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): October 8, 2014
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.) |
1101 K Street NW, Washington, D.C. 20005
(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)) |
| ITEM 2.02. | Results of Operations and Financial Condition |
FTI Consulting, Inc. (“FTI Consulting”) is posting selected financial and operating data, including non-GAAP financial measures, for the years and four quarters ended December 31, 2012 and December 31, 2013 to its website at www.fticonsulting.com. The Non-GAAP financial measures presented for those annual and quarterly periods has been conformed to the definitions of each of the non-GAAP measures adopted by FTI Consulting beginning with the quarter ended March 31, 2014, to exclude the impact of the remeasurement of acquisition-related contingent consideration. In addition, FTI Consulting is posting non-GAAP financial measures and selected financial and operating data for the first quarter ended March 31, 2014 and the second quarter ended June 30, 2014 to its website.
The selected financial data for the years and four quarters ended December 31, 2012 and December 31, 2013, conforms to the information included in FTI Consulting’s annual and quarterly reports for the applicable periods previously filed with the Securities and Exchange Commission (the “SEC”). The selected operating data for the years and four quarters ended December 31, 2012 and December 31, 2013 conforms to the information included in FTI Consulting’s annual and quarterly reports for the applicable periods, except that operating data relating to days sales outstanding (DSOs) for those periods has not been previously reported by FTI Consulting.
The Non-GAAP financial measures and selected financial and operating data for the first quarter ended March 31, 2014 and second quarter ended June 30, 2014, conforms to the information included in FTI Consulting’s quarterly reports for the applicable periods previously filed with the SEC.
FTI Consulting defines “Segment Operating Income” as a segment’s share of consolidated operating income. FTI Consulting defines “Total Segment Operating Income” 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 EBITDA” 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, “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, and “Total Adjusted Segment EBITDA” as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. Although Adjusted EBITDA, Adjusted Segment EBITDA and Total Adjusted Segment EBITDA are not measures of financial condition or performance determined in accordance with generally accepted accounting principles (“GAAP”), FTI Consulting believes that they can be useful operating performance measures. FTI Consulting uses Adjusted Segment EBITDA to internally evaluate the financial performance of each of FTI Consulting’s segments because it believes it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment’s ability to generate cash. FTI Consulting also believes that these non-GAAP measures, when considered together with FTI Consulting’s
1
GAAP financial results, provide management and investors with a more complete understanding of FTI Consulting’s operating results, including underlying trends, by excluding the effects of special charges, remeasurement of acquisition-related contingent consideration and goodwill impairment charges. 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 FTI Consulting’s operating results to the operating results of other companies.
FTI Consulting defines “Adjusted Net Income” and “Adjusted Earnings per Diluted Share” (“Adjusted EPS”) as net income 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. FTI Consulting uses Adjusted Net Income for the purpose of calculating Adjusted EPS and uses Adjusted EPS to assess total FTI Consulting operating performance on a consistent basis. FTI Consulting believes that this measure, when considered together with FTI Consulting’s GAAP financial results, provides management and investors with a more complete understanding of FTI Consulting’s 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 FTI Consulting’s Consolidated Statements of Comprehensive Income.
Reconciliations of GAAP to Non-GAAP financial measures are included in the Selected Financial and Operating Data of FTI Consulting filed as Exhibit 99.1 to this Current Report on Form 8-K, which is hereby incorporated by reference herein.
| ITEM 7.01. | Regulation FD Disclosure |
Reference is made to the Item 2.02 disclosure in this Current Report on Form 8-K, which is hereby incorporated by reference herein.
| ITEM 9.01. | Financial Statements and Exhibits |
(d) Exhibits
| 99.1 | Selected Financial and Operating Data 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: October 8, 2014 |
By: | /S/ ERIC B. MILLER | ||||
|
| ||||||
| Eric B. Miller Executive Vice President, General Counsel and Chief Risk Officer | ||||||
3
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Selected Financial and Operating Data of FTI Consulting, Inc. |
1
Exhibit 99.1
|
FTI CONSULTING, INC.
SELECTED FINANCIAL DATA
(unaudited)
|
| All numbers in $000s except for per share data, DSO and percentages |
||||||||||||||||||||||||||||||||||||||||||||||||
| Q2 2014 | Q1 2014 | FY2013 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | FY2012 | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | |||||||||||||||||||||||||||||||||||||
| CONSOLIDATED |
||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues |
$ | 454,324 | $ | 425,552 | $ | 1,652,432 | $ | 415,998 | $ | 414,643 | $ | 414,613 | $ | 407,178 | $ | 1,576,871 | $ | 399,345 | $ | 386,055 | $ | 396,243 | $ | 395,228 | ||||||||||||||||||||||||
| Y/Y Growth Rate1 |
9.6% | 4.5% | 4.8% | 4.2% | 7.4% | 4.6% | 3.0% | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||
| Q/Q Growth Rate2 |
6.8% | 2.3% | N/A | 0.3% | 0.0% | 1.8% | 2.0% | N/A | 3.4% | (2.6% | ) | 0.3% | N/A | |||||||||||||||||||||||||||||||||||
| SG&A |
$ | 107,032 | $ | 108,387 | $ | 394,681 | $ | 107,196 | $ | 94,513 | $ | 96,325 | $ | 96,647 | $ | 378,016 | $ | 94,058 | $ | 88,909 | $ | 92,460 | $ | 102,589 | ||||||||||||||||||||||||
| SG&A (as % of revenue) |
23.6% | 25.5% | 23.9% | 25.8% | 22.8% | 23.2% | 23.7% | 24.0% | 23.6% | 23.0% | 23.3% | 26.0% | ||||||||||||||||||||||||||||||||||||
| Y/Y Growth Rate1 |
11.1% | 12.1% | 4.4% | 14.0% | 6.3% | 4.2% | (5.8% | ) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||
| Q/Q Growth Rate2 |
(1.3% | ) | 1.1% | N/A | 13.4% | (1.9% | ) | (0.3% | ) | 2.8% | N/A | 5.8% | (3.8% | ) | (9.9% | ) | N/A | |||||||||||||||||||||||||||||||
| Adjusted EBITDA |
$ | 59,903 | $ | 51,196 | $ | 245,545 | $ | 47,663 | $ | 72,544 | $ | 66,012 | $ | 59,326 | $ | 245,764 | $ | 67,005 | $ | 62,281 | $ | 62,516 | $ | 53,960 | ||||||||||||||||||||||||
| Adjusted EBITDA Margin |
13.2% | 12.0% | 14.9% | 11.5% | 17.5% | 15.9% | 14.6% | 15.6% | 16.8% | 16.1% | 15.8% | 13.7% | ||||||||||||||||||||||||||||||||||||
| Y/Y Growth Rate1 |
(9.3% | ) | (13.7% | ) | (0.1% | ) | (28.9% | ) | 16.5% | 5.6% | 9.9% | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Q/Q Growth Rate2 |
17.0% | 7.4% | N/A | (34.3% | ) | 9.9% | 11.3% | (11.5% | ) | N/A | 7.6% | (0.4% | ) | 15.9% | N/A | |||||||||||||||||||||||||||||||||
| Operating Income (Loss) |
$ | 38,932 | $ | 40,117 | $ | 81,439 | $ | 11,450 | $ | (35,599 | ) | $ | 60,259 | $ | 45,329 | $ | 59,036 | $ | (55,331 | ) | $ | 46,588 | $ | 26,832 | $ | 40,947 | ||||||||||||||||||||||
| Y/Y Growth Rate1 |
(35.4% | ) | (11.5% | ) | 37.9% | 120.7% | (176.4% | ) | 124.6% | 10.7% | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||
| Q/Q Growth Rate2 |
(3.0% | ) | 250.4% | N/A | 132.2% | (159.1% | ) | 32.9% | 181.9% | N/A | (218.8% | ) | 73.6% | (34.5% | ) | N/A | ||||||||||||||||||||||||||||||||
| Net Income (Loss) |
$ | 17,247 | $ | 18,117 | $ | (10,594 | ) | $ | (7,139 | ) | $ | (50,621 | ) | $ | 23,486 | $ | 23,680 | $ | (36,986 | ) | $ | (85,877 | ) | $ | 22,713 | $ | 7,747 | $ | 18,431 | |||||||||||||||||||
| Y/Y Growth Rate1 |
(26.6% | ) | (23.5% | ) | 71.4% | 91.7% | (322.9% | ) | 203.2% | 28.5% | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||
| Q/Q Growth Rate2 |
(4.8% | ) | 353.8% | N/A | 85.9% | (315.5% | ) | (0.8% | ) | 127.6% | N/A | (478.1% | ) | 193.2% | (58.0% | ) | N/A | |||||||||||||||||||||||||||||||
| Adjusted Earnings per Diluted Share |
$ | 0.55 | $ | 0.41 | $ | 2.09 | $ | 0.39 | $ | 0.72 | $ | 0.38 | $ | 0.59 | $ | 2.17 | $ | 0.64 | $ | 0.60 | $ | 0.50 | $ | 0.43 | ||||||||||||||||||||||||
| Y/Y Growth Rate1 |
44.7% | (30.5% | ) | (3.7% | ) | (39.1% | ) | 20.0% | (24.0% | ) | 37.2% | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Weighted average number of common shares outstanding — diluted |
40,750 | 40,457 | 40,421 | 40,529 | 40,244 | 40,293 | 40,620 | 41,578 | 40,990 | 41,102 | 42,074 | 43,185 | ||||||||||||||||||||||||||||||||||||
| Balance Sheet / Cash Flow |
||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 94,412 | $ | 77,005 | $ | 205,833 | $ | 205,833 | $ | 147,926 | $ | 92,554 | $ | 100,703 | $ | 156,785 | $ | 156,785 | $ | 126,928 | $ | 165,981 | $ | 182,438 | ||||||||||||||||||||||||
| Accounts receivable, net |
$ | 579,737 | $ | 545,072 | $ | 476,445 | $ | 476,445 | $ | 494,910 | $ | 480,032 | $ | 470,596 | $ | 429,240 | $ | 429,240 | $ | 485,057 | $ | 472,659 | $ | 448,975 | ||||||||||||||||||||||||
| Days sales outstanding (“DSO”) |
108 | 106 | 97 | 97 | 102 | 99 | 96 | 90 | 90 | 108 | 103 | 97 | ||||||||||||||||||||||||||||||||||||
| Net cash provided by (used in) operating activities |
$ | 33,691 | $ | (110,795 | ) | $ | 193,271 | $ | 89,465 | $ | 84,437 | $ | 21,673 | $ | (2,304 | ) | $ | 120,188 | $ | 106,564 | $ | 70,912 | $ | 533 | $ | (57,821 | ) | |||||||||||||||||||||
| Purchases of property and equipment |
$ | 6,599 | $ | 15,179 | $ | 42,544 | $ | 19,550 | $ | 8,864 | $ | 6,807 | $ | 7,323 | $ | 27,759 | $ | 7,225 | $ | 6,806 | $ | 8,972 | $ | 4,756 | ||||||||||||||||||||||||
| Payments for acquisition of businesses, net of cash received |
$ | — | $ | 15,611 | $ | 55,498 | $ | 14,732 | $ | 254 | $ | 25,836 | $ | 14,676 | $ | 62,893 | $ | 36,440 | $ | 4,903 | $ | 2,955 | $ | 18,595 | ||||||||||||||||||||||||
| Purchase and retirement of common stock |
$ | — | $ | 4,367 | $ | 66,763 | $ | 17,994 | $ | 20,011 | $ | — | $ | 28,758 | $ | 50,032 | $ | 30,019 | $ | 20,013 | $ | — | $ | — | ||||||||||||||||||||||||
| Total debt |
$ | 717,000 | $ | 737,000 | $ | 717,014 | $ | 717,014 | $ | 717,000 | $ | 723,000 | $ | 723,045 | $ | 723,045 | $ | 723,045 | $ | 717,842 | $ | 797,383 | $ | 797,988 | ||||||||||||||||||||||||
| 1 | Y/Y Growth Rate is the percentage increase or decrease of Revenues, SG&A, Adjusted EBITDA, Operating Income, Net Income or Adjusted Earnings per Diluted Share compared to the same prior year period. |
| 2 | Q/Q Growth Rate is the percentage increase or decrease of Revenues, SG&A, Adjusted EBITDA, Operating Income, Net Income or Adjusted Earnings per Diluted Share compared to the prior sequential period. |
| 3 | Days sales outstanding (“DSO”) is a performance measure used to assess how quickly revenues are collected by the Company. We calculate DSO at the end of each reporting period by dividing net accounts receivable reduced by billings in excess of services provided, by revenue for the quarter, adjusted for changes in foreign exchange rates. We multiply the result by the number of days in the quarter. |
| FTI Consulting, Inc. | Page 1 |
|
FTI CONSULTING, INC.
SELECTED FINANCIAL DATA
(unaudited)
|
All numbers in $000s except for
per share data, DSO and
percentages
| Q2 2014 | Q1 2014 | FY2013 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | FY2012 | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | |||||||||||||||||||||||||||||||||||||
| SEGMENT |
||||||||||||||||||||||||||||||||||||||||||||||||
| CORPORATE FINANCE/RESTRUCTURING |
||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue |
$ | 104,020 | $ | 93,982 | $ | 382,526 | $ | 92,751 | $ | 93,981 | $ | 96,714 | $ | 99,080 | $ | 394,718 | $ | 108,535 | $ | 93,123 | $ | 96,187 | $ | 96,874 | ||||||||||||||||||||||||
| % of Total Revenues |
22.9% | 22.1% | 23.1% | 22.3% | 22.7% | 23.3% | 24.3% | 25.0% | 27.2% | 24.1% | 24.3% | 24.5% | ||||||||||||||||||||||||||||||||||||
| Adjusted Segment EBITDA |
$ | 19,133 | $ | 10,951 | $ | 67,183 | $ | 10,848 | $ | 19,402 | $ | 17,848 | $ | 19,085 | $ | 95,916 | $ | 26,275 | $ | 21,951 | $ | 23,518 | $ | 24,171 | ||||||||||||||||||||||||
| Adjusted Segment EBITDA Margin1 |
18.4% | 11.7% | 17.6% | 11.7% | 20.6% | 18.5% | 19.3% | 24.3% | 24.2% | 23.6% | 24.5% | 25.0% | ||||||||||||||||||||||||||||||||||||
| FORENSIC AND LITIGATION CONSULTING |
||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue |
$ | 119,081 | $ | 121,429 | $ | 433,632 | $ | 114,720 | $ | 113,068 | $ | 105,120 | $ | 100,724 | $ | 407,586 | $ | 97,235 | $ | 100,460 | $ | 106,256 | $ | 103,635 | ||||||||||||||||||||||||
| % of Total Revenues |
26.2% | 28.5% | 26.2% | 27.6% | 27.3% | 25.4% | 24.7% | 25.8% | 24.3% | 26.0% | 26.8% | 26.2% | ||||||||||||||||||||||||||||||||||||
| Adjusted Segment EBITDA |
$ | 22,271 | $ | 26,494 | $ | 74,481 | $ | 17,556 | $ | 25,362 | $ | 18,752 | $ | 12,811 | $ | 60,566 | $ | 10,387 | $ | 16,289 | $ | 19,220 | $ | 14,670 | ||||||||||||||||||||||||
| Adjusted Segment EBITDA Margin1 |
18.7% | 21.8% | 17.2% | 15.3% | 22.4% | 17.8% | 12.7% | 14.9% | 10.7% | 16.2% | 18.1% | 14.2% | ||||||||||||||||||||||||||||||||||||
| ECONOMIC CONSULTING |
||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue |
$ | 117,227 | $ | 106,851 | $ | 447,366 | $ | 108,089 | $ | 113,069 | $ | 111,014 | $ | 115,194 | $ | 391,622 | $ | 95,740 | $ | 96,375 | $ | 99,455 | $ | 100,052 | ||||||||||||||||||||||||
| % of Total Revenues |
25.8% | 25.1% | 27.1% | 26.0% | 27.3% | 26.8% | 28.3% | 24.8% | 24.0% | 25.0% | 25.1% | 25.3% | ||||||||||||||||||||||||||||||||||||
| Adjusted Segment EBITDA |
$ | 18,043 | $ | 13,030 | $ | 92,204 | $ | 21,982 | $ | 23,225 | $ | 20,803 | $ | 26,194 | $ | 77,461 | $ | 21,459 | $ | 19,087 | $ | 18,491 | $ | 18,424 | ||||||||||||||||||||||||
| Adjusted Segment EBITDA Margin1 |
15.4% | 12.2% | 20.6% | 20.3% | 20.5% | 18.7% | 22.7% | 19.8% | 22.4% | 19.8% | 18.6% | 18.4% | ||||||||||||||||||||||||||||||||||||
| TECHNOLOGY |
||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue |
$ | 60,720 | $ | 60,063 | $ | 202,663 | $ | 53,562 | $ | 51,201 | $ | 51,196 | $ | 46,704 | $ | 195,194 | $ | 47,551 | $ | 50,286 | $ | 47,697 | $ | 49,660 | ||||||||||||||||||||||||
| % of Total Revenues |
13.4% | 14.1% | 12.3% | 12.9% | 12.3% | 12.3% | 11.5% | 12.4% | 11.9% | 13.0% | 12.0% | 12.6% | ||||||||||||||||||||||||||||||||||||
| Adjusted Segment EBITDA |
$ | 15,104 | $ | 17,348 | $ | 60,655 | $ | 14,670 | $ | 15,381 | $ | 16,888 | $ | 13,716 | $ | 57,203 | $ | 15,464 | $ | 15,675 | $ | 12,849 | $ | 13,215 | ||||||||||||||||||||||||
| Adjusted Segment EBITDA Margin1 |
24.9% | 28.9% | 29.9% | 27.4% | 30.0% | 33.0% | 29.4% | 29.3% | 32.5% | 31.2% | 26.9% | 26.6% | ||||||||||||||||||||||||||||||||||||
| STRATEGIC COMMUNICATIONS |
||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue |
$ | 53,276 | $ | 43,227 | $ | 186,245 | $ | 46,876 | $ | 43,324 | $ | 50,569 | $ | 45,476 | $ | 187,750 | $ | 50,284 | $ | 45,811 | $ | 46,648 | $ | 45,007 | ||||||||||||||||||||||||
| % of Total Revenues |
11.7% | 10.2% | 11.3% | 11.3% | 10.4% | 12.2% | 11.2% | 11.9% | 12.6% | 11.9% | 11.8% | 11.4% | ||||||||||||||||||||||||||||||||||||
| Adjusted Segment EBITDA |
$ | 5,834 | $ | 2,729 | $ | 18,737 | $ | 5,928 | $ | 4,036 | $ | 5,219 | $ | 3,554 | $ | 25,019 | $ | 8,742 | $ | 6,778 | $ | 4,970 | $ | 4,529 | ||||||||||||||||||||||||
| Adjusted Segment EBITDA Margin1 |
10.9% | 6.3% | 10.1% | 12.6% | 9.3% | 10.3% | 7.8% | 13.3% | 17.4% | 14.8% | 10.7% | 10.1% | ||||||||||||||||||||||||||||||||||||
| 1 | Adjusted Segment EBITDA Margin is calculated by dividing the Adjusted Segment EBITDA by the Segment Revenue. |
| FTI Consulting, Inc. | Page 2 |
|
FTI CONSULTING, INC.
SELECTED OPERATING DATA
(unaudited)
|
| Q2 2014 | Q1 2014 | FY2013 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | FY2012 | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | |||||||||||||||||||||||||||||||||||||
| SEGMENT |
||||||||||||||||||||||||||||||||||||||||||||||||
| CORPORATE FINANCE/RESTRUCTURING |
||||||||||||||||||||||||||||||||||||||||||||||||
| Billable Headcount (as of period end) |
713 | 726 | 737 | 737 | 732 | 718 | 683 | 697 | 697 | 621 | 596 | 592 | ||||||||||||||||||||||||||||||||||||
| Realized Average Bill Rate1 |
$ | 412 | $ | 362 | $ | 410 | $ | 421 | $ | 396 | $ | 416 | $ | 409 | $ | 416 | $ | 449 | $ | 402 | $ | 413 | $ | 408 | ||||||||||||||||||||||||
| Utilization2 |
71% | 70% | 65% | 62% | 64% | 62% | 71% | 71% | 64% | 72% | 75% | 76% | ||||||||||||||||||||||||||||||||||||
| FORENSIC AND LITIGATION CONSULTING |
||||||||||||||||||||||||||||||||||||||||||||||||
| Billable Headcount (as of period end) |
1,059 | 1,076 | 1,061 | 1,061 | 999 | 969 | 965 | 952 | 952 | 939 | 930 | 955 | ||||||||||||||||||||||||||||||||||||
| Realized Average Bill Rate1 |
$ | 323 | $ | 317 | $ | 317 | $ | 322 | $ | 324 | $ | 307 | $ | 319 | $ | 314 | $ | 318 | $ | 328 | $ | 306 | $ | 323 | ||||||||||||||||||||||||
| Utilization2 |
71% | 75% | 68% | 71% | 67% | 67% | 66% | 66% | 63% | 63% | 68% | 70% | ||||||||||||||||||||||||||||||||||||
| ECONOMIC CONSULTING |
||||||||||||||||||||||||||||||||||||||||||||||||
| Billable Headcount (as of period end) |
525 | 538 | 530 | 530 | 528 | 499 | 476 | 474 | 474 | 467 | 467 | 457 | ||||||||||||||||||||||||||||||||||||
| Realized Average Bill Rate1 |
$ | 522 | $ | 523 | $ | 503 | $ | 506 | $ | 512 | $ | 505 | $ | 493 | $ | 493 | $ | 482 | $ | 495 | $ | 496 | $ | 479 | ||||||||||||||||||||||||
| Utilization2 |
78% | 72% | 81% | 74% | 79% | 82% | 89% | 81% | 80% | 79% | 80% | 86% | ||||||||||||||||||||||||||||||||||||
| TECHNOLOGY3 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Billable Headcount (as of period end) |
328 | 321 | 306 | 306 | 297 | 285 | 275 | 277 | 277 | 283 | 311 | 304 | ||||||||||||||||||||||||||||||||||||
| STRATEGIC COMMUNICATIONS3 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Billable Headcount (as of period end) |
566 | 584 | 590 | 590 | 617 | 611 | 619 | 593 | 593 | 597 | 599 | 596 | ||||||||||||||||||||||||||||||||||||
| 1 | For engagements where revenues are based on number of hours worked by our billable professionals, average billable rate per hour is calculated by dividing revenues (excluding revenues from success fees, pass-through and outside consultants) for a period by the number of hours worked on client assignments during the same period. |
| 2 | We calculate the utilization rate for our billable professionals by dividing the number of hours that all of our billable professionals worked on client assignments during a period by the total available working hours for all of our billable professionals during the same period. Available hours are determined by the standard hours worked by each employee, adjusted for part-time hours, local country standard work weeks and local country holidays. Available working hours include vacation and professional training days, but exclude holidays. Utilization rates are presented for our segments that primarily bill clients on an hourly basis. |
| 3 | We have not presented an average billable rate per hour or utilization for our Technology and Strategic Communications segments as most of the revenues of these segments are not based on billable hours. |
| FTI Consulting, Inc. | Page 3 |
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FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE
(unaudited)
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| All numbers in $000s, except for per share data |
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| Q2 2014 | Q1 2014 | FY2013 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | FY2012 | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | |||||||||||||||||||||||||||||||||||||
| CONSOLIDATED |
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| Net Income (Loss) |
$ | 17,247 | $ | 18,117 | $ | (10,594 | ) | $ | (7,139 | ) | $ | (50,621 | ) | $ | 23,486 | $ | 23,680 | $ | (36,986 | ) | $ | (85,877 | ) | $ | 22,713 | $ | 7,747 | $ | 18,431 | |||||||||||||||||||
| Interest income and other |
(1,448 | ) | (1,003 | ) | (1,748 | ) | (46 | ) | (1,152 | ) | 387 | (937 | ) | (5,659 | ) | (1,156 | ) | (1,584 | ) | 363 | (3,282 | ) | ||||||||||||||||||||||||||
| Interest expense |
12,908 | 12,655 | 51,376 | 12,776 | 12,814 | 13,071 | 12,715 | 56,731 | 13,124 | 13,208 | 15,195 | 15,204 | ||||||||||||||||||||||||||||||||||||
| Income Tax Provision |
10,225 | 10,348 | 42,405 | 5,859 | 3,360 | 23,315 | 9,871 | 40,100 | 13,728 | 12,251 | 3,527 | 10,594 | ||||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of debt |
— | — | — | — | — | — | 4,850 | 4,850 | — | — | — | |||||||||||||||||||||||||||||||||||||
| Depreciation and Amortization |
8,416 | 8,585 | 32,541 | 8,323 | 8,196 | 8,016 | 8,006 | 29,604 | 7,444 | 7,152 | 7,512 | 7,496 | ||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets |
3,452 | 4,616 | 22,954 | 5,661 | 5,776 | 5,953 | 5,564 | 22,407 | 5,634 | 5,766 | 5,490 | 5,517 | ||||||||||||||||||||||||||||||||||||
| Special Charges |
9,364 | 38,414 | 27,568 | 10,419 | — | 427 | 29,557 | — | 2,775 | 26,782 | — | |||||||||||||||||||||||||||||||||||||
| Remeasurement of acquisition related contingent consideration |
(261 | ) | (2,122 | ) | (13,555 | ) | (5,339 | ) | — | (8,216 | ) | — | (5,228 | ) | (1,129 | ) | — | (4,099 | ) | — | ||||||||||||||||||||||||||||
| Goodwill impairment charge |
— | — | 83,752 | — | 83,752 | — | — | 110,387 | 110,387 | — | — | — | ||||||||||||||||||||||||||||||||||||
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| Adjusted EBITDA |
$ | 59,903 | $ | 51,196 | $ | 245,545 | $ | 47,663 | $ | 72,544 | $ | 66,012 | $ | 59,326 | $ | 245,763 | $ | 67,005 | $ | 62,281 | $ | 62,517 | $ | 53,960 | ||||||||||||||||||||||||
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| Earnings (Loss) Per Diluted Share |
$ | 0.42 | $ | 0.45 | $ | (0.27 | ) | $ | (0.18 | ) | $ | (1.29 | ) | $ | 0.58 | $ | 0.58 | $ | (0.92 | ) | $ | (2.15 | ) | $ | 0.55 | $ | 0.18 | $ | 0.43 | |||||||||||||||||||
| Loss on early extinguishment of debt, net of tax |
— | — | — | — | — | — | — | 0.07 | 0.07 | — | — | — | ||||||||||||||||||||||||||||||||||||
| Special Charges, net of tax |
0.14 | — | 0.59 | 0.41 | 0.18 | — | 0.01 | 0.47 | — | 0.05 | 0.42 | — | ||||||||||||||||||||||||||||||||||||
| Remeasurement of acquisition related contingent consideration, net of tax |
(0.01 | ) | (0.04 | ) | (0.30 | ) | (0.10 | ) | — | (0.20 | ) | — | (0.13 | ) | (0.03 | ) | — | (0.10 | ) | — | ||||||||||||||||||||||||||||
| Goodwill impairment charge, net of tax |
— | — | 2.14 | — | 2.14 | — | — | 2.74 | 2.77 | — | — | — | ||||||||||||||||||||||||||||||||||||
| Interim period impact of including goodwill impairment charges in the annual effective tax rate, net of tax |
— | — | — | 0.28 | (0.27 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Impact of denominator for diluted EPS1 |
— | — | (0.07 | ) | (0.02 | ) | (0.04 | ) | — | — | (0.06 | ) | (0.02 | ) | — | — | — | |||||||||||||||||||||||||||||||
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| Adjusted Earnings Per Diluted Share |
$ | 0.55 | $ | 0.41 | $ | 2.09 | $ | 0.39 | $ | 0.72 | $ | 0.38 | $ | 0.59 | $ | 2.17 | $ | 0.64 | $ | 0.60 | $ | 0.50 | $ | 0.43 | ||||||||||||||||||||||||
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| 1 | For FY 2013 and FY 2012 the Company reported a net loss. For such periods, the basic weighted average common shares outstanding equals the diluted weighted average common shares outstanding for purposes of calculating U.S. GAAP earnings per share because potentially dilutive securities would be antidilutive. For non-GAAP purposes, the per share and share amounts presented herein reflect the impact of the inclusion of share-based awards and convertible notes that are considered dilutive based on the impact of the add backs included in Adjusted Net Income above. |
| FTI Consulting, Inc. | Page 4 |
FTI CONSULTING, INC.
RECONCILIATION OF SEGMENT OPERATING INCOME TO ADJUSTED SEGMENT EBITDA
(unaudited)
All numbers in $000s
| Q2 2014 | Q1 2014 | FY2013 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | FY2012 | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | |||||||||||||||||||||||||||||||||||||
| CORPORATE FINANCE/RESTRUCTURING |
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| Segment Operating Income |
$ | 17,068 | $ | 8,607 | $ | 58,594 | $ | 9,869 | $ | 10,590 | $ | 21,436 | $ | 16,699 | $ | 80,970 | $ | 25,482 | $ | 19,024 | $ | 14,520 | $ | 21,944 | ||||||||||||||||||||||||
| Depreciation and Amortization |
854 | 791 | 3,449 | 908 | 919 | 855 | 767 | 3,066 | 788 | 713 | 775 | 789 | ||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets |
1,211 | 2,215 | 6,480 | 1,535 | 1,562 | 1,832 | 1,551 | 5,769 | 1,448 | 1,443 | 1,440 | 1,438 | ||||||||||||||||||||||||||||||||||||
| Special Charges |
— | — | 10,274 | 3,875 | 6,331 | — | 68 | 11,332 | — | 771 | 10,561 | — | ||||||||||||||||||||||||||||||||||||
| Remeasurement of acquisition related contingent consideration |
— | (662 | ) | (11,614 | ) | (5,339 | ) | — | (6,275 | ) | — | (5,221 | ) | (1,443 | ) | — | (3,778 | ) | — | |||||||||||||||||||||||||||||
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| Adjusted Segment EBITDA |
$ | 19,133 | $ | 10,951 | $ | 67,183 | $ | 10,848 | $ | 19,402 | $ | 17,848 | $ | 19,085 | $ | 95,916 | $ | 26,275 | $ | 21,951 | $ | 23,518 | $ | 24,171 | ||||||||||||||||||||||||
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| FORENSIC AND LITIGATION CONSULTING |
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| Segment Operating Income |
$ | 20,839 | $ | 25,402 | $ | 68,211 | $ | 16,017 | $ | 21,915 | $ | 19,177 | $ | 11,102 | $ | 45,809 | $ | 8,449 | $ | 14,062 | $ | 10,201 | $ | 13,097 | ||||||||||||||||||||||||
| Depreciation and Amortization |
1,019 | 1,015 | 3,958 | 1,000 | 997 | 937 | 1,024 | 4,073 | 1,011 | 981 | 1,024 | 1,057 | ||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets |
674 | 750 | 2,142 | 539 | 512 | 579 | 512 | 2,414 | 612 | 778 | 508 | 516 | ||||||||||||||||||||||||||||||||||||
| Special Charges |
— | — | 2,111 | — | 1,938 | — | 173 | 8,276 | — | 468 | 7,808 | — | ||||||||||||||||||||||||||||||||||||
| Remeasurement of acquisition related contingent consideration |
(261 | ) | (673 | ) | (1,941 | ) | — | — | (1,941 | ) | — | (6 | ) | 315 | — | (321 | ) | — | ||||||||||||||||||||||||||||||
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| Adjusted Segment EBITDA |
$ | 22,271 | $ | 26,494 | $ | 74,481 | $ | 17,556 | $ | 25,362 | $ | 18,752 | $ | 12,811 | $ | 60,566 | $ | 10,387 | $ | 16,289 | $ | 19,220 | $ | 14,670 | ||||||||||||||||||||||||
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| ECONOMIC CONSULTING |
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| Segment Operating Income |
$ | 16,840 | $ | 12,430 | $ | 86,714 | $ | 20,481 | $ | 21,708 | $ | 19,530 | $ | 24,995 | $ | 71,992 | $ | 20,311 | $ | 17,810 | $ | 16,551 | $ | 17,320 | ||||||||||||||||||||||||
| Depreciation and Amortization |
981 | 1,081 | 3,671 | 1,024 | 979 | 863 | 805 | 2,863 | 732 | 702 | 724 | 705 | ||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets |
222 | 306 | 1,808 | 477 | 523 | 410 | 398 | 1,615 | 416 | 402 | 398 | 399 | ||||||||||||||||||||||||||||||||||||
| Special Charges |
— | — | 11 | — | 15 | — | (4 | ) | 991 | — | 173 | 818 | — | |||||||||||||||||||||||||||||||||||
| Remeasurement of acquisition related contingent consideration |
— | (787 | ) | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
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| Adjusted Segment EBITDA |
$ | 18,043 | $ | 13,030 | $ | 92,204 | $ | 21,982 | $ | 23,225 | $ | 20,803 | $ | 26,194 | $ | 77,461 | $ | 21,459 | $ | 19,087 | $ | 18,491 | $ | 18,424 | ||||||||||||||||||||||||
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| TECHNOLOGY |
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| Segment Operating Income |
$ | 10,905 | $ | 13,066 | $ | 38,038 | $ | 8,909 | $ | 9,755 | $ | 11,292 | $ | 8,082 | $ | 33,642 | $ | 10,239 | $ | 10,445 | $ | 4,757 | $ | 8,201 | ||||||||||||||||||||||||
| Depreciation and Amortization |
3,981 | 4,064 | 14,661 | 3,773 | 3,642 | 3,611 | 3,635 | 12,501 | 3,239 | 3,098 | 3,142 | 3,022 | ||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets |
218 | 218 | 7,940 | 1,988 | 1,982 | 1,985 | 1,985 | 7,946 | 1,986 | 1,984 | 1,984 | 1,992 | ||||||||||||||||||||||||||||||||||||
| Special Charges |
— | — | 16 | — | 2 | — | 14 | 3,114 | — | 148 | 2,966 | — | ||||||||||||||||||||||||||||||||||||
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| Adjusted Segment EBITDA |
$ | 15,104 | $ | 17,348 | $ | 60,655 | $ | 14,670 | $ | 15,381 | $ | 16,888 | $ | 13,716 | $ | 57,203 | $ | 15,464 | $ | 15,675 | $ | 12,849 | $ | 13,215 | ||||||||||||||||||||||||
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| STRATEGIC COMMUNICATIONS |
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| Segment Operating Income (Loss) |
$ | 4,030 | $ | 1,005 | $ | (72,129 | ) | $ | 4,240 | $ | (81,490 | ) | $ | 3,394 | $ | 1,727 | $ | (97,298 | ) | $ | (103,459 | ) | $ | 4,874 | $ | (1,370 | ) | $ | 2,657 | |||||||||||||||||||
| Depreciation and Amortization |
677 | 597 | 2,464 | 566 | 575 | 678 | 645 | 2,555 | 642 | 544 | 669 | 700 | ||||||||||||||||||||||||||||||||||||
| Amortization of other intangible assets |
1,127 | 1,127 | 4,584 | 1,122 | 1,197 | 1,147 | 1,118 | 4,663 | 1,172 | 1,159 | 1,160 | 1,172 | ||||||||||||||||||||||||||||||||||||
| Special Charges |
— | — | 66 | — | 2 | — | 64 | 4,712 | — | 201 | 4,511 | — | ||||||||||||||||||||||||||||||||||||
| Goodwill impairment charge |
— | — | 83,752 | — | 83,752 | — | — | 110,387 | 110,387 | — | — | — | ||||||||||||||||||||||||||||||||||||
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| Adjusted Segment EBITDA |
$ | 5,834 | $ | 2,729 | $ | 18,737 | $ | 5,928 | $ | 4,036 | $ | 5,219 | $ | 3,554 | $ | 25,019 | $ | 8,742 | $ | 6,778 | $ | 4,970 | $ | 4,529 | ||||||||||||||||||||||||
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| UNALLOCATED CORPORATE EXPENSES |
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| Operating Loss |
$ | (30,750 | ) | $ | (20,393 | ) | $ | (97,989 | ) | $ | (48,066 | ) | $ | (18,077 | ) | $ | (14,570 | ) | $ | (17,276 | ) | $ | (76,079 | ) | $ | (16,353 | ) | $ | (19,627 | ) | $ | (17,827 | ) | $ | (22,272 | ) | ||||||||||||
| Depreciation and Amortization |
904 | 1,037 | 4,338 | 1,052 | 1,084 | 1,072 | 1,130 | 4,546 | 1,031 | 1,114 | 1,177 | 1,223 | ||||||||||||||||||||||||||||||||||||
| Special Charges |
9,364 | — | 25,936 | 23,693 | 2,131 | — | 112 | 1,132 | — | 1,014 | 118 | — | ||||||||||||||||||||||||||||||||||||
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| $ | (20,482 | ) | $ | (19,356 | ) | $ | (67,715 | ) | $ | (23,321 | ) | $ | (14,862 | ) | $ | (13,498 | ) | $ | (16,034 | ) | $ | (70,401 | ) | $ | (15,322 | ) | $ | (17,499 | ) | $ | (16,532 | ) | $ | (21,049 | ) | |||||||||||||
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| Total Adjusted EBITDA |
$ | 59,903 | $ | 51,196 | $ | 245,545 | $ | 47,663 | $ | 72,544 | $ | 66,012 | $ | 59,326 | $ | 245,764 | $ | 67,005 | $ | 62,281 | $ | 62,516 | $ | 53,960 | ||||||||||||||||||||||||
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| FTI Consulting, Inc. | Page 5 |
FTI CONSULTING, INC.
NON GAAP FINANCIAL DATA RECONCILIATIONS
END NOTES
Beginning with the quarter ended March 31, 2014, the definitions of each of these non-GAAP measures have been updated to exclude the impact of changes in the fair value of acquisition-related contingent consideration liabilities. Prior period amounts included herein have been reclassified to conform to the current period’s presentation. Totals may not sum due to rounding differences.
We define Adjusted Earnings per Diluted Share (“Adjusted EPS”) as earnings per diluted share, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. 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.
We define Segment Operating Income as a segment’s share of consolidated operating income. We define Total Segment Operating Income 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 EBITDA 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 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 define Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment’s ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, provide management and investors with a more complete understanding of our operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges, and goodwill impairment charges. In addition, EBITDA 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 to the operating results of other companies.
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.
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FTI Consulting, Inc. |
Page 6 |
