- Third Quarter Revenues of $438.0 Million
- Third Quarter Fully Diluted EPS and Adjusted EPS of $0.52
WASHINGTON, Oct. 27, 2016 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN) (the “Company”) today released its financial results for the third quarter ended September 30, 2016.
For the quarter, revenues decreased 3.8 percent to $438.0 million compared to $455.5 million in the prior year quarter. Excluding the estimated negative impact of foreign currency translation (“FX”), revenues declined by 2.0 percent. Net income increased 110.4 percent to $21.7 million compared to $10.3 million in the prior year quarter. Adjusted EBITDA of $47.2 million, or 10.8 percent of revenues, declined from $56.1 million, or 12.3 percent of revenues, in the prior year quarter. Fully diluted earnings per share (“EPS”) and Adjusted EPS were $0.52 compared to EPS of $0.25 and Adjusted EPS of $0.53 in the prior year quarter. EPS in the prior year quarter included a $19.6 million charge or a $0.28 per share loss related to the early extinguishment of debt.
Net cash provided by operating activities for the quarter was $70.9 million compared to $74.0 million in the prior year quarter. Cash and cash equivalents were $225.2 million at September 30, 2016, compared to $105.0 million at September 30, 2015. Total debt was $475.0 million at September 30, 2016, down from $520.0 million at September 30, 2015.
Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “We are pleased with the ongoing progress our businesses are making towards becoming, on a multi-year basis, real engines for growth. During the third quarter, our billable headcount grew 3.9 percent from the second quarter of 2016 as we continue to attract the best professionals across the globe and extend our offerings into new adjacencies and geographies.”
Third Quarter Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment decreased $2.9 million, or 2.5 percent, to $110.6 million in the quarter compared to $113.5 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues decreased $1.0 million, or 0.9 percent, compared to the prior year quarter. Adjusted Segment EBITDA was $17.8 million, or 16.1 percent of segment revenues, compared to $26.7 million, or 23.5 percent of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA Margin was primarily due to lower utilization and higher costs related to the ramp up of experienced hires.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased $1.1 million, or 1.0 percent, to $115.0 million in the quarter compared to $116.2 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues were comparable to the prior year quarter. Higher success fees were offset by lower demand in the segment’s health solutions practice. Adjusted Segment EBITDA was $16.6 million, or 14.4 percent of segment revenues, compared to $13.4 million, or 11.5 percent of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA Margin was driven by higher success fees in the segment’s health solutions practice.
Economic Consulting
Revenues in the Economic Consulting segment increased $7.9 million, or 6.9 percent, to $122.5 million in the quarter compared to $114.5 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $10.8 million, or 9.4 percent, compared to the prior year quarter. The increase in revenues was primarily due to higher demand and higher average realization in non-merger and acquisition (“M&A”)-related antitrust services in North America, which were partially offset by lower average realization for financial economics services in North America. Adjusted Segment EBITDA was $18.4 million, or 15.0 percent of segment revenues, compared to $16.7 million, or 14.5 percent of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA Margin was due to improved utilization in North America, which was partially offset by lower utilization in Europe, the Middle East and Africa (“EMEA”).
Technology
Revenues in the Technology segment decreased $11.5 million, or 20.7 percent, to $44.1 million in the quarter compared to $55.6 million in the prior year quarter. The decrease in revenues was driven by a decline in M&A-related “second request” activity and reduced demand for litigation services. Adjusted Segment EBITDA was $7.4 million, or 16.8 percent of segment revenues, compared to $10.8 million, or 19.5 percent of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA Margin was due to lower demand and realized pricing for managed review services.
Strategic Communications
Revenues in the Strategic Communications segment decreased $9.9 million, or 17.7 percent, to $45.8 million in the quarter compared to $55.7 million in the prior year quarter. Excluding the estimated impact of FX, revenues decreased $7.8 million, or 14.0 percent, compared to the prior year quarter. The decrease in revenues was primarily due to $8.5 million in lower pass-through revenues compared to the prior year quarter. Adjusted Segment EBITDA was $7.5 million, or 16.4 percent of segment revenues, compared to $8.7 million, or 15.6 percent of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA Margin was primarily due to the impact of lower net pass-through revenue. Excluding this impact, Adjusted Segment EBITDA Margin declined 2.3 percentage points due to higher costs related to the ramp up of new hires.
2016 Guidance
The Company revised its 2016 guidance for revenues to be approximately $1.80 billion. This compares to the previous range of between $1.80 billion and $1.87 billion. The Company reaffirmed 2016 guidance for Adjusted EPS of between $2.15 and $2.45.
Third Quarter 2016 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2016 financial results at 9:00 a.m. Eastern Time on October 27, 2016. The call can be accessed live and will be available for replay over the Internet for 90 days by logging onto the Company's website at www.fticonsulting.com.
About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 4,600 employees located in 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 $1.78 billion in revenues during fiscal year 2015. More information can be found at www.fticonsulting.com.
Use of Non-GAAP Measures
We have included the definitions of Segment Operating Income (Loss), Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin below in order to more fully define the components of certain non-GAAP 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), 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 define Adjusted Segment EBITDA Margin as Adjusted Segment EBITDA as a percentage of a segment’s revenues. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful measure which reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.
We define, non-GAAP measures, (i) Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses, and (ii) Adjusted EBITDA as consolidated net income (loss) 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 our 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, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. In addition, EBITDA and Adjusted EBITDA are common alternative measures of operating performance used by many of our competitors. They are 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 financial measures, provide management and investors with additional supplemental information for comparison of our operating results to the operating results of other companies.
We define Adjusted Net Income and Adjusted Earnings per Diluted Share (“Adjusted EPS”), non-GAAP financial measures, as Net Income (Loss) and earnings per diluted share (“GAAP EPS”), 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 measure, when considered together with our GAAP financial results and GAAP financial measures, provides management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt.
Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Income. Reconciliations of non-GAAP financial measures to GAAP are included in the financial tables accompanying this press release.
The financial tables accompanying this press release do not include a reconciliation of the Company’s 2016 Adjusted EPS guidance to an estimate of GAAP EPS. It is difficult to predict and estimate future 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. Accordingly, a reconciliation of our non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.
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 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 or other market and general economic conditions, which could impact each of our segments differently, the pace and timing of the consummation and integration of past and 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 headings "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. | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
| (in thousands, except per share data) | |||||||
| (unaudited) | |||||||
| Three Months Ended | |||||||
| September 30, | |||||||
| 2016 | 2015 | ||||||
| Revenues | $ | 438,042 | $ | 455,470 | |||
| Operating expenses | |||||||
| Direct cost of revenues | 293,702 | 301,609 | |||||
| Selling, general and administrative expenses | 106,220 | 105,058 | |||||
| Acquisition-related contingent consideration | 201 | 159 | |||||
| Amortization of other intangible assets | 2,845 | 2,900 | |||||
| 402,968 | 409,726 | ||||||
| Operating income | 35,074 | 45,744 | |||||
| Other income (expense) | |||||||
| Interest income and other | 3,213 | 2,027 | |||||
| Interest expense | (6,304 | ) | (11,696 | ) | |||
| Loss on early extinguishment of debt | - | (19,589 | ) | ||||
| (3,091 | ) | (29,258 | ) | ||||
| Income before income tax provision | 31,983 | 16,486 | |||||
| Income tax provision | 10,292 | 6,177 | |||||
| Net income | $ | 21,691 | $ | 10,309 | |||
| Earnings per common share - basic | $ | 0.53 | $ | 0.25 | |||
| Weighted average common shares outstanding - basic | 41,239 | 41,094 | |||||
| Earnings per common share - diluted | $ | 0.52 | $ | 0.25 | |||
| Weighted average common shares outstanding - diluted | 42,065 | 41,982 | |||||
| Other comprehensive loss, net of tax: | |||||||
| Foreign currency translation adjustments, net of tax $0 | $ | (4,478 | ) | $ | (17,229 | ) | |
| Total other comprehensive loss, net of tax | (4,478 | ) | (17,229 | ) | |||
| Comprehensive income (loss) | $ | 17,213 | $ | (6,920 | ) | ||
| FTI CONSULTING, INC. | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
| (in thousands, except per share data) | |||||||
| (unaudited) | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| 2016 | 2015 | ||||||
| Revenues | $ | 1,368,474 | $ | 1,336,945 | |||
| Operating expenses | |||||||
| Direct cost of revenues | 902,532 | 872,108 | |||||
| Selling, general and administrative expenses | 318,074 | 316,317 | |||||
| Special charges | 6,811 | - | |||||
| Acquisition-related contingent consideration | 1,541 | (1,145 | ) | ||||
| Amortization of other intangible assets | 8,041 | 8,919 | |||||
| 1,236,999 | 1,196,199 | ||||||
| Operating income | 131,475 | 140,746 | |||||
| Other income (expense) | |||||||
| Interest income and other | 9,895 | 2,840 | |||||
| Interest expense | (18,836 | ) | (36,537 | ) | |||
| Loss on extinguishment of debt | - | (19,589 | ) | ||||
| (8,941 | ) | (53,286 | ) | ||||
| Income before income tax provision | 122,534 | 87,460 | |||||
| Income tax provision | 44,115 | 31,756 | |||||
| Net income | $ | 78,419 | $ | 55,704 | |||
| Earnings per common share - basic | $ | 1.92 | $ | 1.37 | |||
| Weighted average common shares outstanding - basic | 40,856 | 40,771 | |||||
| Earnings per common share - diluted | $ | 1.88 | $ | 1.34 | |||
| Weighted average common shares outstanding - diluted | 41,605 | 41,682 | |||||
| Other comprehensive loss, net of tax: | |||||||
| Foreign currency translation adjustments, net of tax $0 | $ | (23,645 | ) | $ | (24,412 | ) | |
| Total other comprehensive loss, net of tax | (23,645 | ) | (24,412 | ) | |||
| Comprehensive income | $ | 54,774 | $ | 31,292 | |||
| FTI CONSULTING, INC. | ||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income | $ | 21,691 | $ | 10,309 | $ | 78,419 | $ | 55,704 | ||||||||
| Add back: | ||||||||||||||||
| Special charges, net of tax (1) | - | - | 4,328 | - | ||||||||||||
| Loss on extinguishment of debt, net of tax (2) | - | 11,881 | - | 11,881 | ||||||||||||
| Remeasurement of acquisition-related contingent consideration, net of tax (3) | - | - | 600 | (1,005 | ) | |||||||||||
| Adjusted Net Income | $ | 21,691 | $ | 22,190 | $ | 83,347 | $ | 66,580 | ||||||||
| Earnings per common share – diluted | $ | 0.52 | $ | 0.25 | $ | 1.88 | $ | 1.34 | ||||||||
| Add back: | ||||||||||||||||
| Special charges, net of tax (1) | - | - | 0.10 | - | ||||||||||||
| Loss on extinguishment of debt, net of tax (2) | - | 0.28 | - | 0.28 | ||||||||||||
| Remeasurement of acquisition-related contingent consideration, net of tax (3) | - | - | 0.02 | (0.02 | ) | |||||||||||
| Adjusted earnings per common share - diluted | $ | 0.52 | $ | 0.53 | $ | 2.00 | $ | 1.60 | ||||||||
| Weighted average number of common shares outstanding – diluted | 42,065 | 41,982 | 41,605 | 41,682 | ||||||||||||
| (1) The tax effect takes into account the tax treatment and related tax rates that apply to each adjustment in the applicable tax jurisdiction. As a result, the effective tax rate for the adjustments related to special charges for the nine months ended September 30, 2016 was 36.5%. The tax expense related to the adjustments for special charges for the nine months ended September 30, 2016 was $2.5 million or $0.06 impact on Adjusted EPS. There were no special charges for the three and nine months ended September 30, 2015. | ||||||||||||||||
| (2) The tax effect takes into account the tax treatment and related tax rates that apply to each adjustment in the applicable tax jurisdiction. As a result, the effective tax rate for the loss on early extinguishment of debt for the three and nine months ended September 30, 2015 was 39.3%. The tax expense related to the loss on early extinguishment of debt for the three and nine months ended September 30, 2015 was $7.7 million, or a $0.18 impact on Adjusted EPS. There were no adjustments related to the early extinguishment of debt in the three or nine months ended September 30, 2016. | ||||||||||||||||
| (3) The tax effect takes into account the tax treatment and related tax rates that apply to each adjustment in the applicable tax jurisdiction. As a result, the effective tax rate for the adjustments related to the remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2016 and 2015 were 38.8% and 40%, respectively. The tax expense related to the adjustment for the remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2016 and 2015 were $0.4 million or $0.01 impact on adjusted EPS and $0.7 million or a $0.02 impact on Adjusted EPS, respectively. There were no adjustments related to the remeasurement of acquisition-related contingent consideration in the three months ended September 30, 2016 and 2015. | ||||||||||||||||
| FTI CONSULTING, INC. | ||||||||||||||||||||||
| OPERATING RESULTS BY BUSINESS SEGMENT | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| Average | Revenue- | |||||||||||||||||||||
| Segment | Adjusted | Adjusted EBITDA | Billable | Generating | ||||||||||||||||||
| Revenues | EBITDA | Margin | Utilization | Rate | Headcount | |||||||||||||||||
| (in thousands) | (at period end) | |||||||||||||||||||||
| Three Months Ended September 30, 2016 | ||||||||||||||||||||||
| Corporate Finance & Restructuring | $ | 110,617 | $ | 17,762 | 16.1 | % | 61 | % | $ | 379 | 904 | |||||||||||
| Forensic and Litigation Consulting | 115,045 | 16,554 | 14.4 | % | 57 | % | $ | 330 | 1,145 | |||||||||||||
| Economic Consulting | 122,480 | 18,354 | 15.0 | % | 69 | % | $ | 534 | 647 | |||||||||||||
| Technology (1) | 44,072 | 7,398 | 16.8 | % | N/M | N/M | 298 | |||||||||||||||
| Strategic Communications (1) | 45,828 | 7,509 | 16.4 | % | N/M | N/M | 624 | |||||||||||||||
| $ | 438,042 | 67,577 | 15.4 | % | 3,618 | |||||||||||||||||
| Unallocated Corporate | (20,348 | ) | ||||||||||||||||||||
| Adjusted EBITDA | $ | 47,229 | 10.8 | % | ||||||||||||||||||
| Nine Months Ended September 30, 2016 | ||||||||||||||||||||||
| Corporate Finance & Restructuring | $ | 369,915 | $ | 81,406 | 22.0 | % | 68 | % | $ | 388 | 904 | |||||||||||
| Forensic and Litigation Consulting | 352,242 | 51,552 | 14.6 | % | 60 | % | $ | 329 | 1,145 | |||||||||||||
| Economic Consulting | 371,217 | 55,054 | 14.8 | % | 74 | % | $ | 516 | 647 | |||||||||||||
| Technology (1) | 134,235 | 20,256 | 15.1 | % | N/M | N/M | 298 | |||||||||||||||
| Strategic Communications (1) | 140,865 | 22,057 | 15.7 | % | N/M | N/M | 624 | |||||||||||||||
| $ | 1,368,474 | 230,325 | 16.8 | % | 3,618 | |||||||||||||||||
| Unallocated Corporate | (57,659 | ) | ||||||||||||||||||||
| Adjusted EBITDA | $ | 172,666 | 12.6 | % | ||||||||||||||||||
| Three Months Ended September 30, 2015 | ||||||||||||||||||||||
| Corporate Finance & Restructuring | $ | 113,487 | $ | 26,662 | 23.5 | % | 69 | % | $ | 390 | 830 | |||||||||||
| Forensic and Litigation Consulting | 116,158 | 13,406 | 11.5 | % | 60 | % | $ | 318 | 1,209 | |||||||||||||
| Economic Consulting | 114,541 | 16,654 | 14.5 | % | 71 | % | $ | 523 | 594 | |||||||||||||
| Technology (1) | 55,568 | 10,813 | 19.5 | % | N/M | N/M | 354 | |||||||||||||||
| Strategic Communications (1) | 55,716 | 8,717 | 15.6 | % | N/M | N/M | 594 | |||||||||||||||
| $ | 455,470 | 76,252 | 16.7 | % | 3,581 | |||||||||||||||||
| Unallocated Corporate | (20,150 | ) | ||||||||||||||||||||
| Adjusted EBITDA | $ | 56,102 | 12.3 | % | ||||||||||||||||||
| Nine Months Ended September 30, 2015 | ||||||||||||||||||||||
| Corporate Finance & Restructuring | $ | 328,812 | $ | 71,174 | 21.6 | % | 71 | % | $ | 382 | 830 | |||||||||||
| Forensic and Litigation Consulting | 365,554 | 55,456 | 15.2 | % | 65 | % | $ | 315 | 1,209 | |||||||||||||
| Economic Consulting | 329,320 | 43,502 | 13.2 | % | 72 | % | $ | 506 | 594 | |||||||||||||
| Technology (1) | 172,048 | 33,052 | 19.2 | % | N/M | N/M | 354 | |||||||||||||||
| Strategic Communications (1) | 141,211 | 20,100 | 14.2 | % | N/M | N/M | 594 | |||||||||||||||
| $ | 1,336,945 | 223,284 | 16.7 | % | 3,581 | |||||||||||||||||
| Unallocated Corporate | (52,725 | ) | ||||||||||||||||||||
| Adjusted EBITDA | $ | 170,559 | 12.8 | % | ||||||||||||||||||
| (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) | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Three Months Ended September 30, 2016 | Corporate Finance & Restructuring | Forensic and Litigation Consulting | Economic Consulting | Technology | Strategic Communications | Corp HQ | Total | |||||||||||||||||||||
| Net income | $ | 21,691 | ||||||||||||||||||||||||||
| Interest income and other | (3,213 | ) | ||||||||||||||||||||||||||
| Interest expense | 6,304 | |||||||||||||||||||||||||||
| Income tax provision | 10,292 | |||||||||||||||||||||||||||
| Operating income | $ | 16,182 | $ | 14,867 | $ | 16,888 | $ | 2,869 | $ | 6,006 | $ | (21,738 | ) | $ | 35,074 | |||||||||||||
| Depreciation and amortization | 698 | 1,203 | 1,312 | 4,121 | 586 | 1,390 | 9,310 | |||||||||||||||||||||
| Amortization of other intangible assets | 882 | 484 | 154 | 408 | 917 | - | 2,845 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 17,762 | $ | 16,554 | $ | 18,354 | $ | 7,398 | $ | 7,509 | $ | (20,348 | ) | $ | 47,229 | |||||||||||||
| Nine Months Ended September 30, 2016 | Corporate Finance & Restructuring | Forensic and Litigation Consulting | Economic Consulting | Technology | Strategic Communications | Corp HQ | Total | |||||||||||||||||||||
| Net income | $ | 78,419 | ||||||||||||||||||||||||||
| Interest income and other | (9,895 | ) | ||||||||||||||||||||||||||
| Interest expense | 18,836 | |||||||||||||||||||||||||||
| Income tax provision | 44,115 | |||||||||||||||||||||||||||
| Operating income | $ | 76,740 | $ | 45,005 | $ | 51,390 | $ | 2,569 | $ | 16,661 | $ | (60,890 | ) | $ | 131,475 | |||||||||||||
| Depreciation and amortization | 2,175 | 3,278 | 3,172 | 11,901 | 1,602 | 3,231 | 25,359 | |||||||||||||||||||||
| Amortization of other intangible assets | 2,491 | 1,519 | 492 | 725 | 2,814 | - | 8,041 | |||||||||||||||||||||
| Special charges | - | 1,750 | - | 5,061 | - | - | 6,811 | |||||||||||||||||||||
| Remeasurement of acquisition-related contingent consideration | - | - | - | - | 980 | - | 980 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 81,406 | $ | 51,552 | $ | 55,054 | $ | 20,256 | $ | 22,057 | $ | (57,659 | ) | $ | 172,666 | |||||||||||||
| Three Months Ended September 30, 2015 | Corporate Finance & Restructuring | Forensic and Litigation Consulting | Economic Consulting | Technology | Strategic Communications | Corp HQ | Total | |||||||||||||||||||||
| Net income | $ | 10,309 | ||||||||||||||||||||||||||
| Interest income and other | (2,027 | ) | ||||||||||||||||||||||||||
| Interest expense | 11,696 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt | 19,589 | |||||||||||||||||||||||||||
| Income tax provision | 6,177 | |||||||||||||||||||||||||||
| Operating income | $ | 25,112 | $ | 11,944 | $ | 15,498 | $ | 6,830 | $ | 7,235 | $ | (20,875 | ) | $ | 45,744 | |||||||||||||
| Depreciation and amortization | 677 | 925 | 848 | 3,784 | 499 | 725 | 7,458 | |||||||||||||||||||||
| Amortization of other intangible assets | 873 | 537 | 308 | 199 | 983 | - | 2,900 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 26,662 | $ | 13,406 | $ | 16,654 | $ | 10,813 | $ | 8,717 | $ | (20,150 | ) | $ | 56,102 | |||||||||||||
| Nine Months Ended September 30, 2015 | Corporate Finance & Restructuring | Forensic and Litigation Consulting | Economic Consulting | Technology | Strategic Communications | Corp HQ | Total | |||||||||||||||||||||
| Net income | $ | 55,704 | ||||||||||||||||||||||||||
| Interest income and other | (2,840 | ) | ||||||||||||||||||||||||||
| Interest expense | 36,537 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt | 19,589 | |||||||||||||||||||||||||||
| Income tax provision | 31,756 | |||||||||||||||||||||||||||
| Operating income | $ | 67,782 | $ | 50,894 | $ | 40,076 | $ | 21,493 | $ | 15,558 | $ | (55,057 | ) | $ | 140,746 | |||||||||||||
| Depreciation and amortization | 2,141 | 2,862 | 2,686 | 10,969 | 1,579 | 2,332 | 22,569 | |||||||||||||||||||||
| Amortization of other intangible assets | 2,742 | 1,700 | 924 | 590 | 2,963 | - | 8,919 | |||||||||||||||||||||
| Remeasurement of acquisition-related contingent consideration | (1,491 | ) | - | (184 | ) | - | - | - | (1,675 | ) | ||||||||||||||||||
| Adjusted EBITDA | $ | 71,174 | $ | 55,456 | $ | 43,502 | $ | 33,052 | $ | 20,100 | $ | (52,725 | ) | $ | 170,559 | |||||||||||||
| FTI CONSULTING, INC. | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| 2016 | 2015 | ||||||
| Operating activities | |||||||
| Net income | $ | 78,419 | $ | 55,704 | |||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||
| Depreciation and amortization | 25,359 | 22,569 | |||||
| Amortization of other intangible assets | 8,041 | 8,919 | |||||
| Acquisition-related contingent consideration | 1,541 | (1,145 | ) | ||||
| Provision for doubtful accounts | 5,903 | 10,364 | |||||
| Non-cash share-based compensation | 13,381 | 14,356 | |||||
| Non-cash interest expense | 1,489 | 2,029 | |||||
| Loss on early extinguishment of debt | - | 19,589 | |||||
| Other | (1,159 | ) | (674 | ) | |||
| Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||
| Accounts receivable, billed and unbilled | (67,318 | ) | (84,411 | ) | |||
| Notes receivable | (3,674 | ) | (334 | ) | |||
| Prepaid expenses and other assets | (3,575 | ) | (4,396 | ) | |||
| Accounts payable, accrued expenses and other | 10,900 | 10,158 | |||||
| Income taxes | 28,204 | 15,371 | |||||
| Accrued compensation | 4,486 | (19,518 | ) | ||||
| Billings in excess of services provided | 9,578 | (5,278 | ) | ||||
| Net cash provided by operating activities | 111,575 | 43,303 | |||||
| Investing activities | |||||||
| Payments for acquisition of businesses, net of cash received | (56 | ) | (575 | ) | |||
| Purchases of property and equipment | (22,855 | ) | (24,674 | ) | |||
| Other | 74 | 94 | |||||
| Net cash used in investing activities | (22,837 | ) | (25,155 | ) | |||
| Financing activities | |||||||
| Borrowings (repayments) under revolving line of credit, net | (25,000 | ) | 220,000 | ||||
| Payments of long-term debt | - | (425,671 | ) | ||||
| Payments of debt issue costs | - | (3,701 | ) | ||||
| Deposits | 2,806 | 2,406 | |||||
| Purchase and retirement of common stock | (2,903 | ) | - | ||||
| Net issuance of common stock under equity compensation plans | 18,394 | 13,931 | |||||
| Other | 357 | 124 | |||||
| Net cash used in financing activities | (6,346 | ) | (192,911 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | (6,968 | ) | (3,943 | ) | |||
| Net increase (decrease) in cash and cash equivalents | 75,424 | (178,706 | ) | ||||
| Cash and cash equivalents, beginning of period | 149,760 | 283,680 | |||||
| Cash and cash equivalents, end of period | $ | 225,184 | $ | 104,974 | |||
| FTI CONSULTING, INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (in thousands, except per share amounts) | |||||||
| September 30, | December 31, | ||||||
| 2016 | 2015 | ||||||
| (unaudited) | |||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 225,184 | $ | 149,760 | |||
| Accounts receivable: | |||||||
| Billed receivables | 416,960 | 405,000 | |||||
| Unbilled receivables | 326,297 | 280,538 | |||||
| Allowance for doubtful accounts and unbilled services | (195,669 | ) | (185,754 | ) | |||
| Accounts receivable, net | 547,588 | 499,784 | |||||
| Current portion of notes receivable | 32,490 | 36,115 | |||||
| Prepaid expenses and other current assets | 58,804 | 55,966 | |||||
| Total current assets | 864,066 | 741,625 | |||||
| Property and equipment, net of accumulated depreciation | 66,422 | 74,760 | |||||
| Goodwill | 1,188,230 | 1,198,298 | |||||
| Other intangible assets, net of amortization | 54,493 | 63,935 | |||||
| Notes receivable, net of current portion | 112,364 | 106,882 | |||||
| Other assets | 56,043 | 43,518 | |||||
| Total assets | $ | 2,341,618 | $ | 2,229,018 | |||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities | |||||||
| Accounts payable, accrued expenses and other | $ | 97,144 | $ | 89,845 | |||
| Accrued compensation | 229,611 | 227,783 | |||||
| Billings in excess of services provided | 38,774 | 29,449 | |||||
| Total current liabilities | 365,529 | 347,077 | |||||
| Long-term debt, net | 470,339 | 494,772 | |||||
| Deferred income taxes | 170,768 | 139,787 | |||||
| Other liabilities | 103,397 | 99,779 | |||||
| Total liabilities | 1,110,033 | 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 ― 42,367 (2016) and 41,234 (2015) | 423 | 412 | |||||
| Additional paid-in capital | 429,902 | 400,705 | |||||
| Retained earnings | 933,900 | 855,481 | |||||
| Accumulated other comprehensive loss | (132,640 | ) | (108,995 | ) | |||
| Total stockholders' equity | 1,231,585 | 1,147,603 | |||||
| Total liabilities and stockholders' equity | $ | 2,341,618 | $ | 2,229,018 | |||