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8-K - FORM 8-K - FTI CONSULTING, INCd510869d8k.htm

Exhibit 99.1

 

LOGO

FTI Consulting, Inc.

555 12th Street NW

Washington, DC 20004

+1.202.312.9100

Investor & Media Contact:

Mollie Hawkes

+1.617.747.1791

mollie.hawkes@fticonsulting.com

FTI Consulting Reports Fourth Quarter and Full Year 2017 Financial Results

 

    Record Fourth Quarter 2017 Revenues of $467.7 million, up 5.8% compared to Prior Year Quarter

 

    Fourth Quarter Fully Diluted EPS of $1.78 compared to $0.17 in Prior Year Quarter; Favorable Impact of $44.9 million from the 2017 U.S. Tax Cuts and Jobs Act

 

    Adjusted EPS of $0.78 compared to $0.24 in Prior Year Quarter

Washington, D.C., Feb. 22, 2018 — FTI Consulting, Inc. (NYSE: FCN) today released its financial results for the fourth quarter and full year ended December 31, 2017.

Full Year 2017 Results

 

    Revenues of $1.808 billion were down 0.1% compared to the prior year

 

    Net income of $108.0 million was up 26.2% compared to the prior year

 

    Adjusted EBITDA of $192.0 million was down 5.4% compared to the prior year

 

    Fully diluted EPS of $2.75 was up 34.1% compared to the prior year

 

    Adjusted EPS of $2.32 was up 3.6% compared to the prior year

 

    $168.0 million returned through share repurchases during full year 2017

Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “We are, of course, pleased with our very strong results in both the third and fourth quarters. These results reflect, in part, actions we took earlier in the year, but more fundamentally, they reflect the deep focus that our professionals have on helping our clients successfully navigate the largest and most significant issues they face.”

For the full year 2017, revenues of $1.808 billion declined $2.7 million, or 0.1%, compared to $1.810 billion in the prior year. The decline in revenues was primarily due to lower demand in the Economic Consulting and Technology segments, which was partially offset by higher demand in the Forensic and Litigation Consulting segment. Net income increased 26.2% to $108.0 million compared to $85.5 million in the prior year. The increase was largely due to a $44.9 million discrete tax benefit recorded in the fourth quarter, resulting from the adoption of the 2017 U.S. Tax Cuts and Jobs Act (“2017 Tax Act”). This benefit was partially offset by $40.9


million of special charges, $10.8 million of which were recorded in the fourth quarter, reflecting targeted headcount and real estate reduction actions. Adjusted EBITDA was $192.0 million, or 10.6% of revenues, compared to $203.0 million, or 11.2% of revenues, in the prior year. The Adjusted EBITDA decline resulted primarily from lower revenues during the first half of 2017. Adjusted EBITDA significantly improved during the second half of 2017, primarily as a result of revenue growth and cost-cutting actions taken at the end of the second quarter of 2017.

Full year 2017 fully diluted earnings per share (“EPS”) of $2.75 compared to $2.05 in the prior year. Full year 2017 EPS included the $44.9 million 2017 Tax Act benefit, which increased EPS by $1.14, and the $40.9 million special charge related to headcount and real estate reductions, which reduced EPS by $0.70. Full year 2017 Adjusted EPS, which excludes the 2017 Tax Act benefit and the special charges, of $2.32 compared to $2.24 in the prior year.

Cash Position and Capital Allocation

Net cash provided by operating activities of $147.6 million for the year ended December 31, 2017 compared to $233.5 million for the year ended December 31, 2016. The year-over-year difference in operating cash flows was primarily due to increased compensation payments, including severance, and lower cash receipts.

In 2017, the Company used approximately $168.0 million to repurchase 4,674,418 shares of its common stock at an average price per share of $35.94. As of December 31, 2017, approximately $113.3 million remained available for stock repurchases under the Company’s $300.0 million share repurchase authorization.

The Company increased the balance drawn on its credit facility by $30.0 million during 2017. Total debt of $400.0 million at December 31, 2017 compared to total debt of $370.0 million at December 31, 2016. Cash and cash equivalents were $190.0 million at December 31, 2017 compared to $216.2 million at December 31, 2016. Total debt, net of cash, was $210.0 million at December 31, 2017, up from $153.8 million at December 31, 2016.

Fourth Quarter 2017 Results

Fourth quarter 2017 revenues of $467.7 million increased $25.8 million, or 5.8%, compared to revenues of $441.9 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation (“FX”), revenues increased by $19.2 million, or 4.3%, compared to the prior year quarter. The increase in revenues was primarily driven by higher demand within the Corporate Finance & Restructuring and Forensic and Litigation Consulting segments, which was partially offset by reduced demand in the Economic Consulting segment. Net income of $66.9 million compared to $7.1 million in the prior year quarter. The increase was largely due to the $44.9 million 2017 Tax Act benefit and higher revenues. Adjusted EBITDA was $55.5 million, or 11.9% of revenues, compared to $30.3 million, or 6.9% of revenues, in the prior year quarter. The increase in Adjusted EBITDA was primarily due to higher revenues, improved utilization and lower general and administrative costs.

Fourth quarter 2017 EPS of $1.78 compared to $0.17 in the prior year quarter. Fourth quarter 2017 EPS included the 2017 Tax Act benefit of $44.9 million, which increased EPS by $1.19, and the $10.8 million special charge related to headcount reductions, which reduced EPS by $0.19. Fourth quarter 2017 Adjusted EPS, which excludes the 2017 Tax Act benefit and special charge, of $0.78 compared to $0.24 in the prior year quarter.


Fourth Quarter 2017 Segment Results

Corporate Finance & Restructuring

Revenues in the Corporate Finance & Restructuring segment increased $17.2 million, or 15.2%, to $130.5 million in the quarter compared to $113.4 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $15.7 million, or 13.8%, compared to the prior year quarter. The increase in revenues was due to higher demand for restructuring, business transformation and transaction services. Adjusted Segment EBITDA was $25.8 million, or 19.7% of segment revenues, compared to $16.3 million, or 14.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased $15.4 million, or 14.6%, to $120.9 million in the quarter, compared to $105.5 million in the prior year quarter. The increase in revenues was driven by improved demand for global investigations, construction solutions and dispute services, which was partially offset by lower demand for health solutions services. Adjusted Segment EBITDA was $23.6 million, or 19.5% of segment revenues, compared to $6.3 million, or 6.0% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.

Economic Consulting

Revenues in the Economic Consulting segment decreased $8.2 million, or 6.4%, to $121.1 million in the quarter compared to $129.3 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues decreased $10.3 million, or 8.0%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for antitrust services. Adjusted Segment EBITDA was $14.3 million, or 11.8% of segment revenues, compared to $19.0 million, or 14.7% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues and higher bad debt expense, which was partially offset by lower compensation.

Technology

Revenues in the Technology segment decreased $2.6 million, or 5.9%, to $40.9 million in the quarter compared to $43.5 million in the prior year quarter. The decrease in revenues was primarily due to lower demand for managed review services, which was partially offset by higher demand for consulting services. Adjusted Segment EBITDA was $3.0 million, or 7.3% of segment revenues, compared to $5.6 million, or 12.8% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues.

Strategic Communications

Revenues in the Strategic Communications segment increased $4.0 million, or 8.0%, to $54.3 million in the quarter compared to $50.3 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $2.2 million, or 4.3%, compared to the prior year quarter. The increase in revenues was primarily driven by higher retained revenues from public affairs and corporate reputation services in Europe, the Middle East and Africa. Adjusted Segment EBITDA was $10.5 million, or 19.4% of segment revenues, compared to $8.4 million, or 16.7% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by higher compensation costs.


2018 Guidance

The Company estimates that revenues for full year 2018 will be in the range of $1.825 billion and $1.875 billion. The Company estimates that full year 2018 EPS will be in the range of $2.35 and $2.65. The Company does not expect Adjusted EPS to differ from EPS.

Fourth Quarter and Full Year 2017 Conference Call

FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year 2017 financial results at 9:00 a.m. Eastern Time on February 22, 2018. The call can be accessed live and will be available for replay over the Internet for 90 days by logging onto the Company’s investor relations website here.

About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 4,600 employees located in 28 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $1.81 billion in revenues during fiscal year 2017. More information can be found at http://www.fticonsulting.com/.

Use of Non-GAAP Measures

In the accompanying analysis of financial information, we sometimes use information derived from consolidated and segment financial information that may not be presented in our financial statements or prepared in accordance with generally accepted accounting principles (GAAP). Certain of these measures are considered non-GAAP financial measuresunder the Securities and Exchange Commission (SEC) rules. Specifically, we have referred to the following non-GAAP measures:

 

    Total Segment Operating Income

 

    Adjusted EBITDA

 

    Total Adjusted Segment EBITDA

 

    Adjusted EBITDA Margin

 

    Adjusted Net Income

 

    Adjusted Earnings per Diluted Share

 

    Free Cash Flow

We have included the definitions of Segment Operating Income and Adjusted Segment EBITDA below in order to more fully define the components of certain non-GAAP financial measures presented in this earnings release. We define Segment Operating Income as a segment’s share of Consolidated Operating Income. We define Total Segment Operating Income, which is a non-GAAP financial measure, as the total of Segment Operating Income for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of Consolidated Operating Income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill


impairment charges. We use Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of our segments because we believe it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.

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

We define Adjusted Net Income and Adjusted Earnings per Diluted Share (Adjusted EPS), which are non-GAAP financial measures, as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the adjustment related to the adoption of the 2017 U.S. Tax Cuts and Jobs Act (2017 Tax Act). We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that this non-GAAP financial measure, which excludes the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the 2017 Tax Act, when considered together with our GAAP financial results, provides management and investors with an additional understanding of our business operating results, including underlying trends.

We define Free Cash Flow as net cash provided by operating activities less cash payments for purchases of property and equipment. We believe this non-GAAP financial measure, when considered together with our GAAP financial results, provides management and investors with an additional understanding of the Company’s ability to generate cash for ongoing business operations and other capital deployment.

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


Safe Harbor Statement

This press release includes forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve uncertainties and risks. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions, share repurchases and other matters, business trends and other information that is not historical, including statements regarding estimates of our future financial results. When used in this press release, words such as estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, estimates of our future financial results, are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and estimates will be achieved, and the Company’s actual results may differ materially from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flows in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer, the mix of the geographic locations where our clients are located or where services are performed, fluctuations in the price per share of our common stock, adverse financial, real estate, or other market and general economic conditions, and other future events, which could impact each of our segments differently and could be outside of our control, the pace and timing of the consummation and integration of future acquisitions, the Company’s ability to realize cost savings and efficiencies, competitive and general economic conditions, retention of staff and clients, new laws and regulations, or changes thereto, including the 2017 U.S. Tax Cuts and Jobs Act (“2017 Tax Act”), and other risks described under the heading “Item 1A, Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the SEC, including the risks set forth under “Risks Related to Our Reportable Segments” and “Risks Related to Our Operations,” and in the Company’s other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW

# # #


FTI CONSULTING, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

     December 31,  
     2017     2016  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 189,961     $ 216,158  

Accounts receivable:

    

Billed receivables

     390,996       365,385  

Unbilled receivables

     312,569       288,331  

Allowances for doubtful accounts and unbilled services

     (180,687     (178,819
  

 

 

   

 

 

 

Accounts receivable, net

     522,878       474,897  

Current portion of notes receivable

     25,691       31,864  

Prepaid expenses and other current assets

     55,649       60,252  
  

 

 

   

 

 

 

Total current assets

     794,179       783,171  

Property and equipment, net of accumulated depreciation

     75,075       61,856  

Goodwill

     1,204,803       1,180,001  

Other intangible assets, net of amortization

     44,150       52,120  

Notes receivable, net of current portion

     98,105       104,524  

Other assets

     40,929       43,696  
  

 

 

   

 

 

 

Total assets

   $ 2,257,241     $ 2,225,368  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable, accrued expenses and other

   $ 94,873     $ 87,320  

Accrued compensation

     268,513       261,500  

Billings in excess of services provided

     46,942       29,635  
  

 

 

   

 

 

 

Total current liabilities

     410,328       378,455  

Long-term debt, net

     396,284       365,528  

Deferred income taxes

     124,471       173,799  

Other liabilities

     134,187       100,228  
  

 

 

   

 

 

 

Total liabilities

     1,065,270       1,018,010  
  

 

 

   

 

 

 

Stockholders’ equity

    

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

     —         —    

Common stock, $0.01 par value; shares authorized — 75,000; shares issued and outstanding — 37,729 (2017) and 42,037 (2016)

     377       420  

Additional paid-in capital

     266,035       416,816  

Retained earnings

     1,045,774       941,001  

Accumulated other comprehensive loss

     (120,215     (150,879
  

 

 

   

 

 

 

Total stockholders’ equity

     1,191,971       1,207,358  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,257,241     $ 2,225,368  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
December 31,
 
     2017     2016  

Revenues

   $ 467,711     $ 441,920  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     307,566       308,239  

Selling, general and administrative expenses

     111,176       116,478  

Special charges

     10,811       3,634  

Acquisition-related contingent consideration

     867       623  

Amortization of other intangible assets

     2,766       2,265  
  

 

 

   

 

 

 
     433,186       431,239  
  

 

 

   

 

 

 

Operating income

     34,525       10,681  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     452       571  

Interest expense

     (6,547     (5,983
  

 

 

   

 

 

 
     (6,095     (5,412
  

 

 

   

 

 

 

Income before income tax benefit

     28,430       5,269  

Income tax benefit

     (38,458     (1,832
  

 

 

   

 

 

 

Net income

   $ 66,888     $ 7,101  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 1.81     $ 0.17  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     36,906       41,201  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.78     $ 0.17  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     37,643       42,018  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

Foreign currency translation adjustments, net of tax expense of $0

   $ 1,886     $ (18,239
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     1,886       (18,239
  

 

 

   

 

 

 

Comprehensive income (loss)

   $ 68,774     $ (11,138
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Year Ended
December 31,
 
     2017     2016  

Revenues

   $ 1,807,732     $ 1,810,394  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     1,215,560       1,210,771  

Selling, general and administrative expenses

     429,722       434,552  

Special charges

     40,885       10,445  

Acquisition-related contingent consideration

     2,291       2,164  

Amortization of other intangible assets

     10,563       10,306  
  

 

 

   

 

 

 
     1,699,021       1,668,238  
  

 

 

   

 

 

 

Operating income

     108,711       142,156  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     3,752       10,466  

Interest expense

     (25,358     (24,819
  

 

 

   

 

 

 
     (21,606     (14,353
  

 

 

   

 

 

 

Income before income tax provision (benefit)

     87,105       127,803  

Income tax provision (benefit)

     (20,857     42,283  
  

 

 

   

 

 

 

Net income

   $ 107,962     $ 85,520  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 2.79     $ 2.09  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     38,697       40,943  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 2.75     $ 2.05  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     39,192       41,709  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

Foreign currency translation adjustments, net of tax expense of $0

   $ 30,664     $ (41,884
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     30,664       (41,884
  

 

 

   

 

 

 

Comprehensive income

   $ 138,626     $ 43,636  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2017     2016     2017     2016  
     (Unaudited)              

Net income

   $ 66,888     $ 7,101     $ 107,962     $ 85,520  

Add back:

        

Special charges

     10,811       3,634       40,885       10,445  

Tax impact of special charges

     (3,635     (1,113     (13,570     (3,595

Remeasurement of acquisition-related contingent consideration

     —         423       702       1,403  

Tax impact of remeasurement of acquisition-related contingent consideration

     —         (165     (269     (546

Impact of 2017 Tax Act

     (44,870     —         (44,870     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 29,194     $ 9,880     $ 90,840     $ 93,227  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.78     $ 0.17     $ 2.75     $ 2.05  

Add back:

        

Special charges

     0.29       0.09       1.04       0.25  

Tax impact of special charges

     (0.10     (0.03     (0.34     (0.08

Remeasurement of acquisition-related contingent consideration

     —         0.01       0.02       0.03  

Tax impact of remeasurement of acquisition-related contingent consideration

     —         —         (0.01     (0.01

Impact of 2017 Tax Act

     (1.19     —         (1.14     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per common share — diluted

   $ 0.78     $ 0.24     $ 2.32     $ 2.24  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding — diluted

     37,643       42,018       39,192       41,709  
  

 

 

   

 

 

   

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET INCOME AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended December 31, 2017

(unaudited)                                                   

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

Net income

                   $ 66,888  

Interest income and other

                     (452

Interest expense

                     6,547  

Income tax benefit

                     (38,458
                  

 

 

 

Operating income (loss)

   $ 21,332      $ 20,286      $ 12,120      $ (1,079   $ 4,840      $ (22,974   $ 34,525  

Depreciation and amortization

     815        1,042        1,316        2,664       673        899       7,409  

Amortization of other intangible assets

     1,218        396        134        158       860        —         2,766  

Special charges

     2,391        1,889        714        1,230       4,153        434       10,811  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 25,756      $ 23,613      $ 14,284      $ 2,973     $ 10,526      $ (21,641   $ 55,511  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Year Ended December 31, 2017

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

Net income

                   $ 107,962  

Interest income and other

                     (3,752

Interest expense

                     25,358  

Income tax benefit

                     (20,857
                  

 

 

 

Operating income

   $ 70,234      $ 54,520      $ 49,154      $ 4,795     $ 13,148      $ (83,140   $ 108,711  

Depreciation and amortization

     3,175        4,259        5,589        11,684       2,405        4,065       31,177  

Amortization of other intangible assets

     4,014        1,592        597        635       3,725        —         10,563  

Special charges

     5,440        12,334        6,624        5,057       7,752        3,678       40,885  

Remeasurement of acquisition-related contingent consideration

     —          —          —          —         702        —         702  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 82,863      $ 72,705      $ 61,964      $ 22,171     $ 27,732      $ (75,397   $ 192,038  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET INCOME AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended December 31, 2016

(unaudited)                                                   

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

Net income

                   $ 7,101  

Interest income and other

                     (571

Interest expense

                     5,983  

Income tax provision

                     (1,832
                  

 

 

 

Operating income (loss)

   $ 14,741      $ 4,083      $ 17,452      $ (4,752   $ 6,449      $ (27,292   $ 10,681  

Depreciation and amortization

     722        1,212        1,442        7,919       641        1,405       13,341  

Amortization of other intangible assets

     819        481        154        (77     888        —         2,265  

Special charges

     —          554        —          2,468       —          612       3,634  

Remeasurement of acquisition-related contingent consideration

     —          —          —          —         423        —         423  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 16,282      $ 6,330      $ 19,048      $ 5,558     $ 8,401      $ (25,275   $ 30,344  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Year Ended December 31, 2016

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

Net income

                   $ 85,520  

Interest income and other

                     (10,466

Interest expense

                     24,819  

Income tax provision

                     42,283  
                  

 

 

 

Operating income (loss)

   $ 91,481      $ 49,088      $ 68,842      $ (2,183   $ 23,110      $ (88,182   $ 142,156  

Depreciation and amortization

     2,897        4,490        4,614        19,820       2,243        4,636       38,700  

Amortization of other intangible assets

     3,310        2,000        646        648       3,702        —         10,306  

Special charges

     —          2,304        —          7,529       —          612       10,445  

Remeasurement of acquisition-related contingent consideration

     —          —          —          —         1,403        —         1,403  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 97,688      $ 57,882      $ 74,102      $ 25,814     $ 30,458      $ (82,934   $ 203,010  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 


FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

 

     Segment
Revenues
     Adjusted
EBITDA
    Adjusted
EBITDA

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

Three Months Ended December 31, 2017 (unaudited)

              

Corporate Finance & Restructuring

   $ 130,532      $ 25,756       19.7     62   $ 434        901  

Forensic and Litigation Consulting

     120,869        23,613       19.5     63   $ 330        1,067  

Economic Consulting

     121,051        14,284       11.8     64   $ 542        683  

Technology (1)

     40,915        2,973       7.3     N/M       N/M        292  

Strategic Communications (1)

     54,344        10,526       19.4     N/M       N/M        630  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 467,711      $ 77,152       16.5          3,573  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (21,641         
     

 

 

          

Adjusted EBITDA

      $ 55,511       11.9       
     

 

 

          

Year Ended December 31, 2017

              

Corporate Finance & Restructuring

   $ 482,041      $ 82,863       17.2     61   $ 396        901  

Forensic and Litigation Consulting

     462,324        72,705       15.7     61   $ 321        1,067  

Economic Consulting

     496,029        61,964       12.5     67   $ 524        683  

Technology (1)

     174,850        22,171       12.7     N/M       N/M        292  

Strategic Communications (1)

     192,488        27,732       14.4     N/M       N/M        630  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 1,807,732      $ 267,435       14.8          3,573  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (75,397         
     

 

 

          

Adjusted EBITDA

      $ 192,038       10.6       
     

 

 

          

Three Months Ended December 31, 2016 (unaudited)

              

Corporate Finance & Restructuring

   $ 113,354      $ 16,282       14.4     55   $ 408        895  

Forensic and Litigation Consulting

     105,492        6,330       6.0     55   $ 322        1,110  

Economic Consulting

     129,270        19,048       14.7     71   $ 522        656  

Technology (1)

     43,485        5,558       12.8     N/M       N/M        288  

Strategic Communications (1)

     50,319        8,401       16.7     N/M       N/M        647  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 441,920      $ 55,619       12.6          3,596  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (25,275         
     

 

 

          

Adjusted EBITDA

      $ 30,344       6.9       
     

 

 

          

Year Ended December 31, 2016

              

Corporate Finance & Restructuring

   $ 483,269      $ 97,688       20.2     65   $ 392        895  

Forensic and Litigation Consulting

     457,734        57,882       12.6     59   $ 327        1,110  

Economic Consulting

     500,487        74,102       14.8     73   $ 517        656  

Technology (1)

     177,720        25,814       14.5     N/M       N/M        288  

Strategic Communications (1)

     191,184        30,458       15.9     N/M       N/M        647  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 1,810,394      $ 285,944       15.8          3.596  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (82,934         
     

 

 

          

Adjusted EBITDA

      $ 203,010       11.2       
     

 

 

          

 

N/M Not meaningful
(1)  The majority of the Technology and Strategic Communications segments’ revenues are not generated based on billable hours. Accordingly, utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric.


FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Year Ended
December 31,
 
     2017     2016  

Operating activities

    

Net income

   $ 107,962     $ 85,520  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     31,177       38,700  

Amortization and impairment of other intangible assets

     10,563       10,306  

Acquisition-related contingent consideration

     2,291       2,164  

Provision for doubtful accounts

     15,386       8,912  

Non-cash share-based compensation

     16,030       16,920  

Non-cash interest expense

     1,984       1,985  

Other

     611       (1,204

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

    

Accounts receivable, billed and unbilled

     (50,831     3,471  

Notes receivable

     14,928       3,145  

Prepaid expenses and other assets

     629       (2,840

Accounts payable, accrued expenses and other

     4,421       3,268  

Income taxes

     (25,768     22,012  

Accrued compensation

     1,795       40,350  

Billings in excess of services provided

     16,447       779  
  

 

 

   

 

 

 

Net cash provided by operating activities

     147,625       233,488  
  

 

 

   

 

 

 

Investing activities

    

Payments for acquisition of businesses, net of cash received

     (8,929     (1,251

Purchases of property and equipment

     (32,004     (28,935

Other

     295       54  
  

 

 

   

 

 

 

Net cash used in investing activities

     (40,638     (30,132
  

 

 

   

 

 

 

Financing activities

    

Borrowings (repayments) under revolving line of credit, net

     30,000       (130,000

Deposits

     2,825       4,006  

Purchase and retirement of common stock

     (168,094     (21,489

Net issuance of common stock under equity compensation plans

     (504     21,708  

Payments for acquisition-related contingent consideration

     (5,161     (866

Other

     —         1,331  
  

 

 

   

 

 

 

Net cash used in financing activities

     (140,934     (125,310
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     7,750       (11,648
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (26,197     66,398  

Cash and cash equivalents, beginning of period

     216,158       149,760  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 189,961     $ 216,158