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FTI Consulting Reports Second Quarter 2014 Results
- Second Quarter Revenues of $454.3 Million
- Second Quarter Adjusted EPS of $0.55; Fully Diluted EPS of $0.42

WASHINGTON, July 31, 2014 /PRNewswire/ -- FTI Consulting, Inc. (NYSE: FCN) (the "Company"), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today released its financial results for the quarter ended June 30, 2014.

For the quarter, revenues increased 9.6 percent to $454.3 million compared to $414.6 million in the prior year quarter. Fully diluted earnings per share ("EPS") were $0.42 compared to $0.58 in the prior year quarter. EPS for the quarter included a special charge of $9.4 million related to the closure of the Company's West Palm Beach office and the termination of a corporate plane lease which reduced EPS by $0.14. Adjusted EPS for the quarter were $0.55. Adjusted EBITDA for the quarter was $59.9 million or 13.2 percent of revenues compared to $66.0 million or 15.9 percent of revenues in the prior year quarter.

Adjusted EPS, Adjusted EBITDA and Adjusted Segment EBITDA are non-GAAP measures defined elsewhere in this press release and are reconciled to GAAP measures in the financial tables that accompany this press release.

Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting said,  "Our second quarter results are in line with the focus and expectations we discussed at our June investor day,  including a focus on organic growth and continued investment to build the business."

Cash and Capital Allocation

Net cash provided by operating activities for the quarter was $33.7 million compared to $21.7 million in the prior year. Cash and cash equivalents were $94.4 million at June 30, 2014.

Second Quarter Segment Results

Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 7.6 percent to $104.0 million in the quarter compared to $96.7 million in the prior year quarter. The increase in revenues was driven by higher demand for the segment's North America non-distressed service offerings partially offset by continued softness in global bankruptcy engagements. Adjusted Segment EBITDA was $19.1 million or 18.4 percent of segment revenues compared to $17.8 million or 18.5 percent of segment revenues in the prior year quarter.

Economic Consulting 
Revenues in the Economic Consulting segment increased 5.6 percent to $117.2 million in the quarter compared to $111.0 million in the prior year quarter. The increase in revenues was due to higher demand in the segment's Europe, Middle East and Africa ("EMEA") antitrust litigation practice and higher demand and realized pricing in its EMEA international arbitration, regulatory and valuation practices. Adjusted Segment EBITDA was $18.1 million or 15.4 percent of segment revenues compared to $20.8 million or 18.7 percent of segment revenues in the prior year quarter. The decline in Adjusted Segment EBITDA margin was due largely to increased compensation expense related to extensions of employment contracts entered into late last year with key senior client-service professionals and lower utilization in the financial economics practice in North America.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased 13.3 percent to $119.1 million in the quarter compared to $105.1 million in the prior year quarter. Revenues increased organically by 10.4 percent due to increased demand related primarily to disputes and investigations in the segment's North America and Asia Pacific regions. Adjusted Segment EBITDA was $22.3 million or 18.7 percent of segment revenues compared to $18.8 million or 17.9 percent of segment revenues in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to strong utilization and employee leverage in the aforementioned practices, which was partially offset by higher performance-based compensation costs as well as lower success fees and lower utilization as a result of increased hiring in our health solutions practice.

Technology
Revenues in the Technology segment increased 18.6 percent to $60.7 million in the quarter compared to $51.2 million in the prior year quarter. The increase in revenues was primarily due to increased demand related to large scale complex global investigations. Adjusted Segment EBITDA was $15.1 million or 24.9 percent of segment revenues compared to $16.9 million or 33.0 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was due to an increase in the mix of lower margin services and increased investment in business development activities.

Strategic Communications
Revenues in the Strategic Communications segment increased 5.4 percent to $53.3 million in the quarter compared to $50.6 million in the prior year quarter. Favorable foreign currency translation resulted in a revenues increase of 2.8 percent and the remaining growth resulted from increases in the number of retainer-based relationships in EMEA. Adjusted Segment EBITDA was $5.8 million or 10.9 percent of segment revenues compared to $5.2 million or 10.3 percent of segment revenues in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to the favorable foreign currency translation impact and higher margins on pass-through revenues.

Second Quarter 2014 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss second quarter 2014 financial results at 9:00 a.m. Eastern Time on July 31, 2014. 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 protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. With more than 4,200 employees located in 26 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management, strategic communications and restructuring. The company generated $1.65 billion in revenues during fiscal year 2013. More information can be found at www.fticonsulting.com.

Note: We define Segment Operating Income as a segment's share of consolidated operating income. We define Total Segment Operating Income 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 EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We 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 define Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment's ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, 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 is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results to the operating results of other companies.

We define Adjusted Net Income and Adjusted Earnings per Diluted Share ("Adjusted EPS") as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results, 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 GAAP to non-GAAP financial measures are included elsewhere in 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 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 heading "Item 1A Risk Factors" in the Company's most recent Form 10-K filed with the SEC and in the Company's other filings with the SEC, including the risks set forth under "Risks Related to Our Reportable Segments" and "Risks Related to Our Operations". We are under no duty to update any of the forward looking statements to conform such statements to actual results or events and do not intend to do so.

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

 

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

 

FINANCIAL TABLES FOLLOW 

 

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands, except per share data)

(unaudited)

       
 

Six Months Ended

 

June 30,

 

2014

 

2013

       

Revenues

$               879,876

 

$              821,791

       

Operating expenses

     

Direct cost of revenues

569,824

 

518,008

Selling, general and administrative expense

215,419

 

192,972

Special charges

9,364

 

427

Acquisition-related contingent consideration

(1,848)

 

(6,721)

Amortization of other intangible assets

8,068

 

11,517

 

800,827

 

716,203

       

Operating income

79,049

 

105,588

       

Other income (expense)

     

Interest income and other

2,451

 

550

Interest expense

(25,563)

 

(25,786)

 

(23,112)

 

(25,236)

       

Income before income tax provision

55,937

 

80,352

       

Income tax provision

20,573

 

33,186

       

Net income

$                 35,364

 

$                47,166

       

Earnings per common share - basic

$                     0.89

 

$                    1.20

Earnings per common share - diluted

$                     0.87

 

$                    1.17

       

Weighted average common shares outstanding - basic

39,560

 

39,272

Weighted average common shares outstanding - diluted

40,604

 

40,456

       

Other comprehensive income (loss), net of tax:

     

Foreign currency translation adjustments, net of tax of $0

$                 12,422

 

$              (27,223)

Total other comprehensive income (loss), net of tax

12,422

 

(27,223)

Comprehensive income

$                 47,786

 

$                19,943

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands, except per share data)

(unaudited)

       
 

Three Months Ended

 

June 30,

 

2014

 

2013

       

Revenues

$               454,324

 

$              414,613

       

Operating expenses

     

Direct cost of revenues

295,549

 

259,528

Selling, general and administrative expense

107,032

 

96,325

Special charges

9,364

 

-

Acquisition-related contingent consideration

(5)

 

(7,452)

Amortization of other intangible assets

3,452

 

5,953

 

415,392

 

354,354

       

Operating income

38,932

 

60,259

       

Other income (expense)

     

Interest income and other

1,448

 

(387)

Interest expense

(12,908)

 

(13,071)

 

(11,460)

 

(13,458)

       

Income before income tax provision

27,472

 

46,801

       

Income tax provision

10,225

 

23,315

       

Net income

$                 17,247

 

$                23,486

       

Earnings per common share - basic

$                     0.43

 

$                    0.60

Earnings per common share - diluted

$                     0.42

 

$                    0.58

       

Weighted average common shares outstanding - basic

39,681

 

39,143

Weighted average common shares outstanding - diluted

40,750

 

40,293

       

Other comprehensive income (loss), net of tax:

     

Foreign currency translation adjustments, net of tax of $0

$                   7,694

 

$              (11,714)

Total other comprehensive income (loss), net of tax

7,694

 

(11,714)

Comprehensive income

$                 24,941

 

$                11,772

 

 

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

 
                   

  Average  

 

Revenue-

       

Adjusted

         

 Billable 

 

Generating

   

Revenues

 

EBITDA (1)

 

Margin(1)

 

Utilization

 

Rate

 

Headcount

   

  (in thousands)  

             

(at period end)

Three Months Ended June 30, 2014

                       

Corporate Finance/Restructuring

 

$                 104,020

 

$                        19,133

 

18.4%

 

71%

 

$          412

 

713

Forensic and Litigation Consulting 

 

119,081

 

22,271

 

18.7%

 

71%

 

$          323

 

1,059

Economic Consulting

 

117,227

 

18,043

 

15.4%

 

78%

 

$          522

 

525

Technology  (2)

 

60,720

 

15,104

 

24.9%

 

N/M

 

N/M

 

328

Strategic Communications  (2)

 

53,276

 

5,834

 

11.0%

 

N/M

 

N/M

 

566

   

$                 454,324

 

80,385

 

17.7%

         

3,191

   Corporate 

     

(20,482)

               

Adjusted EBITDA(1)

     

$                        59,903

 

13.2%

           
                         

Six Months Ended June 30, 2014

                       

Corporate Finance/Restructuring

 

$                 198,002

 

$                        30,084

 

15.2%

 

71%

 

$          396

 

713

Forensic and Litigation Consulting

 

240,510

 

48,765

 

20.3%

 

73%

 

$          319

 

1,059

Economic Consulting

 

224,078

 

31,073

 

13.9%

 

75%

 

$          519

 

525

Technology  (2)

 

120,783

 

32,452

 

26.9%

 

N/M

 

N/M

 

328

Strategic Communications  (2)

 

96,503

 

8,563

 

8.9%

 

N/M

 

N/M

 

566

   

$                 879,876

 

150,937

 

17.2%

         

3,191

   Corporate 

     

(39,838)

               

Adjusted EBITDA(1)

     

$                      111,099

 

12.6%

           
                         

Three Months Ended June 30, 2013

                       

Corporate Finance/Restructuring

 

$                   96,714

 

$                        17,848

 

18.5%

 

62%

 

$          416

 

718

Forensic and Litigation Consulting 

 

105,120

 

18,752

 

17.8%

 

67%

 

$          307

 

969

Economic Consulting

 

111,014

 

20,803

 

18.7%

 

82%

 

$          505

 

499

Technology  (2)

 

51,196

 

16,888

 

33.0%

 

N/M

 

N/M

 

285

Strategic Communications  (2)

 

50,569

 

5,219

 

10.3%

 

N/M

 

N/M

 

611

   

$                 414,613

 

79,510

 

19.2%

         

3,082

   Corporate 

     

(13,498)

               

Adjusted EBITDA(1)

     

$                        66,012

 

15.9%

           
                         

Six Months Ended June 30. 2013

                       

Corporate Finance/Restructuring

 

$                 195,794

 

$                        36,933

 

18.9%

 

66%

 

$          412

 

718

Forensic and Litigation Consulting

 

205,844

 

31,563

 

15.3%

 

65%

 

$          314

 

969

Economic Consulting

 

226,208

 

46,997

 

20.8%

 

86%

 

$          501

 

499

Technology  (2)

 

97,900

 

30,604

 

31.3%

 

N/M

 

N/M

 

285

Strategic Communications  (2)

 

96,045

 

8,773

 

9.1%

 

N/M

 

N/M

 

611

   

$                 821,791

 

154,870

 

18.8%

         

3,082

   Corporate 

     

(29,532)

               

Adjusted EBITDA(1)

     

$                      125,338

 

15.3%

           
 
 

(1)  We define Adjusted EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. Amounts presented in the Adjusted EBITDA column for each segment reflect the segments' respective 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 to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment's ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, 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 is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results to the operating results of other companies. Adjusted EBITDA and Adjusted Segment EBITDA are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Margin is equal to Adjusted Segment EBITDA divided by the respective Segment Revenues. These 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. See also our reconciliation of GAAP to non-GAAP financial measures.

 

(2) 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.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE THREE AND SIX MONTHS ENDED JUNE, 2014 AND 2013

(in thousands, except per share data)

                       
         

Three Months Ended June 30,

 

Six Months Ended June 30,

         

2014

 

2013

 

2014

 

2013

               

Net income

       

$                      17,247

 

$                      23,486

 

$                      35,364

 

$                      47,166

Add back:

                     

Special charges, net of tax effect (1)

 

5,523

 

-

 

5,523

 

253

Remeasurement of acquisition-related contingent consideration, net of tax effect (2)

(164)

 

(8,216)

 

(1,514)

 

(8,216)

Adjusted Net Income (3)

     

$                      22,606

 

$                      15,270

 

$                      39,373

 

$                      39,203

                       

Earnings per common share – diluted

 

$                          0.42

 

$                          0.58

 

$                          0.87

 

$                          1.17

Add back:

                     

Special charges, net of tax effect (1)

 

0.14

 

-

 

0.14

 

-

Remeasurement of acquisition-related contingent consideration, net of tax effect (2)

(0.01)

 

(0.20)

 

(0.04)

 

(0.20)

Adjusted earnings per common share – diluted (3)

$                          0.55

 

$                          0.38

 

$                          0.97

 

$                          0.97

                       

Weighted average number of common shares outstanding – diluted

40,750

 

40,293

 

40,604

 

40,456

                       
                       

(1) The tax effect takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). As a result, the effective tax rate for the adjustments related to special charges for the three and six months ended June 30, 2014 was 41.0%. The tax expense related to the adjustment for special charges for the three and six months ended June 30, 2014 were $3.8 million or a $0.09 impact on diluted earnings per share. The effective tax rate for the adjustments related to special charges for the six months ended June 30, 2013 was 40.7%. The tax expense related to the adjustment for special charges for the six months ended June 30,  2013 was $0.2 million with no impact on diluted earnings per share. In the three months ended June 30, 2013, there were no special charges.

(2)The  tax effect takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). As a result, the effective tax rates for the adjustments related to the remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2014 were 37.2% and 36.5%, respectively. The tax expense related to the remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2014 was $0.1 million with no impact on diluted earnings per share and $0.9 million or a $0.02 impact on diluted earnings per share. The adjustments related to remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2013 were not taxable.

(3)We define Adjusted Net Income and Adjusted Earnings per Diluted Share as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted Earnings per Diluted Share. Management uses Adjusted Earnings per Diluted Share to assess total company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results, 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. 

 

 

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

 
                                     

Three Months Ended June 30, 2014

 

Corporate Finance
/ Restructuring

 

Forensic and
Litigation
Consulting

 

Economic
Consulting

 

Technology

 

Strategic
Communications

 

Corp HQ

 

Total

 
                                     

Net income

                             

$             17,247

 
 

Interest income and other

                         

(1,448)

 
 

Interest expense

                           

12,908

 
 

Income tax provision

                           

10,225

 

Operating income (1)

     

$                   17,068

 

$                   20,839

 

$                   16,840

 

$                   10,905

 

$                     4,030

 

$                 (30,750)

 

$             38,932

 
 

Depreciation and amortization

 

854

 

1,019

 

981

 

3,981

 

677

 

904

 

8,416

 
 

Amortization of other intangible assets

1,211

 

674

 

222

 

218

 

1,127

 

-

 

3,452

 
 

Special charges

   

-

 

-

 

-

 

-

 

-

 

9,364

 

9,364

 
 

Remeasurement of acquisition-related contingent consideration

-

 

(261)

 

-

 

-

 

-

 

-

 

(261)

 

Adjusted EBITDA (2)

     

$                   19,133

 

$                   22,271

 

$                   18,043

 

$                   15,104

 

$                     5,834

 

$                 (20,482)

 

$             59,903

 
                                     
                                     
                                     

Six Months Ended June 30, 2014

                               
                                     

Net income

                             

$             35,364

 
 

Interest income and other

                         

(2,451)

 
 

Interest expense

                           

25,563

 
 

Income tax provision

                           

20,573

 

Operating income (1)

     

$                   25,675

 

$                   46,241

 

$                   29,270

 

$                   23,971

 

$                     5,035

 

$                 (51,143)

 

$             79,049

 
 

Depreciation and amortization

 

1,645

 

2,034

 

2,062

 

8,045

 

1,274

 

1,941

 

17,001

 
 

Amortization of other intangible assets

     

3,426

 

1,424

 

528

 

436

 

2,254

 

-

 

8,068

 
 

Special charges

   

-

 

-

 

-

 

-

 

-

 

9,364

 

9,364

 
 

Remeasurement of acquisition-related contingent consideration

(662)

 

(934)

 

(787)

 

-

 

-

 

-

 

(2,383)

 

Adjusted EBITDA (2)

     

$                   30,084

 

$                   48,765

 

$                   31,073

 

$                   32,452

 

$                     8,563

 

$                 (39,838)

 

$           111,099

 
                                     
                                     

Three Months Ended June 30, 2013

 

Corporate Finance
/ Restructuring

 

Forensic and
Litigation
Consulting

 

Economic
Consulting

 

Technology

 

Strategic
Communications

 

Corp HQ

 

Total

 
                                     

Net income

                             

$             23,486

 
 

Interest income and other

                         

387

 
 

Interest expense

                           

13,071

 
 

Income tax provision

                           

23,315

 

Operating income (1)

     

$                   21,436

 

$                   19,177

 

$                   19,530

 

$                   11,292

 

$                     3,394

 

$                 (14,570)

 

$             60,259

 
 

Depreciation and amortization

 

855

 

937

 

863

 

3,611

 

678

 

1,072

 

8,016

 
 

Amortization of other intangible assets

1,832

 

579

 

410

 

1,985

 

1,147

 

-

 

5,953

 
 

Remeasurement of acquisition-related contingent consideration

(6,275)

 

(1,941)

 

-

 

-

 

-

 

-

 

(8,216)

 

Adjusted EBITDA (2)

     

$                   17,848

 

$                   18,752

 

$                   20,803

 

$                   16,888

 

$                     5,219

 

$                 (13,498)

 

$             66,012

 
                                     
                                     
                                     

Six Months Ended June 30, 2013

                           
                                     

Net income

                             

$             47,166

 
 

Interest income and other

                         

(550)

 
 

Interest expense

                           

25,786

 
 

Income tax provision

                           

33,186

 

Operating income (1)

     

$                   38,135

 

$                   30,279

 

$                   44,525

 

$                   19,374

 

$                     5,121

 

$                 (31,846)

 

$           105,588

 
 

Depreciation and amortization

 

1,622

 

1,961

 

1,668

 

7,246

 

1,323

 

2,202

 

16,022

 
 

Amortization of other intangible assets

     

3,383

 

1,091

 

808

 

3,970

 

2,265

 

-

 

11,517

 
 

Special charges

   

68

 

173

 

(4)

 

14

 

64

 

112

 

427

 
 

Remeasurement of acquisition-related contingent consideration

(6,275)

 

(1,941)

 

-

 

-

 

-

 

-

 

(8,216)

 

Adjusted EBITDA (2)

     

$                   36,933

 

$                   31,563

 

$                   46,997

 

$                   30,604

 

$                     8,773

 

$                 (29,532)

 

$           125,338

 
                                     
 

(1) We define Segment Operating Income as a segment's share of consolidated operating income. We define Total Segment Operating Income 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.

 

(2) We define Adjusted EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. Amounts presented in the Adjusted EBITDA row for each segment reflect the segments' respective 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 to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment's ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, 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 is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results to the operating results of other companies. Adjusted EBITDA and Adjusted Segment EBITDA are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies.  These 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.  See also our reconciliation of GAAP to non-GAAP financial measures.

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands)

(unaudited)

       
 

Six Months Ended

 

June 30,

 

2014

 

2013

Operating activities

     

Net income

$           35,364

 

$           47,166

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

     

Depreciation and amortization

18,138

 

16,022

Amortization of other intangible assets

8,068

 

11,517

Acquisition-related contingent consideration

(1,848)

 

(6,721)

Provision for doubtful accounts 

8,671

 

7,478

Non-cash share-based compensation 

15,194

 

17,046

Non-cash interest expense

1,348

 

1,349

Other

(368)

 

(197)

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

     

Accounts receivable, billed and unbilled

(115,787)

 

(58,827)

Notes receivable

(22,559)

 

(11,113)

Prepaid expenses and other assets

8,860

 

(1,485)

Accounts payable, accrued expenses and other

2,645

 

(1,354)

Income taxes 

4,832

 

14,740

Accrued compensation

(47,418)

 

(10,467)

Billings in excess of services provided

7,756

 

(5,785)

                           Net cash (used in) provided by operating activities

(77,104)

 

19,369

       

Investing activities

     

Payments for acquisition of businesses, net of cash received 

(15,611)

 

(40,512)

Purchases of property and equipment

(21,778)

 

(14,130)

Other

(6)

 

21

                          Net cash used in investing activities

(37,395)

 

(54,621)

       

Financing activities

     

Purchase and retirement of common stock

(4,367)

 

(28,758)

Net issuance of common stock under equity compensation plans

(2,692)

 

1,245

Deposits

11,580

 

-

Other

(891)

 

(616)

                          Net cash used in financing activities

3,630

 

(28,129)

       

Effect of exchange rate changes on cash and cash equivalents

(552)

 

(850)

       

Net decrease in cash and cash equivalents

(111,421)

 

(64,231)

Cash and cash equivalents, beginning of period

205,833

 

156,785

Cash and cash equivalents, end of period

$           94,412

 

$           92,554

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AT JUNE 30, 2014 AND DECEMBER 31, 2013

(in thousands, except per share amounts)

       
 

June 30,

 

December 31,

 

2014

 

2013

Assets

(unaudited)

   

Current assets

     

   Cash and cash equivalents

$            94,412

 

$                    205,833

   Accounts receivable:

     

       Billed receivables

423,058

 

352,411

       Unbilled receivables

296,299

 

233,307

       Allowance for doubtful accounts and unbilled services

(139,620)

 

(109,273)

          Accounts receivable, net

579,737

 

476,445

   Current portion of notes receivable

29,911

 

33,093

   Prepaid expenses and other current assets

52,162

 

61,800

   Current portion of deferred tax assets

29,046

 

26,690

 Total current assets

785,268

 

803,861

Property and equipment, net of accumulated depreciation

83,495

 

79,007

Goodwill

1,225,403

 

1,218,733

Other intangible assets, net of amortization

86,270

 

97,148

Notes receivable, net of current portion

131,707

 

108,298

Other assets

61,097

 

57,900

Total assets

$       2,373,240

 

$                 2,364,947

       

Liabilities and Stockholders' Equity

     

Current liabilities

     

    Accounts payable, accrued expenses and other

$            96,005

 

$                    126,886

   Accrued compensation

169,923

 

222,738

   Current portion of long-term debt

6,000

 

6,014

    Billings in excess of services provided

36,946

 

28,692

  Total current liabilities

308,874

 

384,330

Long-term debt, net of current portion

711,000

 

711,000

Deferred income taxes

149,130

 

137,697

Other liabilities

96,316

 

89,661

Total liabilities

1,265,320

 

1,322,688

       

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 ―40,936 (2014) and 40,526 (2013)

409

 

405

Additional paid-in capital

380,193

 

362,322

Retained earnings

765,985

 

730,621

Accumulated other comprehensive loss

(38,667)

 

(51,089)

Total stockholders' equity

1,107,920

 

1,042,259

Total liabilities and stockholders' equity

$       2,373,240

 

$                 2,364,947

 

 

 

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