FTI Consulting, Inc. (NYSE:FCN) (the “Company”), the global
business advisory firm dedicated to helping organizations protect
and enhance their enterprise value, today released its financial
results for the quarter ended September 30, 2015.
For the quarter, revenues increased 1.0 percent to $455.5
million compared to $451.2 million in the prior year quarter.
Excluding the estimated negative impact of foreign currency
translation (“FX”), revenues increased 4.1 percent compared to the
prior year quarter. Fully diluted earnings per share (“EPS”) were
$0.25 compared to $0.55 in the prior year quarter. EPS in the
quarter includes a $19.6 million loss on early extinguishment of
debt, which decreased EPS by $0.28. EPS in the prior year quarter
included a special charge of $5.3 million, which decreased EPS by
$0.08. Adjusted EPS and Adjusted EBITDA, which exclude the loss on
extinguishment of debt and special charges, were $0.53 and $56.1
million, respectively, compared to $0.63 and $63.4 million,
respectively, in the prior year quarter. Adjusted EBITDA was 12.3
percent of revenues as compared to 14.1 percent of revenues in the
prior year quarter.
Adjusted EPS, Adjusted EBITDA and Adjusted Segment EBITDA are
non-GAAP measures defined elsewhere in this press release and are
reconciled to GAAP measures in the accompanying financial
tables.
Commenting on these results, Steven H. Gunby, President and
Chief Executive Officer of FTI Consulting, said, “While we had a
solid quarter, persistent headwinds facing three of our core
businesses have caused us to downgrade our expectations for 2015
and our aspirational targets for 2016. Notwithstanding those
headwinds, however, I am pleased that we continue to anticipate
double-digit EPS growth.”
Cash Position
Net cash provided by operating activities for the quarter was
$74.0 million compared to net cash provided by operating activities
of $97.6 million in the prior year quarter. Cash and cash
equivalents were $105.0 million at September 30, 2015 compared to
$178.8 million at September 30, 2014.
Third Quarter Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring (f/k/a
Corporate Finance/Restructuring) segment increased $13.4 million or
13.4 percent to $113.5 million in the quarter compared to $100.0
million in the prior year quarter. Excluding the estimated negative
impact of FX, revenues increased $17.8 million or 17.8 percent
compared to the prior year quarter. The increase in revenues was
driven by higher demand for distressed service offerings in North
America. Adjusted Segment EBITDA was $26.7 million, or 23.5 percent
of segment revenues, compared to $15.5 million, or 15.5 percent of
segment revenues in the prior year quarter. The increase in
Adjusted Segment EBITDA margin was due to the higher demand for
distressed service offerings, which contributed to improvements in
staff leverage and utilization.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment
decreased $5.6 million or 4.6 percent to $116.2 million in the
quarter compared to $121.7 million in the prior year quarter.
Excluding the estimated negative impact of FX, revenues decreased
$2.8 million or 2.3 percent. The decrease in revenues was driven by
lower demand in the global disputes and investigations practices,
which was partially offset by higher demand in the financial and
enterprise data analytics practice and success fees in the health
solutions practice. Adjusted Segment EBITDA was $13.4 million, or
11.5 percent of segment revenues, compared to $22.3 million, or
18.3 percent of segment revenues in the prior year quarter. The
decrease in Adjusted Segment EBITDA margin was due to lower demand
in the global disputes and investigations practices coupled with
the ramp up of hiring in certain core practices and higher bad debt
expenses compared to recoveries in the prior year quarter. These
decreases were partially offset by the increase in success
fees.
Economic Consulting
Revenues in the Economic Consulting segment decreased $6.0
million or 4.9 percent to $114.5 million in the quarter compared to
$120.5 million in the prior year quarter. Revenues increased $1.7
million, or 1.4 percent, from an acquisition as compared to the
same prior year period. Excluding the estimated negative impact of
FX, revenues declined organically $5.0 million or 4.2 percent. The
decline in organic revenues was driven by decreased demand in
non-mergers and acquisitions (“M&A”) related antitrust and
financial economics services, which was partially offset by higher
demand for M&A and international arbitration services. Adjusted
Segment EBITDA was $16.7 million, or 14.5 percent of segment
revenues, compared to $18.4 million, or 15.3 percent of segment
revenues in the prior year quarter. The decrease in Adjusted
Segment EBITDA margin was impacted by lower revenue realization in
the international arbitration, regulatory and valuation practices
in the Europe, Middle East and Africa (“EMEA”) region. Lower
utilization in the antitrust and financial economics practices were
offset by lower variable compensation.
Technology
Revenues in the Technology segment decreased $6.8 million or
10.9 percent to $55.6 million in the quarter compared to $62.4
million in the prior year quarter. Excluding the estimated negative
impact of FX, revenues decreased $5.9 million, or 9.4 percent. The
decline in revenues was impacted by a decline in consulting and a
decline in other services related to financial services and
cross-border investigations, which were partially offset by higher
M&A-related “second request” work. Adjusted Segment EBITDA was
$10.8 million, or 19.5 percent of segment revenues, compared to
$17.8 million, or 28.6 percent of segment revenues in the prior
year quarter. The decrease in Adjusted Segment EBITDA margin was
due to lower utilization and realized pricing related to client mix
and reduced licensing revenues.
Strategic Communications
Revenues in the Strategic Communications segment increased $9.2
million or 19.7 percent to $55.7 million in the quarter compared to
$46.6 million in the prior year quarter. Excluding the estimated
negative impact of FX, revenues increased $12.4 million or 26.7
percent with $9.3 million of higher pass-through income and higher
M&A and public affairs project revenues in EMEA and North
America. Adjusted Segment EBITDA was $8.7 million, or 15.6 percent
of segment revenues, compared to $6.6 million, or 14.2 percent of
segment revenues in the prior year quarter. The increase in
Adjusted Segment EBITDA margin was due to an increase in higher
priced project revenues combined with improved staff leverage.
2015 Guidance Update
The Company now estimates that revenue for 2015 will be between
$1.74 billion and $1.78 billion and Adjusted EPS will be between
$1.80 and $1.95.
Third Quarter 2015 Conference Call
FTI Consulting will host a conference call for analysts and
investors to discuss third quarter 2015 financial results at 9:00
a.m. Eastern Time on October 29, 2015. The call can be accessed
live and will be available for replay over the Internet for 90 days
by logging onto the Company's website at www.fticonsulting.com.
About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm
dedicated to helping organizations protect and enhance enterprise
value in an increasingly complex legal, regulatory and economic
environment. With more than 4,400 employees located in 26
countries, FTI Consulting professionals work closely with clients
to anticipate, illuminate and overcome complex business challenges
in areas such as investigations, litigation, mergers and
acquisitions, regulatory issues, reputation management, strategic
communications and restructuring. The company generated $1.76
billion in revenues during fiscal year 2014. More information can
be found at www.fticonsulting.com.
Use of Non-GAAP Measures
Note: We define Segment Operating Income (Loss) as a segment’s
share of consolidated operating income (Loss). We define Total
Segment Operating Income (Loss) 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
EBITDA as consolidated net income (loss) 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 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 define Total Adjusted Segment
EBITDA as the total of Adjusted Segment EBITDA for all segments,
which excludes unallocated corporate expenses. We define Adjusted
Segment EBITDA margin as Adjusted Segment EBITDA as a percentage of
a segment’s share of revenue. We use Adjusted Segment EBITDA to
internally evaluate the financial performance of our segments
because we believe it is a useful supplemental measure which
reflects current core operating performance and provides an
indicator of the segment’s ability to generate cash. We also
believe that these measures, when considered together with our GAAP
financial results, provide management and investors with a more
complete understanding of our operating results, including
underlying trends, by excluding the effects of remeasurement of
acquisition-related contingent consideration, special charges and
goodwill impairment charges. In addition, EBITDA and Adjusted
EBITDA are common alternative measures 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 to
the operating results of other companies.
We define Adjusted Net Income and Adjusted Earnings per Diluted
Share (“Adjusted EPS”) 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
measure, when considered together with our GAAP financial results,
provides management and investors with a more complete
understanding of our business operating results, including
underlying trends, by excluding the effects of remeasurement of
acquisition-related contingent consideration, special charges,
goodwill impairment charges and losses on early extinguishment of
debt. Non-GAAP financial measures are not defined in the same
manner by all companies and may not be comparable to 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
Consolidated Statements of Comprehensive Income. Reconciliations of
GAAP to non-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 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 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 locoh yes ated 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 filed with the SEC and in the Company's other filings with the
SEC, including the risks set forth under "Risks Related to Our
Reportable 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.
FINANCIAL TABLES FOLLOW
FTI CONSULTING, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME |
|
FOR THE THREE MONTHS ENDED September 30, 2015
AND 2014 |
|
(in thousands, except per share
data) |
|
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
Revenues |
$ |
455,470 |
|
|
$ |
451,178 |
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Direct cost of revenues |
|
301,609 |
|
|
|
293,244 |
|
|
Selling, general and administrative
expenses |
|
105,058 |
|
|
|
102,461 |
|
|
Special charges |
|
- |
|
|
|
5,347 |
|
|
Acquisition-related contingent
consideration |
|
159 |
|
|
|
257 |
|
|
Amortization of other intangible
assets |
|
2,900 |
|
|
|
3,398 |
|
|
|
|
409,726 |
|
|
|
404,707 |
|
|
|
|
|
|
|
Operating
income |
|
45,744 |
|
|
|
46,471 |
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
Interest income and other |
|
2,027 |
|
|
|
1,014 |
|
|
Interest expense |
|
(11,696 |
) |
|
|
(12,634 |
) |
|
Loss on early extinguishment of
debt |
|
(19,589 |
) |
|
|
- |
|
|
|
|
(29,258 |
) |
|
|
(11,620 |
) |
|
|
|
|
|
|
Income before
income tax provision |
|
16,486 |
|
|
|
34,851 |
|
|
|
|
|
|
|
Income tax
provision |
|
6,177 |
|
|
|
12,329 |
|
|
|
|
|
|
|
Net
income |
$ |
10,309 |
|
|
$ |
22,522 |
|
|
|
|
|
|
|
Earnings per
common share - basic |
$ |
0.25 |
|
|
$ |
0.57 |
|
|
Earnings per
common share - diluted |
$ |
0.25 |
|
|
$ |
0.55 |
|
|
|
|
|
|
|
Weighted
average common shares outstanding - basic |
|
41,094 |
|
|
|
39,789 |
|
|
Weighted
average common shares outstanding - diluted |
|
41,982 |
|
|
|
40,819 |
|
|
|
|
|
|
|
Other
comprehensive loss, net of tax: |
|
|
|
|
Foreign currency translation
adjustments, net of tax of $0 |
$ |
(17,229 |
) |
|
$ |
(22,542 |
) |
|
Total other
comprehensive loss, net of tax |
|
(17,229 |
) |
|
|
(22,542 |
) |
|
Comprehensive
loss |
$ |
(6,920 |
) |
|
$ |
(20 |
) |
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME |
|
FOR THE Nine MONTHS ENDED September 30, 2015
AND 2014 |
|
(in thousands, except per share
data) |
|
(unaudited) |
|
|
|
|
|
|
|
Nine Months Ended |
|
|
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
Revenues |
$ |
1,336,945 |
|
|
$ |
1,331,054 |
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Direct cost of revenues |
|
872,108 |
|
|
|
863,068 |
|
|
Selling, general and administrative
expenses |
|
316,317 |
|
|
|
317,880 |
|
|
Special charges |
|
- |
|
|
|
14,711 |
|
|
Acquisition-related contingent
consideration |
|
(1,145 |
) |
|
|
(1,591 |
) |
|
Amortization of other intangible
assets |
|
8,919 |
|
|
|
11,466 |
|
|
|
|
1,196,199 |
|
|
|
1,205,534 |
|
|
|
|
|
|
|
Operating
income |
|
140,746 |
|
|
|
125,520 |
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
Interest income and other |
|
2,840 |
|
|
|
3,465 |
|
|
Interest expense |
|
(36,537 |
) |
|
|
(38,197 |
) |
|
Loss on early extinguishment of
debt |
|
(19,589 |
) |
|
|
- |
|
|
|
|
(53,286 |
) |
|
|
(34,732 |
) |
|
|
|
|
|
|
Income before
income tax provision |
|
87,460 |
|
|
|
90,788 |
|
|
|
|
|
|
|
Income tax
provision |
|
31,756 |
|
|
|
32,902 |
|
|
|
|
|
|
|
Net
income |
$ |
55,704 |
|
|
$ |
57,886 |
|
|
|
|
|
|
|
Earnings per
common share - basic |
$ |
1.37 |
|
|
$ |
1.46 |
|
|
Earnings per
common share - diluted |
$ |
1.34 |
|
|
$ |
1.43 |
|
|
|
|
|
|
|
Weighted
average common shares outstanding - basic |
|
40,771 |
|
|
|
39,637 |
|
|
Weighted
average common shares outstanding - diluted |
|
41,682 |
|
|
|
40,608 |
|
|
|
|
|
|
|
Other
comprehensive loss, net of tax: |
|
|
|
|
Foreign currency translation
adjustments, net of tax of $0 |
$ |
(24,412 |
) |
|
$ |
(10,120 |
) |
|
Total other
comprehensive loss, net of tax |
|
(24,412 |
) |
|
|
(10,120 |
) |
|
Comprehensive
income |
$ |
31,292 |
|
|
$ |
47,766 |
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
OPERATING RESULTS BY BUSINESS
SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
Average |
|
Revenue- |
|
|
|
|
|
Adjusted |
|
|
|
|
|
Billable |
|
Generating |
|
|
|
Revenues |
|
EBITDA |
|
Margin |
|
Utilization |
|
Rate |
|
Headcount |
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
(at period end) |
|
Three Months Ended September 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
Finance/Restructuring |
|
$ |
113,487 |
|
|
$ |
26,662 |
|
|
|
23.5 |
% |
|
|
69 |
% |
|
$ |
390 |
|
|
830 |
|
Forensic and
Litigation Consulting |
|
|
116,158 |
|
|
|
13,406 |
|
|
|
11.5 |
% |
|
|
60 |
% |
|
$ |
318 |
|
|
1,209 |
|
Economic
Consulting |
|
|
114,541 |
|
|
|
16,654 |
|
|
|
14.5 |
% |
|
|
71 |
% |
|
$ |
523 |
|
|
594 |
|
Technology (1) |
|
|
55,568 |
|
|
|
10,813 |
|
|
|
19.5 |
% |
|
N/M |
|
N/M |
|
354 |
|
Strategic
Communications (1) |
|
|
55,716 |
|
|
|
8,717 |
|
|
|
15.6 |
% |
|
N/M |
|
N/M |
|
594 |
|
|
|
$ |
455,470 |
|
|
|
76,252 |
|
|
|
16.7 |
% |
|
|
|
|
|
3,581 |
|
Selling, general and administrative expenses |
|
|
|
|
(20,150 |
) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
56,102 |
|
|
|
12.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance/Restructuring |
|
$ |
328,812 |
|
|
$ |
71,174 |
|
|
|
21.6 |
% |
|
|
71 |
% |
|
$ |
382 |
|
|
830 |
|
Forensic and Litigation Consulting |
|
|
365,554 |
|
|
|
55,456 |
|
|
|
15.2 |
% |
|
|
65 |
% |
|
$ |
315 |
|
|
1,209 |
|
Economic Consulting |
|
|
329,320 |
|
|
|
43,502 |
|
|
|
13.2 |
% |
|
|
72 |
% |
|
$ |
506 |
|
|
594 |
|
Technology (1) |
|
|
172,048 |
|
|
|
33,052 |
|
|
|
19.2 |
% |
|
N/M |
|
N/M |
|
354 |
|
Strategic Communications (1) |
|
|
141,211 |
|
|
|
20,100 |
|
|
|
14.2 |
% |
|
N/M |
|
N/M |
|
594 |
|
|
|
$ |
1,336,945 |
|
|
|
223,284 |
|
|
|
16.7 |
% |
|
|
|
|
|
3,581 |
|
Corporate |
|
|
|
|
(52,725 |
) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
170,559 |
|
|
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance/Restructuring |
|
$ |
100,041 |
|
|
$ |
15,534 |
|
|
|
15.5 |
% |
|
|
70 |
% |
|
$ |
396 |
|
|
722 |
|
Forensic and Litigation Consulting |
|
|
121,732 |
|
|
|
22,260 |
|
|
|
18.3 |
% |
|
|
68 |
% |
|
$ |
323 |
|
|
1,135 |
|
Economic Consulting |
|
|
120,494 |
|
|
|
18,426 |
|
|
|
15.3 |
% |
|
|
77 |
% |
|
$ |
535 |
|
|
551 |
|
Technology (1) |
|
|
62,359 |
|
|
|
17,835 |
|
|
|
28.6 |
% |
|
N/M |
|
N/M |
|
335 |
|
Strategic Communications (1) |
|
|
46,552 |
|
|
|
6,605 |
|
|
|
14.2 |
% |
|
N/M |
|
N/M |
|
549 |
|
|
|
$ |
451,178 |
|
|
|
80,660 |
|
|
|
17.9 |
% |
|
|
|
|
|
3,292 |
|
Corporate |
|
|
|
|
(17,265 |
) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
63,395 |
|
|
|
14.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance/Restructuring |
|
$ |
298,043 |
|
|
$ |
45,618 |
|
|
|
15.3 |
% |
|
|
71 |
% |
|
$ |
388 |
|
|
722 |
|
Forensic and Litigation Consulting |
|
|
362,242 |
|
|
|
71,025 |
|
|
|
19.6 |
% |
|
|
71 |
% |
|
$ |
323 |
|
|
1,135 |
|
Economic Consulting |
|
|
344,572 |
|
|
|
49,499 |
|
|
|
14.4 |
% |
|
|
77 |
% |
|
$ |
517 |
|
|
551 |
|
Technology (1) |
|
|
183,142 |
|
|
|
50,287 |
|
|
|
27.5 |
% |
|
N/M |
|
N/M |
|
335 |
|
Strategic Communications (1) |
|
|
143,055 |
|
|
|
15,168 |
|
|
|
10.6 |
% |
|
N/M |
|
N/M |
|
549 |
|
|
|
$ |
1,331,054 |
|
|
|
231,597 |
|
|
|
17.4 |
% |
|
|
|
|
|
3,292 |
|
Corporate |
|
|
|
|
(57,103 |
) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
174,494 |
|
|
|
13.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES |
|
FOR THE THREE AND Nine MONTHS ENDED September
30, 2015 AND 2014 |
|
(in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
|
|
|
$ |
10,309 |
|
|
$ |
22,522 |
|
|
$ |
55,704 |
|
|
$ |
57,886 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
Special charges, net of
tax effect (1) |
|
|
- |
|
|
|
3,154 |
|
|
|
- |
|
|
|
8,676 |
|
|
Remeasurement of
acquisition-related contingent consideration, net of tax effect
(2) |
|
- |
|
|
|
- |
|
|
|
(1,005 |
) |
|
|
(1,514 |
) |
|
Loss on early
extinguishment of debt, net of tax effect (3) |
|
|
11,881 |
|
|
|
- |
|
|
|
11,881 |
|
|
|
- |
|
|
Adjusted net income |
|
|
|
$ |
22,190 |
|
|
$ |
25,676 |
|
|
$ |
66,580 |
|
|
$ |
65,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share – diluted |
|
$ |
0.25 |
|
|
$ |
0.55 |
|
|
$ |
1.34 |
|
|
$ |
1.43 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
Special charges, net of
tax effect (1) |
|
|
- |
|
|
|
0.08 |
|
|
|
- |
|
|
|
0.21 |
|
|
Remeasurement of
acquisition-related contingent consideration, net of tax effect
(2) |
|
- |
|
|
|
- |
|
|
|
(0.02 |
) |
|
|
(0.04 |
) |
|
Loss on early
extinguishment of debt, net of tax effect (3) |
|
|
0.28 |
|
|
|
- |
|
|
|
0.28 |
|
|
|
- |
|
|
Adjusted EPS – diluted |
|
|
|
$ |
0.53 |
|
|
$ |
0.63 |
|
|
$ |
1.60 |
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding –
diluted |
|
|
41,982 |
|
|
|
40,819 |
|
|
|
41,682 |
|
|
|
40,608 |
|
|
(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 rate for the
adjustments related to special charges for the three and nine
months ended September 30, 2014 was 41.0%. The tax expense related
to the adjustment for special charges for the three and nine months
ended September 30, 2014 was $2.2 million, or a $0.05 impact on
diluted earnings per share, and $6.0 million, or a $0.15 impact on
diluted earnings per share, respectively. During the three and nine
months ended, September 30, 2015, there were no special
charges. |
|
(2) 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 related to the remeasurement of acquisition-related
contingent consideration for the nine months ended September 30,
2015 was 40.0%. The tax expense related to the remeasurement of
acquisition-related contingent consideration for the nine months
ended September 30, 2015 was $0.7 million, or a $0.02 impact on
diluted earnings per share. The effective tax rates for the
adjustments related to the remeasurement of acquisition-related
contingent consideration for the nine months ended September 30,
2014 was 36.5%. The tax expense related to the remeasurement of
acquisition-related contingent consideration for the nine months
ended September 30, 2014 was $0.9 million, or a $0.02 impact on
diluted earnings per share. There were no adjustments related to
the remeasurement of acquisition-related contingent consideration
for the three months ended September 30, 2015 and 2014. |
|
(3) 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 loss
on early extinguishment of debt for the three and nine months ended
September 30, 2015 was 39.3%. The tax expense related to the loss
on early extinguishment of debt for the three and nine months ended
September 30, 2015 was $7.7 million, or a $0.18 impact on diluted
earnings per share. During the three and nine months ended,
September 30, 2014, there was no loss on early extinguishment of
debt. |
|
RECONCILIATION OF NET INCOME AND OPERATING
INCOME TO ADJUSTED EBITDA |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
2015 |
|
Corporate Finance / Restructuring |
|
Forensic and Litigation
Consulting |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Corp HQ |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,309 |
|
|
|
|
Interest
income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,027 |
) |
|
|
|
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,696 |
|
|
|
|
Loss on
extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,589 |
|
|
|
|
Income tax
provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,177 |
|
|
|
Operating
income |
|
|
|
$ |
25,112 |
|
|
$ |
11,944 |
|
|
$ |
15,498 |
|
|
$ |
6,830 |
|
|
$ |
7,235 |
|
|
$ |
(20,875 |
) |
|
$ |
45,744 |
|
|
|
|
Depreciation and amortization |
|
|
677 |
|
|
|
925 |
|
|
|
848 |
|
|
|
3,784 |
|
|
|
499 |
|
|
|
725 |
|
|
|
7,458 |
|
|
|
|
Amortization of other intangible assets |
|
873 |
|
|
|
537 |
|
|
|
308 |
|
|
|
199 |
|
|
|
983 |
|
|
|
- |
|
|
|
2,900 |
|
|
|
Adjusted
EBITDA |
|
|
|
$ |
26,662 |
|
|
$ |
13,406 |
|
|
$ |
16,654 |
|
|
$ |
10,813 |
|
|
$ |
8,717 |
|
|
$ |
(20,150 |
) |
|
$ |
56,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
55,704 |
|
|
|
|
Interest
income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,840 |
) |
|
|
|
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,537 |
|
|
|
|
Loss on
extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,589 |
|
|
|
|
Income tax
provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,756 |
|
|
|
Operating income |
|
|
|
$ |
67,782 |
|
|
$ |
50,894 |
|
|
$ |
40,076 |
|
|
$ |
21,493 |
|
|
$ |
15,558 |
|
|
$ |
(55,057 |
) |
|
$ |
140,746 |
|
|
|
|
Depreciation and amortization |
|
|
2,141 |
|
|
|
2,862 |
|
|
|
2,686 |
|
|
|
10,969 |
|
|
|
1,579 |
|
|
|
2,332 |
|
|
|
22,569 |
|
|
|
|
Amortization of other
intangible assets |
|
|
|
|
2,742 |
|
|
|
1,700 |
|
|
|
924 |
|
|
|
590 |
|
|
|
2,963 |
|
|
|
- |
|
|
|
8,919 |
|
|
|
|
Remeasurement of acquisition-related contingent consideration |
|
(1,491 |
) |
|
|
- |
|
|
|
(184 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,675 |
) |
|
|
Adjusted
EBITDA |
|
|
|
$ |
71,174 |
|
|
$ |
55,456 |
|
|
$ |
43,502 |
|
|
$ |
33,052 |
|
|
$ |
20,100 |
|
|
$ |
(52,725 |
) |
|
$ |
170,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
2014 |
|
|
|
|
Corporate Finance / Restructuring |
|
Forensic and Litigation
Consulting |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Corp HQ |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
22,522 |
|
|
|
|
Interest
income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,014 |
) |
|
|
|
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,634 |
|
|
|
|
Income tax
provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,329 |
|
|
|
Operating
income |
|
|
|
$ |
13,406 |
|
|
$ |
20,276 |
|
|
$ |
17,245 |
|
|
$ |
13,741 |
|
|
$ |
4,875 |
|
|
$ |
(23,072 |
) |
|
$ |
46,471 |
|
|
|
|
Depreciation and amortization |
|
|
869 |
|
|
|
1,023 |
|
|
|
934 |
|
|
|
3,857 |
|
|
|
610 |
|
|
|
886 |
|
|
|
8,179 |
|
|
|
|
Amortization of other intangible assets |
|
1,175 |
|
|
|
653 |
|
|
|
235 |
|
|
|
218 |
|
|
|
1,117 |
|
|
|
- |
|
|
|
3,398 |
|
|
|
|
Special
charges |
|
|
|
84 |
|
|
|
308 |
|
|
|
12 |
|
|
|
19 |
|
|
|
3 |
|
|
|
4,921 |
|
|
|
5,347 |
|
|
|
Adjusted
EBITDA |
|
|
|
$ |
15,534 |
|
|
$ |
22,260 |
|
|
$ |
18,426 |
|
|
$ |
17,835 |
|
|
$ |
6,605 |
|
|
$ |
(17,265 |
) |
|
$ |
63,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
57,886 |
|
|
|
|
Interest
income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,465 |
) |
|
|
|
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,197 |
|
|
|
|
Income tax
provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,902 |
|
|
|
Operating
income |
|
|
|
$ |
39,081 |
|
|
$ |
66,517 |
|
|
$ |
46,515 |
|
|
$ |
37,712 |
|
|
$ |
9,910 |
|
|
$ |
(74,215 |
) |
|
$ |
125,520 |
|
|
|
|
Depreciation and amortization |
|
|
2,514 |
|
|
|
3,057 |
|
|
|
2,996 |
|
|
|
11,902 |
|
|
|
1,884 |
|
|
|
2,827 |
|
|
|
25,180 |
|
|
|
|
Amortization of other
intangible assets |
|
|
|
|
4,601 |
|
|
|
2,077 |
|
|
|
763 |
|
|
|
654 |
|
|
|
3,371 |
|
|
|
- |
|
|
|
11,466 |
|
|
|
|
Special
charges |
|
|
|
84 |
|
|
|
308 |
|
|
|
12 |
|
|
|
19 |
|
|
|
3 |
|
|
|
14,285 |
|
|
|
14,711 |
|
|
|
|
Remeasurement of acquisition-related contingent consideration |
|
(662 |
) |
|
|
(934 |
) |
|
|
(787 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,383 |
) |
|
|
Adjusted
EBITDA |
|
|
|
$ |
45,618 |
|
|
$ |
71,025 |
|
|
$ |
49,499 |
|
|
$ |
50,287 |
|
|
$ |
15,168 |
|
|
$ |
(57,103 |
) |
|
$ |
174,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
FOR THE Nine MONTHS ENDED September 30, 2015
AND 2014 |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
Nine Months Ended |
|
|
September 30, |
|
|
|
2015 |
|
|
|
2014 |
|
|
Operating
activities |
|
|
|
|
Net income |
$ |
55,704 |
|
|
$ |
57,886 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
Depreciation and amortization |
|
22,569 |
|
|
|
26,318 |
|
|
Amortization of other intangible
assets |
|
8,919 |
|
|
|
11,466 |
|
|
Selling, general and administrative
expenses |
|
(1,145 |
) |
|
|
(1,591 |
) |
|
Provision for doubtful
accounts |
|
10,364 |
|
|
|
11,896 |
|
|
Non-cash share-based
compensation |
|
14,356 |
|
|
|
18,930 |
|
|
Non-cash interest expense |
|
2,029 |
|
|
|
2,020 |
|
|
Loss on early extinguishment of
debt |
|
19,589 |
|
|
|
- |
|
|
Other |
|
(674 |
) |
|
|
(358 |
) |
|
Changes in operating assets and
liabilities, net of effects from acquisitions: |
|
|
|
|
Accounts receivable, billed and
unbilled |
|
(84,411 |
) |
|
|
(107,847 |
) |
|
Notes receivable |
|
(334 |
) |
|
|
(18,266 |
) |
|
Prepaid expenses and other
assets |
|
(4,396 |
) |
|
|
7,099 |
|
|
Accounts payable, accrued expenses
and other |
|
10,158 |
|
|
|
10,538 |
|
|
Income taxes |
|
15,371 |
|
|
|
8,315 |
|
|
Accrued compensation |
|
(19,518 |
) |
|
|
(16,958 |
) |
|
Billings in excess of services
provided |
|
(5,278 |
) |
|
|
11,031 |
|
|
Net cash provided by
operating activities |
|
43,303 |
|
|
|
20,479 |
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
Payments for acquisition of
businesses, net of cash received |
|
(575 |
) |
|
|
(15,684 |
) |
|
Purchases of property and
equipment |
|
(24,674 |
) |
|
|
(31,797 |
) |
|
Other |
|
94 |
|
|
|
69 |
|
|
Net cash used in investing activities |
|
(25,155 |
) |
|
|
(47,412 |
) |
|
|
|
|
|
|
Financing
activities |
|
|
|
|
Borrowings under revolving line of
credit, net |
|
220,000 |
|
|
|
- |
|
|
Payments of long-term debt |
|
(425,671 |
) |
|
|
(6,014 |
) |
|
Payments of debt financing
fees |
|
(3,701 |
) |
|
|
- |
|
|
Purchase and retirement of common
stock |
|
- |
|
|
|
(4,367 |
) |
|
Net issuance of common stock under
equity compensation plans |
|
13,931 |
|
|
|
(29 |
) |
|
Deposits |
|
2,406 |
|
|
|
12,956 |
|
|
Other |
|
124 |
|
|
|
(1,036 |
) |
|
Net cash (used in) provided
by financing activities |
|
(192,911 |
) |
|
|
1,510 |
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(3,943 |
) |
|
|
(1,632 |
) |
|
|
|
|
|
|
Net decrease in cash
and cash equivalents |
|
(178,706 |
) |
|
|
(27,055 |
) |
|
Cash and cash
equivalents, beginning of period |
|
283,680 |
|
|
|
205,833 |
|
|
Cash and cash
equivalents, end of period |
$ |
104,974 |
|
|
$ |
178,778 |
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
AT September 30, 2015 AND DECEMBER 31,
2014 |
|
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
|
Assets |
(unaudited) |
|
|
|
Current
assets |
|
|
|
|
Cash and cash equivalents |
$ |
104,974 |
|
|
$ |
283,680 |
|
|
Accounts receivable: |
|
|
|
|
Billed receivables |
|
426,947 |
|
|
|
381,464 |
|
|
Unbilled receivables |
|
310,778 |
|
|
|
248,462 |
|
|
Allowance for doubtful accounts and
unbilled services |
|
(183,325 |
) |
|
|
(144,825 |
) |
|
Selling, general and
administrative expenses |
|
554,400 |
|
|
|
485,101 |
|
|
Current portion of notes
receivable |
|
35,097 |
|
|
|
27,208 |
|
|
Prepaid expenses and other current
assets |
|
55,166 |
|
|
|
60,852 |
|
|
Current portion of deferred tax
assets |
|
38,842 |
|
|
|
27,332 |
|
|
Total current assets |
|
788,479 |
|
|
|
884,173 |
|
|
Property and equipment,
net of accumulated depreciation |
|
77,716 |
|
|
|
82,163 |
|
|
Goodwill |
|
1,199,490 |
|
|
|
1,211,689 |
|
|
Other intangible
assets, net of amortization |
|
67,252 |
|
|
|
77,034 |
|
|
Notes receivable, net
of current portion |
|
112,711 |
|
|
|
122,149 |
|
|
Other assets |
|
48,364 |
|
|
|
53,319 |
|
|
Total assets |
$ |
2,294,012 |
|
|
$ |
2,430,527 |
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts payable, accrued expenses
and other |
$ |
101,464 |
|
|
$ |
99,494 |
|
|
Accrued compensation |
|
203,492 |
|
|
|
220,959 |
|
|
Current portion of long-term
debt |
|
- |
|
|
|
11,000 |
|
|
Billings in excess of services
provided |
|
29,554 |
|
|
|
35,639 |
|
|
Total current liabilities |
|
334,510 |
|
|
|
367,092 |
|
|
Long-term debt, net of
current portion |
|
520,000 |
|
|
|
700,000 |
|
|
Deferred income
taxes |
|
178,180 |
|
|
|
161,932 |
|
|
Other liabilities |
|
98,919 |
|
|
|
98,757 |
|
|
Total
liabilities |
|
1,131,609 |
|
|
|
1,327,781 |
|
|
|
|
|
|
|
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 ―
41,887 (2015) and 41,181 (2014) |
|
419 |
|
|
|
412 |
|
|
Additional paid-in capital |
|
421,532 |
|
|
|
393,174 |
|
|
Retained earnings |
|
845,132 |
|
|
|
789,428 |
|
|
Accumulated other comprehensive
loss |
|
(104,680 |
) |
|
|
(80,268 |
) |
|
Total stockholders'
equity |
|
1,162,403 |
|
|
|
1,102,746 |
|
|
Total liabilities and
stockholders' equity |
$ |
2,294,012 |
|
|
$ |
2,430,527 |
|
|
|
|
|
|
|
Investor Contact:
Abaigeal Healy
+1.617.747.1727
abaigeal.healy@fticonsulting.com
Media Contact:
Nicole Madison
+1.212.850.5647
nicole.madison@fticonsulting.com
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