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 Second Quarter 2020 Financial Results

 

   

Second Quarter 2020 Revenues of $607.9 Million, Up 0.3% Compared to $606.1 Million in Prior Year Quarter

 

   

Second Quarter 2020 EPS of $1.27, Down 24.9% Compared to $1.69 in Prior Year Quarter; Second Quarter 2020 Adjusted EPS of $1.32, Down 23.7% Compared to $1.73 in Prior Year Quarter

 

   

Announces $200.0 Million Increase in Share Repurchase Authorization and Reaffirms 2020 Guidance

Washington, D.C., July 30, 2020

— FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended June 30, 2020.

Second quarter 2020 revenues of $607.9 million increased $1.7 million, or 0.3%, compared to revenues of $606.1 million in the prior year quarter. Excluding the estimated negative impact from foreign currency translation (“FX”), revenues increased $9.3 million, or 1.6%, compared to the prior year quarter. The increase in revenues was driven by higher demand in the Corporate Finance & Restructuring business segment, which was nearly offset by lower demand in the Forensic and Litigation Consulting and Technology business segments compared to the prior year quarter. Net income of $48.2 million compared to $64.6 million in the prior year quarter. The decrease in net income was due to higher compensation, primarily related to an 18.2% increase in billable headcount and higher variable compensation, which was partially offset by a decline in selling, general and administrative (“SG&A”) expenses and a lower tax rate compared to the prior year quarter. Adjusted EBITDA of $75.8 million, or 12.5% of revenues, compared to $97.2 million, or 16.0% of revenues, in the prior year quarter.

Second quarter 2020 fully diluted earnings per share (“EPS”) of $1.27 compared to $1.69 in the prior year quarter. Second quarter 2020 EPS included $2.3 million of non-cash interest expense related to the Company’s 2.0% convertible senior notes due 2023 (“2023 Convertible Notes”), which decreased EPS by $0.05. Second quarter 2019 EPS included $2.1 million of non-cash interest expense related to the Company’s 2023 Convertible Notes, which decreased EPS by $0.04. Second quarter 2020 Adjusted EPS of $1.32, which excludes the non-cash interest expense, compared to Adjusted EPS of $1.73 in the prior year quarter.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our strong results this quarter reflect the powerful sets of initiatives we have undertaken over the last few years to strengthen our core positions, extend into new adjacencies and anticipate our clients’ needs, together with the extraordinary efforts of our teams to collaborate with our clients as they face their greatest challenges and opportunities.”


Cash Position and Capital Allocation

Net cash provided by operating activities of $153.0 million for the quarter ended June 30, 2020 compared to $47.6 million for the quarter ended June 30, 2019. The year-over-year increase in net cash provided by operating activities was largely due to an increase in cash collected and lower non-compensation-related operating expenses compared to the prior year quarter, which was partially offset by an increase in salaries, primarily related to the increase in headcount.

Cash and cash equivalents of $304.2 million at June 30, 2020 compared to $189.1 million at June 30, 2019 and $223.1 million at March 31, 2020. Total debt, net of cash, of $47.0 million at June 30, 2020 compared to $147.1 million at June 30, 2019 and $143.2 million at March 31, 2020. The sequential decrease in total debt, net of cash, was primarily due to net cash provided by operating activities, which was partially offset by cash used for share repurchases.

During the quarter, the Company repurchased 470,853 shares of its common stock at an average price per share of $108.41 for a total cost of $51.0 million. As of June 30, 2020, approximately $65.3 million remained available for stock repurchases under the Company’s $500.0 million stock repurchase authorization. On July 28, 2020, the Company’s Board of Directors authorized an additional $200.0 million to repurchase shares of FTI Consulting’s outstanding common stock pursuant to its stock repurchase program. After giving effect to share repurchases through such date and the increased authorization, FTI Consulting has approximately $249.5 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.

Second Quarter 2020 Segment Results

Corporate Finance & Restructuring

Revenues in the Corporate Finance & Restructuring segment increased $56.0 million, or 29.5%, to

$246.0 million in the quarter compared to $190.0 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $58.3 million, or 30.7%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand and realization for restructuring services, which was partially offset by a decline in success fees and lower revenues related to business transformation and transaction services compared to the prior year quarter. Acquisition-related revenues contributed $12.4 million compared to the prior year quarter. Adjusted Segment EBITDA of $76.3 million, or 31.0% of segment revenues, compared to $50.5 million, or 26.6% 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 a 34.7% increase in billable headcount and higher variable compensation.


Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment decreased $39.5 million, or 27.1%, to $106.4 million in the quarter compared to $145.9 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $37.5 million, or 25.7%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for investigations and disputes services. Adjusted Segment EBITDA of a loss of $9.0 million compared to $28.2 million, or 19.4% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to lower revenues and higher compensation, primarily related to a 9.4% increase in billable headcount, which was partially offset by a decline in SG&A expenses.

Economic Consulting

Revenues in the Economic Consulting segment decreased $4.0 million, or 2.6%, to $151.5 million in the quarter compared to $155.5 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $2.5 million, or 1.6%, compared to the prior year quarter. The decrease in revenues was largely due to lower demand for financial economics and non-merger and acquisition (“M&A”)-related antitrust services, as well as lower realization for non-M&A-related antitrust and international arbitration services, which was partially offset by higher demand for M&A-related antitrust services. Adjusted Segment EBITDA of $21.7 million, or 14.3% of segment revenues, compared to $23.3 million, or 15.0% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues and an increase in bad debt expenses, which was partially offset by lower variable compensation.

Technology

Revenues in the Technology segment decreased $8.5 million, or 15.4%, to $47.1 million in the quarter compared to $55.6 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $8.0 million, or 14.4%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for litigation and global cross-border investigation services, as well as lower revenues related to the completion of transition services associated with the September 2018 sale of the Company’s Ringtail e-discovery software and related business. Adjusted Segment EBITDA of $6.4 million, or 13.7% of segment revenues, compared to $12.9 million, or 23.1% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to lower revenues and higher compensation, primarily related to a 19.5% increase in billable headcount.

Strategic Communications

Revenues in the Strategic Communications segment decreased $2.2 million, or 3.8%, to $56.9 million in the quarter compared to $59.1 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $1.0 million, or 1.7%, compared to the prior year quarter. This decrease in revenues was primarily due to a $1.9 million decline in pass-through revenues. Adjusted Segment EBITDA of $10.0 million, or 17.6% of segment revenues, compared to $10.5 million, or 17.7% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to higher compensation, primarily related to a 13.2% increase in billable headcount, which was partially offset by a decline in SG&A expenses.

2020 Guidance

The Company is reaffirming its full year 2020 revenue guidance of between $2.450 billion and $2.550 billion. The Company is also reaffirming its full year 2020 EPS guidance of between $5.32 and $5.82 and full year 2020 Adjusted EPS guidance of between $5.50 and $6.00. The variance between EPS and Adjusted EPS guidance for full year 2020 includes an estimated non-cash interest expense of $0.18 per share related to the Company’s 2023 Convertible Notes.


Second Quarter 2020 Conference Call

FTI Consulting will host a conference call for analysts and investors to discuss second quarter 2020 financial results at 9:00 a.m. Eastern Time on Thursday, July 30, 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 5,800 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 measures are considered “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 (Loss) 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 (Loss) 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 (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 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 and the gain or loss on sale of a business. 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 (used in) 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 Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows. 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; the impact of the COVID-19 pandemic and related events that are beyond our control, which could affect our segments, practices and the geographic regions in which we conduct business differently and adversely; and other future events, which could impact each of our segments, practices and the geographic regions in which we conduct business 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; 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 on February 25, 2020 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on April 30, 2020, 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

     June 30,     December 31,  
     2020     2019  
     (unaudited)        

Assets

    

Current assets

    

Cash and cash equivalents

   $ 304,206     $ 369,373  

Accounts receivable:

    

Billed receivables

     578,722       540,584  

Unbilled receivables

     435,234       418,288  

Allowances for doubtful accounts and unbilled services

     (299,038     (265,500
  

 

 

   

 

 

 

Accounts receivable, net

     714,918       693,372  

Current portion of notes receivable

     32,279       35,106  

Prepaid expenses and other current assets

     75,938       80,810  
  

 

 

   

 

 

 

Total current assets

     1,127,341       1,178,661  

Property and equipment, net

     91,753       93,672  

Operating lease assets

     152,245       159,777  

Goodwill

     1,196,162       1,202,767  

Other intangible assets, net

     33,588       38,432  

Notes receivable, net

     64,646       69,033  

Other assets

     39,172       40,800  
  

 

 

   

 

 

 

Total assets

   $ 2,704,907     $ 2,783,142  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable, accrued expenses and other

   $ 163,162     $ 158,936  

Accrued compensation

     314,018       416,903  

Billings in excess of services provided

     40,288       36,698  
  

 

 

   

 

 

 

Total current liabilities

     517,468       612,537  

Long-term debt, net

     315,808       275,609  

Noncurrent operating lease liabilities

     161,753       176,378  

Deferred income taxes

     155,293       151,352  

Other liabilities

     75,482       78,124  
  

 

 

   

 

 

 

Total liabilities

     1,225,804       1,294,000  
  

 

 

   

 

 

 

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 — 36,710 (2020) and 37,390 (2019)

     367       374  

Additional paid-in capital

     122,743       216,162  

Retained earnings

     1,518,374       1,413,453  

Accumulated other comprehensive loss

     (162,381     (140,847
  

 

 

   

 

 

 

Total stockholders’ equity

     1,479,103       1,489,142  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,704,907     $ 2,783,142  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Three Months Ended
June 30,
 
     2020     2019  
     (unaudited)  

Revenues

   $ 607,852     $ 606,119  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     413,011       386,266  

Selling, general and administrative expenses

     126,928       129,906  

Amortization of other intangible assets

     2,314       1,852  
  

 

 

   

 

 

 
     542,253       518,024  
  

 

 

   

 

 

 

Operating income

     65,599       88,095  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     2,202       2,609  

Interest expense

     (5,157     (4,793
  

 

 

   

 

 

 
     (2,955     (2,184
  

 

 

   

 

 

 

Income before income tax provision

     62,644       85,911  

Income tax provision

     14,470       21,313  
  

 

 

   

 

 

 

Net income

   $ 48,174     $ 64,598  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 1.33     $ 1.75  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     36,169       36,960  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.27     $ 1.69  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     37,852       38,168  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

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

   $ 9,568     $ (4,815
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     9,568       (4,815
  

 

 

   

 

 

 

Comprehensive income

   $ 57,742     $ 59,783  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Six Months Ended
June 30,
 
     2020     2019  
     (unaudited)  

Revenues

   $ 1,212,445     $ 1,157,393  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     815,258       735,332  

Selling, general and administrative expenses

     253,887       243,091  

Amortization of other intangible assets

     4,645       3,713  
  

 

 

   

 

 

 
     1,073,790       982,136  
  

 

 

   

 

 

 

Operating income

     138,655       175,257  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     7,219       2,768  

Interest expense

     (10,018     (9,539
  

 

 

   

 

 

 
     (2,799     (6,771
  

 

 

   

 

 

 

Income before income tax provision

     135,856       168,486  

Income tax provision

     30,935       41,243  
  

 

 

   

 

 

 

Net income

   $ 104,921     $ 127,243  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 2.89     $ 3.44  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     36,292       36,970  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 2.76     $ 3.33  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     38,021       38,193  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

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

   $ (21,534   $ 408  
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     (21,534     408  
  

 

 

   

 

 

 

Comprehensive income

   $ 83,387     $ 127,651  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2020     2019     2020     2019  
     (Unaudited)     (Unaudited)  

Net income

   $ 48,174     $ 64,598     $ 104,921     $ 127,243  

Add back:

        

Non-cash interest expense on convertible notes

     2,255       2,137       4,480       4,245  

Tax impact of non-cash interest expense on convertible notes

     (586     (556     (1,165     (1,103

Tax impact of gain on sale of business (1)

     —         —         —         (2,097
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 49,843     $ 66,179     $ 108,236     $ 128,288  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.27     $ 1.69     $ 2.76     $ 3.33  

Add back:

        

Non-cash interest expense on convertible notes

     0.06       0.05       0.12       0.11  

Tax impact of non-cash interest expense on convertible notes

     (0.01     (0.01     (0.03     (0.03

Tax impact of gain on sale of business (1)

     —         —         —         (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per common share — diluted

   $ 1.32     $ 1.73     $ 2.85     $ 3.36  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding — diluted

     37,852       38,168       38,021       38,193  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

For the six months ended June 30, 2019, represents a discrete tax adjustment resulting from a change in estimate related to the accounting for the sale of our Ringtail e-discovery software and related business.


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 (LOSS) TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended June 30, 2020
(unaudited)

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

Net income

                   $ 48,174  

Interest income and other

                     (2,202

Interest expense

                     5,157  

Income tax provision

                     14,470  
                  

 

 

 

Operating income (loss)

   $ 73,811      $ (10,382   $ 20,216      $ 3,432      $ 8,798      $ (30,276   $ 65,599  

Depreciation and amortization

     1,038        1,165       1,433        3,003        552        693       7,884  

Amortization of other intangible assets

     1,415        170       45        —          684        —         2,314  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 76,264      $ (9,047   $ 21,694      $ 6,435      $ 10,034      $ (29,583   $ 75,797  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Six Months Ended June 30, 2020
(unaudited)

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

Net income

                   $ 104,921  

Interest income and other

                     (7,219

Interest expense

                     10,018  

Income tax provision

                     30,935  
                  

 

 

 

Operating income

   $ 120,475      $ 9,124     $ 31,612      $ 15,021      $ 16,290      $ (53,867   $ 138,655  

Depreciation and amortization

     2,017        2,581       2,703        5,898        1,138        1,370       15,707  

Amortization of other intangible assets

     2,718        456       89        —          1,382        —         4,645  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 125,210      $ 12,161     $ 34,404      $ 20,919      $ 18,810      $ (52,497   $ 159,007  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended June 30, 2019
(unaudited)

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

Net income

                    $ 64,598  

Interest income and other

                      (2,609

Interest expense

                      4,793  

Income tax provision

                      21,313  
                   

 

 

 

Operating income

   $ 48,779      $ 26,779      $ 21,747      $ 10,550      $ 9,132      $ (28,892   $ 88,095  

Depreciation and amortization

     947        1,174        1,521        2,325        589        681       7,237  

Amortization of other intangible assets

     766        288        45        —          753        —         1,852  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 50,492      $ 28,241      $ 23,313      $ 12,875      $ 10,474      $ (28,211   $ 97,184  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Six Months Ended June 30, 2019
(unaudited)

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

Net income

                    $ 127,243  

Interest income and other

                      (2,768

Interest expense

                      9,539  

Income tax provision

                      41,243  
                   

 

 

 

Operating income

   $ 84,463      $ 57,219      $ 44,236      $ 20,986      $ 19,348      $ (50,995   $ 175,257  

Depreciation and amortization

     1,857        2,260        3,028        4,612        1,163        1,383       14,303  

Amortization of other intangible assets

     1,533        579        89        —          1,512        —         3,713  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 87,853      $ 60,058      $ 47,353      $ 25,598      $ 22,023      $ (49,612   $ 193,273  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 


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 June 30, 2020

(unaudited)

              

Corporate Finance & Restructuring

   $ 246,011      $ 76,264       31.0     71   $ 494        1,362  

Forensic and Litigation Consulting

     106,381        (9,047     (8.5 )%      46   $ 327        1,326  

Economic Consulting

     151,493        21,694       14.3     73   $ 508        810  

Technology (1)

     47,084        6,435       13.7     N/M       N/M        386  

Strategic Communications (1)

     56,883        10,034       17.6     N/M       N/M        761  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 607,852      $ 105,380       17.3          4,645  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (29,583         
     

 

 

          

Adjusted EBITDA

      $ 75,797       12.5       
     

 

 

          

Six Months Ended June 30, 2020

(unaudited)

              

Corporate Finance & Restructuring

   $ 453,760      $ 125,210       27.6     70   $ 473        1,362  

Forensic and Litigation Consulting

     253,978        12,161       4.8     52   $ 332        1,326  

Economic Consulting

     283,631        34,404       12.1     70   $ 478        810  

Technology (1)

     105,807        20,919       19.8     N/M       N/M        386  

Strategic Communications (1)

     115,269        18,810       16.3     N/M       N/M        761  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 1,212,445      $ 211,504       17.4          4,645  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (52,497         
     

 

 

          

Adjusted EBITDA

      $ 159,007       13.1       
     

 

 

          

Three Months Ended June 30, 2019

(unaudited)

              

Corporate Finance & Restructuring

   $ 190,003      $ 50,492       26.6     68   $ 475        1,011  

Forensic and Litigation Consulting

     145,870        28,241       19.4     65   $ 340        1,212  

Economic Consulting

     155,502        23,313       15.0     79   $ 524        712  

Technology (1)

     55,632        12,875       23.1     N/M       N/M        323  

Strategic Communications (1)

     59,112        10,474       17.7     N/M       N/M        672  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 606,119      $ 125,395       20.7          3,930  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (28,211         
     

 

 

          

Adjusted EBITDA

      $ 97,184       16.0       
     

 

 

          

Six Months Ended June 30, 2019

(unaudited)

              

Corporate Finance & Restructuring

   $ 350,969      $ 87,853       25.0     69   $ 453        1,011  

Forensic and Litigation Consulting

     284,867        60,058       21.1     66   $ 337        1,212  

Economic Consulting

     297,773        47,353       15.9     78   $ 501        712  

Technology (1)

     106,968        25,598       23.9     N/M       N/M        323  

Strategic Communications (1)

     116,816        22,023       18.9     N/M       N/M        672  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 1,157,393      $ 242,885       21.0          3,930  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (49,612         
     

 

 

          

Adjusted EBITDA

      $ 193,273       16.7       
     

 

 

          

 

 

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.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Six Months Ended
June 30, 2020
 
     2020     2019  
     (unaudited)  

Operating activities

    

Net income

   $ 104,921     $ 127,243  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     15,707       14,304  

Amortization and impairment of other intangible assets

     4,645       3,713  

Acquisition-related contingent consideration

     1,120       186  

Provision for doubtful accounts

     11,624       6,260  

Share-based compensation

     12,147       10,207  

Amortization of debt discount and issuance costs

     5,987       5,748  

Deferred income taxes

     4,128       966  

Other

     13       225  

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

    

Accounts receivable, billed and unbilled

     (42,804     (186,854

Notes receivable

     5,993       8,343  

Prepaid expenses and other assets

     8,979       (1,953

Accounts payable, accrued expenses and other

     2,230       (11,606

Income taxes

     (2,344     23,458  

Accrued compensation

     (107,217     (55,183

Billings in excess of services provided

     4,285       505  
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     29,414       (54,438
  

 

 

   

 

 

 

Investing activities

    

Purchases of property and equipment

     (13,899     (20,661

Other

     14       69  
  

 

 

   

 

 

 

Net cash used in investing activities

     (13,885     (20,592
  

 

 

   

 

 

 

Financing activities

    

Borrowings under revolving line of credit

     90,000       25,000  

Repayments under revolving line of credit

     (55,000     (5,000

Purchase and retirement of common stock

     (99,678     (66,893

Net issuance of common stock under equity compensation plans

     (6,523     1,009  

Payments for business acquisition liabilities

     (3,948     (2,282

Deposits and other

     5,098       1,014  
  

 

 

   

 

 

 

Net cash used in financing activities

     (70,051     (47,152
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (10,645     (781
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (65,167     (122,963

Cash and cash equivalents, beginning of period

     369,373       312,069  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 304,206     $ 189,106  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW

(in thousands)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2020     2019     2020     2019  
     (in thousands)     (in thousands)  

Net cash provided by (used in) operating activities

   $ 152,976     $ 47,648     $ 29,414     $ (54,438

Purchases of property and equipment

     (5,663     (10,508     (13,899     (20,661
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

   $ 147,313     $ 37,140     $ 15,515     $ (75,099
  

 

 

   

 

 

   

 

 

   

 

 

 

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