FTI Consulting Reports Fourth Quarter and Full Year 2016 Financial Results

Introduces 2017 Guidance

WASHINGTON, Feb. 28, 2017 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN) today released its financial results for the fourth quarter and full year ended December 31, 2016.

Full Year 2016 Results

  • Revenues of $1.81 billion increased 1.8% compared to the prior year. Excluding the estimated negative impact of foreign currency translation, revenues increased 3.6% compared to the prior year.
  • Fully diluted EPS of $2.05 were up 29.7% compared to the prior year.
  • Adjusted EPS of $2.24 were up 21.7% compared to the prior year.
  • Net income of $85.5 million was up 29.5% compared to the prior year.
  • Adjusted EBITDA was $203.0 million, or 11.2% of revenues, compared to $205.8 million, or 11.6% of revenues, in the prior year.

Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “2016 was a superb year for FTI Consulting. We delivered record revenues in Economic Consulting and Corporate Finance & Restructuring, and had another year of strong performance in Strategic Communications. And our EMEA region is benefitting from our multi-year commitment to grow our global platform, delivering record revenues and continuing to grow headcount substantially.”

For the full year 2016, revenues increased 1.8% to $1.81 billion compared to $1.78 billion in the prior year. Excluding the estimated negative impact of foreign currency translation (“FX”), revenues increased 3.6% compared to the prior year. The increase in revenues was driven by broad-based higher demand across the Economic Consulting segment and higher demand for restructuring services in the Corporate Finance & Restructuring segment. This strength was partially offset by reduced demand in the Technology and Forensic and Litigation Consulting segments. Net income increased 29.5% to $85.5 million compared to $66.1 million in the prior year. Adjusted EBITDA was $203.0 million, or 11.2% of revenues, compared to $205.8 million, or 11.6% of revenues, in the prior year. Adjusted EBITDA growth in the Economic Consulting, Corporate Finance & Restructuring and Strategic Communications segments was more than offset by Adjusted EBITDA declines in the Technology and Forensic and Litigation Consulting segments and higher corporate costs. The decline in Adjusted EBITDA and Adjusted EBITDA Margin was also impacted by higher costs primarily from higher compensation related to an increase in aggregate headcount, which was not sufficiently offset by higher revenues.

Full year 2016 fully diluted earnings per share (“EPS”) were $2.05 compared to $1.58 in the prior year. Full year 2015 EPS included a $19.6 million debt extinguishment charge, which reduced EPS by $0.28. Full year 2016 EPS included:

  • A $10.4 million special charge related to headcount reductions, which reduced EPS by $0.17;
  • A $3.8 million charge related to the write-down of capitalized software, which reduced EPS by $0.06;
  • $17.9 million in interest expense savings due to reduced borrowings and lower average interest rates, which increased EPS by $0.27; and
  • A $3.7 million reduction in income tax expense related to the reversal of a tax reserve, which increased EPS by $0.09.

Full year 2016 Adjusted EPS were $2.24 compared to $1.84 in the prior year. Adjusted EPS in 2016 excludes the $10.4 million special charge related to headcount reductions and a $1.4 million fair value adjustment for an acquisition contingent consideration liability.

Cash Position and Capital Allocation

Cash and cash equivalents were $216.2 million at December 31, 2016, compared to $149.8 million at December 31, 2015. In 2016, the Company spent $21.5 million to repurchase 537,400 shares of its common stock at an average price of $39.97. As of December 31, 2016, approximately $81.4 million remained available under the Company’s $100.0 million share repurchase authorization.

The Company reduced the balance drawn on its credit facility by $130.0 million during 2016. Total debt of $370.0 million at December 31, 2016 compares to total debt of $500.0 million at December 31, 2015. Total debt, net of cash, was $153.8 million at December 31, 2016, down from $350.2 million at December 31, 2015.

Fourth Quarter 2016 Results

Fourth quarter 2016 revenues of $441.9 million compared to revenues of $442.2 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased 2.6% compared to the prior year quarter. Excluding FX, the increase in revenues was primarily driven by higher demand for mergers and acquisition (“M&A”) related antitrust services in the Economic Consulting segment, which was partially offset by lower demand in the dispute advisory and health solutions practices within the Forensic and Litigation Consulting segment. Net income of $7.1 million decreased 31.4% compared to $10.3 million in the prior year quarter. Adjusted EBITDA was $30.3 million, or 6.9% of revenues, compared to $35.2 million, or 8.0% of revenues in the prior year quarter. The decline in Adjusted EBITDA was due to higher compensation related to increased headcount in the Corporate Finance & Restructuring segment and lower demand in the Forensic and Litigation Consulting segment.

Fourth quarter 2016 EPS were $0.17 compared to $0.25 in the prior year quarter. Fourth quarter 2016 EPS included a special charge of $3.6 million related to headcount reductions and a $3.8 million write-down of capitalized software. These charges were partially offset by a $3.7 million reduction in income tax expense. Fourth quarter 2016 Adjusted EPS of $0.24 were the same as the prior year quarter. Adjusted EPS excludes the impact of the $3.6 million special charge related to headcount reductions.

Fourth Quarter 2016 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $1.8 million, or 1.6%, to $113.4 million in the quarter compared to $111.6 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $4.4 million, or 3.9%, compared to the prior year quarter. The increase in revenues were primarily due to higher realized pricing for restructuring services and higher success fees, which was partially offset by lower demand. Adjusted Segment EBITDA was $16.3 million, or 14.4% of segment revenues, compared to $18.9 million, or 17.0% of segment revenues, in the prior year quarter. The decline in Adjusted Segment EBITDA was due to higher compensation costs, which were partially offset by lower bad debt expense and increased revenues.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased $11.2 million, or 9.6%, to $105.5 million in the quarter compared to $116.7 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues decreased $9.8 million, or 8.4%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand in the segment’s dispute advisory and health solutions practices. Adjusted Segment EBITDA was $6.3 million, or 6.0% of segment revenues, compared to $8.8 million, or 7.5% of segment revenues, in the prior year quarter. The decline in Adjusted Segment EBITDA was due to lower revenues, which were partially offset by lower compensation costs resulting from headcount reductions in the health solutions practice.

Economic Consulting
Revenues in the Economic Consulting segment increased $10.7 million, or 9.0%, to $129.3 million in the quarter compared to $118.6 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $15.0 million, or 12.6%, compared to the prior year quarter. The increase in revenues was driven primarily by higher demand for M&A-related antitrust services. Adjusted Segment EBITDA was $19.0 million, or 14.7% of segment revenues, compared to $18.8 million, or 15.9% of segment revenues, in the prior year quarter. Adjusted Segment EBITDA was up only slightly from the prior year quarter as the increase in revenues was partially offset by higher compensation costs, primarily related to an increase in professionals and shifts in business mix.

Technology
Revenues in the Technology segment decreased $3.1 million, or 6.6%, to $43.5 million in the quarter compared to $46.6 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues decreased $2.3 million, or 4.8%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand and lower realized pricing for M&A-related “second request” and litigation services. Adjusted Segment EBITDA was $5.6 million, or 12.8% of segment revenues, compared to $6.0 million, or 12.8% of segment revenues, in the prior year quarter. The decline in Adjusted Segment EBITDA was due to lower revenues, which were partially offset by lower compensation costs resulting from headcount reductions taken in 2016.

Strategic Communications
Revenues in the Strategic Communications segment increased $1.6 million or 3.2%, to $50.3 million in the quarter compared to $48.8 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $4.3 million, or 8.8%, compared to the prior year quarter. The increase in revenues was primarily due to higher project-based revenues in the Europe, Middle East and Africa (“EMEA”) region, driven by public affairs and financial communications engagements. Adjusted Segment EBITDA was $8.4 million, or 16.7% of segment revenues, compared to $7.6 million, or 15.6% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to the increase in revenues, which were partially offset by higher compensation costs, primarily related to an increase in professionals.

2017 Guidance
The Company estimates that revenues for 2017 will range between $1.80 billion and $1.90 billion. The Company estimates that EPS will range between $1.95 and $2.30 and that Adjusted EPS will range between $2.10 and $2.40. The variance between EPS and Adjusted EPS guidance for 2017 is related to estimated lease cancellation charges of $0.10 to $0.15 per share for the move of the Company’s Washington, D.C., office to another Washington, D.C., office location. The Company’s guidance assumes the completion of the remaining $81.4 million of its $100.0 million share repurchase authorization in 2017, which will be dependent on fluctuations in the price per share of the Company’s common stock, the timing of stock repurchases, market conditions and other future events that may be beyond the Company’s control.

Fourth Quarter and Full Year 2016 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year 2016 financial results at 9:00 a.m. Eastern Time on February 28, 2017. 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 4,700 employees located in 29 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $1.81 billion in revenues during fiscal year 2016. More information can be found at www.fticonsulting.com.

Use of Non-GAAP Measures

We have included the definitions of Segment Operating Income (Loss) 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 (Loss) as a segment’s share of Consolidated Operating Income (Loss). We define Total Segment Operating Income (Loss), 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 (Loss) 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 Segment EBITDA Margin as Adjusted Segment EBITDA as a percentage of a segment’s 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 and losses on early extinguishment of debt. 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 and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that this non-GAAP financial measure, which excludes the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt, when considered together with our GAAP financial results, provides management and investors with an additional understanding of our business operating results, including underlying trends.

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. 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 flow in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer, the mix of the geographic locations where our clients are located or where services are performed, adverse financial, real estate, fluctuations in the price per share of our common stock, 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 and other risks described under the heading "Item 1A Risk Factors" in the Company's most recent Form 10-K filed with the SEC and in the Company's other filings with the SEC, including the risks set forth under "Risks Related to Our Reportable Segments" and "Risks Related to Our Operations". We are under no duty to update any of the forward looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW

FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
 
  Year Ended
  December 31,
    2016       2015  
       
Revenues $   1,810,394     $   1,779,149  
       
Operating expenses      
Direct cost of revenues     1,210,771         1,171,444  
Selling, general and administrative expenses     434,552         432,668  
Special charges     10,445         -   
Acquisition-related contingent consideration     2,164         (1,200 )
Amortization of other intangible assets     10,306         11,726  
      1,668,238         1,614,638  
       
Operating income     142,156         164,511  
       
Other income (expense)      
Interest income and other     10,466         3,232  
Interest expense     (24,819 )       (42,768 )
Loss on early extinguishment of debt     -          (19,589 )
      (14,353 )       (59,125 )
       
Income before income tax provision     127,803         105,386  
       
Income tax provision     42,283         39,333  
       
Net income  $   85,520     $   66,053  
       
Earnings per common share - basic $   2.09     $   1.62  
Weighted average common shares outstanding - basic     40,943         40,846  
       
Earnings per common share - diluted $   2.05     $   1.58  
Weighted average common shares outstanding - diluted     41,709         41,729  
       
       
Other comprehensive loss, net of tax      
Foreign currency translation adjustments, net of tax expense of $0 $   (41,884 )   $   (28,727 )
Other comprehensive loss, net of tax     (41,884 )       (28,727 )
Comprehensive income $   43,636     $   37,326  
               


FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
       
  Three Months Ended
  December 31,
    2016       2015  
       
Revenues $   441,920     $   442,204  
       
Operating expenses      
Direct cost of revenues     308,239         299,336  
Selling, general and administrative expenses     116,478         116,351  
Special charges     3,634         -   
Acquisition-related contingent consideration     623         (55 )
Amortization of other intangible assets     2,265         2,807  
      431,239         418,439  
       
Operating income     10,681         23,765  
       
Other income (expense)      
Interest income and other     571         392  
Interest expense     (5,983 )       (6,231 )
      (5,412 )       (5,839 )
       
Income before income tax provision     5,269         17,926  
       
Income tax (benefit) provision     (1,832 )       7,577  
       
Net income  $   7,101     $   10,349  
       
Earnings per common share - basic $   0.17     $   0.25  
Weighted average common shares outstanding - basic     41,201         41,078  
       
Earnings per common share - diluted $   0.17     $   0.25  
Weighted average common shares outstanding - diluted     42,018         41,879  
       
       
Other comprehensive loss, net of tax      
Foreign currency translation adjustments, net of tax expense of $0 $   (18,239 )   $   (4,315 )
Other comprehensive loss, net of tax     (18,239 )       (4,315 )
Comprehensive income (loss) $   (11,138 )   $   6,034  
               


FTI CONSULTING, INC.  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
   
    Three Months Ended December 31,   Year Ended December 31,  
      2016       2015       2016       2015    
    (unaudited)          
               
Net income    $   7,101     $   10,349     $   85,520     $   66,053    
Add back:                  
Special charges       3,634         -          10,445         -     
Tax impact of special charges       (1,113 )       -          (3,595 )       -     
Loss on early extinguishment of debt       -          -          -          19,589    
Tax impact of loss on early extinguishment of debt       -          -          -          (7,708 )  
Remeasurement of acquisition-related contingent consideration       423         (192 )       1,403         (1,867 )  
Tax impact of remeasurement of acquisition-related contingent consideration       (165 )       77         (546 )       747    
Adjusted Net Income   $   9,880     $   10,234     $   93,227     $   76,814    
                   
Earnings per common share – diluted   $   0.17     $   0.25     $   2.05     $   1.58    
Add back:                  
Special charges       0.09         -          0.25         -     
Tax impact of special charges       (0.03 )       -          (0.08 )       -     
Loss on early extinguishment of debt       -          -          -          0.47    
Tax impact of loss on early extinguishment of debt       -          -          -          (0.19 )  
Remeasurement of acquisition-related contingent consideration       0.01         (0.01 )       0.03         (0.04 )  
Tax impact of remeasurement of acquisition-related contingent consideration       -          -          (0.01 )       0.02    
Adjusted earnings per common share – diluted   $   0.24     $   0.24     $   2.24     $   1.84    
                   
Weighted average number of common shares outstanding – diluted       42,018         41,879         41,709         41,729    
                   
                   
    Year Ended December 31, 2017          
    Low   High          
Guidance on estimated earnings per common share – diluted (GAAP)(1)   $   1.95     $   2.30            
Estimated special charge for lease termination costs related to the relocation of the Company's office in Washington, D.C.       0.15         0.10            
Guidance on estimated adjusted earnings per common share (Non-GAAP)(1)    $   2.10     $   2.40            
                   
(1) The forward-looking guidance on estimated 2017 earnings per diluted share (“EPS”) and adjusted earnings per common share – diluted ("Adjusted EPS") do not reflect other gains and losses (all of which would be excluded from Adjusted EPS) related to future impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and/or losses on early extinguishment of debt, as these items are dependent on future events that are uncertain and difficult to predict.  Additionally, the guidance on estimated 2017 EPS and Adjusted EPS assumes the Company will complete the remaining $81.4 million of its $100 million share repurchase authorization in 2017.  This reduction of outstanding common shares is estimated to benefit 2017 EPS and Adjusted EPS between $0.05 and $0.09 per share.  The actual benefit of additional share repurchases may be higher or lower than this estimated range as a result of fluctuations in the timing and amount of repurchases, per share price of our common stock, market conditions and other future events that cannot be predicted.  
   


FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
                    Average    Revenue-
  Segment    Adjusted   Adjusted EBITDA        Billable    Generating
  Revenues   EBITDA   Margin   Utilization    Rate    Headcount
  (in thousands)
              (at period end)
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 %            
                       
Three Months Ended December 31, 2015 (unaudited)                      
Corporate Finance & Restructuring  $   111,586   $   18,927     17.0 %   62 %   $   386     838
Forensic and Litigation Consulting      116,715       8,811     7.5 %   60 %   $   330     1,131
Economic Consulting     118,589       18,828     15.9 %   70 %   $   529     599
Technology (1)     46,551       5,958     12.8 %   N/M   N/M     349
Strategic Communications (1)     48,763       7,627     15.6 %   N/M   N/M     599
  $   442,204   $   60,151     13.6 %             3,516
Unallocated Corporate          (24,948 )                
Adjusted EBITDA      $   35,203     8.0 %            
                       
Year Ended December 31, 2015                      
Corporate Finance & Restructuring  $   440,398   $   90,101     20.5 %   69 %   $   383     838
Forensic and Litigation Consulting      482,269       64,267     13.3 %   64 %   $   319     1,131
Economic Consulting     447,909       62,330     13.9 %   72 %   $   512     599
Technology (1)     218,599       39,010     17.8 %   N/M   N/M     349
Strategic Communications (1)     189,974       27,727     14.6 %   N/M   N/M     599
  $   1,779,149   $   283,435     15.9 %             3,516
Unallocated Corporate          (77,673 )                
Adjusted EBITDA      $   205,762     11.6 %            
                       
                       
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.
 


RECONCILIATION OF NET INCOME AND OPERATING INCOME 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    
                             
                             
                             
Three Months Ended December 31, 2015 (unaudited) Corporate Finance &
Restructuring
  Forensic and Litigation
Consulting
  Economic
Consulting
  Technology    Strategic
Communications
  Unallocated
Corporate
  Total  
                             
Net income                          $   10,349    
Interest income and other                             (392 )  
Interest expense                             6,231    
Income tax provision                             7,577    
Operating income $   17,425     $   7,291   $   17,836     $   1,339     $   6,165   $   (26,291 )   $   23,765    
Depreciation and amortization     694         998       876         4,421         491       1,343         8,823    
Amortization of other intangible assets     808         522       308         198         971       -          2,807    
Remeasurement of acquisition-related contingent consideration     -          -        (192 )       -          -        -          (192 )  
Adjusted EBITDA  $   18,927     $   8,811   $   18,828     $   5,958     $   7,627   $   (24,948 )   $   35,203    
                             
                             
Year Ended December 31, 2015 Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology    Strategic Communications   Unallocated Corporate   Total  
                             
Net income                          $   66,053    
Interest income and other                             (3,232 )  
Interest expense                             42,768    
Loss on early extinguishment of debt                             19,589    
Income tax provision                             39,333    
Operating income $   85,207     $   58,185   $   57,912     $   22,832     $   21,723   $   (81,348 )   $   164,511    
Depreciation and amortization     2,835         3,860       3,562         15,390         2,070       3,675         31,392    
Amortization of other intangible assets     3,550         2,222       1,232         788         3,934       -          11,726    
Remeasurement of acquisition-related contingent consideration     (1,491 )       -        (376 )       -          -        -          (1,867 )  
Adjusted EBITDA  $   90,101     $   64,267   $   62,330     $   39,010     $   27,727   $   (77,673 )   $   205,762    
                             
                             


FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
       
  Year Ended
  December 31,
    2016       2015  
Operating activities      
Net income  $   85,520     $   66,053  
       
Adjustments to reconcile net income to net cash provided by (used in) operating activities:      
Depreciation and amortization     38,700         31,392  
Amortization and impairment of other intangible assets     10,306         11,726  
Acquisition-related contingent consideration     2,164         (1,200 )
Provision for doubtful accounts      8,912         15,564  
Non-cash share-based compensation      16,920         17,951  
Non-cash interest expense     1,985         2,521  
Loss on early extinguishment of debt     -          19,589  
Other     (1,204 )       (760 )
Changes in operating assets and liabilities, net of effects from acquisitions:      
Accounts receivable, billed and unbilled     3,471         (35,648 )
Notes receivable     3,145         3,106  
Prepaid expenses and other assets     (2,840 )       (3,557 )
Accounts payable, accrued expenses and other     3,268         (4,718 )
Income taxes      22,012         18,491  
Accrued compensation     40,350         4,780  
Billings in excess of services provided     779         (5,370 )
Net cash provided by operating activities     233,488         139,920  
       
Investing activities      
Payments for acquisition of businesses, net of cash received      (1,251 )       (575 )
Purchases of property and equipment     (28,935 )       (31,399 )
Other     54         237  
Net cash used in investing activities     (30,132 )       (31,737 )
       
Financing activities      
Borrowings (repayments) under revolving line of credit, net     (130,000 )       200,000  
Payments of long-term debt     -          (425,671 )
Payments of debt issue costs     -          (3,843 )
Deposits     4,006         3,227  
Purchase and retirement of common stock     (21,489 )       (26,532 )
Net issuance of common stock under equity compensation plans     21,708         16,666  
Other     465         191  
Net cash used in financing activities     (125,310 )       (235,962 )
       
Effect of exchange rate changes on cash and cash equivalents     (11,648 )       (6,141 )
       
Net increase (decrease) in cash and cash equivalents     66,398         (133,920 )
Cash and cash equivalents, beginning of period     149,760         283,680  
Cash and cash equivalents, end of period $   216,158     $   149,760  
               


FTI CONSULTING, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
     
  December 31,  December 31, 
    2016     2015  
     
Assets    
Current assets    
Cash and cash equivalents $   216,158   $   149,760  
Accounts receivable:    
Billed receivables     365,385       405,000  
Unbilled receivables     288,331       280,538  
Allowance for doubtful accounts and unbilled services     (178,819 )     (185,754 )
Accounts receivable, net     474,897       499,784  
Current portion of notes receivable     31,864       36,115  
Prepaid expenses and other current assets     60,252       55,966  
Total current assets     783,171       741,625  
Property and equipment, net of accumulated depreciation     61,856       74,760  
Goodwill     1,180,001       1,198,298  
Other intangible assets, net of amortization     52,120       63,935  
Notes receivable, net of current portion     104,524       106,882  
Other assets     43,696       43,518  
Total assets $   2,225,368   $   2,229,018  
     
Liabilities and Stockholders' Equity    
Current liabilities    
Accounts payable, accrued expenses and other $   87,320   $   89,845  
Accrued compensation     261,500       227,783  
Billings in excess of services provided     29,635       29,449  
Total current liabilities     378,455       347,077  
Long-term debt, net     365,528       494,772  
Deferred income taxes     173,799       139,787  
Other liabilities     100,228       99,779  
Total liabilities     1,018,010       1,081,415  
     
Stockholders' equity    
Preferred stock, $0.01 par value; shares authorized ― 5,000; none outstanding     -        -   
Common stock, $0.01 par value; shares authorized ― 75,000; shares issued and outstanding ― 42,037 (2016) and 41,234 (2015)      420       412  
Additional paid-in capital     416,816       400,705  
Retained earnings     941,001       855,481  
Accumulated other comprehensive loss     (150,879 )     (108,995 )
Total stockholders' equity     1,207,358       1,147,603  
Total liabilities and stockholders' equity $   2,225,368   $   2,229,018  


FTI Consulting, Inc.
1101 K Street NW
Washington, DC 20005
+1.202.312.9100

Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com

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FTI Consulting, Inc.

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