FTI Consulting, Inc. (NYSE:FCN) (the “Company”) today released its
financial results for the third quarter ended September 30, 2016.
For the quarter, revenues decreased 3.8 percent to $438.0
million compared to $455.5 million in the prior year quarter.
Excluding the estimated negative impact of foreign currency
translation (“FX”), revenues declined by 2.0 percent. Net income
increased 110.4 percent to $21.7 million compared to $10.3 million
in the prior year quarter. Adjusted EBITDA of $47.2 million, or
10.8 percent of revenues, declined from $56.1 million, or 12.3
percent of revenues, in the prior year quarter. Fully diluted
earnings per share (“EPS”) and Adjusted EPS were $0.52 compared to
EPS of $0.25 and Adjusted EPS of $0.53 in the prior year quarter.
EPS in the prior year quarter included a $19.6 million charge or a
$0.28 per share loss related to the early extinguishment of
debt.
Net cash provided by operating activities for the quarter was
$70.9 million compared to $74.0 million in the prior year quarter.
Cash and cash equivalents were $225.2 million at September 30,
2016, compared to $105.0 million at September 30, 2015. Total debt
was $475.0 million at September 30, 2016, down from $520.0 million
at September 30, 2015.
Commenting on these results, Steven H. Gunby, President and
Chief Executive Officer of FTI Consulting, said, “We are
pleased with the ongoing progress our businesses are making towards
becoming, on a multi-year basis, real engines for growth. During
the third quarter, our billable headcount grew 3.9 percent from the
second quarter of 2016 as we continue to attract the best
professionals across the globe and extend our offerings into new
adjacencies and geographies.”
Third Quarter Segment Results
Corporate Finance & Restructuring Revenues
in the Corporate Finance & Restructuring segment decreased $2.9
million, or 2.5 percent, to $110.6 million in the quarter compared
to $113.5 million in the prior year quarter. Excluding the
estimated negative impact of FX, revenues decreased $1.0 million,
or 0.9 percent, compared to the prior year quarter. Adjusted
Segment EBITDA was $17.8 million, or 16.1 percent of segment
revenues, compared to $26.7 million, or 23.5 percent of segment
revenues, in the prior year quarter. The decrease in Adjusted
Segment EBITDA Margin was primarily due to lower utilization and
higher costs related to the ramp up of experienced hires.
Forensic and Litigation ConsultingRevenues in
the Forensic and Litigation Consulting segment decreased $1.1
million, or 1.0 percent, to $115.0 million in the quarter compared
to $116.2 million in the prior year quarter. Excluding the
estimated negative impact of FX, revenues were comparable to the
prior year quarter. Higher success fees were offset by lower demand
in the segment’s health solutions practice. Adjusted Segment EBITDA
was $16.6 million, or 14.4 percent of segment revenues, compared to
$13.4 million, or 11.5 percent of segment revenues, in the prior
year quarter. The increase in Adjusted Segment EBITDA Margin was
driven by higher success fees in the segment’s health solutions
practice.
Economic ConsultingRevenues in the Economic
Consulting segment increased $7.9 million, or 6.9 percent, to
$122.5 million in the quarter compared to $114.5 million in the
prior year quarter. Excluding the estimated negative impact of FX,
revenues increased $10.8 million, or 9.4 percent, compared to the
prior year quarter. The increase in revenues was primarily due to
higher demand and higher average realization in non-merger and
acquisition (“M&A”)-related antitrust services in North
America, which were partially offset by lower average realization
for financial economics services in North America. Adjusted Segment
EBITDA was $18.4 million, or 15.0 percent of segment revenues,
compared to $16.7 million, or 14.5 percent of segment revenues, in
the prior year quarter. The increase in Adjusted Segment EBITDA
Margin was due to improved utilization in North America, which was
partially offset by lower utilization in Europe, the Middle East
and Africa (“EMEA”).
TechnologyRevenues in the Technology segment
decreased $11.5 million, or 20.7 percent, to $44.1 million in the
quarter compared to $55.6 million in the prior year quarter. The
decrease in revenues was driven by a decline in M&A-related
“second request” activity and reduced demand for litigation
services. Adjusted Segment EBITDA was $7.4 million, or 16.8 percent
of segment revenues, compared to $10.8 million, or 19.5 percent of
segment revenues, in the prior year quarter. The decrease in
Adjusted Segment EBITDA Margin was due to lower demand and realized
pricing for managed review services.
Strategic CommunicationsRevenues in the
Strategic Communications segment decreased $9.9 million, or 17.7
percent, to $45.8 million in the quarter compared to $55.7 million
in the prior year quarter. Excluding the estimated impact of FX,
revenues decreased $7.8 million, or 14.0 percent, compared to the
prior year quarter. The decrease in revenues was primarily due to
$8.5 million in lower pass-through revenues compared to the prior
year quarter. Adjusted Segment EBITDA was $7.5 million, or 16.4
percent of segment revenues, compared to $8.7 million, or 15.6
percent of segment revenues, in the prior year quarter. The
increase in Adjusted Segment EBITDA Margin was primarily due to the
impact of lower net pass-through revenue. Excluding this impact,
Adjusted Segment EBITDA Margin declined 2.3 percentage points due
to higher costs related to the ramp up of new hires.
2016 Guidance The Company revised its 2016
guidance for revenues to be approximately $1.80 billion. This
compares to the previous range of between $1.80 billion and $1.87
billion. The Company reaffirmed 2016 guidance for Adjusted EPS of
between $2.15 and $2.45.
Third Quarter 2016 Conference CallFTI
Consulting will host a conference call for analysts and investors
to discuss third quarter 2016 financial results at 9:00 a.m.
Eastern Time on October 27, 2016. 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 ConsultingFTI 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 29
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 $1.78
billion in revenues during fiscal year 2015. More information can
be found at www.fticonsulting.com.
Use of Non-GAAP MeasuresWe have included the
definitions of Segment Operating Income (Loss), Adjusted Segment
EBITDA and Adjusted Segment EBITDA Margin below in order to more
fully define the components of 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), 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 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 measure which reflects current core operating performance
and provides an indicator of the segment’s ability to generate
cash.
We define, non-GAAP measures, (i) Total Adjusted Segment EBITDA
as the total of Adjusted Segment EBITDA for all segments, which
excludes unallocated corporate expenses, and (ii) 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 financial 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 financial measures,
provide management and investors with additional supplemental
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”), non-GAAP financial measures, as Net Income
(Loss) and earnings per diluted share (“GAAP EPS”), 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 and GAAP financial
measures, 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 non-GAAP
financial measures to GAAP 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
headings "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 |
(in thousands, except per share
data) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
2016 |
|
2015 |
|
|
|
|
Revenues |
$ |
438,042 |
|
|
$ |
455,470 |
|
|
|
|
|
Operating
expenses |
|
|
|
Direct cost of revenues |
|
293,702 |
|
|
|
301,609 |
|
Selling, general and administrative
expenses |
|
106,220 |
|
|
|
105,058 |
|
Acquisition-related contingent
consideration |
|
201 |
|
|
|
159 |
|
Amortization of other intangible
assets |
|
2,845 |
|
|
|
2,900 |
|
|
|
402,968 |
|
|
|
409,726 |
|
|
|
|
|
Operating
income |
|
35,074 |
|
|
|
45,744 |
|
|
|
|
|
Other income
(expense) |
|
|
|
Interest income and other |
|
3,213 |
|
|
|
2,027 |
|
Interest expense |
|
(6,304 |
) |
|
|
(11,696 |
) |
Loss on early extinguishment of
debt |
|
- |
|
|
|
(19,589 |
) |
|
|
(3,091 |
) |
|
|
(29,258 |
) |
|
|
|
|
Income before
income tax provision |
|
31,983 |
|
|
|
16,486 |
|
|
|
|
|
Income tax
provision |
|
10,292 |
|
|
|
6,177 |
|
|
|
|
|
Net
income |
$ |
21,691 |
|
|
$ |
10,309 |
|
|
|
|
|
Earnings per
common share - basic |
$ |
0.53 |
|
|
$ |
0.25 |
|
Weighted
average common shares outstanding - basic |
|
41,239 |
|
|
|
41,094 |
|
|
|
|
|
Earnings per
common share - diluted |
$ |
0.52 |
|
|
$ |
0.25 |
|
Weighted
average common shares outstanding - diluted |
|
42,065 |
|
|
|
41,982 |
|
|
|
|
|
|
|
|
|
Other
comprehensive loss, net of tax: |
|
|
|
Foreign currency translation
adjustments, net of tax $0 |
$ |
(4,478 |
) |
|
$ |
(17,229 |
) |
Total other
comprehensive loss, net of tax |
|
(4,478 |
) |
|
|
(17,229 |
) |
Comprehensive
income (loss) |
$ |
17,213 |
|
|
$ |
(6,920 |
) |
|
FTI CONSULTING, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME |
(in thousands, except per share
data) |
(unaudited) |
|
|
|
|
|
Nine Months Ended |
|
September 30, |
|
2016 |
|
2015 |
|
|
|
|
Revenues |
$ |
1,368,474 |
|
|
$ |
1,336,945 |
|
|
|
|
|
Operating
expenses |
|
|
|
Direct cost of revenues |
|
902,532 |
|
|
|
872,108 |
|
Selling, general and administrative
expenses |
|
318,074 |
|
|
|
316,317 |
|
Special charges |
|
6,811 |
|
|
|
- |
|
Acquisition-related contingent
consideration |
|
1,541 |
|
|
|
(1,145 |
) |
Amortization of other intangible
assets |
|
8,041 |
|
|
|
8,919 |
|
|
|
1,236,999 |
|
|
|
1,196,199 |
|
|
|
|
|
Operating
income |
|
131,475 |
|
|
|
140,746 |
|
|
|
|
|
Other income
(expense) |
|
|
|
Interest income and other |
|
9,895 |
|
|
|
2,840 |
|
Interest expense |
|
(18,836 |
) |
|
|
(36,537 |
) |
Loss on extinguishment of debt |
|
- |
|
|
|
(19,589 |
) |
|
|
(8,941 |
) |
|
|
(53,286 |
) |
|
|
|
|
Income before
income tax provision |
|
122,534 |
|
|
|
87,460 |
|
|
|
|
|
Income tax
provision |
|
44,115 |
|
|
|
31,756 |
|
|
|
|
|
Net
income |
$ |
78,419 |
|
|
$ |
55,704 |
|
|
|
|
|
Earnings per
common share - basic |
$ |
1.92 |
|
|
$ |
1.37 |
|
Weighted
average common shares outstanding - basic |
|
40,856 |
|
|
|
40,771 |
|
|
|
|
|
Earnings per
common share - diluted |
$ |
1.88 |
|
|
$ |
1.34 |
|
Weighted
average common shares outstanding - diluted |
|
41,605 |
|
|
|
41,682 |
|
|
|
|
|
|
|
|
|
Other
comprehensive loss, net of tax: |
|
|
|
Foreign currency translation
adjustments, net of tax $0 |
$ |
(23,645 |
) |
|
$ |
(24,412 |
) |
Total other
comprehensive loss, net of tax |
|
(23,645 |
) |
|
|
(24,412 |
) |
Comprehensive
income |
$ |
54,774 |
|
|
$ |
31,292 |
|
|
FTI CONSULTING, INC. |
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES |
(in thousands, except per share
data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
Net
income |
|
$ |
21,691 |
|
|
$ |
10,309 |
|
|
$ |
78,419 |
|
|
$ |
55,704 |
|
Add back: |
|
|
|
|
|
|
|
|
Special charges, net of tax
(1) |
|
|
- |
|
|
|
- |
|
|
|
4,328 |
|
|
|
- |
|
Loss on extinguishment of debt, net
of tax (2) |
|
|
- |
|
|
|
11,881 |
|
|
|
- |
|
|
|
11,881 |
|
Remeasurement of
acquisition-related contingent consideration, net of tax
(3) |
|
|
- |
|
|
|
- |
|
|
|
600 |
|
|
|
(1,005 |
) |
Adjusted Net Income |
|
$ |
21,691 |
|
|
$ |
22,190 |
|
|
$ |
83,347 |
|
|
$ |
66,580 |
|
|
|
|
|
|
|
|
|
|
Earnings per
common share – diluted |
|
$ |
0.52 |
|
|
$ |
0.25 |
|
|
$ |
1.88 |
|
|
$ |
1.34 |
|
Add back: |
|
|
|
|
|
|
|
|
Special charges, net of tax
(1) |
|
|
- |
|
|
|
- |
|
|
|
0.10 |
|
|
|
- |
|
Loss on extinguishment of debt, net
of tax (2) |
|
|
- |
|
|
|
0.28 |
|
|
|
- |
|
|
|
0.28 |
|
Remeasurement of
acquisition-related contingent consideration, net of tax
(3) |
|
|
- |
|
|
|
- |
|
|
|
0.02 |
|
|
|
(0.02 |
) |
Adjusted
earnings per common share - diluted |
|
$ |
0.52 |
|
|
$ |
0.53 |
|
|
$ |
2.00 |
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding – diluted |
|
|
42,065 |
|
|
|
41,982 |
|
|
|
41,605 |
|
|
|
41,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 rate for the
adjustments related to special charges for the nine months ended
September 30, 2016 was 36.5%. The tax expense related to the
adjustments for special charges for the nine months ended September
30, 2016 was $2.5 million or $0.06 impact on Adjusted EPS.
There were no special charges for the three and nine months ended
September 30, 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 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
Adjusted EPS. There were no adjustments related to the early
extinguishment of debt in the three or nine months ended
September 30, 2016. |
|
(3) 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 nine months ended September 30,
2016 and 2015 were 38.8% and 40%, respectively. The tax
expense related to the adjustment for the remeasurement of
acquisition-related contingent consideration for the nine months
ended September 30, 2016 and 2015 were $0.4 million or $0.01 impact
on adjusted EPS and $0.7 million or a $0.02 impact on Adjusted EPS,
respectively. There were no adjustments related to the
remeasurement of acquisition-related contingent consideration in
the three months ended September 30, 2016 and 2015. |
|
FTI CONSULTING, INC. |
OPERATING RESULTS BY BUSINESS
SEGMENT |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
Average |
|
Revenue- |
|
|
Segment |
|
Adjusted |
|
Adjusted EBITDA |
|
|
|
Billable |
|
Generating |
|
|
Revenues |
|
EBITDA |
|
Margin |
|
Utilization |
|
Rate |
|
Headcount |
|
|
(in
thousands) |
|
|
|
|
|
|
|
(at period end) |
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance & Restructuring |
|
$ |
110,617 |
|
|
$ |
17,762 |
|
|
|
16.1 |
% |
|
|
61 |
% |
|
$ |
379 |
|
|
904 |
Forensic and Litigation Consulting |
|
|
115,045 |
|
|
|
16,554 |
|
|
|
14.4 |
% |
|
|
57 |
% |
|
$ |
330 |
|
|
1,145 |
Economic Consulting |
|
|
122,480 |
|
|
|
18,354 |
|
|
|
15.0 |
% |
|
|
69 |
% |
|
$ |
534 |
|
|
647 |
Technology (1) |
|
|
44,072 |
|
|
|
7,398 |
|
|
|
16.8 |
% |
|
N/M |
|
N/M |
|
298 |
Strategic Communications (1) |
|
|
45,828 |
|
|
|
7,509 |
|
|
|
16.4 |
% |
|
N/M |
|
N/M |
|
624 |
|
|
$ |
438,042 |
|
|
|
67,577 |
|
|
|
15.4 |
% |
|
|
|
|
|
3,618 |
Unallocated Corporate |
|
|
|
|
(20,348 |
) |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
47,229 |
|
|
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance & Restructuring |
|
$ |
369,915 |
|
|
$ |
81,406 |
|
|
|
22.0 |
% |
|
|
68 |
% |
|
$ |
388 |
|
|
904 |
Forensic and Litigation Consulting |
|
|
352,242 |
|
|
|
51,552 |
|
|
|
14.6 |
% |
|
|
60 |
% |
|
$ |
329 |
|
|
1,145 |
Economic Consulting |
|
|
371,217 |
|
|
|
55,054 |
|
|
|
14.8 |
% |
|
|
74 |
% |
|
$ |
516 |
|
|
647 |
Technology (1) |
|
|
134,235 |
|
|
|
20,256 |
|
|
|
15.1 |
% |
|
N/M |
|
N/M |
|
298 |
Strategic Communications (1) |
|
|
140,865 |
|
|
|
22,057 |
|
|
|
15.7 |
% |
|
N/M |
|
N/M |
|
624 |
|
|
$ |
1,368,474 |
|
|
|
230,325 |
|
|
|
16.8 |
% |
|
|
|
|
|
3,618 |
Unallocated Corporate |
|
|
|
|
(57,659 |
) |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
172,666 |
|
|
|
12.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
Unallocated Corporate |
|
|
|
|
(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 |
Unallocated Corporate |
|
|
|
|
(52,725 |
) |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
170,559 |
|
|
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 September 30, 2016 |
Corporate Finance
&Restructuring |
|
Forensic and LitigationConsulting |
|
EconomicConsulting |
|
Technology |
|
StrategicCommunications |
|
Corp HQ |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
21,691 |
|
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,213 |
) |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
6,304 |
|
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
10,292 |
|
|
Operating income |
$ |
16,182 |
|
|
$ |
14,867 |
|
|
$ |
16,888 |
|
|
$ |
2,869 |
|
|
$ |
6,006 |
|
|
$ |
(21,738 |
) |
|
$ |
35,074 |
|
|
Depreciation and amortization |
|
698 |
|
|
|
1,203 |
|
|
|
1,312 |
|
|
|
4,121 |
|
|
|
586 |
|
|
|
1,390 |
|
|
|
9,310 |
|
|
Amortization of other intangible assets |
|
882 |
|
|
|
484 |
|
|
|
154 |
|
|
|
408 |
|
|
|
917 |
|
|
|
- |
|
|
|
2,845 |
|
|
Adjusted EBITDA |
$ |
17,762 |
|
|
$ |
16,554 |
|
|
$ |
18,354 |
|
|
$ |
7,398 |
|
|
$ |
7,509 |
|
|
$ |
(20,348 |
) |
|
$ |
47,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016 |
Corporate Finance
&Restructuring |
|
Forensic and LitigationConsulting |
|
EconomicConsulting |
|
Technology |
|
StrategicCommunications |
|
Corp HQ |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
78,419 |
|
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,895 |
) |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
18,836 |
|
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
44,115 |
|
|
Operating income |
$ |
76,740 |
|
|
$ |
45,005 |
|
|
$ |
51,390 |
|
|
$ |
2,569 |
|
|
$ |
16,661 |
|
|
$ |
(60,890 |
) |
|
$ |
131,475 |
|
|
Depreciation and amortization |
|
2,175 |
|
|
|
3,278 |
|
|
|
3,172 |
|
|
|
11,901 |
|
|
|
1,602 |
|
|
|
3,231 |
|
|
|
25,359 |
|
|
Amortization of other intangible assets |
|
2,491 |
|
|
|
1,519 |
|
|
|
492 |
|
|
|
725 |
|
|
|
2,814 |
|
|
|
- |
|
|
|
8,041 |
|
|
Special charges |
|
- |
|
|
|
1,750 |
|
|
|
- |
|
|
|
5,061 |
|
|
|
- |
|
|
|
- |
|
|
|
6,811 |
|
|
Remeasurement of acquisition-related contingent consideration |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
980 |
|
|
|
- |
|
|
|
980 |
|
|
Adjusted EBITDA |
$ |
81,406 |
|
|
$ |
51,552 |
|
|
$ |
55,054 |
|
|
$ |
20,256 |
|
|
$ |
22,057 |
|
|
$ |
(57,659 |
) |
|
$ |
172,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2015 |
Corporate Finance
&Restructuring |
|
Forensic and LitigationConsulting |
|
EconomicConsulting |
|
Technology |
|
StrategicCommunications |
|
Corp HQ |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,309 |
|
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,027 |
) |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
11,696 |
|
|
Loss on early 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 |
Corporate Finance
&Restructuring |
|
Forensic and LitigationConsulting |
|
EconomicConsulting |
|
Technology |
|
StrategicCommunications |
|
Corp HQ |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
55,704 |
|
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,840 |
) |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
36,537 |
|
|
Loss on early 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FTI CONSULTING, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in thousands) |
(unaudited) |
|
|
|
|
|
Nine Months Ended |
|
September 30, |
|
2016 |
|
2015 |
Operating
activities |
|
|
|
Net income |
$ |
78,419 |
|
|
$ |
55,704 |
|
|
|
|
|
Adjustments to
reconcile net income to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
|
25,359 |
|
|
|
22,569 |
|
Amortization of other intangible
assets |
|
8,041 |
|
|
|
8,919 |
|
Acquisition-related contingent
consideration |
|
1,541 |
|
|
|
(1,145 |
) |
Provision for doubtful
accounts |
|
5,903 |
|
|
|
10,364 |
|
Non-cash share-based
compensation |
|
13,381 |
|
|
|
14,356 |
|
Non-cash interest expense |
|
1,489 |
|
|
|
2,029 |
|
Loss on early extinguishment of
debt |
|
- |
|
|
|
19,589 |
|
Other |
|
(1,159 |
) |
|
|
(674 |
) |
Changes in operating assets and
liabilities, net of effects from acquisitions: |
|
|
|
Accounts receivable, billed and
unbilled |
|
(67,318 |
) |
|
|
(84,411 |
) |
Notes receivable |
|
(3,674 |
) |
|
|
(334 |
) |
Prepaid expenses and other
assets |
|
(3,575 |
) |
|
|
(4,396 |
) |
Accounts payable, accrued expenses
and other |
|
10,900 |
|
|
|
10,158 |
|
Income taxes |
|
28,204 |
|
|
|
15,371 |
|
Accrued compensation |
|
4,486 |
|
|
|
(19,518 |
) |
Billings in excess of services
provided |
|
9,578 |
|
|
|
(5,278 |
) |
Net cash provided by
operating activities |
|
111,575 |
|
|
|
43,303 |
|
|
|
|
|
Investing
activities |
|
|
|
Payments for acquisition of
businesses, net of cash received |
|
(56 |
) |
|
|
(575 |
) |
Purchases of property and
equipment |
|
(22,855 |
) |
|
|
(24,674 |
) |
Other |
|
74 |
|
|
|
94 |
|
Net cash used in investing
activities |
|
(22,837 |
) |
|
|
(25,155 |
) |
|
|
|
|
Financing
activities |
|
|
|
Borrowings (repayments) under
revolving line of credit, net |
|
(25,000 |
) |
|
|
220,000 |
|
Payments of long-term debt |
|
- |
|
|
|
(425,671 |
) |
Payments of debt issue costs |
|
- |
|
|
|
(3,701 |
) |
Deposits |
|
2,806 |
|
|
|
2,406 |
|
Purchase and retirement of common
stock |
|
(2,903 |
) |
|
|
- |
|
Net issuance of common stock under
equity compensation plans |
|
18,394 |
|
|
|
13,931 |
|
Other |
|
357 |
|
|
|
124 |
|
Net cash used in financing
activities |
|
(6,346 |
) |
|
|
(192,911 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(6,968 |
) |
|
|
(3,943 |
) |
|
|
|
|
Net increase (decrease)
in cash and cash equivalents |
|
75,424 |
|
|
|
(178,706 |
) |
Cash and cash
equivalents, beginning of period |
|
149,760 |
|
|
|
283,680 |
|
Cash and cash
equivalents, end of period |
$ |
225,184 |
|
|
$ |
104,974 |
|
|
FTI CONSULTING, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands, except per share
amounts) |
|
|
|
|
|
September
30, |
|
December
31, |
|
2016 |
|
2015 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current
assets |
|
|
|
Cash and
cash equivalents |
$ |
225,184 |
|
|
$ |
149,760 |
|
Accounts
receivable: |
|
|
|
Billed
receivables |
|
416,960 |
|
|
|
405,000 |
|
Unbilled
receivables |
|
326,297 |
|
|
|
280,538 |
|
Allowance
for doubtful accounts and unbilled services |
|
(195,669 |
) |
|
|
(185,754 |
) |
Accounts
receivable, net |
|
547,588 |
|
|
|
499,784 |
|
Current
portion of notes receivable |
|
32,490 |
|
|
|
36,115 |
|
Prepaid
expenses and other current assets |
|
58,804 |
|
|
|
55,966 |
|
Total
current assets |
|
864,066 |
|
|
|
741,625 |
|
Property and equipment,
net of accumulated depreciation |
|
66,422 |
|
|
|
74,760 |
|
Goodwill |
|
1,188,230 |
|
|
|
1,198,298 |
|
Other intangible
assets, net of amortization |
|
54,493 |
|
|
|
63,935 |
|
Notes receivable, net
of current portion |
|
112,364 |
|
|
|
106,882 |
|
Other
assets |
|
56,043 |
|
|
|
43,518 |
|
Total assets |
$ |
2,341,618 |
|
|
$ |
2,229,018 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable, accrued expenses and other |
$ |
97,144 |
|
|
$ |
89,845 |
|
Accrued
compensation |
|
229,611 |
|
|
|
227,783 |
|
Billings
in excess of services provided |
|
38,774 |
|
|
|
29,449 |
|
Total
current liabilities |
|
365,529 |
|
|
|
347,077 |
|
Long-term debt,
net |
|
470,339 |
|
|
|
494,772 |
|
Deferred income
taxes |
|
170,768 |
|
|
|
139,787 |
|
Other liabilities |
|
103,397 |
|
|
|
99,779 |
|
Total liabilities |
|
1,110,033 |
|
|
|
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 ― 42,367 (2016) and 41,234 (2015) |
|
423 |
|
|
|
412 |
|
Additional paid-in capital |
|
429,902 |
|
|
|
400,705 |
|
Retained
earnings |
|
933,900 |
|
|
|
855,481 |
|
Accumulated other comprehensive loss |
|
(132,640 |
) |
|
|
(108,995 |
) |
Total stockholders' equity |
|
1,231,585 |
|
|
|
1,147,603 |
|
Total liabilities and stockholders' equity |
$ |
2,341,618 |
|
|
$ |
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
FTI Consulting (NYSE:FCN)
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