Exhibit 99.1

FTI Consulting, Inc.

555 12th Street NW

Washington, D.C. 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 2019 Financial Results

 

   

Record Full Year 2019 Revenues of $2.353 Billion, Up 16.0% Compared to $2.028 Billion in Prior Year

 

   

Record Full Year 2019 EPS of $5.69, Up 44.8% Compared to $3.93 in Prior Year; Record Full Year 2019 Adjusted EPS of $5.80, Up 45.0% Compared to $4.00 in Prior Year

 

   

Record Fourth Quarter 2019 Revenues of $602.2 Million, Up 19.3% Compared to Prior Year Quarter

 

   

Fourth Quarter 2019 EPS of $0.76 Compared to $0.61 in Prior Year Quarter; Fourth Quarter 2019 Adjusted EPS of $0.80 Compared to $0.83 in Prior Year Quarter

 

   

Announces $100 Million Increase in Share Repurchase Authorization and Introduces 2020 Guidance

Washington, D.C., February 25, 2020 — FTI Consulting, Inc. (NYSE: FCN) today released financial results for the fourth quarter and full year ended December 31, 2019.

For the full year 2019, revenues of $2.353 billion increased $324.8 million, or 16.0%, compared to revenues of $2.028 billion in the prior year. Excluding the estimated negative impact from foreign currency translation, revenues increased $351.2 million, or 17.3%, compared to the prior year. The increase in revenues was driven by higher demand across all business segments compared to the prior year. Net income of $216.7 million compared to $150.6 million in the prior year. The increase in net income was primarily due to higher operating profits across all business segments, lower interest expense and a lower effective tax rate. 2018 net income included a $13.0 million gain related to the sale of the Company’s Ringtail e-discovery software and related business (“Ringtail divestiture”), which was partially offset by a $9.1 million loss on early extinguishment of debt related to the Company’s redemption of $300.0 million of its 6.0% Senior Notes due 2022 (the “2022 Senior Notes”).

Adjusted EBITDA of $343.9 million, or 14.6% of revenues, compared to $265.7 million, or 13.1% of revenues, in the prior year. The increase in Adjusted EBITDA was primarily due to higher revenues across all business segments, which was partially offset by higher compensation, primarily related to an increase in variable compensation and a 17.8% increase in billable headcount, as well as higher selling, general and administrative (“SG&A”) expenses compared to the prior year.

Full year 2019 fully diluted earnings per share (“EPS”) of $5.69 compared to $3.93 in the prior year. 2019 EPS included $8.6 million of non-cash interest expense related to the Company’s 2.0% convertible senior notes due 2023 (“2023 Convertible Notes”), which reduced EPS by $0.17, and a $2.1 million tax gain related to the Ringtail divestiture, which increased EPS by $0.06. 2018 EPS included a $9.1 million loss on early extinguishment of debt, which reduced EPS by $0.17, and $3.0 million of non-cash interest expense related to the 2023 Convertible Notes, which reduced EPS by $0.06. This was partially offset by the $13.0 million gain


from the Ringtail divestiture, which increased 2018 EPS by $0.16. 2019 Adjusted EPS of $5.80, which excludes the non-cash interest expense and tax gain from the Ringtail divestiture, compared to Adjusted EPS of $4.00 in the prior year. 2018 Adjusted EPS excluded the loss on early extinguishment of debt, non-cash interest expense and gain from the Ringtail divestiture.

Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “The level of notable growth we have achieved the last couple of years only happens through intense commitment by our people in support of our clients, together with major efforts to attract and support them as they build businesses. I therefore want to thank our leadership and teams across the globe for that commitment and congratulate the entire team on the success.”

Cash Position and Capital Allocation

Net cash provided by operating activities of $217.9 million for the year ended December 31, 2019 compared to $230.7 million for the year ended December 31, 2018. The year-over-year decrease in net cash provided by operating activities was largely due to the pace of cash collections lagging the increase in revenues throughout the year.

Cash and cash equivalents of $369.4 million at December 31, 2019 compared to $258.5 million at September 30, 2019 and $312.1 million at December 31, 2018. Total debt, net of cash, of ($53.1) million at December 31, 2019 improved compared to $57.8 million at September 30, 2019 and $4.2 million at December 31, 2018. The sequential decrease in total debt, net of cash, was due to an increase in cash provided by operating activities, which was partially offset by cash used for share repurchases.

During the quarter, the Company repurchased 259,823 shares of its common stock at an average price per share of $107.71 for a total cost of $28.0 million. In full year 2019, the Company repurchased 1,258,420 shares of its common stock at an average price per share of $84.16 for a total cost of $105.9 million. As of December 31, 2019, approximately $66.6 million remained available for stock repurchases under the Company’s $400.0 million stock repurchase authorization. On February 20, 2020, the Company’s Board of Directors authorized an additional $100.0 million to repurchase shares of FTI Consulting’s outstanding common stock pursuant to its stock repurchase program, for an aggregate authorization of $500.0 million. As of February 24, 2020, FTI Consulting had repurchased 7,140,941 shares of its outstanding common stock at an average price per share of $46.66 for an aggregate cost of approximately $333.2 million. After giving effect to share repurchases through such date and the increased authorization, FTI Consulting has approximately $166.6 million remaining available for common stock repurchases under the program. No time limit was established for the completion of the program, and the program may be suspended, discontinued or replaced by the Board at any time without prior notice.

Under the program, FTI Consulting may repurchase shares in open-market purchases or any other method in accordance with applicable securities laws and regulations. The specific timing and amount of repurchases will be determined by FTI Consulting’s management, in its discretion, and will vary based on market conditions, securities law limitations and other factors. The repurchases may be funded using available cash on hand or a combination of cash and available borrowings under FTI Consulting’s senior secured revolving bank credit facility.


Fourth Quarter 2019 Results

Fourth quarter 2019 revenues of $602.2 million increased $97.2 million, or 19.3%, compared to revenues of $505.0 million in the prior year quarter. The increase in revenues was driven by higher demand across all business segments and an increase in pass-through revenues compared to the prior year quarter. Net income of $29.1 million compared to $23.7 million in the prior year quarter. The increase in net income was primarily due to higher operating profits in the Economic Consulting and Technology segments. 2018 fourth quarter net income included a $9.1 million loss on early extinguishment of debt related to the Company’s redemption of $300.0 million of its 2022 Senior Notes.

Adjusted EBITDA of $58.3 million, or 9.7% of revenues, compared to $53.7 million, or 10.6% of revenues, in the prior year quarter. The increase in Adjusted EBITDA was primarily due to higher revenues across all business segments, which was partially offset by higher compensation related to an increase in variable compensation and a 17.8% increase in billable headcount, as well as higher SG&A expenses compared to the prior year quarter.

Fourth quarter 2019 EPS of $0.76 compared to $0.61 in the prior year quarter. Fourth quarter 2019 EPS included $2.2 million of non-cash interest expense related to the Company’s 2023 Convertible Notes, which reduced EPS by $0.04. Fourth quarter 2018 EPS included a $9.1 million loss on early extinguishment of debt, which reduced EPS by $0.17, and $2.1 million of non-cash interest expense related to the Company’s 2023 Convertible Notes, which reduced EPS by $0.05. Fourth quarter 2019 Adjusted EPS of $0.80, which excludes the non-cash interest expense, compared to Adjusted EPS of $0.83 in the prior year quarter. Fourth quarter 2018 Adjusted EPS excluded the loss on early extinguishment of debt and non-cash interest expense.

Fourth Quarter 2019 Segment Results

Corporate Finance & Restructuring

Revenues in the Corporate Finance & Restructuring segment increased $36.3 million, or 25.1%, to $181.1 million in the quarter compared to $144.8 million in the prior year quarter. The increase in revenues was due to higher demand for restructuring and business transformation and transactions services, as well as higher success fees. Acquisition-related revenues contributed $12.6 million, or 8.7% of the increase, compared to the prior year quarter. Adjusted Segment EBITDA of $24.8 million, or 13.7% of segment revenues, compared to $24.3 million, or 16.8% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was nearly offset by higher compensation, primarily related to an increase in variable compensation and a 25.9% increase in billable headcount, as well as higher SG&A expenses, including costs related to the August 2019 acquisition.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased $18.2 million, or 13.8%, to $150.3 million in the quarter compared to $132.1 million in the prior year quarter. The increase in revenues was primarily due to higher demand for investigations and disputes services. Adjusted Segment EBITDA of $17.4 million, or 11.6% of segment revenues, compared to $21.5 million, or 16.3% of segment revenues, in the prior year quarter. Adjusted Segment EBITDA declined compared to the prior year quarter, as the increase in revenues was more than offset by higher compensation, primarily related to a 17.2% increase in billable headcount and higher variable compensation as well as higher SG&A expenses.


Economic Consulting

Revenues in the Economic Consulting segment increased $24.7 million, or 19.2%, to $153.1 million in the quarter compared to $128.4 million in the prior year quarter. The increase in revenues was primarily due to higher demand for merger and acquisition-related antitrust and financial economics services, as well as higher realization for international arbitration services. Adjusted Segment EBITDA of $17.3 million, or 11.3% of segment revenues, compared to $12.1 million, or 9.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation, primarily related to higher variable compensation and an 11.6% increase in billable headcount.

Technology

Revenues in the Technology segment increased $9.8 million, or 23.5%, to $51.5 million in the quarter compared to $41.7 million in the prior year quarter. The increase in revenues was primarily due to higher demand for global cross-border and merger and acquisition-related “second request” services. Adjusted Segment EBITDA of $7.8 million, or 15.1% of segment revenues, compared to $2.7 million, or 6.4% 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, primarily related to an 18.0% increase in billable headcount and an increase in SG&A expenses.

Strategic Communications

Revenues in the Strategic Communications segment increased $8.3 million, or 14.3%, to $66.3 million in the quarter compared to $58.0 million in the prior year quarter. The increase in revenues was due to a $4.5 million increase in pass-through revenues and higher project-based revenues in North America and Europe, the Middle East and Africa, primarily related to corporate reputation services. Adjusted Segment EBITDA of $9.9 million, or 14.9% of segment revenues, compared to $11.3 million, or 19.5% of segment revenues, in the prior year quarter. Adjusted Segment EBITDA declined compared to the prior year quarter, as the increase in revenues was more than offset by higher compensation, primarily related to a 13.6% increase in billable headcount and higher SG&A expenses.

2020 Guidance

The Company estimates that revenues for full year 2020 will range between $2.450 billion and $2.550 billion. The Company estimates that full year 2020 EPS will range between $5.32 and $5.82 and that Adjusted EPS will range between $5.50 and $6.00. The variance between EPS and Adjusted EPS guidance for 2020 includes estimated non-cash interest expense of $0.18 per share related to the Company’s 2023 Convertible Notes.

Fourth Quarter and Full Year 2019 Conference Call

FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year 2019 financial results at 9:00 a.m. Eastern Time on Tuesday, February 25, 2020. 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 5,500 employees located in 27 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 $2.35 billion in revenues during fiscal year 2019. More information can be found at www.fticonsulting.com.


Use of Non-GAAP Measures

In the accompanying analysis of financial information, we sometimes use information derived from consolidated and segment financial information that may not be presented in our financial statements or prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Certain of these financial measures are considered not in conformity with GAAP (“non-GAAP financial measures”) under the U.S. Securities and Exchange Commission (“SEC”) rules. Specifically, we have referred to the following non-GAAP financial 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, which are GAAP financial measures, below in order to more fully define the components of certain non-GAAP financial measures presented in this press 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 Adjusted EBITDA Margin, which is a non-GAAP financial measure, as Adjusted EBITDA as a percentage of total revenues.

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, gain or loss on sale of a business and losses on early extinguishment of debt. We believe that these 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. 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 non-GAAP financial measures, considered along with corresponding GAAP financial measures, provide management and investors with additional information for comparison of our operating results with the operating results of other companies.


We define Adjusted Net Income and Adjusted Earnings per Diluted Share (“Adjusted EPS”), which are non-GAAP financial measures, as net income and earnings per diluted share (“EPS”), respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt, non-cash interest expense on convertible notes, gain or loss on sale of a business and the impact of adopting the 2017 U.S. Tax Cuts and Jobs 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 these non-GAAP financial measures, when considered together with our GAAP financial results and GAAP financial measures, provide management and investors with an additional understanding of our business operating results, including underlying trends.

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

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

Safe Harbor Statement

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve uncertainties and risks. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions, share repurchases and other matters, business trends and other information that is not historical, including statements regarding estimates of our future financial results. When used in this press release, words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, estimates of our future financial results, are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and estimates will be achieved, and the Company’s actual results may differ materially from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flows in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer; the mix of the geographic locations where our clients are located or where services are performed; fluctuations in the price per share of our common stock;


adverse financial, real estate or other market and general economic conditions; and other future events, which could impact each of our segments differently and could be outside of our control; the pace and timing of the consummation and integration of future acquisitions; the Company’s ability to realize cost savings and efficiencies, competitive and general economic conditions; retention of staff and clients; new laws and regulations, or changes thereto, including the 2017 U.S. Tax Cuts and Jobs 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, 2019, 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,
2019
    December 31,
2018
 

Assets

    

Current assets

    

Cash and cash equivalents

   $ 369,373     $ 312,069  

Accounts receivable:

    

Billed receivables

     540,584       437,797  

Unbilled receivables

     418,288       319,205  

Allowances for doubtful accounts and unbilled services

     (265,500     (202,394
  

 

 

   

 

 

 

Accounts receivable, net

     693,372       554,608  

Current portion of notes receivable

     35,106       29,228  

Prepaid expenses and other current assets

     80,810       69,448  
  

 

 

   

 

 

 

Total current assets

     1,178,661       965,353  

Property and equipment, net

     93,672       84,577  

Operating lease assets

     159,777       —    

Goodwill

     1,202,767       1,172,316  

Other intangible assets, net

     38,432       34,633  

Notes receivable, net

     69,033       84,471  

Other assets

     40,800       37,771  
  

 

 

   

 

 

 

Total assets

   $ 2,783,142     $ 2,379,121  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable, accrued expenses and other

   $ 158,936     $ 104,600  

Accrued compensation

     416,903       333,536  

Billings in excess of services provided

     36,698       44,434  
  

 

 

   

 

 

 

Total current liabilities

     612,537       482,570  

Long-term debt, net

     275,609       265,571  

Non-current operating lease liabilities

     176,378       —    

Deferred income taxes

     151,352       155,088  

Other liabilities

     78,124       127,067  
  

 

 

   

 

 

 

Total liabilities

     1,294,000       1,030,296  
  

 

 

   

 

 

 

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 — 37,390 (2019) and 38,147 (2018)

     374       381  

Additional paid-in capital

     216,162       299,534  

Retained earnings

     1,413,453       1,196,727  

Accumulated other comprehensive loss

     (140,847     (147,817
  

 

 

   

 

 

 

Total stockholders’ equity

     1,489,142       1,348,825  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,783,142     $ 2,379,121  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
December 31,
 
     2019     2018  
     (unaudited)  
  

 

 

   

 

 

 

Revenues

   $ 602,218     $ 504,993  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     418,672       340,162  

Selling, general and administrative expenses

     133,032       118,163  

Amortization of other intangible assets

     2,314       1,865  
  

 

 

   

 

 

 
     554,018       460,190  
  

 

 

   

 

 

 

Operating income

     48,200       44,803  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     (3,680     2,903  

Interest expense

     (4,835     (7,076

Loss on early extinguishment of debt

     —         (9,072
  

 

 

   

 

 

 
     (8,515     (13,245
  

 

 

   

 

 

 

Income before income tax provision

     39,685       31,558  

Income tax provision

     10,624       7,834  
  

 

 

   

 

 

 

Net income

   $ 29,061     $ 23,724  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 0.80     $ 0.63  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     36,545       37,368  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 0.76     $ 0.61  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     38,126       38,628  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

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

   $ 23,195     $ (10,185
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     23,195       (10,185
  

 

 

   

 

 

 

Comprehensive income

   $ 52,256     $ 13,539  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Year Ended
December 31,
 
     2019     2018  

Revenues

   $ 2,352,717     $ 2,027,877  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     1,534,896       1,328,074  

Selling, general and administrative expenses

     504,074       465,636  

Amortization of other intangible assets

     8,152       8,162  
  

 

 

   

 

 

 
     2,047,122       1,801,872  
  

 

 

   

 

 

 

Operating income

     305,595       226,005  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     2,061       4,977  

Interest expense

     (19,206     (27,149

Gain on sale of business

     —         13,031  

Loss on early extinguishment of debt

     —         (9,072
  

 

 

   

 

 

 
     (17,145     (18,213
  

 

 

   

 

 

 

Income before income tax provision

     288,450       207,792  

Income tax provision

     71,724       57,181  
  

 

 

   

 

 

 

Net income

   $ 216,726     $ 150,611  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 5.89     $ 4.06  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     36,774       37,098  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 5.69     $ 3.93  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     38,111       38,318  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

Foreign currency translation adjustments, net of tax expense of $0 and $373

   $ 6,970     $ (27,602
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     6,970       (27,602
  

 

 

   

 

 

 

Comprehensive income

   $ 223,696     $ 123,009  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2019     2018     2019     2018  
     (Unaudited)              

Net income

   $ 29,061     $ 23,724     $ 216,726     $ 150,611  

Add back:

        

Loss on early extinguishment of debt

     —         9,072       —         9,072  

Tax impact of loss on early extinguishment of debt

     —         (2,359     —         (2,359

Non-cash interest expense on convertible notes

     2,195       2,080       8,606       3,019  

Tax impact of non-cash interest expense on convertible notes

     (571     (534     (2,237     (775

Gain on sale of business

     —         —         —         (13,031

Tax impact of gain on sale of business (1)

     —         —         (2,097     6,798  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 30,685     $ 31,983     $ 220,998     $ 153,335  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share — diluted

   $ 0.76     $ 0.61     $ 5.69     $ 3.93  

Add back:

        

Loss on early extinguishment of debt

     —         0.23       —         0.23  

Tax impact of loss on early extinguishment of debt

     —         (0.06     —         (0.06

Non-cash interest expense on convertible notes

     0.06       0.06       0.23       0.08  

Tax impact of non-cash interest expense on convertible notes

     (0.02     (0.01     (0.06     (0.02

Gain on sale of business

     —         —         —         (0.34

Tax impact of gain on sale of business (1)

     —         —         (0.06     0.18  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per common share — diluted

   $ 0.80     $ 0.83     $ 5.80     $ 4.00  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding — diluted

     38,126       38,628       38,111       38,318  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

In 2019, represents a discrete tax adjustment resulting from a change in estimate related to the accounting for the sale of Ringtail.


FTI CONSULTING, INC.

RECONCILIATION OF EPS GUIDANCE TO ADJUSTED EPS GUIDANCE

 

     Year Ended December 31, 2020  
         Low              High      

Guidance on estimated earnings per common share diluted (GAAP) (1)

   $ 5.32      $ 5.82  

Non-cash interest expense on convertible notes, net of tax

     0.18        0.18  
  

 

 

    

 

 

 

Guidance on estimated adjusted earnings per common share (non-GAAP) (1)

   $ 5.50      $ 6.00  
  

 

 

    

 

 

 

 

(1)

The forward-looking guidance on estimated 2020 EPS and Adjusted EPS does not reflect other gains and losses (all of which would be excluded from Adjusted EPS) related to the future impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt, or gain or loss on sale of a business as these items are dependent on future events that are uncertain and difficult to predict. The forward-looking guidance excludes any shares of common stock potentially issuable upon conversion of the 2023 Convertible Notes from the calculation of EPS.


FTI CONSULTING, INC.

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended December 31, 2019
(unaudited)

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

Net income

                    $ 29,061  

Interest income and other

                      3,680  

Interest expense

                      4,835  

Income tax provision

                      10,624  
                   

 

 

 

Operating income

   $ 22,478      $ 15,895      $ 16,022      $ 4,942      $ 8,483      $ (19,620   $ 48,200  

Depreciation and amortization

     1,037        1,187        1,280        2,862        694        710       7,770  

Amortization of other intangible assets

     1,283        287        44        —          700        —         2,314  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 24,798      $ 17,369      $ 17,346      $ 7,804      $ 9,877      $ (18,910   $ 58,284  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Year Ended December 31, 2019

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

Net income

                    $ 216,726  

Interest income and other

                      (2,061

Interest expense

                      19,206  

Income tax provision

                      71,724  
                   

 

 

 

Operating income

   $ 152,948      $ 98,648      $ 78,201      $ 35,022      $ 39,174      $ (98,398   $ 305,595  

Depreciation and amortization

     3,858        4,635        5,734        10,666        2,476        2,784       30,153  

Amortization of other intangible assets

     3,929        1,152        177        —          2,894        —         8,152  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 160,735      $ 104,435      $ 84,112      $ 45,688      $ 44,544      $ (95,614   $ 343,900  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended December 31, 2018
(unaudited)

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

Net income

                    $ 23,724  

Interest income and other

                      (2,903

Interest expense

                      7,076  

Loss on early extinguishment of debt

                      9,072  

Income tax provision

                      7,834  
                   

 

 

 

Operating income

   $ 22,620      $ 20,134      $ 10,667      $ 426      $ 9,975      $ (19,019   $ 44,803  

Depreciation and amortization

     894        1,042        1,398        2,248        555        835       6,972  

Amortization of other intangible assets

     767        303        44        —          767        —         1,881  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 24,281      $ 21,479      $ 12,109      $ 2,674      $ 11,297      $ (18,184   $ 53,656  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Year Ended December 31, 2018

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

Net income

                    $ 150,611  

Interest income and other

                      (4,977

Interest expense

                      27,149  

Gain on sale of business

                      (13,031

Loss on early extinguishment of debt

                      9,072  

Income tax provision

                      57,181  
                   

 

 

 

Operating income

   $ 115,124      $ 91,262      $ 64,052      $ 14,912      $ 37,250      $ (96,595   $ 226,005  

Depreciation and amortization

     3,428        4,237        5,607        12,405        2,302        3,557       31,536  

Amortization of other intangible assets

     3,108        1,322        296        70        3,366        —         8,162  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 121,660      $ 96,821      $ 69,955      $ 27,387      $ 42,918      $ (93,038   $ 265,703  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 


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, 2019 (unaudited)

               

Corporate Finance & Restructuring

   $ 181,054      $ 24,798       13.7     59%      $ 455        1,194  

Forensic and Litigation Consulting

     150,262        17,369       11.6     59%      $ 343        1,351  

Economic Consulting

     153,054        17,346       11.3     72%      $ 509        790  

Technology (1)

     51,533        7,804       15.1     N/M        N/M        361  

Strategic Communications (1)

     66,315        9,877       14.9     N/M        N/M        728  
  

 

 

    

 

 

   

 

 

         

 

 

 
   $ 602,218      $ 77,194       12.8           4,424  
  

 

 

    

 

 

   

 

 

         

 

 

 

Unallocated Corporate

        (18,910          
     

 

 

           

Adjusted EBITDA

      $ 58,284       9.7        
     

 

 

           

Year Ended December 31, 2019

               

Corporate Finance & Restructuring

   $ 723,721      $ 160,735       22.2     67%      $ 452        1,194  

Forensic and Litigation Consulting

     577,780        104,435       18.1     63%      $ 337        1,351  

Economic Consulting

     592,542        84,112       14.2     75%      $ 500        790  

Technology (1)

     215,584        45,688       21.2     N/M        N/M        361  

Strategic Communications (1)

     243,090        44,544       18.3     N/M        N/M        728  
  

 

 

    

 

 

   

 

 

         

 

 

 
   $ 2,352,717      $ 439,514       18.7           4,424  
  

 

 

    

 

 

   

 

 

         

 

 

 

Unallocated Corporate

        (95,614          
     

 

 

           

Adjusted EBITDA

      $ 343,900       14.6        
     

 

 

           

Three Months Ended December 31, 2018 (unaudited)

               

Corporate Finance & Restructuring

   $ 144,784      $ 24,281       16.8     61%      $ 458        948  

Forensic and Litigation Consulting

     132,083        21,479       16.3     63%      $ 340        1,153  

Economic Consulting

     128,396        12,109       9.4     67%      $ 530        708  

Technology (1)

     41,720        2,674       6.4     N/M        N/M        306  

Strategic Communications (1)

     58,010        11,297       19.5     N/M        N/M        641  
  

 

 

    

 

 

   

 

 

         

 

 

 
   $ 504,993      $ 71,840       14.2           3,756  
  

 

 

    

 

 

   

 

 

         

 

 

 

Unallocated Corporate

        (18,184          
     

 

 

           

Adjusted EBITDA

      $ 53,656       10.6        
     

 

 

           

Year Ended December 30, 2018

               

Corporate Finance & Restructuring

   $ 564,479      $ 121,660       21.6     66%      $ 433        948  

Forensic and Litigation Consulting

     520,333        96,821       18.6     64%      $ 331        1,153  

Economic Consulting

     533,979        69,955       13.1     69%      $ 519        708  

Technology (1)

     185,755        27,387       14.7     N/M        N/M        306  

Strategic Communications (1)

     223,331        42,918       19.2     N/M        N/M        641  
  

 

 

    

 

 

   

 

 

         

 

 

 
   $ 2,027,877      $ 358,741       17.7           3,756  
  

 

 

    

 

 

   

 

 

         

 

 

 

Unallocated Corporate

        (93,038          
     

 

 

           

Adjusted EBITDA

      $ 265,703       13.1        
     

 

 

           

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,
 
     2019     2018  

Operating activities

    

Net income

   $ 216,726     $ 150,611  

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

    

Depreciation and amortization

     30,153       31,536  

Amortization and impairment of other intangible assets

     8,152       8,162  

Acquisition-related contingent consideration

     2,372       479  

Provision for doubtful accounts

     19,602       17,872  

Share-based compensation

     17,978       15,577  

Amortization of debt discount and issuance costs

     11,615       5,456  

Loss on early extinguishment of debt

     —         9,072  

Gain on sale of business

     —         (13,031

Deferred income taxes

     (3,712     20,831  

Other

     302       769  

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

    

Accounts receivable, billed and unbilled

     (141,894     (72,034

Notes receivable

     10,445       8,987  

Prepaid expenses and other assets

     (22,648     (2,258

Accounts payable, accrued expenses and other

     (8,907     8,908  

Income taxes

     24,496       (8,890

Accrued compensation

     61,339       52,510  

Billings in excess of services provided

     (8,133     (3,885
  

 

 

   

 

 

 

Net cash provided by operating activities

     217,886       230,672  
  

 

 

   

 

 

 

Investing activities

    

Proceeds from sale of business

     —         50,283  

Payments for acquisition of businesses, net of cash received

     (18,791     —    

Purchases of property and equipment

     (42,072     (32,270

Other

     257       731  
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (60,606     18,744  
  

 

 

   

 

 

 

Financing activities

    

Borrowings under revolving line of credit

     45,000       233,500  

Repayments under revolving line of credit

     (45,000     (333,500

Proceeds from issuance of convertible notes

     —         316,250  

Payments of long-term debt

     —         (300,000

Payments of debt issue and debt prepayment costs

     —         (16,149

Purchase and retirement of common stock

     (105,797     (55,738

Net issuance of common stock under equity compensation plans

     3,171       38,475  

Payments for business acquisition liabilities

     (2,282     (3,029

Deposits and other

     1,597       2,672  
  

 

 

   

 

 

 

Net cash used in financing activities

     (103,311     (117,519
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     3,335       (9,789
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     57,304       122,108  

Cash and cash equivalents, beginning of period

     312,069       189,961  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 369,373     $ 312,069  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(in thousands)

 

     Year Ended December 31,  
     2019     2018  

Net cash provided by operating activities

   $ 217,886     $ 230,672  

Purchases of property and equipment

     (42,072     (32,270
  

 

 

   

 

 

 

Free Cash Flow

   $ 175,814     $ 198,402  
  

 

 

   

 

 

 

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