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FTI Consulting Reports Fourth Quarter and Full Year 2019 Financial Results
  • Record Full Year 2019 Revenues of $2.353 Billion, Up 16.0% Compared to $2.028 Billion in Prior Year
  • Record Full Year 2019 EPS of $5.69, Up 44.8% Compared to $3.93 in Prior Year; Record Full Year 2019 Adjusted EPS of $5.80, Up 45.0% Compared to $4.00 in Prior Year
  • Record Fourth Quarter 2019 Revenues of $602.2 Million, Up 19.3% Compared to Prior Year Quarter
  • Fourth Quarter 2019 EPS of $0.76 Compared to $0.61 in Prior Year Quarter; Fourth Quarter 2019 Adjusted EPS of $0.80 Compared to $0.83 in Prior Year Quarter
  • Announces $100 Million Increase in Share Repurchase Authorization and Introduces 2020 Guidance

WASHINGTON, Feb. 25, 2020 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the fourth quarter and full year ended December 31, 2019.

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

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

Full year 2019 fully diluted earnings per share ("EPS") of $5.69 compared to $3.93 in the prior year. 2019 EPS included $8.6 million of non-cash interest expense related to the Company's 2.0% convertible senior notes due 2023 ("2023 Convertible Notes"), which reduced EPS by $0.17, and a $2.1 million tax gain related to the Ringtail divestiture, which increased EPS by $0.06. 2018 EPS included a $9.1 million loss on early extinguishment of debt, which reduced EPS by $0.17, and $3.0 million of non-cash interest expense related to the 2023 Convertible Notes, which reduced EPS by $0.06. This was partially offset by the $13.0 million gain from the Ringtail divestiture, which increased 2018 EPS by $0.16. 2019 Adjusted EPS of $5.80, which excludes the non-cash interest expense and tax gain from the Ringtail divestiture, compared to Adjusted EPS of $4.00 in the prior year. 2018 Adjusted EPS excluded the loss on early extinguishment of debt, non-cash interest expense and gain from the Ringtail divestiture.

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

Cash Position and Capital Allocation

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

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

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

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

Fourth Quarter 2019 Results

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

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

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

Fourth Quarter 2019 Segment Results

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

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

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

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

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

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

Fourth Quarter and Full Year 2019 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year 2019 financial results at 9:00 a.m. Eastern Time on Tuesday, February 25, 2020. The call can be accessed live and will be available for replay over the internet for 90 days by logging onto the Company’s investor relations website here.

About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 5,500 employees located in 27 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $2.35 billion in revenues during fiscal year 2019. More information can be found at www.fticonsulting.com.

Use of Non-GAAP Measures
In the accompanying analysis of financial information, we sometimes use information derived from consolidated and segment financial information that may not be presented in our financial statements or prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Certain of these financial measures are considered not in conformity with GAAP ("non-GAAP financial measures") under the U.S. Securities and Exchange Commission ("SEC") rules. Specifically, we have referred to the following non-GAAP financial measures:

  • Total Segment Operating Income
  • Adjusted EBITDA
  • Total Adjusted Segment EBITDA
  • Adjusted EBITDA Margin
  • Adjusted Net Income
  • Adjusted Earnings per Diluted Share
  • Free Cash Flow

We have included the definitions of Segment Operating Income and Adjusted Segment EBITDA, which are GAAP financial measures, below in order to more fully define the components of certain non-GAAP financial measures presented in this press release. We define Segment Operating Income as a segment’s share of consolidated operating income. We define Total Segment Operating Income, which is a non-GAAP financial measure, as the total of Segment Operating Income for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We use Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of our segments because we believe it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash. We define Adjusted EBITDA Margin, which is a non-GAAP financial measure, as Adjusted EBITDA as a percentage of total revenues.

We define Total Adjusted Segment EBITDA, which is a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We define Adjusted EBITDA, which is a non-GAAP financial measure, as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, gain or loss on sale of a business and losses on early extinguishment of debt. We believe that these non-GAAP financial measures, when considered together with our GAAP financial results and GAAP financial measures, provide management and investors with a more complete understanding of our operating results, including underlying trends. In addition, EBITDA is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these non-GAAP financial measures, considered along with corresponding GAAP financial measures, provide management and investors with additional information for comparison of our operating results with the operating results of other companies.

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

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

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

Safe Harbor Statement

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve uncertainties and risks. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions, share repurchases and other matters, business trends and other information that is not historical, including statements regarding estimates of our future financial results. When used in this press release, words such as "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes,"  "forecasts" and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, estimates of our future financial results, are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and estimates will be achieved, and the Company’s actual results may differ materially from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flows in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer; the mix of the geographic locations where our clients are located or where services are performed; fluctuations in the price per share of our common stock; adverse financial, real estate or other market and general economic conditions; and other future events, which could impact each of our segments differently and could be outside of our control; the pace and timing of the consummation and integration of future acquisitions; the Company’s ability to realize cost savings and efficiencies, competitive and general economic conditions; retention of staff and clients; new laws and regulations, or changes thereto, including the 2017 U.S. Tax Cuts and Jobs Act; and other risks described under the heading "Item 1A, Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC, including the risks set forth under "Risks Related to Our Reportable Segments" and "Risks Related to Our Operations," and in the Company’s other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW

 

FTI CONSULTING, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)

  December 31,   December 31,
  2019   2018
Assets      
Current assets      
Cash and cash equivalents $ 369,373     $ 312,069  
Accounts receivable:      
Billed receivables 540,584     437,797  
Unbilled receivables 418,288     319,205  
Allowances for doubtful accounts and unbilled services (265,500 )   (202,394 )
Accounts receivable, net 693,372     554,608  
Current portion of notes receivable 35,106     29,228  
Prepaid expenses and other current assets 80,810     69,448  
Total current assets 1,178,661     965,353  
Property and equipment, net 93,672     84,577  
Operating lease assets 159,777      
Goodwill 1,202,767     1,172,316  
Other intangible assets, net 38,432     34,633  
Notes receivable, net 69,033     84,471  
Other assets 40,800     37,771  
Total assets $ 2,783,142     $ 2,379,121  
Liabilities and Stockholders' Equity      
Current liabilities      
Accounts payable, accrued expenses and other $ 158,936     $ 104,600  
Accrued compensation 416,903     333,536  
Billings in excess of services provided 36,698     44,434  
Total current liabilities 612,537     482,570  
Long-term debt, net 275,609     265,571  
Non-current operating lease liabilities 176,378      
Deferred income taxes 151,352     155,088  
Other liabilities 78,124     127,067  
Total liabilities 1,294,000     1,030,296  
Stockholders' equity      
Preferred stock, $0.01 par value; shares authorized — 5,000; none outstanding      
Common stock, $0.01 par value; shares authorized — 75,000; shares issued and outstanding — 37,390 (2019) and 38,147 (2018) 374     381  
Additional paid-in capital 216,162     299,534  
Retained earnings 1,413,453     1,196,727  
Accumulated other comprehensive loss (140,847 )   (147,817 )
Total stockholders' equity 1,489,142     1,348,825  
Total liabilities and stockholders' equity $ 2,783,142     $ 2,379,121  

 

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

  Three Months Ended
  December 31,
  2019   2018
       
  (unaudited)
Revenues $ 602,218     $ 504,993  
               
Operating expenses      
Direct cost of revenues 418,672     340,162  
Selling, general and administrative expenses 133,032     118,163  
Amortization of other intangible assets 2,314     1,865  
  554,018     460,190  
Operating income 48,200     44,803  
Other income (expense)      
Interest income and other (3,680 )   2,903  
Interest expense (4,835 )   (7,076 )
Loss on early extinguishment of debt     (9,072 )
  (8,515 )   (13,245 )
Income before income tax provision 39,685     31,558  
Income tax provision 10,624     7,834  
Net income $ 29,061     $ 23,724  
Earnings per common share ― basic $ 0.80     $ 0.63  
Weighted average common shares outstanding ― basic 36,545     37,368  
Earnings per common share ― diluted $ 0.76     $ 0.61  
Weighted average common shares outstanding ― diluted 38,126     38,628  
Other comprehensive income (loss), net of tax      
Foreign currency translation adjustments, net of tax expense of $0 and $0 $ 23,195     $ (10,185 )
Total other comprehensive income (loss), net of tax 23,195     (10,185 )
Comprehensive income $ 52,256     $ 13,539  

 

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

  Year Ended
  December 31,
  2019   2018
Revenues $ 2,352,717     $ 2,027,877  
Operating expenses      
Direct cost of revenues 1,534,896     1,328,074  
Selling, general and administrative expenses 504,074     465,636  
Amortization of other intangible assets 8,152     8,162  
  2,047,122     1,801,872  
Operating income 305,595     226,005  
Other income (expense)      
Interest income and other 2,061     4,977  
Interest expense (19,206 )   (27,149 )
Gain on sale of business     13,031  
Loss on early extinguishment of debt     (9,072 )
  (17,145 )   (18,213 )
Income before income tax provision 288,450     207,792  
Income tax provision 71,724     57,181  
Net income $ 216,726     $ 150,611  
Earnings per common share ― basic $ 5.89     $ 4.06  
Weighted average common shares outstanding ― basic 36,774     37,098  
Earnings per common share ― diluted $ 5.69     $ 3.93  
Weighted average common shares outstanding ― diluted 38,111     38,318  
Other comprehensive income (loss), net of tax      
Foreign currency translation adjustments, net of tax expense of $0 and $373 $ 6,970     $ (27,602 )
Total other comprehensive income (loss), net of tax 6,970     (27,602 )
Comprehensive income $ 223,696     $ 123,009  

 

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

  Three Months Ended December 31,   Year Ended
December 31,
  2019   2018   2019   2018
               
  (Unaudited)    
Net income $ 29,061     $ 23,724     $ 216,726     $ 150,611  
Add back:              
Loss on early extinguishment of debt     9,072         9,072  
Tax impact of loss on early extinguishment of debt     (2,359 )       (2,359 )
Non-cash interest expense on convertible notes 2,195     2,080     8,606     3,019  
Tax impact of non-cash interest expense on convertible notes (571 )   (534 )   (2,237 )   (775 )
Gain on sale of business             (13,031 )
Tax impact of gain on sale of business (1)         (2,097 )   6,798  
Adjusted net income $ 30,685     $ 31,983     $ 220,998     $ 153,335  
Earnings per common share — diluted $ 0.76     $ 0.61     $ 5.69     $ 3.93  
Add back:              
Loss on early extinguishment of debt     0.23         0.23  
Tax impact of loss on early extinguishment of debt     (0.06 )       (0.06 )
Non-cash interest expense on convertible notes 0.06     0.06     0.23     0.08  
Tax impact of non-cash interest expense on convertible notes (0.02 )   (0.01 )   (0.06 )   (0.02 )
Gain on sale of business             (0.34 )
Tax impact of gain on sale of business (1)         (0.06 )   0.18  
Adjusted earnings per common share — diluted $ 0.80     $ 0.83     $ 5.80     $ 4.00  
Weighted average number of common shares outstanding ― diluted 38,126     38,628     38,111     38,318  

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

 

FTI CONSULTING, INC.
RECONCILIATION OF EPS GUIDANCE TO ADJUSTED EPS GUIDANCE

  Year Ended December 31, 2020
  Low   High
Guidance on estimated earnings per common share diluted (GAAP) (1) $ 5.32     $ 5.82  
Non-cash interest expense on convertible notes, net of tax 0.18     0.18  
Guidance on estimated adjusted earnings per common share (non-GAAP) (1) $ 5.50     $ 6.00  

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

 

FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)

Three Months Ended December 31, 2019
(unaudited)
  Corporate
Finance &
Restructuring
  Forensic and
Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 29,061  
Interest income and other                           3,680  
Interest expense                           4,835  
Income tax provision                           10,624  
Operating income   $ 22,478     $ 15,895     $ 16,022     $ 4,942     $ 8,483     $ (19,620 )   $ 48,200  
Depreciation and amortization   1,037     1,187     1,280     2,862     694     710     7,770  
Amortization of other intangible assets   1,283     287     44         700         2,314  
Adjusted EBITDA   $ 24,798     $ 17,369     $ 17,346     $ 7,804     $ 9,877     $ (18,910 )   $ 58,284  
                             
Year Ended December 31, 2019   Corporate
Finance &
Restructuring
  Forensic and
Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 216,726  
Interest income and other                           (2,061 )
Interest expense                           19,206  
Income tax provision                           71,724  
Operating income   $ 152,948     $ 98,648     $ 78,201     $ 35,022     $ 39,174     $ (98,398 )   $ 305,595  
Depreciation and amortization   3,858     4,635     5,734     10,666     2,476     2,784     30,153  
Amortization of other intangible assets   3,929     1,152     177         2,894         8,152  
Adjusted EBITDA   $ 160,735     $ 104,435     $ 84,112     $ 45,688     $ 44,544     $ (95,614 )   $ 343,900  

 

FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)

Three Months Ended December 31, 2018
(unaudited)
  Corporate
Finance &
Restructuring
  Forensic and
Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 23,724  
Interest income and other                           (2,903 )
Interest expense                           7,076  
Loss on early extinguishment of debt                           9,072  
Income tax provision                           7,834  
Operating income   $ 22,620     $ 20,134     $ 10,667     $ 426     $ 9,975     $ (19,019 )   $ 44,803  
Depreciation and amortization   894     1,042     1,398     2,248     555     835     6,972  
Amortization of other intangible assets   767     303     44         767         1,881  
Adjusted EBITDA   $ 24,281     $ 21,479     $ 12,109     $ 2,674     $ 11,297     $ (18,184 )   $ 53,656  
                             
Year Ended December 31, 2018   Corporate
Finance &
Restructuring
  Forensic and
Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 150,611  
Interest income and other                           (4,977 )
Interest expense                           27,149  
Gain on sale of business                           (13,031 )
Loss on early extinguishment of debt                           9,072  
Income tax provision                           57,181  
Operating income   $ 115,124     $ 91,262     $ 64,052     $ 14,912     $ 37,250     $ (96,595 )   $ 226,005  
Depreciation and amortization   3,428     4,237     5,607     12,405     2,302     3,557     31,536  
Amortization of other intangible assets   3,108     1,322     296     70     3,366         8,162  
Adjusted EBITDA   $ 121,660     $ 96,821     $ 69,955     $ 27,387     $ 42,918     $ (93,038 )   $ 265,703  

 

FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT

   

Segment
Revenues
  Adjusted
EBITDA
  Adjusted EBITDA
Margin
  Utilization    Average
Billable
Rate
  Revenue-
Generating
Headcount
   (in thousands)               (at period end)
Three Months Ended December 31, 2019 (unaudited)                      
Corporate Finance & Restructuring $ 181,054     $ 24,798     13.7 %   59 %   $ 455     1,194  
Forensic and Litigation Consulting 150,262     17,369     11.6 %   59 %   $ 343     1,351  
Economic Consulting 153,054     17,346     11.3 %   72 %   $ 509     790  
Technology (1) 51,533     7,804     15.1 %   N/M     N/M     361  
Strategic Communications(1) 66,315     9,877     14.9 %   N/M     N/M     728  
  $ 602,218     $ 77,194     12.8 %           4,424  
Unallocated Corporate     (18,910 )                
Adjusted EBITDA     $ 58,284     9.7 %            
                       
Year Ended December 31, 2019                       
Corporate Finance & Restructuring $ 723,721     $ 160,735     22.2 %   67 %   $ 452     1,194  
Forensic and Litigation Consulting 577,780     104,435     18.1 %   63 %   $ 337     1,351  
Economic Consulting 592,542     84,112     14.2 %   75 %   $ 500     790  
Technology (1) 215,584     45,688     21.2 %   N/M     N/M     361  
Strategic Communications(1) 243,090     44,544     18.3 %   N/M     N/M     728  
  $ 2,352,717     $ 439,514     18.7 %           4,424  
Unallocated Corporate     (95,614 )                
Adjusted EBITDA     $ 343,900     14.6 %            
                       
Three Months Ended December 31, 2018 (unaudited)                      
Corporate Finance & Restructuring $ 144,784     $ 24,281     16.8 %   61 %   $ 458     948  
Forensic and Litigation Consulting 132,083     21,479     16.3 %   63 %   $ 340     1,153  
Economic Consulting 128,396     12,109     9.4 %   67 %   $ 530     708  
Technology (1) 41,720     2,674     6.4 %   N/M     N/M     306  
Strategic Communications(1) 58,010     11,297     19.5 %   N/M     N/M     641  
  $ 504,993     $ 71,840     14.2 %           3,756  
Unallocated Corporate     (18,184 )                
Adjusted EBITDA     $ 53,656     10.6 %            
                       
Year Ended December 30, 2018                       
Corporate Finance & Restructuring $ 564,479     $ 121,660     21.6 %   66 %   $ 433     948  
Forensic and Litigation Consulting 520,333     96,821     18.6 %   64 %   $ 331     1,153  
Economic Consulting 533,979     69,955     13.1 %   69 %   $ 519     708  
Technology (1) 185,755     27,387     14.7 %   N/M     N/M     306  
Strategic Communications(1) 223,331     42,918     19.2 %   N/M     N/M     641  
  $ 2,027,877     $ 358,741     17.7 %           3,756  
Unallocated Corporate     (93,038 )                
Adjusted EBITDA     $ 265,703     13.1 %            
                       
N/M Not meaningful                      

__________________
  (1)    The majority of the Technology and Strategic Communications segments' revenues are not generated based on billable hours. Accordingly, utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric.

 

FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

  Year Ended
December 31,
 
  2019   2018
Operating activities      
Net income $ 216,726     $ 150,611  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 30,153     31,536  
Amortization and impairment of other intangible assets 8,152     8,162  
Acquisition-related contingent consideration 2,372     479  
Provision for doubtful accounts 19,602     17,872  
Share-based compensation 17,978     15,577  
Amortization of debt discount and issuance costs 11,615     5,456  
Loss on early extinguishment of debt     9,072  
Gain on sale of business     (13,031 )
Deferred income taxes (3,712 )   20,831  
Other 302     769  
Changes in operating assets and liabilities, net of effects from acquisitions:      
Accounts receivable, billed and unbilled (141,894 )   (72,034 )
Notes receivable 10,445     8,987  
Prepaid expenses and other assets (22,648 )   (2,258 )
Accounts payable, accrued expenses and other (8,907 )   8,908  
Income taxes 24,496     (8,890 )
Accrued compensation 61,339     52,510  
Billings in excess of services provided (8,133 )   (3,885 )
Net cash provided by operating activities 217,886     230,672  
Investing activities      
Proceeds from sale of business     50,283  
Payments for acquisition of businesses, net of cash received (18,791 )    
Purchases of property and equipment (42,072 )   (32,270 )
Other 257     731  
Net cash provided by (used in) investing activities (60,606 )   18,744  
Financing activities      
Borrowings under revolving line of credit 45,000     233,500  
Repayments under revolving line of credit (45,000 )   (333,500 )
Proceeds from issuance of convertible notes     316,250  
Payments of long-term debt     (300,000 )
Payments of debt issue and debt prepayment costs     (16,149 )
Purchase and retirement of common stock (105,797 )   (55,738 )
Net issuance of common stock under equity compensation plans 3,171     38,475  
Payments for business acquisition liabilities (2,282 )   (3,029 )
Deposits and other 1,597     2,672  
Net cash used in financing activities (103,311 )   (117,519 )
Effect of exchange rate changes on cash and cash equivalents 3,335     (9,789 )
Net increase in cash and cash equivalents 57,304     122,108  
Cash and cash equivalents, beginning of period 312,069     189,961  
Cash and cash equivalents, end of period $ 369,373     $ 312,069  

 

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

  Year Ended December 31,
  2019   2018
   
Net cash provided by operating activities $ 217,886     $ 230,672  
Purchases of property and equipment (42,072 )   (32,270 )
Free Cash Flow $ 175,814     $ 198,402  

 

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

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

FTI Consulting, Inc. logo

 

Source: FTI Consulting, Inc.

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Investor Relations Contacts

Mollie Hawkes

Vice President, Investor Relations & Communications

+1 617.747.1791

Megan McLaughlin Hawkins

Manager of Investor Relations & Corporate Citizenship

+1 617.747.1740