FTI Consulting Reports Third Quarter 2020 Financial Results

  • Third Quarter 2020 Revenues of $622.2 Million, Up 4.9% Compared to $593.1 Million in Prior Year Quarter
  • Third Quarter 2020 EPS of $1.35, Down 15.1% Compared to $1.59 in Prior Year Quarter; Third Quarter 2020 Adjusted EPS of $1.54, Down 5.5% Compared to $1.63 in Prior Year Quarter
  • Company Revises 2020 Guidance

WASHINGTON, Oct. 29, 2020 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended September 30, 2020.

Third quarter 2020 revenues of $622.2 million increased $29.1 million, or 4.9%, compared to revenues of $593.1 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation ("FX"), revenues increased $23.3 million, or 3.9%, compared to the prior year quarter. The increase in revenues was driven by higher demand in the Corporate Finance & Restructuring and Economic Consulting business segments, which was partially offset by lower demand in the Forensic and Litigation Consulting and Strategic Communications business segments, as well as a decline in pass-through revenues compared to the prior year quarter. Net income of $50.2 million compared to $60.4 million in the prior year quarter. Net income included a special charge of $7.1 million and FX remeasurement losses, which were partially offset by a lower effective tax rate compared to the prior year quarter. The third quarter special charge of $7.1 million included $4.7 million of lease abandonment and other relocation costs related to the Company’s New York City office consolidation and $2.4 million of severance and employee-related costs in the Forensic and Litigation Consulting segment. Adjusted EBITDA, which excludes the special charge, of $90.9 million, or 14.6% of revenues, compared to $92.3 million, or 15.6% of revenues, in the prior year quarter. The decrease in Adjusted EBITDA was due to higher compensation, primarily related to a 15.8% increase in billable headcount, which was partially offset by higher revenues and a decline in selling, general and administrative ("SG&A") expenses compared to the prior year quarter.

Third quarter 2020 fully diluted earnings per share ("EPS") of $1.35 compared to $1.59 in the prior year quarter. Third quarter 2020 EPS included the $7.1 million special charge, which reduced EPS by $0.14. Third quarter 2020 EPS also 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. Third quarter 2019 EPS included $2.2 million of non-cash interest expense related to the Company's 2023 Convertible Notes, which decreased EPS by $0.04. Third quarter 2020 Adjusted EPS of $1.54, which excludes the special charge and non-cash interest expense, compared to Adjusted EPS of $1.63 in the prior year quarter.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our growth in the face of COVID-19, in the face of all the challenges it has created for our clients and for our teams working to deliver for them, is a powerful testament to the strength of this company, its relevance to clients facing major issues, and the dedication and resilience of our more than 6,200 employees across the globe.”

Cash Position and Capital Allocation
Net cash provided by operating activities of $111.6 million for the quarter ended September 30, 2020 compared to $131.3 million for the quarter ended September 30, 2019. The year-over-year decrease in net cash provided by operating activities was largely due to an increase in compensation, primarily related to headcount growth, and higher income taxes paid, which was partially offset by lower non-compensation-related operating expenses and slightly higher cash collections compared to the prior year quarter.

Cash and cash equivalents of $304.7 million at September 30, 2020 compared to $258.5 million at September 30, 2019 and $304.2 million at June 30, 2020. Total debt, net of cash, of $36.6 million at September 30, 2020 compared to $57.8 million at September 30, 2019 and $47.0 million at June 30, 2020. The sequential decrease in total debt, net of cash, was primarily due to net cash provided by operating activities which exceeded cash used for share repurchases and acquisitions.

During the quarter, the Company repurchased 749,315 shares of its common stock at an average price per share of $110.57 for a total cost of $82.9 million. As of September 30, 2020, approximately $182.4 million remained available for stock repurchases under the Company’s stock repurchase authorization.

Third Quarter 2020 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $44.9 million, or 23.4%, to $236.6 million in the quarter compared to $191.7 million in the prior year quarter. Acquisition-related revenues contributed $8.5 million, or 4.4% of the increase, compared to the prior year quarter. The increase in revenues was primarily due to higher demand and higher realized bill rates for restructuring services compared to the prior year quarter. Adjusted Segment EBITDA of $56.2 million, or 23.8% of segment revenues, compared to $48.1 million, or 25.1% 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 36.6% increase in billable headcount and higher variable compensation compared to the prior year quarter.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased $23.5 million, or 16.5%, to $119.1 million in the quarter compared to $142.7 million in the prior year quarter. The decrease in revenues was primarily due to lower demand for disputes and investigations services. Adjusted Segment EBITDA of $13.6 million, or 11.4% of segment revenues, compared to $27.0 million, or 18.9% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues with lower utilization, which was partially offset by a decline in SG&A expenses compared to the prior year quarter.

Economic Consulting
Revenues in the Economic Consulting segment increased $13.3 million, or 9.4%, to $155.0 million in the quarter compared to $141.7 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $11.4 million, or 8.1%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand and realized bill rates for merger and acquisition ("M&A")-related antitrust services, which was partially offset by lower realized bill rates for non-M&A-related antitrust services. Adjusted Segment EBITDA of $25.7 million, or 16.6% of segment revenues, compared to $19.4 million, or 13.7% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by higher compensation, primarily related to a 15.2% increase in billable headcount and higher variable compensation compared to the prior year quarter.

Technology
Revenues in the Technology segment increased $1.5 million, or 2.6%, to $58.6 million in the quarter compared to $57.1 million in the prior year quarter. The increase in revenues was primarily due to higher demand for global cross-border investigation and litigation services. Adjusted Segment EBITDA of $11.9 million, or 20.4% of segment revenues, compared to $12.3 million, or 21.5% 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 13.2% increase in billable headcount.

Strategic Communications
Revenues in the Strategic Communications segment decreased $7.0 million, or 11.7%, to $53.0 million in the quarter compared to $60.0 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues decreased $8.2 million, or 13.7%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for corporate reputation and financial communications services and a $2.3 million decline in pass-through revenues. Adjusted Segment EBITDA of $8.4 million, or 15.9% of segment revenues, compared to $12.6 million, or 21.1% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues compared to the prior year quarter.

2020 Guidance
The Company is revising its full year 2020 guidance. The Company now estimates that 2020 revenues will range between $2.42 billion and $2.47 billion. This compares to the previous revenue range of $2.45 billion to $2.55 billion. The Company now estimates that 2020 EPS will range between $4.93 and $5.43. This compares to the previous EPS range of $5.32 to $5.82. This range is inclusive of the third quarter special charge of $0.14 per share and an estimated full year non-cash interest expense of $0.18 per share related to the Company's 2023 Convertible Notes. The Company now estimates that 2020 Adjusted EPS will range between $5.25 and $5.75. This compares to the previous Adjusted EPS range of $5.50 to $6.00.

Third Quarter 2020 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2020 financial results at 9:00 a.m. Eastern Time on Thursday, October 29, 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 6,200 employees located in 28 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $2.35 billion in revenues during fiscal year 2019. More information can be found at www.fticonsulting.com.

Non-GAAP Financial 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 United States 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 definition 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 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 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, unaudited quarterly 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)

    September 30,   December 31,
    2020   2019
    (Unaudited)    
Assets        
Current assets        
Cash and cash equivalents   $ 304,658       $ 369,373    
Accounts receivable:        
Billed receivables   603,832       540,584    
Unbilled receivables   482,586       418,288    
Allowances for doubtful accounts and unbilled services   (323,658 )     (265,500 )  
Accounts receivable, net   762,760       693,372    
Current portion of notes receivable   34,089       35,106    
Prepaid expenses and other current assets   74,223       80,810    
Total current assets   1,175,730       1,178,661    
Property and equipment, net   95,544       93,672    
Operating lease assets   153,818       159,777    
Goodwill   1,223,764       1,202,767    
Other intangible assets, net   43,652       38,432    
Notes receivable, net   66,078       69,033    
Other assets   35,812       40,800    
Total assets   $ 2,794,398       $ 2,783,142    
Liabilities and Stockholders' Equity        
Current liabilities        
Accounts payable, accrued expenses and other   $ 164,493       $ 158,936    
Accrued compensation   397,147       416,903    
Billings in excess of services provided   46,621       36,698    
Total current liabilities   608,261       612,537    
Long-term debt, net   308,454       275,609    
Noncurrent operating lease liabilities   161,976       176,378    
Deferred income taxes   150,572       151,352    
Other liabilities   90,638       78,124    
Total liabilities   1,319,901       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 — 36,028 (2020) and 37,390 (2019)   360       374    
Additional paid-in capital   46,642       216,162    
Retained earnings   1,568,546       1,413,453    
Accumulated other comprehensive loss   (141,051 )     (140,847 )  
Total stockholders' equity   1,474,497       1,489,142    
Total liabilities and stockholders' equity   $ 2,794,398       $ 2,783,142    


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)

  Three Months Ended September 30,
 
  2020   2019
  (Unaudited)
Revenues $ 622,249       $ 593,106    
Operating expenses      
Direct cost of revenues 417,179       380,892    
Selling, general and administrative expenses 122,102       127,951    
Special charges 7,103          
Amortization of other intangible assets 2,795       2,125    
  549,179       510,968    
Operating income 73,070       82,138    
Other income (expense)      
Interest income and other (3,340 )     2,973    
Interest expense (5,151 )     (4,832 )  
  (8,491 )     (1,859 )  
Income before income tax provision 64,579       80,279    
Income tax provision 14,407       19,857    
Net income $ 50,172       $ 60,422    
Earnings per common share ― basic $ 1.41       $ 1.65    
Weighted average common shares outstanding ― basic 35,639       36,617    
Earnings per common share ― diluted $ 1.35       $ 1.59    
Weighted average common shares outstanding ― diluted 37,086       37,938    
Other comprehensive income (loss), net of tax      
Foreign currency translation adjustments, net of tax expense of $0 $ 21,330       $ (16,633 )  
Total other comprehensive income (loss), net of tax 21,330       (16,633 )  
Comprehensive income $ 71,502       $ 43,789    


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)

  Nine Months Ended
September 30,
 
  2020   2019
  (Unaudited)
Revenues $ 1,834,694       $ 1,750,499    
Operating expenses      
Direct cost of revenues 1,232,437       1,116,224    
Selling, general and administrative expenses 375,989       371,042    
Special charges 7,103          
Amortization of other intangible assets 7,440       5,838    
  1,622,969       1,493,104    
Operating income 211,725       257,395    
Other income (expense)      
Interest income and other 3,879       5,741    
Interest expense (15,169 )     (14,371 )  
  (11,290 )     (8,630 )  
Income before income tax provision 200,435       248,765    
Income tax provision 45,342       61,100    
Net income $ 155,093       $ 187,665    
Earnings per common share ― basic $ 4.30       $ 5.09    
Weighted average common shares outstanding ― basic 36,073       36,851    
Earnings per common share ― diluted $ 4.11       $ 4.92    
Weighted average common shares outstanding ― diluted 37,708       38,107    
Other comprehensive loss, net of tax      
Foreign currency translation adjustments, net of tax expense of $0 $ (204 )     $ (16,225 )  
Total other comprehensive loss, net of tax (204 )     (16,225 )  
Comprehensive income $ 154,889       $ 171,440    


FTI CONSULTING, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)

    Three Months Ended September 30,   Nine Months Ended September 30,
    2020   2019   2020   2019
    (Unaudited)   (Unaudited)
Net income   $ 50,172       $ 60,422       $ 155,093       $ 187,665    
Add back:                
Special charges   7,103             7,103          
Tax impact of special charges   (1,847 )           (1,847 )        
Non-cash interest expense on convertible notes   2,286       2,166       6,766       6,411    
Tax impact of non-cash interest expense on 
  convertible notes
  (595 )     (563 )     (1,760 )     (1,666 )  
Tax impact of gain on sale of business (1)                     (2,097 )  
Adjusted Net Income   $ 57,119       $ 62,025       $ 165,355       $ 190,313    
Earnings per common share — diluted   $ 1.35       $ 1.59       $ 4.11       $ 4.92    
Add back:                
Special charges   0.19             0.19          
Tax impact of special charges   (0.05 )           (0.05 )        
Non-cash interest expense on convertible notes   0.06       0.06       0.18       0.17    
Tax impact of non-cash interest expense on
  convertible notes
  (0.01 )     (0.02 )     (0.04 )     (0.04 )  
Tax impact of gain on sale of business (1)                     (0.06 )  
Adjusted earnings per common share — diluted   $ 1.54       $ 1.63       $ 4.39       $ 4.99    
Weighted average number of common shares
  outstanding ― diluted
  37,086       37,938       37,708       38,107    


 

(1) For the nine months ended September 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)   $ 4.93     $ 5.43  
Special charges, net of tax   0.14     0.14  
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)   $ 5.25     $ 5.75  


 

(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 September 30, 2020
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 50,172  
Interest income and other                           3,340  
Interest expense                           5,151  
Income tax provision                           14,407  
Operating income   $ 52,372     $ 8,729     $ 24,304     $ 8,621     $ 5,105     $ (26,061 )   $ 73,070  
Depreciation and amortization   1,109     1,207     1,337     3,041     542     713     7,949  
Amortization of other intangible assets   1,873     171     44     1     706         2,795  
Special charges   861     3,484     35     276     2,074     373     7,103  
Adjusted EBITDA   $ 56,215     $ 13,591     $ 25,720     $ 11,939     $ 8,427     $ (24,975 )   $ 90,917  
                             
Nine Months Ended September 30, 2020
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 155,093  
Interest income and other                           (3,879 )
Interest expense                           15,169  
Income tax provision                           45,342  
Operating income   $ 172,847     $ 17,853     $ 55,916     $ 23,642     $ 21,395     $ (79,928 )   $ 211,725  
Depreciation and amortization   3,126     3,788     4,040     8,939     1,680     2,083     23,656  
Amortization of other intangible assets   4,591     627     133     1     2,088         7,440  
Special charges   861     3,484     35     276     2,074     373     7,103  
Adjusted EBITDA   $ 181,425     $ 25,752     $ 60,124     $ 32,858     $ 27,237     $ (77,472 )   $ 249,924  


Three Months Ended September 30, 2019
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 60,422  
Interest income and other                           (2,973 )
Interest expense                           4,832  
Income tax provision                           19,857  
Operating income   $ 46,007     $ 25,534     $ 17,943     $ 9,094     $ 11,343     $ (27,783 )   $ 82,138  
Depreciation and amortization   964     1,188     1,426     3,192     619     691     8,080  
Amortization of other intangible assets   1,113     286     44         682         2,125  
Adjusted EBITDA   $ 48,084     $ 27,008     $ 19,413     $ 12,286     $ 12,644     $ (27,092 )   $ 92,343  
                             
Nine Months Ended September 30, 2019
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 187,665  
Interest income and other                           (5,741 )
Interest expense                           14,371  
Income tax provision                           61,100  
Operating income   $ 130,470     $ 82,753     $ 62,179     $ 30,080     $ 30,691     $ (78,778 )   $ 257,395  
Depreciation and amortization   2,821     3,448     4,454     7,804     1,782     2,074     22,383  
Amortization of other intangible assets   2,646     865     133         2,194         5,838  
Adjusted EBITDA   $ 135,937     $ 87,066     $ 66,766     $ 37,884     $ 34,667     $ (76,704 )   $ 285,616  



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 September 30, 2020 (Unaudited)                      
Corporate Finance & Restructuring $ 236,615     $ 56,215     23.8 %   64 %   $ 460     1,608  
Forensic and Litigation Consulting 119,104     13,591     11.4 %   48 %   $ 337     1,371  
Economic Consulting 154,978     25,720     16.6 %   66 %   $ 502     880  
Technology (1) 58,585     11,939     20.4 %   N/M   N/M   394  
Strategic Communications (1) 52,967     8,427     15.9 %   N/M   N/M   766  
  $ 622,249     $ 115,892     18.6 %           5,019  
Unallocated Corporate     (24,975 )                
Adjusted EBITDA     $ 90,917     14.6 %            
                       
Nine Months Ended September 30, 2020
(Unaudited)
                     
Corporate Finance & Restructuring $ 690,375     $ 181,425     26.3 %   68 %   $ 468     1,608  
Forensic and Litigation Consulting 373,082     25,752     6.9 %   50 %   $ 333     1,371  
Economic Consulting 438,609     60,124     13.7 %   68 %   $ 482     880  
Technology (1) 164,392     32,858     20.0 %   N/M   N/M   394  
Strategic Communications (1) 168,236     27,237     16.2 %   N/M   N/M   766  
  $ 1,834,694     $ 327,396     17.8 %           5,019  
Unallocated Corporate     (77,472 )                
Adjusted EBITDA     $ 249,924     13.6 %            
                       
Three Months Ended September 30, 2019 (Unaudited)                      
Corporate Finance & Restructuring $ 191,698     $ 48,084     25.1 %   70 %   $ 449     1,177  
Forensic and Litigation Consulting 142,651     27,008     18.9 %   61 %   $ 336     1,326  
Economic Consulting 141,715     19,413     13.7 %   70 %   $ 512     764  
Technology (1) 57,083     12,286     21.5 %   N/M   N/M   348  
Strategic Communications (1) 59,959     12,644     21.1 %   N/M   N/M   719  
  $ 593,106     $ 119,435     20.1 %           4,334  
Unallocated Corporate     (27,092 )                
Adjusted EBITDA     $ 92,343     15.6 %            
                       
Nine Months Ended September 30, 2019
(Unaudited)
                     
Corporate Finance & Restructuring $ 542,667     $ 135,937     25.0 %   70 %   $ 451     1,177  
Forensic and Litigation Consulting 427,518     87,066     20.4 %   64 %   $ 336     1,326  
Economic Consulting 439,488     66,766     15.2 %   76 %   $ 500     764  
Technology (1) 164,051     37,884     23.1 %   N/M   N/M   348  
Strategic Communications (1) 176,775     34,667     19.6 %   N/M   N/M   719  
  $ 1,750,499     $ 362,320     20.7 %           4,334  
Unallocated Corporate     (76,704 )                
Adjusted EBITDA     $ 285,616     16.3 %            
                       


 

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)

  Nine Months Ended
September 30,
 
  2020   2019
  (Unaudited)
Operating activities      
Net income $ 155,093       $ 187,665    
Adjustments to reconcile net income to net cash provided by operating
   activities:
     
Depreciation and amortization 23,655       22,384    
Amortization and impairment of other intangible assets 7,440       5,838    
Acquisition-related contingent consideration 4,652       717    
Provision for doubtful accounts 15,608       13,552    
Share-based compensation 17,576       14,060    
Amortization of debt discount and issuance costs 9,028       8,666    
Deferred income taxes (1,658 )     4,084    
Other 45       248    
Changes in operating assets and liabilities, net of effects from acquisitions:      
Accounts receivable, billed and unbilled (86,491 )     (191,644 )  
Notes receivable 3,346       2,521    
Prepaid expenses and other assets 8,294       (5,817 )  
Accounts payable, accrued expenses and other 7,713       (7,332 )  
Income taxes (14,635 )     26,693    
Accrued compensation (18,985 )     5,156    
Billings in excess of services provided 10,296       (9,925 )  
                          Net cash provided by operating activities 140,977       76,866    
Investing activities      
Payments for acquisition of businesses, net of cash received (25,271 )     (18,791 )  
Purchases of property and equipment (25,663 )     (27,026 )  
Other 558       55    
                          Net cash used in investing activities (50,376 )     (45,762 )  
Financing activities      
Borrowings under revolving line of credit 149,500       45,000    
Repayments under revolving line of credit (124,500 )     (45,000 )  
Purchase and retirement of common stock (175,832 )     (77,949 )  
Net issuance of common stock under equity compensation plans (5,195 )     3,176    
Payments for business acquisition liabilities (3,948 )     (2,282 )  
Deposits and other 4,561       535    
                          Net cash used in financing activities (155,414 )     (76,520 )  
Effect of exchange rate changes on cash and cash equivalents 98       (8,183 )  
Net decrease in cash and cash equivalents (64,715 )     (53,599 )  
Cash and cash equivalents, beginning of period 369,373       312,069    
Cash and cash equivalents, end of period $ 304,658       $ 258,470    


FTI CONSULTING, INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands)

  Three Months Ended September 30,   Nine Months Ended September 30,
  2020   2019   2020   2019
               
  (in thousands)   (in thousands)
Net cash provided by operating activities $ 111,563       $ 131,304       $ 140,977       $ 76,866    
Purchases of property and equipment (11,764 )     (6,365 )     (25,663 )     (27,026 )  
Free Cash Flow $ 99,799       $ 124,939       $ 115,314       $ 49,840    

FTI Consulting, Inc.
555 12th Street NW Washington, DC 20004
+1.202.312.9100

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

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Source: FTI Consulting, Inc.

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