2,260,593     $ 2,225,368  
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Current liabilities

    

Accounts payable, accrued expenses and other

   $ 108,054     $ 87,320  

Accrued compensation

     232,291       261,500  

Billings in excess of services provided

     26,521       29,635  
  

 

 

   

 

 

 

Total current liabilities

     366,866       378,455  

Long-term debt, net

     461,095       365,528  

Deferred income taxes

     181,293       173,799  

Other liabilities

     120,410       100,228  
  

 

 

   

 

 

 

Total liabilities

     1,129,664       1,018,010  
  

 

 

   

 

 

 

Stockholders’ equity

    

Preferred stock, $0.01 par value; shares authorized — 5,000; none outstanding

     —         —    

Common stock, $0.01 par value; shares authorized — 75,000; shares issued and outstanding — 37,941 (2017) and 42,037 (2016)

     379       420  

Additional paid-in capital

     273,765       416,816  

Retained earnings

     978,886       941,001  

Accumulated other comprehensive loss

     (122,101     (150,879
  

 

 

   

 

 

 

Total stockholders’ equity

     1,130,929       1,207,358  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,260,593     $ 2,225,368  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(Unaudited)

 

     Three Months Ended  
     September 30,  
     2017     2016  

Revenues

   $ 448,962     $ 438,042  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     294,851       293,702  

Selling, general and administrative expenses

     103,909       106,220  

Acquisition-related contingent consideration

     252       201  

Amortization of other intangible assets

     2,882       2,845  
  

 

 

   

 

 

 
     401,894     402,968  
  

 

 

   

 

 

 

Operating income

     47,068       35,074  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     1,103       3,213  

Interest expense

     (6,760     (6,304
  

 

 

   

 

 

 
     (5,657)     (3,091)  
  

 

 

   

 

 

 

Income before income tax provision

     41,411       31,983  

Income tax provision

     9,197       10,292  
  

 

 

   

 

 

 

Net income

   $ 32,214     $ 21,691  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 0.86     $ 0.53  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     37,431       41,239  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 0.85     $ 0.52  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     37,746       42,065  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

Foreign currency translation adjustments, net of tax expense of $0

   $ 11,234     $ (4,478
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     11,234       (4,478
  

 

 

   

 

 

 

Comprehensive income

   $ 43,448     $ 17,213  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(Unaudited)

 

     Nine Months Ended  
     September 30,  
     2017     2016  

Revenues

   $ 1,340,021     $ 1,368,474  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     907,994       902,532  

Selling, general and administrative expenses

     318,546       318,074  

Special charges

     30,074       6,811  

Acquisition-related contingent consideration

     1,424       1,541  

Amortization of other intangible assets

     7,797       8,041  
  

 

 

   

 

 

 
     1,265,835       1,236,999  
  

 

 

   

 

 

 

Operating income

     74,186       131,475  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     3,300       9,895  

Interest expense

     (18,811     (18,836
  

 

 

   

 

 

 
     (15,511     (8,941
  

 

 

   

 

 

 

Income before income tax provision

     58,675       122,534  

Income tax provision

     17,601       44,115  
  

 

 

   

 

 

 

Net income

   $ 41,074     $ 78,419  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 1.05     $ 1.92  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     39,301       40,856  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.03     $ 1.88  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     39,715       41,605  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

Foreign currency translation adjustments, net of tax expense of $0

   $ 28,778     $ (23,645
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     28,778       (23,645
  

 

 

   

 

 

 

Comprehensive income

   $ 69,852     $ 54,774  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

 

     Three Months Ended September 30,      Nine Months Ended September 30,  
     2017     2016      2017     2016  
     (Unaudited)      (Unaudited)  

Net income

   $ 32,214     $ 21,691      $ 41,074     $ 78,419  

Add back:

         

Special charges

     —         —          30,074       6,811  

Tax impact of special charges

     (832     —          (9,935     (2,483

Remeasurement of acquisition-related contingent consideration

     —         —          702       980  

Tax impact of remeasurement of acquisition-related contingent consideration

     —         —          (269     (380
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted Net Income

   $ 31,382     $ 21,691      $ 61,646     $ 83,347  
  

 

 

   

 

 

    

 

 

   

 

 

 

Earnings per common share — diluted

   $ 0.85     $ 0.52      $ 1.03     $ 1.88  

Add back:

         

Special charges

     —         —          0.76       0.16  

Tax impact of special charges

     (0.02     —          (0.25     (0.06

Remeasurement of acquisition-related contingent consideration

     —         —          0.02       0.02  

Tax impact of remeasurement of acquisition-related contingent consideration

     —         —          (0.01     —    
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted earnings per common share — diluted

   $ 0.83     $ 0.52      $ 1.55     $ 2.00  
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average number of common shares outstanding — diluted

     37,746       42,065        39,715       41,605  
  

 

 

   

 

 

    

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended September 30, 2017 (Unaudited)

  Corporate Finance &
Restructuring
    Forensic and
Litigation Consulting
    Economic
Consulting
    Technology     Strategic
Communications
    Corp HQ     Total  

Net income

              $ 32,214  

Interest income and other

                (1,103

Interest expense

                6,760  

Income tax provision

                9,197  
             

 

 

 

Operating income

  $ 24,706     $ 21,127     $ 10,524     $ 3,002     $ 6,536     $ (18,827   $ 47,068  

Depreciation and amortization

    811       1,012       1,383       2,813       584       867       7,470  

Amortization of other intangible assets

    1,217       400       154       158       953       —         2,882  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 26,734     $ 22,539     $ 12,061     $ 5,973     $ 8,073     $ (17,960   $ 57,420  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nine Months Ended September 30, 2017 (Unaudited)

  Corporate Finance &
Restructuring
    Forensic and
Litigation Consulting
    Economic
Consulting
    Technology     Strategic
Communications
    Corp HQ     Total  

Net income

              $ 41,074  

Interest income and other

                (3,300

Interest expense

                18,811  

Income tax provision

                17,601  
             

 

 

 

Operating income

  $ 48,902     $ 34,234     $ 37,034     $ 5,874     $ 8,308     $ (60,166   $ 74,186  

Depreciation and amortization

    2,360       3,217       4,273       9,020       1,732       3,166       23,768  

Amortization of other intangible assets

    2,796       1,196       463       477       2,865       —         7,797  

Special charges

    3,049       10,445       5,910       3,827       3,599       3,244       30,074  

Remeasurement of acquisition-related contingent consideration

    —         —         —         —         702       —         702  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 57,107     $ 49,092     $ 47,680     $ 19,198     $ 17,206     $ (53,756   $ 136,527  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Three Months Ended September 30, 2016 (Unaudited)

  Corporate Finance &
Restructuring
    Forensic and
Litigation Consulting
    Economic
Consulting
    Technology     Strategic
Communications
    Corp HQ     Total  

Net income

              $ 21,691  

Interest income and other

                (3,213

Interest expense

                6,304  

Income tax provision

                10,292  
             

 

 

 

Operating income

  $ 16,182     $ 14,867     $ 16,888     $ 2,869     $ 6,006     $ (21,738   $ 35,074  

Depreciation and amortization

    698       1,203       1,312       4,121       586       1,390       9,310  

Amortization of other intangible assets

    882       484       154       408       917       —         2,845  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 17,762     $ 16,554     $ 18,354     $ 7,398     $ 7,509     $ (20,348   $ 47,229  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nine Months Ended September 30, 2016 (Unaudited)

  Corporate Finance &
Restructuring
    Forensic and
Litigation Consulting
    Economic
Consulting
    Technology     Strategic
Communications
    Corp HQ     Total  

Net income

              $ 78,419  

Interest income and other

                (9,895

Interest expense

                18,836  

Income tax provision

                44,115  
             

 

 

 

Operating income

  $ 76,740     $ 45,005     $ 51,390     $ 2,569     $ 16,661     $ (60,890   $ 131,475  

Depreciation and amortization

    2,175       3,278       3,172       11,901       1,602       3,231       25,359  

Amortization of other intangible assets

    2,491       1,519       492       725       2,814       —         8,041  

Special Charges

    —         1,750       —         5,061       —         —         6,811  

Remeasurement of acquisition-related contingent consideration

    —         —         —         —         980       —         980  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 81,406     $ 51,552     $ 55,054     $ 20,256     $ 22,057     $ (57,659   $ 172,666  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

 

                           

Average

Billable

   

Revenue-

Generating

 
    Segment     Adjusted     Adjusted EBITDA            
    Revenues     EBITDA     Margin     Utilization     Rate     Headcount  
    (in thousands)                       (at period end)  

Three Months Ended September 30, 2017 (Unaudited)

 

Corporate Finance & Restructuring

  $ 128,121     $ 26,734       20.9     64   $ 390       934  

Forensic and Litigation Consulting

    118,639       22,539       19.0     63   $ 326       1,080  

Economic Consulting

    111,753       12,061       10.8     62   $ 520       688  

Technology(1)

    42,282       5,973       14.1     N/M       N/M       291  

Strategic Communications(1)

    48,167       8,073       16.8     N/M       N/M       626  
 

 

 

   

 

 

   

 

 

       

 

 

 
  $ 448,962     $ 75,380       16.8         3,619  
 

 

 

   

 

 

   

 

 

       

 

 

 

Unallocated Corporate

      (17,960        
   

 

 

         

Adjusted EBITDA

    $ 57,420       12.8      
   

 

 

         

Nine Months Ended September 30, 2017 (Unaudited)

 

Corporate Finance & Restructuring

  $ 351,509     $ 57,107       16.2     61   $ 383       934  

Forensic and Litigation Consulting

    341,455       49,092       14.4     61   $ 318       1,080  

Economic Consulting

    374,978       47,680       12.7     68   $ 519       688  

Technology(1)

    133,935       19,198       14.3     N/M       N/M       291  

Strategic Communications(1)

    138,144       17,206       12.5     N/M       N/M       626  
 

 

 

   

 

 

   

 

 

       

 

 

 
  $ 1,340,021     $ 190,283       14.2         3,619  
 

 

 

   

 

 

   

 

 

       

 

 

 

Unallocated Corporate

      (53,756        
   

 

 

         

Adjusted EBITDA

    $ 136,527       10.2      
   

 

 

         

Three Months Ended September 30, 2016 (Unaudited)

 

Corporate Finance & Restructuring

  $ 110,617     $ 17,762       16.1     61   $ 379       904  

Forensic and Litigation Consulting

    115,045       16,554       14.4     57   $ 330       1,145  

Economic Consulting

    122,480       18,354       15.0     69   $ 534       647  

Technology(1)

    44,072       7,398       16.8     N/M       N/M       298  

Strategic Communications(1)

    45,828       7,509       16.4     N/M       N/M       624  
 

 

 

   

 

 

   

 

 

       

 

 

 
  $ 438,042     $ 67,577       15.4         3,618  
 

 

 

   

 

 

   

 

 

       

 

 

 

Unallocated Corporate

      (20,348        
   

 

 

         

Adjusted EBITDA

    $ 47,229       10.8      
   

 

 

         

Nine Months Ended September 30, 2016 (Unaudited)

 

Corporate Finance & Restructuring

  $ 369,915     $ 81,406       22.0     68   $ 388       904  

Forensic and Litigation Consulting

    352,242       51,552       14.6     60   $ 329       1,145  

Economic Consulting

    371,217       55,054       14.8     74   $ 516       647  

Technology(1)

    134,235       20,256       15.1     N/M       N/M       298  

Strategic Communications(1)

    140,865       22,057       15.7     N/M       N/M       624  
 

 

 

   

 

 

   

 

 

       

 

 

 
  $ 1,368,474     $ 230,325       16.8         3,618  
 

 

 

   

 

 

   

 

 

       

 

 

 

Unallocated Corporate

      (57,659        
   

 

 

         

Adjusted EBITDA

    $ 172,666       12.6      
   

 

 

         

N/M - Not meaningful

(1) The majority of the Technology and Strategic Communications segments’ revenues are not generated based on billable hours. Accordingly, utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric.


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Nine months ended  
     September 30,  
     2017     2016  

Operating activities

    

Net income

   $ 41,074     $ 78,419  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     23,768       25,359  

Amortization and impairment of other intangible assets

     7,797       8,041  

Acquisition-related contingent consideration

     1,547       1,541  

Provision for doubtful accounts

     10,510       5,903  

Non-cash share-based compensation

     12,888       13,381  

Non-cash interest expense

     1,489       1,489  

Other

     297       (1,159

Changes in operating assets and liabilities, net of effects from acquisitions:

    

Accounts receivable, billed and unbilled

     (72,640     (67,318

Notes receivable

     8,449       (3,674

Prepaid expenses and other assets

     935       (3,575

Accounts payable, accrued expenses and other

     16,823       10,900  

Income taxes

     8,876       28,204  

Accrued compensation

     (34,123     4,486  

Billings in excess of services provided

     (3,657     9,578  
  

 

 

   

 

 

 

Net cash provided by operating activities

     24,033       111,575  
  

 

 

   

 

 

 

Investing activities

    

Payments for acquisition of businesses, net of cash received

     (8,929     (56

Purchases of property and equipment

     (20,021     (22,855

Other

     74       74  
  

 

 

   

 

 

 

Net cash used in investing activities

     (28,876     (22,837
  

 

 

   

 

 

 

Financing activities

    

Borrowings under revolving line of credit, net

     95,000       (25,000

Deposits

     3,585       2,806  

Purchase and retirement of common stock

     (155,285     (2,903

Net issuance of common stock under equity compensation plans

     (2,354     18,394  

Other

     (79     357  
  

 

 

   

 

 

 

Net cash used in financing activities

     (59,133     (6,346
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     5,779       (6,968
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (58,197     75,424  

Cash and cash equivalents, beginning of period

     216,158       149,760  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 157,961     $ 225,184