• Second Quarter Revenues of $444.7 Million
• Second Quarter Fully Diluted Loss Per Share of ($0.13); Adjusted EPS of $0.40
WASHINGTON, July 27, 2017 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN) today released its financial results for the
quarter ended June 30, 2017.
For the quarter, revenues of $444.7 million declined $15.4 million, or 3.4%, compared to revenues of $460.1 million in the prior
year quarter. Excluding the estimated negative impact of foreign currency translation (“FX”), revenues decreased $7.4 million, or
1.6%, compared to the prior year quarter. The decrease in revenues was primarily driven by lower demand for services within the
Corporate Finance & Restructuring segment.
Second quarter 2017 net loss of $5.2 million compared to net income of $26.5 million in the prior year quarter. Net loss
included a special charge of $30.1 million, which included $16.1 million of severance costs related to the termination of
approximately 4% of the Company’s more than 4,700 employees, $12.4 million of lease curtailment charges related to the Company’s
Washington, D.C., office relocation and $1.6 million of costs related to the disposal or closing of several small international
offices. The Company expects that these actions will result in cost savings of approximately $23.0 million over the remainder of
2017. Adjusted EBITDA, which excludes the special charge, was $40.8 million, or 9.2% of revenues, compared to $56.6 million, or
12.3% of revenues in the prior year quarter. The decline in Adjusted EBITDA was due to lower revenues.
On a GAAP basis, second quarter 2017 fully diluted loss per share was ($0.13) compared to fully diluted earnings per share
(“EPS”) of $0.64 in the prior year quarter. In total, the second quarter 2017 special charge reduced EPS by $0.52. EPS in the prior
year quarter included a $1.7 million special charge, which reduced EPS by $0.02. Adjusted EPS, which excludes special charges, was
$0.40 compared to $0.66 in the prior year quarter.
Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “We had a slow
start to 2017. Despite this, we continue to expect a stronger second half of the year. This expectation is supported by the strong
sequential improvement compared to the first quarter and significant new wins in our Corporate Finance & Restructuring segment;
continued investment where we have confidence we can grow; and the disciplined actions we have taken to align costs with demand and
reduce overhead. We believe this combination of sustained investment, disciplined cost control and the strength of our franchise
will translate into second half financials that more closely reflect the underlying strength of our businesses.”
Cash Position and Capital Allocation
Net cash provided by operating activities of $10.9 million for the three months ended June 30, 2017, compared to $73.7 million for
the three months ended June 30, 2016. The year-over-year difference in operating cash flows is due to lower cash receipts resulting
from lower revenues and slower collections and increased compensation payments due to annual increases in salaries, increased
headcount and an additional US payroll.
During the quarter, the Company repurchased 1,887,033 shares of its common stock at an average price of $34.74 for a total of
$65.6 million. As of June 30, 2017, $78.9 million remained available under the Company’s $200.0 million share repurchase
authorization.
Total debt of $485.0 million at June 30, 2017, compared to $500.0 million at June 30, 2016. Cash and cash equivalents were
$138.5 million at June 30, 2017, compared to $182.7 million at June 30, 2016. Total debt, net of cash, of $346.5 million at June
30, 2017, compared to $317.3 million at June 30, 2016.
Second Quarter 2017 Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment decreased $14.7 million, or 11.1%, to $117.5 million in the quarter
compared to $132.1 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues decreased $12.5
million, or 9.4%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for restructuring
services globally, which was partially offset by higher success fees. Adjusted Segment EBITDA was $20.0 million, or 17.1% of
segment revenues, compared to $32.0 million, or 24.2% of segment revenues, in the prior year quarter. The decline in Adjusted
Segment EBITDA was primarily due to lower revenues.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased $6.8 million, or 5.7%, to $111.4 million in the quarter
compared to $118.2 million in the prior year quarter. The decrease in revenues was primarily due to lower demand for global
investigations and health solutions services, which was partially offset by higher demand for construction solutions services.
Adjusted Segment EBITDA was $13.0 million, or 11.7% of segment revenues, compared to $15.2 million, or 12.9% of segment revenues,
in the prior year quarter. The decline in Adjusted Segment EBITDA was primarily due to lower revenues, which was partially offset
by lower compensation resulting from headcount reductions taken in the health solutions practice in 2016.
Economic Consulting
Revenues in the Economic Consulting segment increased $6.0 million, or 5.1%, to $124.0 million in the quarter compared to $118.0
million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $8.6 million, or 7.2%,
compared to the prior year quarter. The increase in revenues was primarily due to higher demand for antitrust services in North
America. Adjusted Segment EBITDA was $15.5 million, or 12.5% of segment revenues, compared to $15.4 million, or 13.0% of segment
revenues, in the prior year quarter. Adjusted Segment EBITDA was consistent with the prior year quarter, as the increase in
revenues was offset by increased compensation costs related to an increase in billable headcount.
Technology
Revenues in the Technology segment increased $3.7 million, or 8.8%, to $45.6 million in the quarter compared to $41.9 million in
the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $4.2 million, or 10.1%, compared to the
prior year quarter. The increase in revenues was primarily driven by higher consulting demand related to merger and acquisition
related “second request” services, which was partially offset by reduced hosting revenue. Adjusted Segment EBITDA was $5.4 million,
or 11.9% of segment revenues, compared to $5.0 million, or 12.0% of segment revenues, in the prior year quarter. The increase in
Adjusted Segment EBITDA was a result of higher revenues, which was largely offset by higher cost of service and investment in
future revenue generating initiatives.
Strategic Communications
Revenues in the Strategic Communications segment decreased $3.7 million, or 7.4%, to $46.2 million in the quarter compared to $49.9
million in the prior year quarter. Excluding the estimated negative impact of FX, revenues decreased $2.0 million, or 4.0%,
compared to the prior year quarter. The decrease in revenues was primarily due to a decline in project-based revenues in North
America, particularly for financial communications and corporate reputation services. Adjusted Segment EBITDA was $4.9 million, or
10.5% of segment revenues, compared to $8.4 million, or 16.9% of segment revenues, in the prior year quarter. The decrease in
Adjusted Segment EBITDA was due to lower revenues.
2017 Guidance
The Company reaffirms its full year 2017 revenue guidance of between $1.775 billion and $1.875 billion. Given the special charge in
the second quarter of 2017, the Company is revising its full year 2017 GAAP EPS guidance. The Company now estimates that full year
2017 GAAP EPS will range between $1.37 and $1.67. This compares to the previous GAAP EPS guidance range of between $1.75 and $2.10.
The Company is maintaining its full year 2017 Adjusted EPS guidance of between $1.90 and $2.20. The variance between GAAP EPS and
Adjusted EPS guidance for full year 2017 is related to the second quarter 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.
Second Quarter 2017 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss second quarter 2017 financial results at 9:00 a.m.
Eastern Time on July 27, 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.
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 Net Income (Loss)
- Adjusted Earnings per Diluted Share
We have included the definitions of Segment Operating Income (Loss) 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
(Loss) as a segment’s share of Consolidated Operating Income (Loss). We define Total Segment Operating Income (Loss), which is a
non-GAAP financial measure, as the total of Segment Operating Income (Loss) for all segments, which excludes unallocated corporate
expenses. We use Segment Operating Income (Loss) for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted Segment
EBITDA as a segment’s share of Consolidated Operating Income (Loss) 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 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 (loss) 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.
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 most recent Form 10-K 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, including as they will be amended
and restated in the Company’s quarterly report on the Form 10-Q for the quarter ended June 30, 2017. 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 STATEMENTS OF COMPREHENSIVE INCOME |
|
| (in thousands, except per share data) |
|
| |
|
|
|
|
| |
Three Months Ended |
|
| |
June
30, |
|
| |
|
2017 |
|
|
|
2016 |
|
|
| |
(unaudited) |
|
| |
|
|
|
|
| Revenues |
$ |
444,715 |
|
|
$ |
460,147 |
|
|
| |
|
|
|
|
| Operating expenses |
|
|
|
|
| Direct cost of revenues |
|
304,071 |
|
|
|
303,194 |
|
|
| Selling, general and administrative expenses |
|
107,342 |
|
|
|
108,245 |
|
|
| Special charges |
|
30,074 |
|
|
|
1,750 |
|
|
| Acquisition-related contingent consideration |
|
777 |
|
|
|
206 |
|
|
| Amortization of other intangible assets |
|
2,422 |
|
|
|
2,590 |
|
|
| |
|
444,686 |
|
|
|
415,985 |
|
|
| |
|
|
|
|
| Operating income |
|
29 |
|
|
|
44,162 |
|
|
| |
|
|
|
|
| Other income (expense) |
|
|
|
|
| Interest income and other |
|
1,592 |
|
|
|
4,125 |
|
|
| Interest expense |
|
(6,250 |
) |
|
|
(6,303 |
) |
|
| |
|
(4,658 |
) |
|
|
(2,178 |
) |
|
| |
|
|
|
|
| Income (loss) before income tax provision |
|
(4,629 |
) |
|
|
41,984 |
|
|
| |
|
|
|
|
| Income tax provision |
|
527 |
|
|
|
15,437 |
|
|
| |
|
|
|
|
| Net income (loss) |
$ |
(5,156 |
) |
|
$ |
26,547 |
|
|
| |
|
|
|
|
| Earnings (loss) per common share - basic |
$ |
(0.13 |
) |
|
$ |
0.65 |
|
|
| Weighted average common shares outstanding - basic |
|
39,555 |
|
|
|
40,820 |
|
|
| |
|
|
|
|
| Earnings (loss) per common share - diluted |
$ |
(0.13 |
) |
|
$ |
0.64 |
|
|
| Weighted average common shares outstanding - diluted |
|
39,555 |
|
|
|
41,599 |
|
|
| |
|
|
|
|
| |
|
|
|
|
| Other comprehensive income (loss), net of tax |
|
|
|
|
| Foreign currency translation adjustments, net of tax expense of
$0 |
$ |
10,174 |
|
|
$ |
(18,809 |
) |
|
| Total other comprehensive income (loss), net of tax |
|
10,174 |
|
|
|
(18,809 |
) |
|
| Comprehensive income |
$ |
5,018 |
|
|
$ |
7,738 |
|
|
| |
|
|
|
|
| FTI CONSULTING, INC. |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|
| (in thousands, except per share data) |
|
| |
|
|
|
|
| |
Six Months Ended |
|
| |
June
30, |
|
| |
|
2017 |
|
|
|
2016 |
|
|
| |
(unaudited) |
|
| |
|
|
|
|
| Revenues |
$ |
891,059 |
|
|
$ |
930,432 |
|
|
| |
|
|
|
|
| Operating expenses |
|
|
|
|
| Direct cost of revenues |
|
613,143 |
|
|
|
608,830 |
|
|
| Selling, general and administrative expenses |
|
214,637 |
|
|
|
211,854 |
|
|
| Special charges |
|
30,074 |
|
|
|
6,811 |
|
|
| Acquisition-related contingent consideration |
|
1,172 |
|
|
|
1,340 |
|
|
| Amortization of other intangible assets |
|
4,915 |
|
|
|
5,196 |
|
|
| |
|
863,941 |
|
|
|
834,031 |
|
|
| |
|
|
|
|
| Operating income |
|
27,118 |
|
|
|
96,401 |
|
|
| |
|
|
|
|
| Other income (expense) |
|
|
|
|
| Interest income and other |
|
2,197 |
|
|
|
6,682 |
|
|
| Interest expense |
|
(12,051 |
) |
|
|
(12,532 |
) |
|
| |
|
(9,854 |
) |
|
|
(5,850 |
) |
|
| |
|
|
|
|
| Income before income tax provision |
|
17,264 |
|
|
|
90,551 |
|
|
| |
|
|
|
|
| Income tax provision |
|
8,404 |
|
|
|
33,823 |
|
|
| |
|
|
|
|
| Net income |
$ |
8,860 |
|
|
$ |
56,728 |
|
|
| |
|
|
|
|
| Earnings per common share - basic |
$ |
0.22 |
|
|
$ |
1.40 |
|
|
| Weighted average common shares outstanding - basic |
|
40,039 |
|
|
|
40,663 |
|
|
| |
|
|
|
|
| Earnings per common share - diluted |
$ |
0.22 |
|
|
$ |
1.37 |
|
|
| Weighted average common shares outstanding - diluted |
|
40,502 |
|
|
|
41,373 |
|
|
| |
|
|
|
|
| |
|
|
|
|
| Other comprehensive income (loss), net of tax |
|
|
|
|
| Foreign currency translation adjustments, net of tax expense of
$0 |
$ |
17,544 |
|
|
$ |
(19,167 |
) |
|
| Total other comprehensive income (loss), net of tax |
|
17,544 |
|
|
|
(19,167 |
) |
|
| Comprehensive income |
$ |
26,404 |
|
|
$ |
37,561 |
|
|
| |
|
|
|
|
| FTI CONSULTING, INC. |
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|
| (in thousands, except per share data) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June
30, |
|
| |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
| |
|
|
|
|
(unaudited) |
|
(unaudited) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
|
$ |
(5,156 |
) |
|
$ |
26,547 |
|
|
$ |
8,860 |
|
|
$ |
56,728 |
|
|
| Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
| Special charges |
|
|
|
|
30,074 |
|
|
|
1,750 |
|
|
|
30,074 |
|
|
|
6,810 |
|
|
| Tax impact of special charges |
|
|
|
(9,103 |
) |
|
|
(691 |
) |
|
|
(9,103 |
) |
|
|
(2,482 |
) |
|
| Remeasurement of acquisition-related contingent
consideration |
|
|
536 |
|
|
|
- |
|
|
|
702 |
|
|
|
980 |
|
|
| Tax impact of remeasurement of acquisition-related
contingent consideration |
|
|
(204 |
) |
|
|
- |
|
|
|
(269 |
) |
|
|
(380 |
) |
|
| Adjusted Net Income |
|
|
|
$ |
16,147 |
|
|
$ |
27,606 |
|
|
$ |
30,264 |
|
|
$ |
61,656 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings (loss) per common share – diluted |
|
$ |
(0.13 |
) |
|
$ |
0.64 |
|
|
$ |
0.22 |
|
|
$ |
1.37 |
|
|
| Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
| Special charges |
|
|
|
|
0.75 |
|
|
|
0.04 |
|
|
|
0.74 |
|
|
|
0.16 |
|
|
| Tax impact of special charges |
|
|
|
(0.23 |
) |
|
|
(0.02 |
) |
|
|
(0.22 |
) |
|
|
(0.06 |
) |
|
| Remeasurement of acquisition-related contingent
consideration |
|
|
0.01 |
|
|
|
- |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
| Tax impact of remeasurement of acquisition-related
contingent consideration |
|
|
- |
|
|
|
- |
|
|
|
(0.01 |
) |
|
|
- |
|
|
| Adjusted earnings per common share - diluted |
|
$ |
0.40 |
|
|
$ |
0.66 |
|
|
$ |
0.75 |
|
|
$ |
1.49 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of common shares outstanding –
diluted(1) |
|
|
39,932 |
|
|
|
41,599 |
|
|
|
40,502 |
|
|
|
41,373 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| (1) For the three months ended June 30,
2017, the Company reported a net loss. For the period, the basic weighted average common shares outstanding equals the diluted
weighted average common shares outstanding for purposes of calculating U.S. GAAP earnings per share because potentially
dilutive securities would be antidilutive. For non-GAAP purposes, the Adjusted EPS and diluted weighted average number of
common shares outstanding presented herein reflect the impact of the inclusion of share-based awards that are considered
dilutive based on the impact of the add-backs included in Adjusted Net Income above. |
|
| |
|
| |
|
|
|
|
Year Ended December
31, 2017 |
|
|
|
|
|
| |
|
|
|
|
Low |
|
High |
|
|
|
|
|
| Guidance on estimated earnings per common share
- diluted (GAAP)(1) |
|
$ |
1.37 |
|
|
$ |
1.67 |
|
|
|
|
|
|
| Special charges, net of tax |
|
|
|
0.52 |
|
|
|
0.52 |
|
|
|
|
|
|
| Remeasurement of acquisition-related contingent
consideration, net of tax |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
|
|
|
| Guidance on estimated adjusted earnings per
common share (Non-GAAP)(1) |
|
$ |
1.90 |
|
|
$ |
2.20 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| (1) The forward-looking guidance on
estimated 2017 earnings per diluted share (“EPS”) and adjusted earnings per common share - diluted ("Adjusted EPS") do not
reflect other gains and losses (all of which would be excluded from Adjusted EPS) related to future impact of remeasurement of
acquisition-related contingent consideration, special charges, goodwill impairment charges and/or losses on early
extinguishment of debt except for the actual charges taken during the six months ended June 30, 2017, as these items are
dependent on future events that are uncertain and difficult to predict. |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| FTI CONSULTING, INC. |
|
| OPERATING RESULTS BY BUSINESS SEGMENT |
|
| |
|
|
|
|
|
Adjusted |
|
|
|
Average |
|
Revenue- |
|
| |
|
Segment |
|
Adjusted |
|
EBITDA |
|
|
|
Billable |
|
Generating |
|
| |
|
Revenues |
|
EBITDA |
|
Margin |
|
Utilization |
|
Rate |
|
Headcount |
|
| |
|
(in
thousands) |
|
|
|
|
|
|
|
(at period end) |
|
| Three Months Ended June 30, 2017
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate Finance & Restructuring |
|
$ |
117,487 |
|
$ |
20,048 |
|
|
17.1 |
% |
|
60 |
% |
|
$ |
403 |
|
881 |
|
| Forensic and Litigation Consulting |
|
|
111,410 |
|
|
13,032 |
|
|
11.7 |
% |
|
60 |
% |
|
$ |
310 |
|
1,070 |
|
| Economic Consulting |
|
|
124,004 |
|
|
15,509 |
|
|
12.5 |
% |
|
68 |
% |
|
$ |
542 |
|
652 |
|
| Technology(1) |
|
|
45,566 |
|
|
5,421 |
|
|
11.9 |
% |
|
N/M |
|
N/M |
|
301 |
|
| Strategic Communications(1) |
|
|
46,248 |
|
|
4,876 |
|
|
10.5 |
% |
|
N/M |
|
N/M |
|
659 |
|
| |
|
$ |
444,715 |
|
$ |
58,886 |
|
|
13.2 |
% |
|
|
|
|
|
3,563 |
|
| Unallocated Corporate |
|
|
|
|
(18,098 |
) |
|
|
|
|
|
|
|
|
|
| Adjusted
EBITDA |
|
|
|
$ |
40,788 |
|
|
9.2 |
% |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended June 30, 2017
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate Finance & Restructuring |
|
$ |
223,388 |
|
$ |
30,373 |
|
|
13.6 |
% |
|
60 |
% |
|
$ |
390 |
|
881 |
|
| Forensic and Litigation Consulting |
|
|
222,816 |
|
|
26,553 |
|
|
11.9 |
% |
|
60 |
% |
|
$ |
320 |
|
1,070 |
|
| Economic Consulting |
|
|
263,225 |
|
|
35,619 |
|
|
13.5 |
% |
|
70 |
% |
|
$ |
548 |
|
652 |
|
| Technology(1) |
|
|
91,653 |
|
|
13,225 |
|
|
14.4 |
% |
|
N/M |
|
N/M |
|
301 |
|
| Strategic Communications(1) |
|
|
89,977 |
|
|
9,133 |
|
|
10.2 |
% |
|
N/M |
|
N/M |
|
659 |
|
| |
|
$ |
891,059 |
|
$ |
114,903 |
|
|
12.9 |
% |
|
|
|
|
|
3,563 |
|
| Unallocated Corporate |
|
|
|
|
(35,796 |
) |
|
|
|
|
|
|
|
|
|
| Adjusted
EBITDA |
|
|
|
$ |
79,107 |
|
|
8.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, 2016
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate Finance & Restructuring |
|
$ |
132,142 |
|
$ |
32,041 |
|
|
24.2 |
% |
|
68 |
% |
|
$ |
422 |
|
853 |
|
| Forensic and Litigation Consulting |
|
|
118,193 |
|
|
15,190 |
|
|
12.9 |
% |
|
61 |
% |
|
$ |
333 |
|
1,117 |
|
| Economic Consulting |
|
|
118,006 |
|
|
15,381 |
|
|
13.0 |
% |
|
71 |
% |
|
$ |
526 |
|
604 |
|
| Technology(1) |
|
|
41,882 |
|
|
5,035 |
|
|
12.0 |
% |
|
N/M |
|
N/M |
|
301 |
|
| Strategic Communications(1) |
|
|
49,924 |
|
|
8,440 |
|
|
16.9 |
% |
|
N/M |
|
N/M |
|
606 |
|
| |
|
$ |
460,147 |
|
$ |
76,087 |
|
|
16.5 |
% |
|
|
|
|
|
3,481 |
|
| Unallocated Corporate |
|
|
|
|
(19,507 |
) |
|
|
|
|
|
|
|
|
|
| Adjusted
EBITDA |
|
|
|
$ |
56,580 |
|
|
12.3 |
% |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended June 30, 2016
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate Finance & Restructuring |
|
$ |
259,298 |
|
$ |
63,644 |
|
|
24.5 |
% |
|
71 |
% |
|
$ |
402 |
|
853 |
|
| Forensic and Litigation Consulting |
|
|
237,197 |
|
|
34,998 |
|
|
14.8 |
% |
|
62 |
% |
|
$ |
333 |
|
1,117 |
|
| Economic Consulting |
|
|
248,737 |
|
|
36,700 |
|
|
14.8 |
% |
|
75 |
% |
|
$ |
529 |
|
604 |
|
| Technology(1) |
|
|
90,163 |
|
|
12,858 |
|
|
14.3 |
% |
|
N/M |
|
N/M |
|
301 |
|
| Strategic Communications(1) |
|
|
95,037 |
|
|
14,548 |
|
|
15.3 |
% |
|
N/M |
|
N/M |
|
606 |
|
| |
|
$ |
930,432 |
|
$ |
162,748 |
|
|
17.5 |
% |
|
|
|
|
|
3,481 |
|
| Unallocated Corporate |
|
|
|
|
(37,311 |
) |
|
|
|
|
|
|
|
|
|
| Adjusted
EBITDA |
|
|
|
$ |
125,437 |
|
|
13.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (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. |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| RECONCILIATION OF NET INCOME (LOSS) AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA |
|
| (in thousands) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, 2017
(unaudited) |
Corporate
Finance &
Restructuring |
|
Forensic and
Litigation
Consulting |
|
Economic
Consulting |
|
Technology |
|
Strategic
Communications |
|
Unallocated
Corporate |
|
Total |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(5,156 |
) |
|
|
| |
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,592 |
) |
|
|
| |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250 |
|
|
|
| |
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
527 |
|
|
|
| Operating income (loss) |
|
$ |
15,447 |
|
$ |
1,183 |
|
$ |
8,008 |
|
$ |
(1,568 |
) |
|
$ |
(755 |
) |
|
$ |
(22,286 |
) |
|
$ |
29 |
|
|
|
| |
Depreciation and amortization |
|
768 |
|
|
1,032 |
|
|
1,436 |
|
|
3,001 |
|
|
|
546 |
|
|
|
944 |
|
|
|
7,727 |
|
|
|
| |
Amortization of other intangible assets |
|
784 |
|
|
372 |
|
|
155 |
|
|
161 |
|
|
|
950 |
|
|
|
- |
|
|
|
2,422 |
|
|
|
| |
Special charges |
|
|
3,049 |
|
|
10,445 |
|
|
5,910 |
|
|
3,827 |
|
|
|
3,599 |
|
|
|
3,244 |
|
|
|
30,074 |
|
|
|
| |
Remeasurement of acquisition-related contingent consideration |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
536 |
|
|
|
- |
|
|
|
536 |
|
|
|
| Adjusted
EBITDA |
|
|
$ |
20,048 |
|
$ |
13,032 |
|
$ |
15,509 |
|
$ |
5,421 |
|
|
$ |
4,876 |
|
|
$ |
(18,098 |
) |
|
$ |
40,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended June 30, 2017
(unaudited) |
Corporate
Finance &
Restructuring |
|
Forensic and
Litigation
Consulting |
|
Economic
Consulting |
|
Technology |
|
Strategic
Communications |
|
Unallocated
Corporate |
|
Total |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,860 |
|
|
|
| |
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,197 |
) |
|
|
| |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,051 |
|
|
|
| |
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,404 |
|
|
|
| Operating income |
|
|
$ |
24,196 |
|
$ |
13,107 |
|
$ |
26,510 |
|
$ |
2,872 |
|
|
$ |
1,772 |
|
|
$ |
(41,339 |
) |
|
$ |
27,118 |
|
|
|
| |
Depreciation and amortization |
|
1,549 |
|
|
2,205 |
|
|
2,890 |
|
|
6,207 |
|
|
|
1,148 |
|
|
|
2,299 |
|
|
|
16,298 |
|
|
|
| |
Amortization of other intangible assets |
|
1,579 |
|
|
796 |
|
|
309 |
|
|
319 |
|
|
|
1,912 |
|
|
|
- |
|
|
|
4,915 |
|
|
|
| |
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 |
|
|
$ |
30,373 |
|
$ |
26,553 |
|
$ |
35,619 |
|
$ |
13,225 |
|
|
$ |
9,133 |
|
|
$ |
(35,796 |
) |
|
$ |
79,107 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, 2016
(unaudited) |
Corporate
Finance &
Restructuring |
|
Forensic and
Litigation
Consulting |
|
Economic
Consulting |
|
Technology |
|
Strategic
Communications |
|
Unallocated
Corporate |
|
Total |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
26,547 |
|
|
|
| |
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,125 |
) |
|
|
| |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,303 |
|
|
|
| |
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,437 |
|
|
|
| Operating income |
|
|
$ |
30,482 |
|
$ |
11,925 |
|
$ |
14,291 |
|
$ |
880 |
|
|
$ |
6,990 |
|
|
$ |
(20,406 |
) |
|
$ |
44,162 |
|
|
|
| |
Depreciation and amortization |
|
755 |
|
|
996 |
|
|
935 |
|
|
3,996 |
|
|
|
497 |
|
|
|
899 |
|
|
|
8,078 |
|
|
|
| |
Amortization of other intangible assets |
|
804 |
|
|
519 |
|
|
155 |
|
|
159 |
|
|
|
953 |
|
|
|
- |
|
|
|
2,590 |
|
|
|
| |
Special charges |
|
|
- |
|
|
1,750 |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,750 |
|
|
|
| Adjusted
EBITDA |
|
|
$ |
32,041 |
|
$ |
15,190 |
|
$ |
15,381 |
|
$ |
5,035 |
|
|
$ |
8,440 |
|
|
$ |
(19,507 |
) |
|
$ |
56,580 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended June 30, 2016
(unaudited) |
Corporate
Finance &
Restructuring |
|
Forensic and
Litigation
Consulting |
|
Economic
Consulting |
|
Technology |
|
Strategic
Communications |
|
Unallocated
Corporate |
|
Total |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
56,728 |
|
|
|
| |
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,682 |
) |
|
|
| |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,532 |
|
|
|
| |
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,823 |
|
|
|
| Operating income (loss) |
|
$ |
60,558 |
|
$ |
30,138 |
|
$ |
34,502 |
|
$ |
(300 |
) |
|
$ |
10,655 |
|
|
$ |
(39,152 |
) |
|
$ |
96,401 |
|
|
|
| |
Depreciation and amortization |
|
1,477 |
|
|
2,075 |
|
|
1,860 |
|
|
7,780 |
|
|
|
1,016 |
|
|
|
1,841 |
|
|
|
16,049 |
|
|
|
| |
Amortization of other intangible assets |
|
1,609 |
|
|
1,035 |
|
|
338 |
|
|
317 |
|
|
|
1,897 |
|
|
|
- |
|
|
|
5,196 |
|
|
|
| |
Special Charges |
|
|
- |
|
|
1,750 |
|
|
- |
|
|
5,061 |
|
|
|
- |
|
|
|
- |
|
|
|
6,811 |
|
|
|
| |
Remeasurement of acquisition-related contingent consideration |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
980 |
|
|
|
- |
|
|
|
980 |
|
|
|
| Adjusted
EBITDA |
|
|
$ |
63,644 |
|
$ |
34,998 |
|
$ |
36,700 |
|
$ |
12,858 |
|
|
$ |
14,548 |
|
|
$ |
(37,311 |
) |
|
$ |
125,437 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| FTI CONSULTING, INC. |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
| (in thousands) |
|
| |
|
|
|
|
| |
Six months ended |
|
| |
June 30, |
|
| |
|
2017 |
|
|
|
2016 |
|
|
| |
(unaudited) |
|
| |
|
|
|
|
| Operating activities |
|
|
|
|
| Net income |
$ |
8,860 |
|
|
$ |
56,728 |
|
|
| |
|
|
|
|
| Adjustments to reconcile net income to net cash provided by (used in) operating
activities: |
|
|
|
|
| Depreciation and amortization |
|
16,298 |
|
|
|
16,049 |
|
|
| Amortization and impairment of other intangible assets |
|
4,915 |
|
|
|
5,196 |
|
|
| Acquisition-related contingent consideration |
|
1,172 |
|
|
|
1,340 |
|
|
| Provision for doubtful accounts |
|
5,971 |
|
|
|
4,344 |
|
|
| Non-cash share-based compensation |
|
9,959 |
|
|
|
9,667 |
|
|
| Non-cash interest expense |
|
992 |
|
|
|
992 |
|
|
| Other |
|
242 |
|
|
|
(639 |
) |
|
| Changes in operating assets and liabilities, net of effects from
acquisitions: |
|
|
|
|
| Accounts receivable, billed and unbilled |
|
(78,100 |
) |
|
|
(57,501 |
) |
|
| Notes receivable |
|
2,241 |
|
|
|
(4,640 |
) |
|
| Prepaid expenses and other assets |
|
947 |
|
|
|
(943 |
) |
|
| Accounts payable, accrued expenses and other |
|
(1,887 |
) |
|
|
1,932 |
|
|
| Income taxes |
|
3,087 |
|
|
|
29,329 |
|
|
| Accrued compensation |
|
(64,531 |
) |
|
|
(28,518 |
) |
|
| Billings in excess of services provided |
|
7,634 |
|
|
|
7,297 |
|
|
| Net cash provided by (used in) operating
activities |
|
(82,200 |
) |
|
|
40,633 |
|
|
| |
|
|
|
|
| Investing activities |
|
|
|
|
| Payments for acquisition of businesses, net of cash received |
|
- |
|
|
|
(56 |
) |
|
| Purchases of property and equipment |
|
(13,127 |
) |
|
|
(11,983 |
) |
|
| Other |
|
72 |
|
|
|
96 |
|
|
| Net cash used in investing activities |
|
(13,055 |
) |
|
|
(11,943 |
) |
|
| |
|
|
|
|
| Financing activities |
|
|
|
|
| Borrowings under revolving line of credit, net |
|
115,000 |
|
|
|
- |
|
|
| Deposits |
|
3,262 |
|
|
|
2,557 |
|
|
| Purchase and retirement of common stock |
|
(102,513 |
) |
|
|
(2,903 |
) |
|
| Net issuance of common stock under equity compensation plans |
|
(500 |
) |
|
|
9,353 |
|
|
| Other |
|
(79 |
) |
|
|
(154 |
) |
|
| Net cash provided by financing activities |
|
15,170 |
|
|
|
8,853 |
|
|
| |
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents |
|
2,438 |
|
|
|
(4,638 |
) |
|
| |
|
|
|
|
| Net increase (decrease) in cash and cash equivalents |
|
(77,647 |
) |
|
|
32,905 |
|
|
| Cash and cash equivalents, beginning of period |
|
216,158 |
|
|
|
149,760 |
|
|
| Cash and cash equivalents, end of period |
$ |
138,511 |
|
|
$ |
182,665 |
|
|
| |
|
|
|
|
| FTI CONSULTING, INC. |
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
| (in thousands, except per share amounts) |
|
| |
|
|
|
|
| |
June 30, |
|
December
31, |
|
| |
|
2017 |
|
|
|
2016 |
|
|
| |
(unaudited) |
|
|
|
| Assets |
|
|
|
|
| Current assets |
|
|
|
|
| Cash and cash equivalents |
$ |
138,511 |
|
|
$ |
216,158 |
|
|
| Accounts receivable: |
|
|
|
|
| Billed receivables |
|
399,100 |
|
|
|
365,385 |
|
|
| Unbilled receivables |
|
345,228 |
|
|
|
288,331 |
|
|
| Allowance for doubtful accounts and unbilled services |
|
(191,113 |
) |
|
|
(178,819 |
) |
|
| Accounts receivable, net |
|
553,215 |
|
|
|
474,897 |
|
|
| Current portion of notes receivable |
|
27,126 |
|
|
|
31,864 |
|
|
| Prepaid expenses and other current assets |
|
58,937 |
|
|
|
60,252 |
|
|
| Total current assets |
|
777,789 |
|
|
|
783,171 |
|
|
| Property and equipment, net of accumulated depreciation |
|
60,280 |
|
|
|
61,856 |
|
|
| Goodwill |
|
1,187,664 |
|
|
|
1,180,001 |
|
|
| Other intangible assets, net of amortization |
|
48,213 |
|
|
|
52,120 |
|
|
| Notes receivable, net of current portion |
|
108,692 |
|
|
|
104,524 |
|
|
| Other assets |
|
42,155 |
|
|
|
43,696 |
|
|
| Total assets |
$ |
2,224,793 |
|
|
$ |
2,225,368 |
|
|
| |
|
|
|
|
| Liabilities and Stockholders' Equity |
|
|
|
|
| Current liabilities |
|
|
|
|
| Accounts payable, accrued expenses and other |
$ |
85,403 |
|
|
$ |
87,320 |
|
|
| Accrued compensation |
|
191,683 |
|
|
|
261,500 |
|
|
| Billings in excess of services provided |
|
37,652 |
|
|
|
29,635 |
|
|
| Total current liabilities |
|
314,738 |
|
|
|
378,455 |
|
|
| Long-term debt, net |
|
480,906 |
|
|
|
365,528 |
|
|
| Deferred income taxes |
|
175,683 |
|
|
|
173,799 |
|
|
| Other liabilities |
|
114,288 |
|
|
|
100,228 |
|
|
| Total liabilities |
|
1,085,615 |
|
|
|
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 ― 39,527 (2017) and 42,037 (2016) |
|
395 |
|
|
|
420 |
|
|
| Additional paid-in capital |
|
325,446 |
|
|
|
416,816 |
|
|
| Retained earnings |
|
946,672 |
|
|
|
941,001 |
|
|
| Accumulated other comprehensive loss |
|
(133,335 |
) |
|
|
(150,879 |
) |
|
| Total stockholders' equity |
|
1,139,178 |
|
|
|
1,207,358 |
|
|
| Total liabilities and stockholders' equity |
$ |
2,224,793 |
|
|
$ |
2,225,368 |
|
|
| |
|
|
|
|
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
