SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2018
FTI CONSULTING, INC.
(Exact Name of Registrant as Specified in Charter)
| Maryland | 001-14875 | 52-1261113 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
555 12th Street NW, Washington, D.C. 20004
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (202) 312-9100
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| ITEM 2.02. | Results of Operations and Financial Condition |
On April 26, 2018, FTI Consulting, Inc. (“FTI Consulting”) announced financial results for the three-months ended March 31, 2018. A copy of the press release (including accompanying financial tables) (the “Press Release”) is attached as Exhibit 99.1 to this Current Report on Form 8-K and hereby is incorporated by reference herein.
| ITEM 7.01. | Regulation FD Disclosure |
In the Press Release, FTI Consulting uses information derived from consolidated and segment financial information that may not be presented in its financial statements or prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Certain of these measures are considered “Non-GAAP financial measures” under rules promulgated by the Securities and Exchange Commission. Specifically, FTI Consulting has referred to the following non-GAAP measures:
| • | Total Segment Operating Income |
| • | Adjusted EBITDA |
| • | Total Adjusted Segment EBITDA |
| • | Adjusted EBITDA Margin |
| • | Adjusted Net Income |
| • | Adjusted Earnings per Diluted Share |
| • | Free Cash Flow |
FTI Consulting has included the definitions of “Segment Operating Income” and “Adjusted Segment EBITDA,” which are financial measures presented in accordance with GAAP, in order to more fully define the components of certain Non-GAAP financial measures. FTI Consulting evaluates the performance of its operating segments based on Adjusted Segment EBITDA, and Segment Operating Income is a component of the definition of Adjusted Segment EBITDA. FTI Consulting defines “Segment Operating Income” as a segment’s share of consolidated operating income. FTI Consulting defines “Total Segment Operating Income,” which is a Non-GAAP financial measure, as the total of Segment Operating Income for all segments, which excludes unallocated corporate expenses. FTI Consulting uses Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. FTI Consulting defines “Adjusted Segment EBITDA” as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges.
FTI Consulting uses Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of its segments because FTI Consulting believes it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash. FTI Consulting defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues.
FTI Consulting defines “Total Adjusted Segment EBITDA,” which is a Non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. FTI Consulting defines “Adjusted EBITDA,” which is a Non-GAAP financial measure, as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. FTI Consulting believes that the Non-GAAP financial measures, which exclude the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges, when considered together with its GAAP financial results and GAAP financial measures, provide management and investors with a more complete understanding of FTI Consulting’s operating results, including underlying trends. In addition, EBITDA is a common alternative measure of operating performance used by many of FTI Consulting’s competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in FTI Consulting’s industry. Therefore, FTI Consulting also believes that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of its operating results with the operating results of other companies.
1
FTI Consulting defines “Adjusted Net Income” and “Adjusted Earnings per Diluted Share” (“Adjusted EPS”), which are Non-GAAP financial measures, as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the impact of adopting the U.S. Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”). FTI Consulting uses Adjusted Net Income for the purpose of calculating Adjusted EPS. Management of FTI Consulting uses Adjusted EPS to assess total company operating performance on a consistent basis. FTI Consulting believes that this Non-GAAP financial measure, which excludes the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt, and the impact of adopting the 2017 Tax Act, when considered together with its GAAP financial results, provides management and investors with an additional understanding of its business operating results, including underlying trends.
Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable with other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in FTI Consulting’s Consolidated Statements of Comprehensive Income. Reconciliations of Non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the accompanying tables to the Press Release.
The information included herein, including Exhibit 99.1 furnished herewith, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing, except as expressly set forth by specific reference in such filing.
| ITEM 9.01. | Financial Statements and Exhibits |
| (d) | Exhibits |
| 99.1 | Press Release dated April 26, 2018 of FTI Consulting, Inc. | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, FTI Consulting, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FTI CONSULTING, INC. | ||||||
| Dated: April 30, 2018 | By: | /s/ CURTIS LU | ||||
| Curtis Lu | ||||||
| General Counsel | ||||||
3
Exhibit 99.1
FTI Consulting, Inc.
555 12th Street NW
Washington, DC 20004
+1.202.312.9100
Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com
FTI Consulting Reports Record First Quarter 2018 Financial Results
| • | First Quarter 2018 Revenues of $497.8 million, Up 11.5% Compared to Prior Year Quarter |
| • | First Quarter Fully Diluted and Adjusted EPS of $1.04 Compared to $0.34 in Prior Year Quarter |
Washington, D.C., Apr. 26, 2018 — FTI Consulting, Inc. (NYSE: FCN) today released its financial results for the quarter ended March 31, 2018.
First quarter 2018 revenues of $497.8 million increased $51.4 million, or 11.5%, compared to revenues of $446.3 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation (“FX”), revenues increased by $39.4 million, or 8.8%, compared to the prior year quarter. The increase in revenues was primarily driven by higher demand within the Corporate Finance & Restructuring and Forensic and Litigation Consulting segments. Net income of $38.9 million compared to $14.0 million in the prior year quarter. The increase was largely due to higher revenues and a lower effective income tax rate. Adjusted EBITDA was $72.3 million, or 14.5% of revenues, compared to $38.3 million, or 8.6% of revenues, in the prior year quarter. The increase in Adjusted EBITDA was primarily due to higher revenues and improved utilization. First quarter 2018 fully diluted earnings per share (“EPS”) and Adjusted EPS of $1.04 compared to $0.34 in the prior year quarter.
Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “Our record first quarter results, together with our strong second half of 2017, reflect the enormous efforts our leaders and professionals have made in listening to our clients and investing heavily to deliver on core client needs. Though quarters will always have some volatility, the overall improvement of our positions over these past several years is gratifying and powerful.”
Cash Position and Capital Allocation
Net cash used in operating activities was $69.2 million for the quarter ended March 31, 2018 compared to $93.1 million for the quarter ended March 31, 2017. The year-over-year reduction in the use of operating cash resulted from improved cash collections.
During the quarter, the Company used approximately $14.2 million to repurchase 337,075 shares of its common stock at an average price per share of $42.17. As of March 31, 2018, approximately $99.1 million remained available for stock repurchases under the Company’s $300.0 million share repurchase authorization.
Total debt was $445.0 million at March 31, 2018 compared to total debt of $400.0 million at December 31, 2017 and $407.0 million at March 31, 2017. Cash and cash equivalents were $152.0 million at March 31, 2018 compared to $190.0 million at December 31, 2017 and $121.0 million at March 31, 2017. Total debt, net of cash, was $293.0 million at March 31, 2018, up from $210.0 million at December 31, 2017 and $286.0 million at March 31, 2017.
First Quarter 2018 Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $37.0 million, or 35.0%, to $142.9 million in the quarter compared to $105.9 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $34.3 million, or 32.4%, compared to the prior year quarter. The increase in revenues was due to higher demand for restructuring, business transformation and transaction services. Adjusted Segment EBITDA was $34.8 million, or 24.4% of segment revenues, compared to $10.3 million, or 9.7% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $16.6 million, or 14.9%, to $128.0 million in the quarter compared to $111.4 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $14.9 million, or 13.3%, compared to the prior year quarter. The increase in revenues was primarily driven by increased demand for construction solutions, investigations and health solutions services. Adjusted Segment EBITDA was $25.8 million, or 20.1% of segment revenues, compared to $13.5 million, or 12.1% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.
Economic Consulting
Revenues in the Economic Consulting segment decreased $6.1 million, or 4.4%, to $133.1 million in the quarter compared to $139.2 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues decreased $9.9 million, or 7.1%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for antitrust services in North America. Adjusted Segment EBITDA was $19.1 million, or 14.4% of segment revenues, compared to $20.1 million, or 14.4% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues, which was partially offset by lower variable compensation costs.
Technology
Revenues in the Technology segment decreased $5.2 million, or 11.2%, to $40.9 million in the quarter compared to $46.1 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues decreased $6.0 million, or 12.9%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for managed review services, largely related to a decline in demand for merger and acquisition-related “second request” services. Adjusted Segment EBITDA was $5.7 million, or 14.0% of segment revenues, compared to $7.8 million, or 16.9% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues.
Strategic Communications
Revenues in the Strategic Communications segment increased $9.1 million, or 20.7%, to $52.8 million in the quarter compared to $43.7 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $6.2 million, or 14.1%, compared to the prior year quarter. The increase in revenues was primarily due to an increase in both project- and retainer-based revenues. Adjusted Segment EBITDA was $9.9 million, or 18.7% of segment revenues, compared to $4.3 million, or 9.7% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues.
First Quarter 2018 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss first quarter 2018 financial results at 9:00 a.m. Eastern Time on April 26, 2018. The call can be accessed live and will be available for replay over the internet for 90 days by logging onto the Company’s investor relations website here.
About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 4,600 employees located in 28 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $1.81 billion in revenues during fiscal year 2017. More information can be found at www.fticonsulting.com.
Use of Non-GAAP Measures
In the accompanying analysis of financial information, we sometimes use information derived from consolidated and segment financial information that may not be presented in our financial statements or prepared in accordance with generally accepted accounting principles (“GAAP”). Certain of these measures are considered “non-GAAP financial measures” under the Securities and Exchange Commission (“SEC”) rules. Specifically, we have referred to the following non-GAAP measures:
| • | Total Segment Operating Income |
| • | Adjusted EBITDA |
| • | Total Adjusted Segment EBITDA |
| • | Adjusted EBITDA Margin |
| • | Adjusted Net Income |
| • | Adjusted Earnings per Diluted Share |
| • | Free Cash Flow |
We have included the definitions of Segment Operating Income and Adjusted Segment EBITDA below in order to more fully define the components of certain non-GAAP financial measures presented in this earnings release. We define Segment Operating Income as a segment’s share of Consolidated Operating Income. We define Total Segment Operating Income, which is a non-GAAP financial measure, as the total of Segment
Operating Income for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of Consolidated Operating Income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We use Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of our segments because we believe it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.
We define Total Adjusted Segment EBITDA, which is a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We define Adjusted EBITDA, which is a non-GAAP financial measure, as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. We believe that the non-GAAP financial measures, which exclude the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges, when considered together with our GAAP financial results and GAAP measures, provide management and investors with a more complete understanding of our operating results, including underlying trends. In addition, EBITDA is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results with the operating results of other companies.
We define Adjusted Net Income and Adjusted Earnings per Diluted Share (“Adjusted EPS”), which are non-GAAP financial measures, as net income and earnings per diluted share (“EPS”), respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the adjustment related to the adoption of the 2017 U.S. Tax Cuts and Jobs Act (“2017 Tax Act”). We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that this non-GAAP financial measure, which excludes the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the adjustment related to the adoption of the 2017 Tax Act, when considered together with our GAAP financial results, provides management and investors with an additional understanding of our business operating results, including underlying trends.
We define Free Cash Flow as net cash provided by operating activities less cash payments for purchases of property and equipment. We believe this non-GAAP financial measure, when considered together with our GAAP financial results, provides management and investors with an additional understanding of the Company’s ability to generate cash for ongoing business operations and other capital deployment.
Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable with other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Income. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.
Safe Harbor Statement
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve uncertainties and risks. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions, share repurchases and other matters, business trends and other information that is not historical, including statements regarding estimates of our future financial results. When used in this press release, words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, estimates of our future financial results, are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and estimates will be achieved, and the Company’s actual results may differ materially from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flows in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer, the mix of the geographic locations where our clients are located or where services are performed, fluctuations in the price per share of our common stock, adverse financial, real estate, or other market and general economic conditions, and other future events, which could impact each of our segments differently and could be outside of our control, the pace and timing of the consummation and integration of future acquisitions, the Company’s ability to realize cost savings and efficiencies, competitive and general economic conditions, retention of staff and clients, new laws and regulations, or changes thereto, including the 2017 Tax Act, and other risks described under the heading “Item 1A, Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the SEC, including the risks set forth under “Risks Related to Our Reportable Segments” and “Risks Related to Our Operations,” and in the Company’s other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.
FINANCIAL TABLES FOLLOW
# # #
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| March 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| (unaudited) | ||||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 152,044 | $ | 189,961 | ||||
| Accounts receivable: |
||||||||
| Billed receivables |
417,085 | 390,996 | ||||||
| Unbilled receivables |
367,516 | 312,569 | ||||||
| Allowances for doubtful accounts and unbilled services |
(201,013 | ) | (180,687 | ) | ||||
|
|
|
|
|
|||||
| Accounts receivable, net |
583,588 | 522,878 | ||||||
| Current portion of notes receivable |
29,371 | 25,691 | ||||||
| Prepaid expenses and other current assets |
50,775 | 55,649 | ||||||
|
|
|
|
|
|||||
| Total current assets |
815,778 | 794,179 | ||||||
| Property and equipment, net |
75,586 | 75,075 | ||||||
| Goodwill |
1,208,011 | 1,204,803 | ||||||
| Other intangible assets, net |
42,390 | 44,150 | ||||||
| Notes receivable, net |
91,215 | 98,105 | ||||||
| Other assets |
43,472 | 40,929 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 2,276,452 | $ | 2,257,241 | ||||
|
|
|
|
|
|||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities |
||||||||
| Accounts payable, accrued expenses and other |
$ | 105,966 | $ | 94,873 | ||||
| Accrued compensation |
191,055 | 268,513 | ||||||
| Billings in excess of services provided |
46,446 | 46,942 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
343,467 | 410,328 | ||||||
| Long-term debt, net |
441,473 | 396,284 | ||||||
| Deferred income taxes |
129,274 | 124,471 | ||||||
| Other liabilities |
124,804 | 134,187 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,039,018 | 1,065,270 | ||||||
|
|
|
|
|
|||||
| Stockholders’ equity |
||||||||
| Preferred stock, $0.01 par value; shares authorized — 5,000; none outstanding |
— | — | ||||||
| Common stock, $0.01 par value; shares authorized — 75,000; shares issued and outstanding — 37,720 (2018) and 37,729 (2017) |
377 | 377 | ||||||
| Additional paid-in capital |
261,765 | 266,035 | ||||||
| Retained earnings |
1,085,061 | 1,045,774 | ||||||
| Accumulated other comprehensive loss |
(109,769 | ) | (120,215 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
1,237,434 | 1,191,971 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 2,276,452 | $ | 2,257,241 | ||||
|
|
|
|
|
|||||
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
| Three Months Ended March 31, |
||||||||
| 2018 | 2017 | |||||||
| (unaudited) | ||||||||
| Revenues |
$ | 497,774 | $ | 446,344 | ||||
|
|
|
|
|
|||||
| Operating expenses |
||||||||
| Direct cost of revenues |
321,117 | 309,072 | ||||||
| Selling, general and administrative expenses |
112,128 | 107,690 | ||||||
| Amortization of other intangible assets |
2,270 | 2,493 | ||||||
|
|
|
|
|
|||||
| 435,515 | 419,255 | |||||||
|
|
|
|
|
|||||
| Operating income |
62,259 | 27,089 | ||||||
|
|
|
|
|
|||||
| Other income (expense) |
||||||||
| Interest income and other |
(1,800 | ) | 605 | |||||
| Interest expense |
(6,244 | ) | (5,801 | ) | ||||
|
|
|
|
|
|||||
| (8,044 | ) | (5,196 | ) | |||||
|
|
|
|
|
|||||
| Income before income tax provision |
54,215 | 21,893 | ||||||
| Income tax provision |
15,270 | 7,877 | ||||||
|
|
|
|
|
|||||
| Net income |
$ | 38,945 | $ | 14,016 | ||||
|
|
|
|
|
|||||
| Earnings per common share — basic |
$ | 1.06 | $ | 0.35 | ||||
|
|
|
|
|
|||||
| Weighted average common shares outstanding — basic |
36,700 | 40,527 | ||||||
|
|
|
|
|
|||||
| Earnings per common share — diluted |
$ | 1.04 | $ | 0.34 | ||||
|
|
|
|
|
|||||
| Weighted average common shares outstanding — diluted |
37,612 | 41,245 | ||||||
|
|
|
|
|
|||||
| Other comprehensive income, net of tax |
||||||||
| Foreign currency translation adjustments, net of tax expense of $0 |
$ | 10,446 | $ | 7,370 | ||||
|
|
|
|
|
|||||
| Total other comprehensive income, net of tax |
10,446 | 7,370 | ||||||
|
|
|
|
|
|||||
| Comprehensive income |
$ | 49,391 | $ | 21,386 | ||||
|
|
|
|
|
|||||
FTI CONSULTING, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
| Three Months Ended March 31, |
||||||||
| 2018 | 2017 | |||||||
| (Unaudited) | ||||||||
| Net income |
$ | 38,945 | $ | 14,016 | ||||
| Add back: |
||||||||
| Remeasurement of acquisition-related contingent consideration |
— | 166 | ||||||
| Tax impact of remeasurement of acquisition-related contingent consideration |
— | (65 | ) | |||||
|
|
|
|
|
|||||
| Adjusted net income |
$ | 38,945 | $ | 14,117 | ||||
|
|
|
|
|
|||||
| EPS and Adjusted EPS — diluted |
$ | 1.04 | $ | 0.34 | ||||
|
|
|
|
|
|||||
| Weighted average number of common shares outstanding — diluted |
37,612 | 41,245 | ||||||
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|
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FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)
| Three Months Ended March 31, 2018 (unaudited) |
Corporate Finance & Restructuring |
Forensic and Litigation Consulting |
Economic Consulting |
Technology | Strategic Communications |
Unallocated Corporate |
Total | |||||||||||||||||||||
| Net income |
$ | 38,945 | ||||||||||||||||||||||||||
| Interest income and other |
1,800 | |||||||||||||||||||||||||||
| Interest expense |
6,244 | |||||||||||||||||||||||||||
| Income tax provision |
15,270 | |||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
| Operating income |
$ | 33,211 | $ | 24,330 | $ | 17,648 | $ | 2,593 | $ | 8,365 | $ | (23,888 | ) | $ | 62,259 | |||||||||||||
| Depreciation and amortization |
802 | 1,028 | 1,364 | 3,077 | 593 | 901 | 7,765 | |||||||||||||||||||||
| Amortization of other intangible assets |
791 | 399 | 124 | 62 | 894 | — | 2,270 | |||||||||||||||||||||
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| Adjusted EBITDA |
$ | 34,804 | $ | 25,757 | $ | 19,136 | $ | 5,732 | $ | 9,852 | $ | (22,987 | ) | $ | 72,294 | |||||||||||||
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| Three Months Ended March 31, 2017 (unaudited) |
Corporate Finance & Restructuring |
Forensic and Litigation Consulting |
Economic Consulting |
Technology | Strategic Communications |
Unallocated Corporate |
Total | |||||||||||||||||||||
| Net income |
$ | 14,016 | ||||||||||||||||||||||||||
| Interest income and other |
(605 | ) | ||||||||||||||||||||||||||
| Interest expense |
5,801 | |||||||||||||||||||||||||||
| Income tax provision |
7,877 | |||||||||||||||||||||||||||
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| Operating income |
$ | 8,749 | $ | 11,924 | $ | 18,502 | $ | 4,440 | $ | 2,527 | $ | (19,053 | ) | $ | 27,089 | |||||||||||||
| Depreciation and amortization |
781 | 1,173 | 1,454 | 3,206 | 602 | 1,355 | 8,571 | |||||||||||||||||||||
| Amortization of other intangible assets |
795 | 424 | 154 | 158 | 962 | — | 2,493 | |||||||||||||||||||||
| Remeasurement of acquisition-related contingent consideration |
— | — | — | — | 166 | — | 166 | |||||||||||||||||||||
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| Adjusted EBITDA |
$ | 10,325 | $ | 13,521 | $ | 20,110 | $ | 7,804 | $ | 4,257 | $ | (17,698 | ) | $ | 38,319 | |||||||||||||
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FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
| Segment Revenues |
Adjusted EBITDA |
Adjusted EBITDA Margin |
Utilization | Average Billable Rate |
Revenue- Generating Headcount |
|||||||||||||||||||
| (in thousands) | (at period end) | |||||||||||||||||||||||
| Three Months Ended March 31, 2018 (unaudited) |
||||||||||||||||||||||||
| Corporate Finance & Restructuring |
$ | 142,922 | $ | 34,804 | 24.4% | 71% | $ | 444 | 910 | |||||||||||||||
| Forensic and Litigation Consulting |
128,039 | 25,757 | 20.1% | 67% | $ | 326 | 1,072 | |||||||||||||||||
| Economic Consulting |
133,109 | 19,136 | 14.4% | 71% | $ | 543 | 689 | |||||||||||||||||
| Technology (1) |
40,914 | 5,732 | 14.0% | N/M | N/M | 288 | ||||||||||||||||||
| Strategic Communications (1) |
52,790 | 9,852 | 18.7% | N/M | N/M | 630 | ||||||||||||||||||
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| $ | 497,774 | $ | 95,281 | 19.1% | 3,589 | |||||||||||||||||||
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| Unallocated Corporate |
(22,987 | ) | ||||||||||||||||||||||
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| Adjusted EBITDA |
$ | 72,294 | 14.5% | |||||||||||||||||||||
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| Three Months Ended March 31, 2017 (unaudited) |
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| Corporate Finance & Restructuring |
$ | 105,901 | $ | 10,325 | 9.7% | 59% | $ | 377 | 900 | |||||||||||||||
| Forensic and Litigation Consulting |
111,406 | 13,521 | 12.1% | 60% | $ | 330 | 1,110 | |||||||||||||||||
| Economic Consulting |
139,221 | 20,110 | 14.4% | 72% | $ | 554 | 660 | |||||||||||||||||
| Technology (1) |
46,087 | 7,804 | 16.9% | N/M | N/M | 296 | ||||||||||||||||||
| Strategic Communications (1) |
43,729 | 4,257 | 9.7% | N/M | N/M | 657 | ||||||||||||||||||
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| $ | 446,344 | $ | 56,017 | 12.6% | 3.623 | |||||||||||||||||||
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| Unallocated Corporate |
(17,698 | ) | ||||||||||||||||||||||
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| Adjusted EBITDA |
$ | 38,319 | 8.6% | |||||||||||||||||||||
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N/M — Not meaningful
| (1) | The majority of the Technology and Strategic Communications segments’ revenues are not generated based on billable hours. Accordingly, utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric. |
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Three Months Ended March 31, |
||||||||
| 2018 | 2017 | |||||||
| (unaudited) | ||||||||
| Operating activities |
||||||||
| Net income |
$ | 38,945 | $ | 14,016 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
7,765 | 8,571 | ||||||
| Amortization and impairment of other intangible assets |
2,270 | 2,493 | ||||||
| Acquisition-related contingent consideration |
396 | 395 | ||||||
| Provision for doubtful accounts |
5,676 | 3,551 | ||||||
| Non-cash share-based compensation |
4,676 | 7,281 | ||||||
| Non-cash interest expense and other |
591 | 508 | ||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
| Accounts receivable, billed and unbilled |
(61,677 | ) | (52,489 | ) | ||||
| Notes receivable |
2,622 | 7,153 | ||||||
| Prepaid expenses and other assets |
(378 | ) | 553 | |||||
| Accounts payable, accrued expenses and other |
9,348 | 287 | ||||||
| Income taxes |
13,480 | 3,650 | ||||||
| Accrued compensation |
(92,501 | ) | (92,561 | ) | ||||
| Billings in excess of services provided |
(413 | ) | 3,505 | |||||
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| Net cash used in operating activities |
(69,200 | ) | (93,087 | ) | ||||
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| Investing activities |
||||||||
| Purchases of property and equipment |
(7,680 | ) | (5,831 | ) | ||||
| Other |
27 | 127 | ||||||
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| Net cash used in investing activities |
(7,653 | ) | (5,704 | ) | ||||
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| Financing activities |
||||||||
| Borrowings under revolving line of credit, net |
45,000 | 37,000 | ||||||
| Deposits |
1,431 | 3,069 | ||||||
| Purchase and retirement of common stock |
(14,220 | ) | (36,918 | ) | ||||
| Net issuance of common stock under equity compensation plans |
4,215 | (812 | ) | |||||
| Payments for acquisition-related contingent consideration |
(2,502 | ) | — | |||||
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| Net cash provided by financing activities |
33,924 | 2,339 | ||||||
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| Effect of exchange rate changes on cash and cash equivalents |
5,012 | 1,253 | ||||||
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| Net decrease in cash and cash equivalents |
(37,917 | ) | (95,199 | ) | ||||
| Cash and cash equivalents, beginning of period |
189,961 | 216,158 | ||||||
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| Cash and cash equivalents, end of period |
$ | 152,044 | $ | 120,959 | ||||
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