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 June 30, 2016.
For the quarter, revenues increased 2.5 percent to $460.1
million compared to $449.1 million in the prior year quarter.
Excluding the estimated negative impact of foreign currency
translation (“FX”), revenues increased 3.7 percent compared to the
prior year quarter. Net income increased 22.3 percent to $26.5
million compared to $21.7 million in the prior year quarter. Fully
diluted earnings per share (“EPS”) were $0.64 compared to $0.52 in
the prior year quarter. Second quarter 2016 EPS included a special
charge of $1.7 million related to headcount reductions in the
health solutions practice within the Forensic and Litigation
Consulting segment, which reduced EPS by $0.02, and a $3.0 million
FX revaluation gain, which benefitted EPS by $0.05. EPS in the
prior year quarter included a reduction of contingent consideration
liabilities, which increased EPS by $0.02. Adjusted EPS and
Adjusted EBITDA, which exclude the contingent consideration gain
and special charges, were $0.66 and $56.6 million, respectively,
compared to $0.50 and $55.8 million, respectively, in the prior
year quarter. Adjusted EBITDA was 12.3 percent of revenues compared
to 12.4 percent of revenues in the prior year quarter.
Adjusted EPS and Adjusted 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, “I am pleased to
announce that we had another strong quarter. Together with our
exceptional first quarter, these two quarters constitute the best
first half ever in the history of the Company from a revenue, EPS
and Adjusted EPS basis.”
Mr. Gunby added, “Our goal by the end of 2016 is to have each of
our businesses in the position where we are confident that they are
real engines for growth, on multi-year basis. I believe we are on
track to achieving this goal, which gives us a lot of optimism
about where the Company can continue to go over the next
years.”
Cash Position Net cash generated by operating
activities for the quarter was $73.7 million compared to net cash
generated by operating activities of $20.6 million in the prior
year quarter. Cash and cash equivalents were $182.7 million at June
30, 2016 compared to $240.0 million at June 30, 2015.
Second Quarter Segment Results
Corporate Finance & Restructuring Revenues
in the Corporate Finance & Restructuring segment increased
$23.0 million, or 21.1 percent to $132.1 million in the quarter,
compared to $109.1 million in the prior year quarter. Excluding the
estimated negative impact of FX, revenues increased $24.5 million,
or 22.5 percent compared to the prior year quarter. The increase in
revenues was driven primarily by higher demand for distressed
services in North America and higher demand across all service
offerings in the Europe, Middle East and Africa (“EMEA”) region.
Adjusted Segment EBITDA was $32.0 million, or 24.2 percent of
segment revenues, compared to $22.0 million, or 20.2 percent of
segment revenues in the prior year quarter. The increase in
Adjusted Segment EBITDA margin was driven by higher realized rates
and improved utilization in EMEA, which was partially offset by
lower utilization in non-distressed services in North America.
Forensic and Litigation ConsultingRevenues in
the Forensic and Litigation Consulting segment decreased $7.9
million, or 6.3 percent to $118.2 million in the quarter, compared
to $126.1 million in the prior year quarter. Excluding the
estimated negative impact of FX, revenues decreased $6.7 million,
or 5.3 percent compared to the prior year quarter. The decrease in
revenues was driven by lower demand and success fees in the
segment’s health solutions practice, which was partially offset by
increased demand in the global risk and investigations practice
(“GRIP”). Adjusted Segment EBITDA was $15.2 million, or 12.9
percent of segment revenues, compared to $20.0 million, or 15.8
percent of segment revenues in the prior year quarter. The decrease
in Adjusted Segment EBITDA margin was due to lower utilization and
success fees in the segment’s health solutions practice, which was
partially offset by higher average realization in GRIP and lower
selling, general and administrative (“SG&A”) expenses.
Economic ConsultingRevenues in the Economic
Consulting segment increased $9.3 million, or 8.6 percent to $118.0
million in the quarter, compared to $108.7 million in the prior
year quarter. Excluding the estimated negative impact of FX,
revenues increased $10.4 million, or 9.6 percent compared to the
prior year quarter. The increase in revenues was driven by higher
demand for the segment’s financial economics services in North
America and non-merger and acquisition (“M&A”)-related
antitrust and intellectual property services in North America and
EMEA. Adjusted Segment EBITDA was $15.4 million, or 13.0 percent of
segment revenues, compared to $15.3 million, or 14.1 percent of
segment revenues in the prior year quarter. The decrease in
Adjusted Segment EBITDA margin was due to higher bad debt expense
and overhead support costs.
TechnologyRevenues in the Technology segment
decreased $19.9 million, or 32.3 percent to $41.9 million in the
quarter, compared to $61.8 million in the prior year quarter. The
decrease in revenues was driven by declines in M&A-related
“second request” activity and reduced demand for cross-border
investigations. Adjusted Segment EBITDA was $5.0 million, or 12.0
percent of segment revenues, compared to $12.2 million, or 19.7
percent of segment revenues in the prior year quarter. The decrease
in Adjusted Segment EBITDA margin was due to lower demand for
managed review services, lower realized pricing for consulting
services based on the mix of clients and higher SG&A, including
increased research and development investment, as a percentage of
revenues.
Strategic CommunicationsRevenues in the
Strategic Communications segment increased $6.6 million, or 15.1
percent to $49.9 million in the quarter, compared to $43.4 million
in the prior year quarter. Excluding the estimated negative impact
of FX, revenues increased $7.6 million, or 17.6 percent compared to
the prior year quarter. The increase in revenue was primarily
driven by higher project-based revenues from public affairs and
financial communications engagements in North America and EMEA.
Adjusted Segment EBITDA was $8.4 million, or 16.9 percent of
segment revenues, compared to $5.6 million, or 13.0 percent of
segment revenues in the prior year quarter. The increase in
Adjusted Segment EBITDA margin was due to the mix of higher margin
large project engagements, improved utilization across North
America and lower SG&A expenses as a percent of revenues.
Updated 2016 Guidance The Company now estimates
that revenues for 2016 will be between $1.80 billion and $1.87
billion. The Company reaffirmed its 2016 guidance for Adjusted EPS
of between $2.15 and $2.45.
Second Quarter 2016 Conference CallFTI
Consulting will host a conference call for analysts and investors
to discuss second quarter 2016 financial results at 9:00 a.m.
Eastern Time on July 28, 2016. The call can be accessed live and
will be available for replay over the Internet for 90 days on the
Company's website at www.fticonsulting.com.
About FTI ConsultingFTI 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 4,600
employees located in 28 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 $1.78 billion in revenues during fiscal year 2015. More
information can be found at www.fticonsulting.com.
Use of Certain GAAP and Non-GAAP MeasuresWe
have included the definitions of Segment Operating Income (Loss),
Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin, GAAP
measures, below in order to more fully define the components of the
certain non-GAAP 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) 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 define Adjusted
Segment EBITDA Margin as Adjusted Segment EBITDA as a percentage of
a segment’s revenues. 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 define, non-GAAP measures, Total Adjusted Segment EBITDA as
the total of Adjusted Segment EBITDA for all segments, which
excludes unallocated corporate expenses and 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 believe that our
non-GAAP financial measures, 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, 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. They are
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.
The financial tables accompanying this press release do not
include a reconciliation of the Company’s 2016 Adjusted EPS
guidance to an estimate of GAAP EPS. It is difficult to predict and
estimate future remeasurement of acquisition-related contingent
consideration, special charges, goodwill impairment charges and/or
losses on early extinguishment of debt, as these items are
dependent on future events that are uncertain. Accordingly, a
reconciliation of our non-GAAP financial measure guidance to the
corresponding GAAP measure is not available without unreasonable
effort.
Safe Harbor StatementThis 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 located or where services are performed, adverse
financial, real estate or other market and general economic
conditions, which could impact each of our segments differently,
the pace and timing of the consummation and integration of past and
future acquisitions, the Company's ability to realize cost savings
and efficiencies, competitive and general economic conditions,
retention of staff and clients and other risks described under the
heading "Item 1A Risk Factors" in the Company's most recent Form
10-K 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. |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME |
|
(in thousands, except per share
data) |
|
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Revenues |
$ |
460,147 |
|
|
$ |
449,137 |
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Direct cost of revenues |
|
303,194 |
|
|
|
291,469 |
|
|
Selling, general and administrative
expenses |
|
108,245 |
|
|
|
109,045 |
|
|
Special charges |
|
1,750 |
|
|
|
- |
|
|
Acquisition-related contingent
consideration |
|
206 |
|
|
|
(1,538 |
) |
|
Amortization of other intangible
assets |
|
2,590 |
|
|
|
3,007 |
|
|
|
|
415,985 |
|
|
|
401,983 |
|
|
|
|
|
|
|
Operating
income |
|
44,162 |
|
|
|
47,154 |
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
Interest income and other |
|
4,125 |
|
|
|
950 |
|
|
Interest expense |
|
(6,303 |
) |
|
|
(12,473 |
) |
|
|
|
(2,178 |
) |
|
|
(11,523 |
) |
|
|
|
|
|
|
Income before
income tax provision |
|
41,984 |
|
|
|
35,631 |
|
|
|
|
|
|
|
Income tax
provision |
|
15,437 |
|
|
|
13,922 |
|
|
|
|
|
|
|
Net
income |
$ |
26,547 |
|
|
$ |
21,709 |
|
|
|
|
|
|
|
Earnings per
common share - basic |
$ |
0.65 |
|
|
$ |
0.53 |
|
|
Weighted
average common shares outstanding - basic |
|
40,820 |
|
|
|
40,792 |
|
|
|
|
|
|
|
Earnings per
common share - diluted |
$ |
0.64 |
|
|
$ |
0.52 |
|
|
Weighted
average common shares outstanding - diluted |
|
41,599 |
|
|
|
41,696 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss) income, net of tax: |
|
|
|
|
Foreign currency translation
adjustments, net of tax $0 |
$ |
(18,809 |
) |
|
$ |
13,298 |
|
|
Total other
comprehensive (loss) income, net of tax |
|
(18,809 |
) |
|
|
13,298 |
|
|
Comprehensive
income |
$ |
7,738 |
|
|
$ |
35,007 |
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME |
|
(in thousands, except per share
data) |
|
(unaudited) |
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Revenues |
$ |
930,432 |
|
|
$ |
881,475 |
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Direct cost of revenues |
|
608,830 |
|
|
|
570,499 |
|
|
Selling, general and administrative
expenses |
|
211,854 |
|
|
|
211,259 |
|
|
Special charges |
|
6,811 |
|
|
|
- |
|
|
Acquisition-related contingent
consideration |
|
1,340 |
|
|
|
(1,304 |
) |
|
Amortization of other intangible
assets |
|
5,196 |
|
|
|
6,019 |
|
|
|
|
834,031 |
|
|
|
786,473 |
|
|
|
|
|
|
|
Operating
income |
|
96,401 |
|
|
|
95,002 |
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
Interest income and other |
|
6,682 |
|
|
|
813 |
|
|
Interest expense |
|
(12,532 |
) |
|
|
(24,841 |
) |
|
|
|
(5,850 |
) |
|
|
(24,028 |
) |
|
|
|
|
|
|
Income before
income tax provision |
|
90,551 |
|
|
|
70,974 |
|
|
|
|
|
|
|
Income tax
provision |
|
33,823 |
|
|
|
25,579 |
|
|
|
|
|
|
|
Net
income |
$ |
56,728 |
|
|
$ |
45,395 |
|
|
|
|
|
|
|
Earnings per
common share - basic |
$ |
1.40 |
|
|
$ |
1.12 |
|
|
Weighted
average common shares outstanding - basic |
|
40,663 |
|
|
|
40,607 |
|
|
|
|
|
|
|
Earnings per
common share - diluted |
$ |
1.37 |
|
|
$ |
1.09 |
|
|
Weighted
average common shares outstanding - diluted |
|
41,373 |
|
|
|
41,529 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss, net of tax: |
|
|
|
|
Foreign currency translation
adjustments, net of tax $0 |
$ |
(19,167 |
) |
|
$ |
(7,184 |
) |
|
Total other
comprehensive loss, net of tax |
|
(19,167 |
) |
|
|
(7,184 |
) |
|
Comprehensive
income |
$ |
37,561 |
|
|
$ |
38,211 |
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES |
|
(in thousands, except per share
data) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
26,547 |
|
|
$ |
21,709 |
|
|
$ |
56,728 |
|
|
$ |
45,395 |
|
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
Special charges, net of tax
(1) |
|
|
1,059 |
|
|
|
- |
|
|
|
4,328 |
|
|
|
- |
|
|
|
Remeasurement of
acquisition-related contingent consideration, net of
tax (2) |
|
|
- |
|
|
|
(1,005 |
) |
|
|
600 |
|
|
|
(1,005 |
) |
|
|
Adjusted Net
Income |
|
$ |
27,606 |
|
|
$ |
20,704 |
|
|
$ |
61,656 |
|
|
$ |
44,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share – diluted |
|
$ |
0.64 |
|
|
$ |
0.52 |
|
|
$ |
1.37 |
|
|
$ |
1.09 |
|
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
Special charges, net of tax
(1) |
|
|
0.02 |
|
|
|
- |
|
|
|
0.10 |
|
|
|
- |
|
|
|
Remeasurement of
acquisition-related contingent consideration, net of
tax (2) |
|
|
- |
|
|
|
(0.02 |
) |
|
|
0.02 |
|
|
|
(0.02 |
) |
|
|
Adjusted
earnings per common share– diluted |
|
$ |
0.66 |
|
|
$ |
0.50 |
|
|
$ |
1.49 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding – diluted |
|
|
41,599 |
|
|
|
41,696 |
|
|
|
41,373 |
|
|
|
41,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The tax effect takes into account the tax treatment
and related tax rates that apply to each adjustment in the
applicable tax jurisdiction. As a result, the effective tax rates
for the adjustments related to special charges for the three and
six months ended June 30, 2016 were 39.5% and 36.5%, respectively.
The tax expense related to the adjustments for special charges for
the three and six months ended June 30, 2016 was $0.7 million, or
$0.02 impact on Adjusted EPS, and $2.5 million, or $0.06 impact on
Adjusted EPS, respectively. There were no special charges for the
comparable period in 2015. |
|
|
|
|
|
|
|
|
(2) The tax effect takes into account the tax treatment
and related tax rates that apply to each adjustment in the
applicable tax jurisdiction. As a result, the effective tax rate
for the adjustments related to the remeasurement of
acquisition-related contingent consideration for the six months
ended June 30, 2016 was 38.8%. The tax expense related to the
adjustment for the remeasurement of acquisition-related contingent
consideration for the six months ended June 30, 2016 was $0.4
million or $0.01 impact on Adjusted EPS. The effective tax rate for
the adjustments related to the remeasurement of acquisition-related
contingent consideration for the three and six months ended June
30, 2015 was 40.0%. The tax expense related to the
remeasurement of acquisition-related contingent consideration for
the three and six months ended June 30, 2015 was $0.7 million, or a
$0.02 impact on Adjusted EPS. There were no adjustments related to
the remeasurement of acquisition-related contingent consideration
in the three months ended June 30, 2016. |
|
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
OPERATING RESULTS BY BUSINESS
SEGMENT |
|
(unaudited) |
|
|
|
|
|
|
|
|
Adjusted |
|
|
|
Average |
|
Revenue- |
|
|
|
Segment |
|
|
Adjusted |
|
EBITDA |
|
|
|
Billable |
|
Generating |
|
|
|
Revenues |
|
|
EBITDA |
|
Margin |
|
Utilization |
|
Rate |
|
Headcount |
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
(at period end) |
|
Three Months Ended June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance & Restructuring |
|
$ |
109,113 |
|
|
|
$ |
22,032 |
|
|
|
20.2 |
% |
|
|
70 |
% |
|
$ |
394 |
|
|
775 |
|
Forensic and Litigation Consulting |
|
|
126,131 |
|
|
|
|
19,979 |
|
|
|
15.8 |
% |
|
|
66 |
% |
|
$ |
318 |
|
|
1,169 |
|
Economic Consulting |
|
|
108,698 |
|
|
|
|
15,292 |
|
|
|
14.1 |
% |
|
|
71 |
% |
|
$ |
530 |
|
|
554 |
|
Technology (1) |
|
|
61,826 |
|
|
|
|
12,166 |
|
|
|
19.7 |
% |
|
N/M |
|
N/M |
|
364 |
|
Strategic Communications (1) |
|
|
43,369 |
|
|
|
|
5,631 |
|
|
|
13.0 |
% |
|
N/M |
|
N/M |
|
551 |
|
|
|
$ |
449,137 |
|
|
|
|
75,100 |
|
|
|
16.7 |
% |
|
|
|
|
|
3,413 |
|
Unallocated Corporate |
|
|
|
|
|
(19,311 |
) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
$ |
55,789 |
|
|
|
12.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance & Restructuring |
|
$ |
215,325 |
|
|
|
$ |
44,512 |
|
|
|
20.7 |
% |
|
|
72 |
% |
|
$ |
384 |
|
|
775 |
|
Forensic and Litigation Consulting |
|
|
249,396 |
|
|
|
|
42,050 |
|
|
|
16.9 |
% |
|
|
67 |
% |
|
$ |
318 |
|
|
1,169 |
|
Economic Consulting |
|
|
214,779 |
|
|
|
|
26,848 |
|
|
|
12.5 |
% |
|
|
72 |
% |
|
$ |
515 |
|
|
554 |
|
Technology (1) |
|
|
116,480 |
|
|
|
|
22,239 |
|
|
|
19.1 |
% |
|
N/M |
|
N/M |
|
364 |
|
Strategic Communications (1) |
|
|
85,495 |
|
|
|
|
11,383 |
|
|
|
13.3 |
% |
|
N/M |
|
N/M |
|
551 |
|
|
|
$ |
881,475 |
|
|
|
|
147,032 |
|
|
|
16.7 |
% |
|
|
|
|
|
3,413 |
|
Unallocated Corporate |
|
|
|
|
|
(32,575 |
) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
$ |
114,457 |
|
|
|
13.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 AND OPERATING
INCOME TO ADJUSTED EBITDA |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016 |
Corporate Finance &
Restructuring |
|
Forensic and Litigation
Consulting |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Corp HQ |
|
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 |
Corporate Finance &
Restructuring |
|
Forensic and Litigation
Consulting |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Corp HQ |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2015 |
Corporate Finance &
Restructuring |
|
Forensic and Litigation
Consulting |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Corp HQ |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
21,709 |
|
|
|
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(950 |
) |
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
12,473 |
|
|
|
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
13,922 |
|
|
|
Operating
income |
$ |
21,906 |
|
|
$ |
18,476 |
|
|
$ |
14,282 |
|
|
$ |
8,465 |
|
|
$ |
4,126 |
|
|
$ |
(20,101 |
) |
|
$ |
47,154 |
|
|
|
|
Depreciation and amortization |
|
682 |
|
|
|
922 |
|
|
|
886 |
|
|
|
3,508 |
|
|
|
515 |
|
|
|
790 |
|
|
|
7,303 |
|
|
|
|
Amortization of other intangible
assets |
|
935 |
|
|
|
581 |
|
|
|
308 |
|
|
|
193 |
|
|
|
990 |
|
|
|
- |
|
|
|
3,007 |
|
|
|
|
Remeasurement of
acquisition-related contingent consideration |
|
(1,491 |
) |
|
|
- |
|
|
|
(184 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,675 |
) |
|
|
Adjusted
EBITDA |
$ |
22,032 |
|
|
$ |
19,979 |
|
|
$ |
15,292 |
|
|
$ |
12,166 |
|
|
$ |
5,631 |
|
|
$ |
(19,311 |
) |
|
$ |
55,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2015 |
Corporate Finance &
Restructuring |
|
Forensic and Litigation
Consulting |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Corp HQ |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
45,395 |
|
|
|
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(813 |
) |
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
24,841 |
|
|
|
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
25,579 |
|
|
|
Operating
income |
$ |
42,670 |
|
|
$ |
38,950 |
|
|
$ |
24,578 |
|
|
$ |
14,663 |
|
|
$ |
8,323 |
|
|
$ |
(34,182 |
) |
|
$ |
95,002 |
|
|
|
|
Depreciation and amortization |
|
1,464 |
|
|
|
1,937 |
|
|
|
1,838 |
|
|
|
7,185 |
|
|
|
1,080 |
|
|
|
1,607 |
|
|
|
15,111 |
|
|
|
|
Amortization of other intangible
assets |
|
1,869 |
|
|
|
1,163 |
|
|
|
616 |
|
|
|
391 |
|
|
|
1,980 |
|
|
|
- |
|
|
|
6,019 |
|
|
|
|
Remeasurement of
acquisition-related contingent consideration |
|
(1,491 |
) |
|
|
- |
|
|
|
(184 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,675 |
) |
|
|
Adjusted
EBITDA |
$ |
44,512 |
|
|
$ |
42,050 |
|
|
$ |
26,848 |
|
|
$ |
22,239 |
|
|
$ |
11,383 |
|
|
$ |
(32,575 |
) |
|
$ |
114,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
Operating
activities |
|
|
|
|
Net income |
$ |
56,728 |
|
|
$ |
45,395 |
|
|
Adjustments to
reconcile net income to net cash used in operating activities: |
|
|
|
|
Depreciation and amortization |
|
16,049 |
|
|
|
15,111 |
|
|
Amortization of other intangible
assets |
|
5,196 |
|
|
|
6,019 |
|
|
Acquisition-related contingent
consideration |
|
1,340 |
|
|
|
(1,304 |
) |
|
Provision for doubtful
accounts |
|
4,344 |
|
|
|
6,571 |
|
|
Non-cash share-based
compensation |
|
9,667 |
|
|
|
10,581 |
|
|
Non-cash interest expense |
|
992 |
|
|
|
1,343 |
|
|
Other |
|
(639 |
) |
|
|
(223 |
) |
|
Changes in operating assets and
liabilities, net of effects from acquisitions: |
|
|
|
|
Accounts receivable, billed and
unbilled |
|
(57,501 |
) |
|
|
(70,710 |
) |
|
Notes receivable |
|
(4,640 |
) |
|
|
(6,626 |
) |
|
Prepaid expenses and other
assets |
|
(943 |
) |
|
|
(5,120 |
) |
|
Accounts payable, accrued expenses
and other |
|
1,932 |
|
|
|
(2,435 |
) |
|
Income taxes |
|
29,329 |
|
|
|
16,458 |
|
|
Accrued compensation |
|
(28,518 |
) |
|
|
(40,587 |
) |
|
Billings in excess of services
provided |
|
7,297 |
|
|
|
(5,204 |
) |
|
Net cash provided by (used
in) operating activities |
|
40,633 |
|
|
|
(30,731 |
) |
|
|
|
|
|
|
Investing
activities |
|
|
|
|
Payments for acquisition of
businesses, net of cash received |
|
(56 |
) |
|
|
(576 |
) |
|
Purchases of property and
equipment |
|
(11,983 |
) |
|
|
(17,533 |
) |
|
Other |
|
96 |
|
|
|
64 |
|
|
Net cash used in investing
activities |
|
(11,943 |
) |
|
|
(18,045 |
) |
|
|
|
|
|
|
Financing
activities |
|
|
|
|
Payments of debt issue costs |
|
- |
|
|
|
(3,090 |
) |
|
Deposits |
|
2,557 |
|
|
|
2,423 |
|
|
Purchase and retirement of common
stock |
|
(2,903 |
) |
|
|
- |
|
|
Net issuance of common stock under
equity compensation plans |
|
9,353 |
|
|
|
8,662 |
|
|
Other |
|
(154 |
) |
|
|
(326 |
) |
|
Net cash provided by
financing activities |
|
8,853 |
|
|
|
7,669 |
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(4,638 |
) |
|
|
(2,585 |
) |
|
|
|
|
|
|
Net increase (decrease)
in cash and cash equivalents |
|
32,905 |
|
|
|
(43,692 |
) |
|
Cash and cash
equivalents, beginning of period |
|
149,760 |
|
|
|
283,680 |
|
|
Cash and cash
equivalents, end of period |
$ |
182,665 |
|
|
$ |
239,988 |
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(in thousands, except per share
amounts) (unaudited) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash equivalents |
$ |
182,665 |
|
|
$ |
149,760 |
|
|
Accounts receivable: |
|
|
|
|
Billed receivables |
|
415,750 |
|
|
|
405,000 |
|
|
Unbilled receivables |
|
330,730 |
|
|
|
280,538 |
|
|
Allowance for doubtful accounts and
unbilled services |
|
(199,182 |
) |
|
|
(185,754 |
) |
|
Accounts receivable, net |
|
547,298 |
|
|
|
499,784 |
|
|
Current portion of notes
receivable |
|
34,418 |
|
|
|
36,115 |
|
|
Prepaid expenses and other current
assets |
|
47,361 |
|
|
|
55,966 |
|
|
Total current assets |
|
811,742 |
|
|
|
741,625 |
|
|
Property and equipment,
net of accumulated depreciation |
|
68,764 |
|
|
|
74,760 |
|
|
Goodwill |
|
1,189,602 |
|
|
|
1,198,298 |
|
|
Other intangible
assets, net of amortization |
|
57,568 |
|
|
|
63,935 |
|
|
Notes receivable, net
of current portion |
|
112,095 |
|
|
|
106,882 |
|
|
Other assets |
|
47,693 |
|
|
|
43,518 |
|
|
Total assets |
$ |
2,287,464 |
|
|
$ |
2,229,018 |
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts payable, accrued expenses
and other |
$ |
94,782 |
|
|
$ |
89,845 |
|
|
Accrued compensation |
|
193,826 |
|
|
|
227,783 |
|
|
Billings in excess of services
provided |
|
36,434 |
|
|
|
29,449 |
|
|
Total current liabilities |
|
325,042 |
|
|
|
347,077 |
|
|
Long-term debt,
net |
|
495,150 |
|
|
|
494,772 |
|
|
Deferred income
taxes |
|
161,433 |
|
|
|
139,787 |
|
|
Other liabilities |
|
102,596 |
|
|
|
99,779 |
|
|
Total
liabilities |
|
1,084,221 |
|
|
|
1,081,415 |
|
|
|
|
|
|
|
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 ―
42,083 (2016) and 41,234 (2015) |
|
420 |
|
|
|
412 |
|
|
Additional paid-in capital |
|
418,776 |
|
|
|
400,705 |
|
|
Retained earnings |
|
912,209 |
|
|
|
855,481 |
|
|
Accumulated other comprehensive
loss |
|
(128,162 |
) |
|
|
(108,995 |
) |
|
Total stockholders'
equity |
|
1,203,243 |
|
|
|
1,147,603 |
|
|
Total liabilities and
stockholders' equity |
$ |
2,287,464 |
|
|
$ |
2,229,018 |
|
|
|
|
|
|
|
FTI Consulting, Inc.
1101 K Street NW
Washington, DC 20005
+1.202.312.9100
Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com
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