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): August 5, 2015
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 7.01 | Regulation FD Disclosure. |
FTI Consulting, Inc. (“FTI Consulting”) intends to use a presentation from time to time in its discussions with investors (the “Presentation”). The Presentation addresses FTI Consulting’s financial results, operating data, and past, present and future business drivers. A copy of the Presentation is furnished as Exhibit 99.1 and has been posted to the FTI Consulting website at www.fticonsulting.com.
The Presentation includes information regarding Segment Operating Income, Total Segment Operating Income, Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted EBITDA Margin, Adjusted Segment EBITDA Margin, Total Adjusted Segment EBITDA, Adjusted Net Income and Adjusted Earnings per Share.
FTI Consulting defines “Segment Operating Income (Loss)” as a segment’s share of consolidated operating income (loss). FTI Consulting defines “Total Segment Operating Income (Loss)” as the total of Segment Operating Income (Loss) for all segments, which excludes unallocated corporate expenses. FTI Consulting uses Segment Operating Income (Loss) for the purpose of calculating Adjusted Segment EBITDA. FTI Consulting defines “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 loss 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. FTI Consulting defines “Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage of total revenues, and “Adjusted Segment EBITDA Margin” as Adjusted Segment EBITDA as a percentage of a segment’s share of revenue. Although Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted EBITDA Margin, Adjusted Segment EBITDA Margin 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 supplemental operating performance measures. FTI Consulting uses Adjusted Segment EBITDA to internally evaluate the financial performance of each of its 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 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 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 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 to the operating results of other companies.
FTI Consulting defines “Adjusted Net Income” and “Adjusted Earnings per Diluted Share” (“Adjusted EPS”) as net income (loss) and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. 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 non-GAAP measure, when considered together with its GAAP financial results, provides management and investors with a more complete understanding of its 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 accompanying tables to the press release.
1
The Presentation contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are necessarily based on certain assumptions as of the date such forward-looking statements were made and are subject to significant risks and uncertainties. FTI Consulting does not undertake any responsibility for the adequacy, accuracy or completeness or to update any of these statements in the future. Actual future performance and results could differ from that contained in or suggested by the forward-looking statements.
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 | August 2015 Investor Presentation 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: August 7, 2015 | By: | /S/ DAVID JOHNSON | ||||
| David Johnson Chief Financial Officer | ||||||
3
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | August 2015 Presentation of FTI Consulting, Inc. | |
 FTI Consulting, Inc. Current Investor Presentation August 2015 Exhibit 99.1 |
 Cautionary Note About Forward-Looking Statements 2 This presentation 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 medium-term growth targets or other future financial results. When used in this press release, words such as "anticipates," “aspirational,” "estimates," "expects," “goals,” "intends," "believes,” "forecasts," “targets,” “objectives” 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 medium-term growth targets and our future financial results, are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs, projections
and growth targets
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,
estimates
or
growth
targets
will
be
achieved,
and
the
Company's
actual
results
may
differ
materially
from
our
expectations,
beliefs,
estimates
and
growth
targets.
The
Company
has
experienced
fluctuating
revenues,
operating
income
and
cash
flow
in
prior
periods
and
expects
that
this
will
occur
from
time
to
time
in
the
future.
Other
factors
that
could
cause
such
differences
include
declines
in
demand
for,
or
changes
in,
the
mix
of
services
and
products
that
we
offer,
the
mix
of
the
geographic
locations
where
our
clients
are
located
or
where
services
are
performed,
adverse
financial,
real
estate
or
other
market
and
general
economic
conditions,
which
could
impact
each
of
our
segments
differently,
the
pace
and
timing
of
the
consummation
and
integration
of
past
and
future
acquisitions,
the
Company's
ability
to
realize
cost
savings
and
efficiencies,
competitive
and
general
economic
conditions,
retention
of
staff
and
clients
and
other
risks
described
under
the
heading
"Item
1A
Risk
Factors"
in
the
Company's
most
recent
Form
10-K
filed
with
the
SEC
and
in
the
Company's
other
filings
with
the
SEC,
including
the
risks
set
forth
under
"Risks
Related
to
Our
Reportable
Segments"
and
"Risks
Related
to
Our
Operations.”
We
are
under
no
duty
to
update
any
of
the
forward
looking
statements
to
conform
such
statements
to
actual
results
or
events
and
do
not
intend
to
do
so. |
 FTI Consulting: A Leader Among Leaders 3 FCN Publicly traded $1.7BLN Market capitalization (1) 1982 Year founded 4,400+ Total employees worldwide 440+ Senior Managing Directors 2 Nobel Laureates 10/10 Advisor to the world’s top 10 bank holding companies 94/100 Advisor to 94 of the world’s top 100 law firms 47/100 47 of Global 100 corporations are clients 16 Experts in 16 industry specialties 80 Offices in 79 cities around the globe (1)Total Shares outstanding times the closing share price as of December 31, 2014. |
 Overview 4 New management team (CEO, CFO, CHRO, Chief Strategy, General Counsel) over the past 18 months – focused on analysis, accountability and discipline FTI Consulting is a leading professional services company with strong people and strong positions – corporations and law firms come to FTI Consulting when there is a critical need Willingness to invest EBITDA in key growth areas where we have strong people and strong positions Committed to building a profitable business with sustainable underlying growth, regardless of economic conditions Shifting from a capital driven to an organic growth strategy – with an emphasis on profitable revenue growth Established medium-term financial target of Adjusted EPS of $2.50+ in 2016 |
 Balanced and Diversified Portfolio Technology Technology Computer Forensics & Investigations E-discovery Software & Services Discovery Consulting Strategic Communications Strategic Communications Corporate Communications Creative Engagement & Digital Communications Crisis Communications Employee Engagement & Change Communications Financial Communications Litigation Communications M&A Communications Public Affairs Restructuring & Financial Issues Shareholder Activism & Proxy Advisory Strategy Consulting & Research Forensic and Litigation Consulting Forensic and Litigation Consulting Business Insurance Claims Compliance, Monitoring & Receivership Construction & Environmental Solutions Dispute Advisory Services Financial Enterprise & Data Analytics Financial Services Forensic Accounting & Advisory Services Global Risk & Investigations Practice Government Contracts Health Solutions Insurance Intellectual Property Trial Services Economic Consulting Economic Consulting Antitrust & Competition Economics Business Valuation Center for Healthcare & Economics Intellectual Property International Arbitration Labor & Employment Public Policy Regulated Industries Securities Litigation & Risk Management Corporate Finance/Restructuring Corporate Finance/Restructuring Bankruptcy Support Services Interim Management Services Investment Banking Litigation Support Business Transformation Services Performance Improvement Private Equity Advisory Restructuring/Turnaround Services Transaction Advisory Services Valuation & Financial Advisory Services Q2 2015 Segment Revenues 5 Q2 2015 Segment EBITDA |
 Corporate Finance/Restructuring 6 Services Bankruptcy Support Services Interim Management Services Investment Banking Litigation Support Business Transformation Services Performance Improvement Private Equity Advisory Restructuring/Turnaround Services Corporations/C-Suite Boards of Directors Equity Sponsors Secured Lenders Unsecured Creditors Clients Transaction Advisory Services Valuation & Financial Advisory Services (in thousands, except percentages and headcount data) (unaudited)
See accompanying financial tables and “End Notes: FTI
Consulting Non-GAAP Data Reconciliations” for the definition and reconciliations of Adjusted Segment EBITDA, which is a non-GAAP financial measure, to the most directly comparable GAAP measure, and the definition of Adjusted
Segment EBITDA Margin. 2010
2011
2012
2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
2014
Q1 2015
Q2 2015
Segment Revenue
$396,216
$364,409
$394,718
$382,586
$93,982
$104,020
$100,041
$93,072
$391,115
$106,212
$109,133
Segment Gross Profit
Margin
41.8%
37.4%
39.5%
35.9%
31.9%
35.1%
33.8%
29.3%
32.6%
39.8%
37.6%
Segment SG&A
$59,629
$60,499
$61,027
$71,966
$19,786
$18,191
$19,047
$18,358
$75,382
$20,528
$19,695
Adjusted Segment
EBITDA
$ 108,152
$75,942
$95,916
$67,183
$10,951
$19,133
$15,534
$9,874
$55,492
$22,480
$22,032
Adjusted Segment
EBITDA Margin
27.3%
20.8%
24.3%
17.6%
11.7%
18.4%
15.5%
10.6%
14.2%
21.2%
20.2%
Segment Billable
Headcount
620
587
697
737
726
713
722
706
706
735
775 |
 Corporate Finance/Restructuring (continued) 7 The Corporate Finance/Restructuring segment focuses on strategic, operational, financial and capital needs of businesses by addressing the full spectrum of financial and transactional challenges faced by companies, boards,
private equity sponsors, creditor constituencies and other
stakeholders.
Medium–Term Initiatives
Reinforce
core
positions
e.g.,
TMT,
retail,
company-side,
interim management, creditor rights
Drive
organic
growth
in
new/adjacent
businesses
where
we
have the right to win, e.g., Office of the CFO, carve
out Drive
overseas
bets
to
fruition
e.g.,
EMEA
transaction
advisory
services, EMEA Tax
Focus
on
profitability
enhancements
e.g.,
geographic
rationalization, cost control, engagement profitability
improvements
Segment Offering
Revenues
increased $5.1 million, or 4.9%, to $109.1 million for
the quarter ended June
30, 2015 compared to $104.0 million
for the same prior year period.
Excluding the foreign currency translation impact, revenue
increased 8.9%.
The increase was primarily due to higher demand for the
segment’s distressed and non-distressed
service offerings in North America and for our
EMEA-based transaction advisory services
practice, partially offset by a decline in demand in our Asia Pacific bankruptcy and restructuring practices and lower
success fees in North America.
Gross profit increased $4.5 million, or 12.4%, to $41.0 million
for the quarter ended June
30, 2015 compared to $36.5 million
for the same prior year period. Gross profit margin increased
to 37.6% for the quarter ended June
30, 2015 compared to 35.1%
for the same prior year period.
The increase in gross margin was due to an increase in higher
margin distressed activity coupled with higher
utilization in North America, growth in
distressed and the transaction advisory services
practice in the EMEA region, which was partially
offset by lower restructuring activity in the Asia Pacific region. Adjusted Segment EBITDA increased $2.9 million, or 15.2%, to $22.0 million for the quarter ended June 30, 2015 compared to
$19.1 million for the same prior year period.
Q2 2015 Form 10–Q Management’s Discussion &
Analysis |
 Forensic and Litigation Consulting 8 Services Clients Corporations Boards of Directors Governments Law Firms Business Insurance Claims Compliance, Monitoring & Receivership Construction & Environmental Solutions Dispute Advisory Services Financial Enterprise & Data Analytics (“FEDA”)
Financial Services
Forensic Accounting & Advisory Services
(“FAAS”) Global Risk & Investigations
Practice (“GRIP”) Government
Contracts Health Solutions
Insurance
Intellectual Property
Trial Services
2010
2011
2012
2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
2014
Q1 2015
Q2 2015
Segment Revenue
$379,780
$428,730
$407,586
$433,632
$121,429
$119,081
$121,732
$121,138
$483,380
$123,265
$126,131
Segment Gross Profit
Margin
37.5%
36.5%
33.8%
35.9%
39.2%
36.7%
35.0%
35.4%
36.6%
36.3%
35.2%
Segment SG&A
$69,712
$78,745
$80,842
$84,616
$22,121
$22,481
$21,409
$24,696
$90,707
$23,634
$25,347
Adjusted Segment
EBITDA
$76,402
$80,923
$60,566
$74,481
$26,494
$22,271
$22,260
$19,443
$90,468
$22,071
$19,979
Adjusted Segment
EBITDA Margin
20.1%
18.9%
14.9%
17.2%
21.8%
18.7%
18.3%
16.1%
18.7%
17.9%
15.8%
Segment Billable
Headcount
911
957
952
1,061
1,076
1,059
1,135
1,154
1,154
1,145
1,169
(in thousands, except percentages and headcount data)
(unaudited) See accompanying financial tables and
“End Notes: FTI Consulting Non-GAAP Data Reconciliations” for the definition and reconciliations of Adjusted Segment EBITDA, which is a non-GAAP financial measure, to the most directly comparable GAAP measure, and the definition of Adjusted
Segment EBITDA Margin. |
 Forensic and Litigation Consulting (continued) 9 Reinvest behind core areas of strength e.g., FAAS, FEDA Grow key regions where we have a right to win e.g., construction & environmental solutions Invest behind people to expand key businesses e.g., insurance, cyber security Segment Offering The Forensic and Litigation Consulting segment provides a complete range of multidisciplinary, independent dispute advisory, investigative, data acquisition/analysis
and forensic accounting services. Our professionals
combine end-to-end capabilities when
clients face high stakes litigation, arbitration
and compliance investigations and regulatory
scrutiny. Medium–Term
Initiatives Revenues $7.1 million, or 5.9%, to $126.1 million for the three
months ended June
30, 2015 compared to $119.1
million for the
same prior year period.
Excluding the estimated impact of foreign currency translation,
revenue increased 7.9%.
Growth was driven by higher demand and success fees in our
health solutions practice and increased demand
for our investigations and global construction
solutions practices, partially offset by declines
in our disputes and financial and enterprise data
analytics practices. Gross profit increased $0.7 million, or 1.5%, to $44.4 million for
the three months ended June
30, 2015 compared to
$43.7
million for the same prior year period. Gross profit margin
decreased to 35.2% for the three months ended
June 30, 2015
compared to 36.7% for the same prior year period.
The decrease in gross profit margin is related to lower
utilization in most practices and increased
investment in new hires to support the EMEA and
Asia Pacific investigation practices, partially
offset by improved performance and success fees
in our health solutions practice. Adjusted
Segment EBITDA decreased by $2.3 million, or 10.3%,
to $20.0
million for the three months ended June
30, 2015
compared to $22.3
million for the same prior year period.
Q2 2015 Form 10–Q Management’s Discussion &
Analysis |
 Economic Consulting 10 Antitrust & Competition Economics Business Valuation Center for Healthcare Economics & Policy Intellectual Property International Arbitration Labor & Employment Public Policy Corporations Government Entities Law Firms Services Clients Regulated Industries Securities Litigation & Risk Management 2010 2011 2012 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Segment Revenue $255,660 $ 353,981 $391,622 $447,366 $106,851 $117,227 $120,494 $106,468 $451,040 $106,081 $108,698 Segment Gross Profit Margin 33.2% 31.4% 32.3% 32.9% 27.0% 27.6% 27.6% 25.5% 27.0% 24.6% 26.9% Segment SG&A $37,879 $46,802 $51,912 $58,282 $16,880 $15,242 $ 15,683 $18,354 $66,159 $15,501 $14,858 Adjusted Segment EBITDA $49,481 $67,028 $77,461 $92,204 $13,030 $18,043 $18,426 $9,783 $59,282 $11,556 $15,292 Adjusted Segment EBITDA Margin 19.4% 18.9% 19.8% 20.6% 12.2% 15.4% 15.3% 9.2% 13.1% 10.9% 14.1% Segment Billable Headcount 297 433 474 530 538 525 551 574 574 566 554 (in thousands, except percentages and headcount data) (unaudited)
See accompanying financial tables and “End Notes: FTI
Consulting Non-GAAP Data Reconciliations” for the definition and reconciliations of Adjusted Segment EBITDA, which is a non-GAAP financial measure, to the most directly comparable GAAP measure, and the definition of Adjusted
Segment EBITDA Margin. |
 Economic Consulting (continued) 11 The Economic Consulting segment provides analysis of complex economic issues. We help our clients with legal,
regulatory and international arbitration proceedings;
strategic decision making; and public policy
debates in the U.S. and around the world. We
deliver sophisticated economic analysis and
modeling of issues arising in M&A
transactions, complex antitrust litigation, commercial
disputes, international arbitration, regulatory
proceedings and a wide range of securities
litigation. Our statistical and economic experts
help clients analyze complex economic issues, such
as the economic impact of deregulation on a
particular industry or the amount of damages suffered by a
business as a result of particular
events. Medium–Term Initiatives
Continue driving Compass Lexecon Expand international arbitration, energy and Center for
Healthcare Economics and Policy
offerings Continue to expand cross-segment collaboration
Segment Offering
Revenues
decreased $8.5 million, or 7.3%, to $108.7 million for
the three months ended June
30, 2015 compared to $117.2
million for the same prior year period.
Revenues increased $2.1 million, or 1.8%, due to acquisitions
as compared to the same prior year period.
Excluding the impact from foreign currency
translation, revenues declined organically $7.4
million primarily due to decreased demand in our
non-M&A related antitrust and financial
economics services, partially offset by higher demand for international arbitration services. Gross profit decreased $3.1 million, or 9.6%, to $29.3 million for
the three months ended June
30, 2015 compared to $32.4
million for the same prior year period. Gross profit margin
decreased to 26.9% for the three months ended
June 30, 2015
compared to 27.6% for the same prior year period.
The decrease in gross profit margin was the result of lower
utilization in our antitrust and financial
economics services, partially offset by higher
realized bill rates and utilization in our energy
practice. Adjusted Segment EBITDA decreased $2.8 million, or 15.2%, to $15.3 million for the three months ended June 30, 2015, compared to $18.0 million for the same prior year period.
Q2 2015 Form 10–Q Management’s Discussion &
Analysis |
 Clients Technology 12 Corporations Government Agencies Law Firms Computer Forensics & Investigations Discovery Consulting E-discovery Software & Services Software & Services 2010 2011 2012 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Segment Revenue $176,607 $218,738 $195,194 $202,663 $60,063 $60,720 $62,359 $58,168 $241,310 $54,654 $61,826 Segment Gross Profit Margin 62.7% 60.0% 54.9% 52.2% 48.9% 45.7% 49.7% 47.8% 48.0% 44.7% 43.6% Segment SG&A $ 59,721 $65,322 $62,436 $59,890 $16,079 $16,648 $17,017 $18,418 $68,162 $18,026 $18,297 Adjusted Segment EBITDA $64,358 $77,011 $57,203 $60,655 $17,348 $15,104 $17,835 $13,258 $63,545 $10,073 $12,166 Adjusted Segment EBITDA Margin 36.4% 35.2% 29.3% 29.9% 28.9% 24.9% 28.6% 22.8% 26.3% 18.4% 19.7% Segment Billable Headcount 257 290 277 306 321 328 335 344 344 360 364 (in thousands, except percentages and headcount data) (unaudited)
See accompanying financial tables and “End Notes: FTI
Consulting Non-GAAP Data Reconciliations” for the definition and reconciliations of Adjusted Segment EBITDA, which is a non-GAAP financial measure, to the most directly comparable GAAP measure, and the definition of Adjusted
Segment EBITDA Margin. |
 Technology (continued) 13 The Technology segment is a leading provider of software,
services and consulting for e-discovery and information
management. We assist clients with internal,
regulatory and global investigations, early case
assessment, litigation and joint defense,
antitrust and competition investigations,
including pre-merger notification “Second
Request”, and the secure management, analysis and use
of critical corporate information. We provide a
comprehensive suite of software and services to
help clients locate, review and produce
electronically stored information
(“ESI”) including e-mail, computer files, voicemail, instant messaging and financial and transactional data. Our proprietary Ringtail® software
and Acuity® managed review are used for e-discovery
and document review in litigation and secure
information management.
Medium–Term Initiatives
Segment Offering
Revenues
increased $ 1.1 million, or 1.8%, to $61.8 million for
the three months ended June 30, 2015 compared to
$60.7 million for the same prior year
period. Excluding the foreign currency translation
impact, revenues increased 2.8%.
Revenue increase was due to higher level of M&A related
second requests, partially offset by a decline in
cross border investigations and reduced pricing
for certain services. Gross profit decreased $0.8 million, or 2.9%, to $27.0 million for
the three months ended June 30, 2015 compared to $27.8
million for the same prior year period. Gross
profit margin decreased to 43.6% for the three
months ended June 30, 2015 compared to 45.7% for
the same prior year period. The decrease in gross
profit margin was due to lower realized pricing
for certain services, investment in global personnel to support future growth opportunities, and increases in lower
margin services as a percentage of total revenues.
Adjusted Segment EBITDA decreased $2.9 million, or 19.5%, to $12.2 million for the three months ended June 30, 2015 compared to $15.1 million for the same prior year period.
Increased investment in sales and marketing Ongoing investment in new products and services and
geographic expansion to stay leading edge with respect to the most complicated, major corporate events Q2 2015 Form 10–Q Management’s Discussion & Analysis |
 Strategic Communications 14 Services Corporate Communications Creative Engagement & Digital Communications Crisis Communications Employee Engagement & Change Communications Financial Communications Litigation Communications M&A Communications Public Affairs Restructuring & Financial Issues CEOs CFOs Chief Communications Officers Investor Relations Officers Boards of Directors Clients Shareholder Activism & Proxy Advisory Strategy Consulting & Research 2010 2011 2012 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014 Q1 2015 Q2 2015 Segment Revenue $193,198 $200,910 $187,750 $186,245 $43,227 $53,276 $46,552 $46,312 $189,367 $42,126 $43,369 Segment Gross Profit Margin 37.4% 37.2% 36.9% 34.7% 35.6% 34.5% 37.1% 39.7% 36.7% 37.4% 36.9% Segment SG&A $46,469 $50,919 $46,852 $47,874 $13,128 $13,084 $11,154 $11,524 $48,890 $10,444 $10,747 Adjusted Segment EBITDA $28,971 $26,801 $25,019 $18,737 $2,729 $5,834 $ 6,605 $7,420 $22,588 $5,752 $5,631 Adjusted Segment EBITDA Margin 15.0% 13.3% 13.3% 10.1% 6.3% 10.9% 14.2% 16.0% 11.9% 13.7% 13.0% Segment Billable Headcount 583 582 593 590 584 566 549 566 566 556 551 (in thousands, except percentages and headcount data) (unaudited)
See accompanying financial tables and “End Notes: FTI
Consulting Non-GAAP Data Reconciliations” for the definition and reconciliations of Adjusted Segment EBITDA, which is a non-GAAP financial measure, to the most directly comparable GAAP measure, and the definition of Adjusted
Segment EBITDA Margin. |
 Strategic Communications (continued) 15 The Strategic Communications segment provides advice and consulting services relating to financial and corporate communications and investor relations, reputation management and brand communications, public affairs, business consulting and digital design and marketing. Medium–Term Initiatives Reinforce financial and corporate communications positions Continued expansion of public affairs practice Focus on EBIT improvement Segment Offering Revenues decreased $9.9 million, or 18.6%, to $43.4 million for
the quarter ended June
30, 2015 compared to $53.3 million for
the same prior year period.
Excluding the foreign currency translation impact, revenues
decreased 11.3%.
The revenue decrease was predominantly due to a decrease
in pass-through income, with the remainder of
the decrease coming from lower project-based
revenues in our North America and EMEA regions
and a decrease in retainer-based revenues in
our North America region, partially offset by
growth in project-based revenues in our Asia Pacific
region. Gross profit decreased $2.4 million, or 12.9%, to $16.0 million
for the quarter ended June
30, 2015 compared to $18.4 million
for the same prior year period. Gross profit margin increased
to 36.9% for the quarter ended June
30, 2015 compared to 34.5%
for the same prior year period.
Gross profit margin increase was primarily due to improved
revenue mix with a lower proportion of revenues
coming from low margin pass-through
income. Adjusted Segment EBITDA decreased $0.2 million, or 3.5%, to $5.6 million for the quarter ended June 30, 2015 compared to $5.8 million for the same prior year period. Q2 2015 Form 10–Q Management’s Discussion & Analysis |
 Financial Overview |
 Revenues and Adjusted Earnings Per Share 17 See accompanying financial tables and “End Notes: FTI Consulting Non-GAAP Data Reconciliations” for the
definition and reconciliations of Adjusted
Earnings Per Share, which is a non-GAAP financial measure, to the most directly comparable GAAP measure. $2.13 $2.37 $2.17 $2.09 $1.64 $0.57 $0.50 $1.95-$2.15 $2.50+ $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Q1 2015 Q2 2015 2015 Guidance 2016 Target Adjusted Earnings Per Share $1,401 $1,567 $1,577 $1,652 $1,756 $432 $449 $1,750-$1,850 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Q1 2015 Q2 2015 2015 Guidance Revenues |
 Financial Profile 18 (1) 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. Q2 2015 Q1 2015 Q2 2014 FY 2014 FY 2013 Cash and cash equivalents $ 239,988 $ 225,295 $ 94,412 $ 283,680 $ 205,833 Accounts receivable, net $ 549,300 $ 513,285 $ 579,737 $ 485,101 $ 476,445 Days sales outstanding ("DSO") 1 104 101 108 97 97 Net cash (used in) provided by operating activities $ (30,731) $ (51,333) $ (77,104) $ 135,401 $ 193,271 Purchases of property and equipment $ 17,533 $ 8,876 $ 21,778 $ 39,256 $ 42,544 Payments for acquisition of businesses, net of cash received $ 576 - $ 15,611 $ 23,467 $ 55,498 Purchase and retirement of common stock - - $ 4,367 $ 4,367 $ 66,763 Total debt $ 711,000 $ 711,000 $ 711,000 $ 711,000 $ 717,014 In thousands, except for DSOs |
 Appendix |
 FTI Technology recognized as a ‘Leader’ in
the 2015 Gartner ‘Magic Quadrant for
E- discovery Software’ report for third consecutive year Five professionals recognized as world leading
patent litigation expert witnesses in Intellectual
Asset Management ("IAM") magazine's Patent 1000 – The World's Leading Patent Professionals guide FTI Consulting named Global Turnaround
Consulting Firm of the Year by the Global M&A Network Five Forensic & Litigation Consulting professionals recognized by Who's Who Legal as world leading construction and
insurance experts
Second Quarter 2015 Awards & Accolades
20
FTI Consulting named 2015 Arbitration Expert Firm of the Year by Who’s Who Legal Honored with eight Turnaround Atlas
Awards from
the Global M&A Network, including engagements
with Momentive Performance Materials, IAP
Worldwide Services, Overseas Shipholding Group,
Classic Party Rentals, Preferred Sands, Unitek
Global Services, Clearlake Capital Group,
FiberTower
Network Services
Compass Lexecon named 2015 Competition Economist Firm of the Year and Janusz Ordover named Competition Economist Individual Expert
of the Year by Who’s Who Legal Ringtail recognized as a top online review
platform in 2015 Best of The National Law
Journal reader rankings |
 Financial Tables Q2 2015 – FY 2010 Reconciliations of Non-GAAP Financial Measures |
 Q2 2015 - FY 2010 Reconciliations of Net Income (Loss) to Adjusted Net Income and Earnings (Loss) Per Share to Adjusted
Earnings Per Share
22
Q2 2015
Q1 2015
2014
2013
2012
2011
2010
Net income (loss)
$21,709
$23,686
$58,807
($10,594)
($36,986)
$103,903
$65,984
Add back:
Special charges, net of tax
-
-
9,637
23,267
19,115
9,285
32,733
Goodwill impairment charge
-
-
-
83,752
110,387
-
-
Loss on early extinguishment of debt, net of tax
-
-
-
-
2,910
-
3,019
Remeasurement of acquisition-related contingent
consideration, net of taxes
(1,005)
-
(1,718)
(12,054)
(5,228)
(9,953)
-
Adjusted Net Income
(1)
$20,704
$23,686
$66,726
$84,371
$90,198
$103,235
$101,736
Earnings (loss) per common share –
diluted
$0.52
$0.57
$1.44
($0.27)
($0.92)
$2.39
$1.38
Add back:
Special charges, net of tax
-
-
0.24
0.59
0.47
0.21
0.69
Goodwill impairment charge
-
-
-
2.14
2.74
-
-
Loss on early extinguishment of debt, net of tax
-
-
-
-
0.07
-
0.06
Remeasurement
of acquisition-related contingent
consideration, net of taxes
(0.02)
-
(0.04)
(0.30)
(0.13)
(0.23)
-
Impact of denominator for diluted adjusted earnings per
common share
-
-
-
(0.07)
(0.06)
-
-
Adjusted earnings per common share –
diluted
(1)
$0.50
$0.57
$1.64
$2.09
$2.17
$2.37
$2.13
Weighted average number of common shares
outstanding –
diluted
41,696
41,324
40,729
40,421
41,578
43,473
47,664
In thousands, except for per share data
(1)
See “End Notes: FTI Consulting Non-GAAP Data
Reconciliations” for the definition of Adjusted Net Income and Adjusted Earnings per Share. |
 Q2 2015: Reconciliation of Net Income And Operating Income to
Adjusted EBITDA
23
(1)
See “End Notes: FTI Consulting Non-GAAP Data
Reconciliations” for the definition of Segment Operating Income, Adjusted EBITDA and Adjusted Segment EBITDA. In thousands Three Months Ended June 30, 2015 Corporate Finance/ Restructuring Forensic and Litigation Consulting Economic Consulting Technology Strategic Communications Unallocated Corporate Total Net income $21,709 Interest income and other (950) Interest expense 12,473 Income tax provision 13,922 Operating income (1) $21,906 $18,476 $14,282 $8,465 $4,126 ($20,101) $47,154 Depreciation and amortization 682 922 886 3,508 515 790 7,303 Amortization of other intangible assets 935 581 308 193 990 - 3,007 Remeasurement of acquisition-related contingent consideration (1,491) - (184) - - - (1,675) Adjusted EBITDA (1) $22,032 $19,979 $15,292 $12,166 $5,631 ($19,311) $55,789 |
 Q1 2015 and FY 2014: Reconciliation of Net Income And Operating Income to Adjusted EBITDA 24 Three Months Ended March 31, 2015 Corporate Finance/ Restructuring Forensic and Litigation Consulting Economic Consulting Technology Strategic Communications Corporate Total Net income $23,686 Interest income and other 137 Interest expense $12,368 Income tax provision $11,657 Operating income (1) $20,764 $20,474 $10,296 $6,198 $4,197 ($14,081) $47,848 Depreciation and amortization of intangible assets $1,716 $1,597 $1,260 $3,875 $1,555 $817 $10,820 Adjusted EBITDA (1) $22,480 $22,071 $11,556 $10,073 $5,752 ($13,264) $58,668 (1) See “End Notes: FTI Consulting Non-GAAP Data Reconciliations” for the definition of Segment Operating Income,
Adjusted EBITDA and Adjusted Segment EBITDA. In
thousands Year Ended December 31, 2014
Corporate
Finance/
Restructuring
Forensic and
Litigation
Consulting
Economic
Consulting
Technology
Strategic
Communications
Corporate
Total
Net income
$58,807
Interest income and other
($4,670)
Interest expense
$50,685
Income tax provision
$42,604
Operating income
(1)
$46,913
$83,180
$55,282
$46,906
$15,603
($100,458)
$147,426
Depreciation and amortization of
intangible assets
$3,568
$4,301
$4,068
$15,768
$2,562
$3,722
$33,989
Amortization of other intangible assets
$5,589
$3,613
$1,047
$852
$4,420
-
$15,521
Special charges
$84
$308
$12
$19
$3
$15,913
$16,339
Remeasurement of acquisition-related
contingent consideration
($662)
($934)
($1,127)
-
-
-
($2,723)
Adjusted EBITDA
(1)
$55,492
$90,468
$59,282
$63,545
$22,588
($80,823)
$210,552 |
 Q1 and Q2 2014: Reconciliation of Net Income And Operating
Income to Adjusted EBITDA
25
Three Months Ended March 31, 2014
Corporate
Finance/
Restructuring
Forensic and
Litigation
Consulting
Economic
Consulting
Technology
Strategic
Communications
Corporate
Total
Net income
$18,117
Interest income and other
($1,003)
Interest expense
$12,655
Income tax provision
$10,348
Operating income
(1)
$8,607
$25,402
$12,430
$13,066
$1,005
($20,393)
$40,117
Depreciation and amortization of
intangible assets
$3,006
$1,765
$1,387
$4,282
$1,724
$1,037
$13,201
Remeasurement of acquisition-related
contingent consideration
($662)
($673)
($787)
-
-
-
($2,122)
Adjusted EBITDA
(1)
$10,951
$26,494
$13,030
$17,348
$2,729
($19,356)
$51,196
(1)
See “End Notes: FTI Consulting Non-GAAP Data
Reconciliations” for the definition of Segment Operating Income, Adjusted EBITDA and Adjusted Segment EBITDA. In thousands Three Months Ended June 30, 2014 Corporate Finance/ Restructuring Forensic and Litigation Consulting Economic Consulting Technology Strategic Communications Corporate Total Net Income $17,247 Interest income and other ($1,448) Interest expense $12,908 Income tax provision $10,225 Operating income (1) $17,068 $20,839 $16,840 $10,905 $4,030 ($30,750) $38,932 Depreciation and amortization of intangible assets $2,065 $1,693 $1,203 $4,199 $1,804 $904 $11,868 Special charges - - - - - $9,364 $9,364 Remeasurement of acquisition-related contingent consideration - ($261) - - - - ($261) Adjusted EBITDA (1) $19,133 $22,271 $18,043 $15,104 $5,834 ($20,482) $59,903 |
 Q3 and Q4 2014: Reconciliation of Net Income And Operating
Income to Adjusted EBITDA
26
In thousands
(1)
See “End Notes: FTI Consulting Non-GAAP Data
Reconciliations” for the definition of Segment Operating Income (Loss), Adjusted EBITDA and Adjusted Segment EBITDA. Three Months Ended December 31, 2014 Corporate Finance/ Restructuring Forensic and Litigation Consulting Economic Consulting Technology Strategic Communications Corporate Total Net Income $921 Interest income and other ($1,205) Interest expense $12,488 Income tax provision $9,702 Operating income (1) $7,832 $16,663 $8,767 $9,194 $5,693 ($26,243) $21,906 Depreciation and amortization of intangible assets $2,042 $2,780 $1,356 $4,064 $1,727 $895 $12,864 Special charges - - - - - $1,628 $1,628 Remeasurement of acquisition-related contingent consideration - - ($340) - - - ($340) Adjusted EBITDA (1) $9,874 $19,443 $9,783 $13,258 $7,420 ($23,720) $36,058 Three Months Ended September 30, 2014 Corporate Finance/ Restructuring Forensic and Litigation Consulting Economic Consulting Technology Strategic Communications Corporate Total Net income $22,522 Interest income and other ($1,014) Interest expense $12,634 Income tax provision $12,329 Operating income (1) $13,406 $20,276 $17,245 $13,741 $4,875 ($23,072) $46,471 Depreciation and amortization of intangible assets $2,044 $1,676 $1,169 $4,075 $1,727 $886 $11,577 Special charges $84 $308 $12 $19 $3 $4,921 $5,347 Adjusted EBITDA (1) $10,951 $26,494 $13,030 $17,348 $2,729 ($19,356) $63,395 |
 Reconciliation of 2013 and 2012 Net Loss And Operating Income (Loss) to Adjusted EBITDA 27 (1) See “End Notes: FTI Consulting Non-GAAP Data Reconciliation” for definitions of Segment Operating Income
(Loss), Adjusted EBITDA and Adjusted Segment EBITDA.
Year Ended December 31, 2013
Corporate
Finance/
Restructuring
Forensic and
Litigation
Consulting
Economic
Consulting
Technology
Strategic
Communications
Corporate
Total
Net loss
($10,594)
Interest income and other
($1,748)
Interest expense
$51,376
Income tax provision
$42,405
Operating income (loss)
1
$58,594
$68,211
$86,714
$38,038
($72,129)
($97,989)
$81,439
Depreciation and amortization
of intangible assets
$9,929
$6,100
$5,479
$22,601
$7,048
$4,338
$55,495
Special charges
$10,274
$2,111
$11
$16
$66
$25,936
$38,414
Goodwill impairment charge
-
-
-
-
$83,752
-
$83,752
Remeasurement of acquisition-related
contingent consideration
($11,614)
($1,941)
-
-
-
-
($13,555)
Adjusted EBITDA
1
$67,183
$74,481
$92,204
$60,655
$18,737
($67,715)
$245,545
Year Ended December 31, 2012
Corporate
Finance/
Restructuring
Forensic and
Litigation
Consulting
Economic
Consulting
Technology
Strategic
Communications
Corporate
Total
Net loss
($36,986)
Interest income and other
($5,659)
Interest expense
$56,731
Income tax provision
$40,100
Loss on early extinguishment of debt
$4,850
Operating income (loss)
(1)
$80,970
$45,809
$71,992
$33,642
($97,298)
($76,079)
$59,036
Depreciation and amortization of
intangible assets
$8,835
$6,487
$4,478
$20,447
$7,218
$4,546
$52,011
Special charges
$11,332
$8,276
$991
$3,114
$4,712
$1,132
$29,557
Goodwill impairment charge
-
-
-
-
$110,387
-
$110,387
Remeasurement of acquisition-related
contingent consideration
($5,222)
($6)
-
-
-
-
($5,228)
Adjusted EBITDA
(1)
$95,915
$60,566
$77,461
$57,203
$25,019
($70,401)
$245,763
In thousands |
 Reconciliation of 2011 and 2010 Net Income And Operating
Income to Adjusted EBITDA
28
Year Ended December 31, 2011
Corporate Finance/
Restructuring
Forensic and
Litigation
Consulting
Economic
Consulting
Technology
Strategic
Communications
Corporate
Total
Net income
$103,903
Interest income and other
($6,304)
Interest expense
$58,624
Income tax provision
$49,224
Operating income
(1)
$66,591
$74,831
$60,890
$57,917
$19,066
($73,848)
$205,447
Depreciation and amortization of
intangible assets
$8,902
$6,215
$4,045
$19,094
$7,735
$4,962
$50,953
Special charges
$9,440
$839
$2,093
-
-
$2,840
$15,212
Remeasurement of acquisition-related
contingent consideration
($8,991)
($962)
-
-
-
-
($9,953)
Adjusted EBITDA
(1)
$75,942
$80,923
$67,028
$77,011
$26,801
($66,046)
$261,659
In thousands
(1)
See “End Notes: FTI Consulting Non-GAAP Data
Reconciliations” for the definition of Segment Operating Income, Adjusted EBITDA and Adjusted Segment EBITDA. Year Ended December 31, 2010 Corporate Finance/ Restructuring Forensic and Litigation Consulting Economic Consulting Technology Strategic Communications Corporate Total Net income $65,984 Interest income and other ($4,423) Interest expense $50,263 Income tax provision $41,407 Loss on early extinguishment of debt $5,161 Operating income (1) $89,861 $62,759 $39,180 $27,569 $11,602 ($72,579) $158,392 Depreciation and amortization of intangible assets $9,730 $7,447 $3,634 $20,876 $8,325 $5,232 $55,244 Special charges $8,561 $6,196 $6,667 $15,913 $9,044 $4,750 $51,131 Adjusted EBITDA (1) $108,152 $76,402 $49,481 $64,358 $28,971 ($62,597) $264,767 |
 End Notes: FTI Consulting Non-GAAP Data Reconciliations
29
We
define
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.
We
use
Adjusted
Net
Income
for
the
purpose
of
calculating
Adjusted
EPS.
Management
uses
Adjusted
EPS
to
assess
total
Company
operating
performance
on
a
consistent
basis.
We
believe
that
this
measure,
when
considered
together
with
our
GAAP
financial
results,
provides
management
and
investors
with
a
more
complete
understanding
of
our
business
operating
results,
including
underlying
trends,
by
excluding
the
effects
of
remeasurement
of
acquisition-related
contingent
consideration,
special
charges,
goodwill
impairment
charges
and
losses
on
early
extinguishment
of
debt.
We
define
Segment
Operating
Income
(loss)
as
a
segment’s
share
of
consolidated
operating
income
(loss).
We
define
Total
Segment
Operating
Income
(loss)
as
the
total
of
Segment
Operating
Income
(loss)
for
all
segments,
which
excludes
unallocated
corporate
expenses.
We
use
Segment
Operating
Income
(loss)
for
the
purpose
of
calculating
Adjusted
Segment
EBITDA
(loss).
We
define
Adjusted
EBITDA
as
consolidated
net
income
(loss)
before
income
tax
provision,
other
non-operating
income
(expense),
depreciation,
amortization
of
intangible
assets,
remeasurement
of
acquisition-related
contingent
consideration,
special
charges,
goodwill
impairment
charges
and
losses
on
early
extinguishment
of
debt.
We
define
Adjusted
Segment
EBITDA
as
a
segment’s
share
of
consolidated
operating
income
(loss)
before
depreciation,
amortization
of
intangible
assets,
remeasurement
of
acquisition-related
contingent
consideration,
special
charges
and
goodwill
impairment
charges.
We
define
Total
Adjusted
Segment
EBITDA
as
the
total
of
Adjusted
Segment
EBITDA
for
all
segments,
which
excludes
unallocated
corporate
expenses.
We
define
Adjusted
EBITDA
Margin
as
Adjusted
EBITDA
as
a
percentage
of
total
revenues.
We
define
Adjusted
Segment
EBITDA
Margin
as
Adjusted
Segment
EBITDA
as
a
percentage
of
a
segment’s
share
of
revenue.
We
use
Adjusted
Segment
EBITDA
to
internally
evaluate
the
financial
performance
of
our
segments
because
we
believe
it
is
a
useful
supplemental
measure
which
reflects
current
core
operating
performance
and
provides
an
indicator
of
the
segment’s
ability
to
generate
cash.
We
also
believe
that
these
measures,
when
considered
together
with
our
GAAP
financial
results,
provide
management
and
investors
with
a
more
complete
understanding
of
our
operating
results,
including
underlying
trends,
by
excluding
the
effects
of
remeasurement
of
acquisition-related
contingent
consideration,
special
charges,
and
goodwill
impairment
charges.
In
addition,
EBITDA
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
(loss). |
 Critical Thinking at the Critical Time ™ |