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8-K - 8-K - FTI CONSULTING, INCd239725d8k.htm

Exhibit 99.1

 

LOGO

FTI Consulting, Inc.

1101 K Street NW

Washington, DC 20005

+1.202.312.9100

Investor & Media Contact:

Mollie Hawkes

+1.617.747.1791

mollie.hawkes@fticonsulting.com

FTI Consulting Reports Third Quarter 2016 Financial Results

    Third Quarter Revenues of $438.0 Million

    Third Quarter Fully Diluted EPS and Adjusted EPS of $0.52

Washington, D.C., Oct. 27, 2016 — FTI Consulting, Inc. (NYSE: FCN) (the “Company”) today released its financial results for the third quarter ended September 30, 2016.

For the quarter, revenues decreased 3.8 percent to $438.0 million compared to $455.5 million in the prior year quarter. Excluding the estimated negative impact of foreign currency translation (“FX”), revenues declined by 2.0 percent. Net income increased 110.4 percent to $21.7 million compared to $10.3 million in the prior year quarter. Adjusted EBITDA of $47.2 million, or 10.8 percent of revenues, declined from $56.1 million, or 12.3 percent of revenues, in the prior year quarter. Fully diluted earnings per share (“EPS”) and Adjusted EPS were $0.52 compared to EPS of $0.25 and Adjusted EPS of $0.53 in the prior year quarter. EPS in the prior year quarter included a $19.6 million charge or a $0.28 per share loss related to the early extinguishment of debt.

Net cash provided by operating activities for the quarter was $70.9 million compared to $74.0 million in the prior year quarter. Cash and cash equivalents were $225.2 million at September 30, 2016, compared to $105.0 million at September 30, 2015. Total debt was $475.0 million at September 30, 2016, down from $520.0 million at September 30, 2015.

Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “We are pleased with the ongoing progress our businesses are making towards becoming, on a multi-year basis, real engines for growth. During the third quarter, our billable headcount grew 3.9 percent from the second quarter of 2016 as we continue to attract the best professionals across the globe and extend our offerings into new adjacencies and geographies.”

Third Quarter Segment Results

Corporate Finance & Restructuring

Revenues in the Corporate Finance & Restructuring segment decreased $2.9 million, or 2.5 percent, to $110.6 million in the quarter compared to $113.5 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues decreased $1.0 million, or 0.9 percent, compared to the prior year quarter. Adjusted Segment EBITDA was $17.8 million, or 16.1 percent of segment revenues, compared to $26.7 million, or 23.5 percent of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA Margin was primarily due to lower utilization and higher costs related to the ramp up of experienced hires.


Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment decreased $1.1 million, or 1.0 percent, to $115.0 million in the quarter compared to $116.2 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues were comparable to the prior year quarter. Higher success fees were offset by lower demand in the segment’s health solutions practice. Adjusted Segment EBITDA was $16.6 million, or 14.4 percent of segment revenues, compared to $13.4 million, or 11.5 percent of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA Margin was driven by higher success fees in the segment’s health solutions practice.

Economic Consulting

Revenues in the Economic Consulting segment increased $7.9 million, or 6.9 percent, to $122.5 million in the quarter compared to $114.5 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $10.8 million, or 9.4 percent, compared to the prior year quarter. The increase in revenues was primarily due to higher demand and higher average realization in non-merger and acquisition (“M&A”)-related antitrust services in North America, which were partially offset by lower average realization for financial economics services in North America. Adjusted Segment EBITDA was $18.4 million, or 15.0 percent of segment revenues, compared to $16.7 million, or 14.5 percent of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA Margin was due to improved utilization in North America, which was partially offset by lower utilization in Europe, the Middle East and Africa (“EMEA”).

Technology

Revenues in the Technology segment decreased $11.5 million, or 20.7 percent, to $44.1 million in the quarter compared to $55.6 million in the prior year quarter. The decrease in revenues was driven by a decline in M&A-related “second request” activity and reduced demand for litigation services. Adjusted Segment EBITDA was $7.4 million, or 16.8 percent of segment revenues, compared to $10.8 million, or 19.5 percent of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA Margin was due to lower demand and realized pricing for managed review services.

Strategic Communications

Revenues in the Strategic Communications segment decreased $9.9 million, or 17.7 percent, to $45.8 million in the quarter compared to $55.7 million in the prior year quarter. Excluding the estimated impact of FX, revenues decreased $7.8 million, or 14.0 percent, compared to the prior year quarter. The decrease in revenues was primarily due to $8.5 million in lower pass-through revenues compared to the prior year quarter. Adjusted Segment EBITDA was $7.5 million, or 16.4 percent of segment revenues, compared to $8.7 million, or 15.6 percent of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA Margin was primarily due to the impact of lower net pass-through revenue. Excluding this impact, Adjusted Segment EBITDA Margin declined 2.3 percentage points due to higher costs related to the ramp up of new hires.

2016 Guidance

The Company revised its 2016 guidance for revenues to be approximately $1.80 billion. This compares to the previous range of between $1.80 billion and $1.87 billion. The Company reaffirmed 2016 guidance for Adjusted EPS of between $2.15 and $2.45.

Third Quarter 2016 Conference Call

FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2016 financial results at 9:00 a.m. Eastern Time on October 27, 2016. The call can be accessed live and will be available for replay over the Internet for 90 days by logging onto the Company’s website at www.fticonsulting.com.

About FTI 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 29 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $1.78 billion in revenues during fiscal year 2015. More information can be found at www.fticonsulting.com.

Use of Non-GAAP Measures

We have included the definitions of Segment Operating Income (Loss), Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin below in order to more fully define the components of certain non-GAAP measures presented in this earnings release. We define Segment Operating Income (Loss) as a segment’s share of Consolidated Operating Income (Loss). We define Total Segment Operating Income (Loss), a non-GAAP financial measure, as the total of Segment Operating Income (Loss) for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income (Loss) for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of Consolidated Operating Income (Loss) before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We define Adjusted Segment EBITDA Margin as Adjusted Segment EBITDA as a percentage of a segment’s revenues. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful measure which reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.

We define, non-GAAP measures, (i) Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses, and (ii) Adjusted EBITDA as consolidated net income (loss) before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We believe that our non-GAAP financial measures, when considered together with our GAAP financial results and GAAP financial measures provide management and investors with a more complete understanding of our operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. In addition, EBITDA and Adjusted EBITDA are common alternative measures of operating performance used by many of our competitors. They are used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP financial measures, provide management and investors with additional supplemental information for comparison of our operating results to the operating results of other companies.

We define Adjusted Net Income and Adjusted Earnings per Diluted Share (“Adjusted EPS”), non-GAAP financial measures, as Net Income (Loss) and earnings per diluted share (“GAAP EPS”), respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results and GAAP financial measures, provides management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt.

Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Income. Reconciliations of non-GAAP financial measures to GAAP are included in the financial tables accompanying this press release.


The financial tables accompanying this press release do not include a reconciliation of the Company’s 2016 Adjusted EPS guidance to an estimate of GAAP EPS. It is difficult to predict and estimate future remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and/or losses on early extinguishment of debt, as these items are dependent on future events that are uncertain. Accordingly, a reconciliation of our non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Safe Harbor 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 and other matters, business trends and other information that is not historical, including statements regarding estimates of our future financial results. When used in this press release, words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, estimates of our future financial results, are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and estimates will be achieved, and the Company’s actual results may differ materially from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flow in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer, the mix of the geographic locations where our clients are located or where services are performed, adverse financial, real estate or other market and general economic conditions, which could impact each of our segments differently, the pace and timing of the consummation and integration of past and future acquisitions, the Company’s ability to realize cost savings and efficiencies, competitive and general economic conditions, retention of staff and clients and other risks described under the headings “Item 1A Risk Factors” in the Company’s most recent Form 10-K filed with the SEC and in the Company’s other filings with the SEC, including the risks set forth under “Risks Related to Our Reportable Segments” and “Risks Related to Our Operations”. We are under no duty to update any of the forward looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW

# # #


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
September 30,
 
         2016             2015      

Revenues

   $ 438,042      $ 455,470   
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     293,702        301,609   

Selling, general and administrative expenses

     106,220        105,058   

Acquisition-related contingent consideration

     201        159   

Amortization of other intangible assets

     2,845        2,900   
  

 

 

   

 

 

 
     402,968        409,726   
  

 

 

   

 

 

 

Operating income

     35,074        45,744   
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     3,213        2,027   

Interest expense

     (6,304     (11,696

Loss on early extinguishment of debt

     —          (19,589
  

 

 

   

 

 

 
     (3,091     (29,258
  

 

 

   

 

 

 

Income before income tax provision

     31,983        16,486   

Income tax provision

     10,292        6,177   
  

 

 

   

 

 

 

Net income

   $ 21,691      $ 10,309   
  

 

 

   

 

 

 

Earnings per common share—basic

   $ 0.53      $ 0.25   
  

 

 

   

 

 

 

Weighted average common shares outstanding—basic

     41,239        41,094   
  

 

 

   

 

 

 

Earnings per common share—diluted

   $ 0.52      $ 0.25   
  

 

 

   

 

 

 

Weighted average common shares outstanding—diluted

     42,065        41,982   
  

 

 

   

 

 

 

Other comprehensive loss, net of tax:

    

Foreign currency translation adjustments, net of tax $0

   $ (4,478   $ (17,229
  

 

 

   

 

 

 

Total other comprehensive loss, net of tax

     (4,478     (17,229
  

 

 

   

 

 

 

Comprehensive income (loss)

   $ 17,213      $ (6,920
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

 

     Nine Months Ended
September 30,
 
         2016             2015      

Revenues

   $ 1,368,474      $ 1,336,945   
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     902,532        872,108   

Selling, general and administrative expenses

     318,074        316,317   

Special charges

     6,811        —     

Acquisition-related contingent consideration

     1,541        (1,145

Amortization of other intangible assets

     8,041        8,919   
  

 

 

   

 

 

 
     1,236,999        1,196,199   
  

 

 

   

 

 

 

Operating income

     131,475        140,746   
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     9,895        2,840   

Interest expense

     (18,836     (36,537

Loss on extinguishment of debt

     —          (19,589
  

 

 

   

 

 

 
     (8,941     (53,286
  

 

 

   

 

 

 

Income before income tax provision

     122,534        87,460   

Income tax provision

     44,115        31,756   
  

 

 

   

 

 

 

Net income

   $ 78,419      $ 55,704   
  

 

 

   

 

 

 

Earnings per common share—basic

   $ 1.92      $ 1.37   
  

 

 

   

 

 

 

Weighted average common shares outstanding—basic

     40,856        40,771   
  

 

 

   

 

 

 

Earnings per common share—diluted

   $ 1.88      $ 1.34   
  

 

 

   

 

 

 

Weighted average common shares outstanding—diluted

     41,605        41,682   
  

 

 

   

 

 

 

Other comprehensive loss, net of tax:

    

Foreign currency translation adjustments, net of tax $0

   $ (23,645   $ (24,412
  

 

 

   

 

 

 

Total other comprehensive loss, net of tax

     (23,645     (24,412
  

 

 

   

 

 

 

Comprehensive income

   $ 54,774      $ 31,292   
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
         2016              2015              2016              2015      

Net income

   $ 21,691       $ 10,309       $ 78,419       $ 55,704   

Add back:

           

Special charges, net of tax (1)

     —           —           4,328         —     

Loss on extinguishment of debt, net of tax (2)

     —           11,881         —           11,881   

Remeasurement of acquisition-related contingent consideration, net of tax (3)

     —           —           600         (1,005
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Net Income

   $ 21,691       $ 22,190       $ 83,347       $ 66,580   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per common share—diluted

   $ 0.52       $ 0.25       $ 1.88       $ 1.34   

Add back:

           

Special charges, net of tax (1)

     —           —           0.10         —     

Loss on extinguishment of debt, net of tax (2)

     —           0.28         —           0.28   

Remeasurement of acquisition-related contingent consideration, net of tax (3)

     —           —           0.02         (0.02
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted earnings per common share—diluted

   $ 0.52       $ 0.53       $ 2.00       $ 1.60   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average number of common shares outstanding—diluted

     42,065         41,982         41,605         41,682   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) The tax effect takes into account the tax treatment and related tax rates that apply to each adjustment in the applicable tax jurisdiction. As a result, the effective tax rate for the adjustments related to special charges for the nine months ended September 30, 2016 was 36.5%. The tax expense related to the adjustments for special charges for the nine months ended September 30, 2016 was $2.5 million or $0.06 impact on Adjusted EPS. There were no special charges for the three and nine months ended September 30, 2015.

 

(2) The tax effect takes into account the tax treatment and related tax rates that apply to each adjustment in the applicable tax jurisdiction. As a result, the effective tax rate for the loss on early extinguishment of debt for the three and nine months ended September 30, 2015 was 39.3%. The tax expense related to the loss on early extinguishment of debt for the three and nine months ended September 30, 2015 was $7.7 million, or a $0.18 impact on Adjusted EPS. There were no adjustments related to the early extinguishment of debt in the three or nine months ended September 30, 2016.

 

(3) The tax effect takes into account the tax treatment and related tax rates that apply to each adjustment in the applicable tax jurisdiction. As a result, the effective tax rate for the adjustments related to the remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2016 and 2015 were 38.8% and 40%, respectively. The tax expense related to the adjustment for the remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2016 and 2015 were $0.4 million or $0.01 impact on adjusted EPS and $0.7 million or a $0.02 impact on Adjusted EPS, respectively. There were no adjustments related to the remeasurement of acquisition-related contingent consideration in the three months ended September 30, 2016 and 2015.


FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

(unaudited)

 

     Segment
Revenues
     Adjusted
EBITDA
    Adjusted EBITDA
Margin
    Utilization      Average
Billable
Rate
     Revenue-
Generating
Headcount
 
     (in thousands)                         (at period end)  

Three Months Ended September 30, 2016

               

Corporate Finance & Restructuring

   $ 110,617       $ 17,762        16.1     61%       $ 379         904   

Forensic and Litigation Consulting

     115,045         16,554        14.4     57%       $ 330         1,145   

Economic Consulting

     122,480         18,354        15.0     69%       $ 534         647   

Technology (1)

     44,072         7,398        16.8     N/M         N/M         298   

Strategic Communications (1)

     45,828         7,509        16.4     N/M         N/M         624   
  

 

 

    

 

 

   

 

 

         

 

 

 
   $ 438,042         67,577        15.4           3,618   
  

 

 

    

 

 

   

 

 

         

 

 

 

Unallocated Corporate

        (20,348          
     

 

 

           

Adjusted EBITDA

      $ 47,229        10.8        
     

 

 

           

Nine Months Ended September 30, 2016

               

Corporate Finance & Restructuring

   $ 369,915       $ 81,406        22.0     68%       $ 388         904   

Forensic and Litigation Consulting

     352,242         51,552        14.6     60%       $ 329         1,145   

Economic Consulting

     371,217         55,054        14.8     74%       $ 516         647   

Technology (1)

     134,235         20,256        15.1     N/M         N/M         298   

Strategic Communications (1)

     140,865         22,057        15.7     N/M         N/M         624   
  

 

 

    

 

 

   

 

 

         

 

 

 
   $ 1,368,474         230,325        16.8           3,618   
  

 

 

    

 

 

   

 

 

         

 

 

 

Unallocated Corporate

        (57,659          
     

 

 

           

Adjusted EBITDA

      $ 172,666        12.6        
     

 

 

           

Three Months Ended September 30, 2015

               

Corporate Finance & Restructuring

   $ 113,487       $ 26,662        23.5     69%       $ 390         830   

Forensic and Litigation Consulting

     116,158         13,406        11.5     60%       $ 318         1,209   

Economic Consulting

     114,541         16,654        14.5     71%       $ 523         594   

Technology (1)

     55,568         10,813        19.5     N/M         N/M         354   

Strategic Communications (1)

     55,716         8,717        15.6     N/M         N/M         594   
  

 

 

    

 

 

   

 

 

         

 

 

 
   $ 455,470         76,252        16.7           3,581   
  

 

 

    

 

 

   

 

 

         

 

 

 

Unallocated Corporate

        (20,150          
     

 

 

           

Adjusted EBITDA

      $ 56,102        12.3        
     

 

 

           

Nine Months Ended September 30, 2015

               

Corporate Finance & Restructuring

   $ 328,812       $ 71,174        21.6     71%       $ 382         830   

Forensic and Litigation Consulting

     365,554         55,456        15.2     65%       $ 315         1,209   

Economic Consulting

     329,320         43,502        13.2     72%       $ 506         594   

Technology (1)

     172,048         33,052        19.2     N/M         N/M         354   

Strategic Communications (1)

     141,211         20,100        14.2     N/M         N/M         594   
  

 

 

    

 

 

   

 

 

         

 

 

 
   $ 1,336,945         223,284        16.7           3,581   
  

 

 

    

 

 

   

 

 

         

 

 

 

Unallocated Corporate

        (52,725          
     

 

 

           

Adjusted EBITDA

      $ 170,559        12.8        
     

 

 

           


RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

(unaudited)

 

    Corporate Finance
& Restructuring
    Forensic and
Litigation
Consulting
    Economic
Consulting
    Technology     Strategic
Communications
    Corp HQ     Total  

Three Months Ended September 30, 2016

             

Net income

              $ 21,691   

Interest income and other

                (3,213

Interest expense

                6,304   

Income tax provision

                10,292   
             

 

 

 

Operating income

  $ 16,182      $ 14,867      $ 16,888      $ 2,869      $ 6,006      $ (21,738   $ 35,074   

Depreciation and amortization

    698        1,203        1,312        4,121        586        1,390        9,310   

Amortization of other intangible assets

    882        484        154        408        917        —          2,845   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 17,762      $ 16,554      $ 18,354      $ 7,398      $ 7,509      $ (20,348   $ 47,229   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Corporate Finance
& Restructuring
    Forensic and
Litigation
Consulting
    Economic
Consulting
    Technology     Strategic
Communications
    Corp HQ     Total  

Nine Months Ended September 30, 2016

             

Net income

              $ 78,419   

Interest income and other

                (9,895

Interest expense

                18,836   

Income tax provision

                44,115   
             

 

 

 

Operating income

  $ 76,740      $ 45,005      $ 51,390      $ 2,569      $ 16,661      $ (60,890   $ 131,475   

Depreciation and amortization

    2,175        3,278        3,172        11,901        1,602        3,231        25,359   

Amortization of other intangible assets

    2,491        1,519        492        725        2,814        —          8,041   

Special charges

    —          1,750        —          5,061        —          —          6,811   

Remeasurement of acquisition-related contingent consideration

    —          —          —          —          980        —          980   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 81,406      $ 51,552      $ 55,054      $ 20,256      $ 22,057      $ (57,659   $ 172,666   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Corporate Finance
& Restructuring
    Forensic and
Litigation
Consulting
    Economic
Consulting
    Technology     Strategic
Communications
    Corp HQ     Total  

Three Months Ended September 30, 2015

             

Net income

              $ 10,309   

Interest income and other

                (2,027

Interest expense

                11,696   

Loss on early extinguishment of debt

                19,589   

Income tax provision

                6,177   
             

 

 

 

Operating income

  $ 25,112      $ 11,944      $ 15,498      $ 6,830      $ 7,235      $ (20,875   $ 45,744   

Depreciation and amortization

    677        925        848        3,784        499        725        7,458   

Amortization of other intangible assets

    873        537        308        199        983        —          2,900   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 26,662      $ 13,406      $ 16,654      $ 10,813      $ 8,717      $ (20,150   $ 56,102   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Corporate Finance
& Restructuring
    Forensic and
Litigation
Consulting
    Economic
Consulting
    Technology     Strategic
Communications
    Corp HQ     Total  

Nine Months Ended September 30, 2015

             

Net income

              $ 55,704   

Interest income and other

                (2,840

Interest expense

                36,537   

Loss on early extinguishment of debt

                19,589   

Income tax provision

                31,756   
             

 

 

 

Operating income

  $ 67,782      $ 50,894      $ 40,076      $ 21,493      $ 15,558      $ (55,057   $ 140,746   

Depreciation and amortization

    2,141        2,862        2,686        10,969        1,579        2,332        22,569   

Amortization of other intangible assets

    2,742        1,700        924        590        2,963        —          8,919   

Remeasurement of acquisition-related contingent consideration

    (1,491     —          (184     —          —          —          (1,675
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 71,174      $ 55,456      $ 43,502      $ 33,052      $ 20,100      $ (52,725   $ 170,559   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

     Nine Months Ended
September 30,
 
         2016             2015      

Operating activities

    

Net income

   $ 78,419      $ 55,704   

Adjustments to reconcile net income to net cash used in operating activities:

    

Depreciation and amortization

     25,359        22,569   

Amortization of other intangible assets

     8,041        8,919   

Acquisition-related contingent consideration

     1,541        (1,145

Provision for doubtful accounts

     5,903        10,364   

Non-cash share-based compensation

     13,381        14,356   

Non-cash interest expense

     1,489        2,029   

Loss on early extinguishment of debt

     —          19,589   

Other

     (1,159     (674

Changes in operating assets and liabilities, net of effects from acquisitions:

    

Accounts receivable, billed and unbilled

     (67,318     (84,411

Notes receivable

     (3,674     (334

Prepaid expenses and other assets

     (3,575     (4,396

Accounts payable, accrued expenses and other

     10,900        10,158   

Income taxes

     28,204        15,371   

Accrued compensation

     4,486        (19,518

Billings in excess of services provided

     9,578        (5,278
  

 

 

   

 

 

 

Net cash provided by operating activities

     111,575        43,303   
  

 

 

   

 

 

 

Investing activities

    

Payments for acquisition of businesses, net of cash received

     (56     (575

Purchases of property and equipment

     (22,855     (24,674

Other

     74        94   
  

 

 

   

 

 

 

Net cash used in investing activities

     (22,837     (25,155
  

 

 

   

 

 

 

Financing activities

    

Borrowings (repayments) under revolving line of credit, net

     (25,000     220,000   

Payments of long-term debt

     —          (425,671

Payments of debt issue costs

     —          (3,701

Deposits

     2,806        2,406   

Purchase and retirement of common stock

     (2,903     —     

Net issuance of common stock under equity compensation plans

     18,394        13,931   

Other

     357        124   
  

 

 

   

 

 

 

Net cash used in financing activities

     (6,346     (192,911
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (6,968     (3,943
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     75,424        (178,706

Cash and cash equivalents, beginning of period

     149,760        283,680   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 225,184      $ 104,974   
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

     September 30,
2016
    December 31,
2015
 
     (unaudited)        
Assets     

Current assets

    

Cash and cash equivalents

   $ 225,184      $ 149,760   

Accounts receivable:

    

Billed receivables

     416,960        405,000   

Unbilled receivables

     326,297        280,538   

Allowance for doubtful accounts and unbilled services

     (195,669     (185,754
  

 

 

   

 

 

 

Accounts receivable, net

     547,588        499,784   

Current portion of notes receivable

     32,490        36,115   

Prepaid expenses and other current assets

     58,804        55,966   
  

 

 

   

 

 

 

Total current assets

     864,066        741,625   

Property and equipment, net of accumulated depreciation

     66,422        74,760   

Goodwill

     1,188,230        1,198,298   

Other intangible assets, net of amortization

     54,493        63,935   

Notes receivable, net of current portion

     112,364        106,882   

Other assets

     56,043        43,518   
  

 

 

   

 

 

 

Total assets

   $ 2,341,618      $ 2,229,018   
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Current liabilities

    

Accounts payable, accrued expenses and other

   $ 97,144      $ 89,845   

Accrued compensation

     229,611        227,783   

Billings in excess of services provided

     38,774        29,449   
  

 

 

   

 

 

 

Total current liabilities

     365,529        347,077   

Long-term debt, net

     470,339        494,772   

Deferred income taxes

     170,768        139,787   

Other liabilities

     103,397        99,779   
  

 

 

   

 

 

 

Total liabilities

     1,110,033        1,081,415   
  

 

 

   

 

 

 

Stockholders’ equity

    

Preferred stock, $0.01 par value; shares authorized—5,000; none outstanding

     —          —     

Common stock, $0.01 par value; shares authorized—75,000; shares issued and outstanding—42,367 (2016) and 41,234 (2015)

     423        412   

Additional paid-in capital

     429,902        400,705   

Retained earnings

     933,900        855,481   

Accumulated other comprehensive loss

     (132,640     (108,995
  

 

 

   

 

 

 

Total stockholders’ equity

     1,231,585        1,147,603   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,341,618      $ 2,229,018