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FTI Consulting Reports Third Quarter 2014 Results
- Third Quarter Revenues of $451.2 Million
- Third Quarter Adjusted EPS of $0.63; Fully Diluted EPS of $0.55
- Increases Full Year Adjusted EPS Guidance Range to Between $1.85 and $2.00

WASHINGTON, Oct. 30, 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 September 30, 2014.

For the quarter, revenues increased 8.8 percent to $451.2 million compared to $414.6 million in the prior year quarter. Fully diluted earnings per share ("EPS") were $0.55 compared to a fully diluted loss per share of ($1.29) in the prior year quarter. EPS for the current quarter included a special charge of $5.3 million, which includes the net cost of certain contractual arrangements for key executive officers who departed the business in the quarter. The special charge reduced EPS by $0.08. Loss per share in the prior year quarter included a goodwill impairment charge related to the Strategic Communications segment of $83.8 million and a special charge of $10.4 million. Adjusted EPS were $0.63 for the quarter compared to $0.72 in the prior year quarter. Adjusted EBITDA for the quarter was $63.4 million or 14.1 percent of revenues compared to $72.5 million or 17.5 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 third quarter performance was driven by very high demand from major clients in our Technology and Forensic and Litigation Consulting segments, supported by continued progress in Economic Consulting and Strategic Communications. These results, combined with a slower ramp up of investment spending, produced an outstanding quarter, which exceeded our expectations."

Mr. Gunby continued, "More important, but much less visible, is our continuing work to deliver the vision for FTI outlined at our investor day in June. The investments we make in 2014 and through the balance of 2015 will continue to build a franchise to deliver sustainable earnings growth in 2016 and beyond."

Third Quarter Segment Results

Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 6.4 percent to $100.0 million in the quarter compared to $94.0 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 and growth in the European transaction advisory and tax practices, which were partially offset by declines in global bankruptcy and restructuring engagements. Adjusted Segment EBITDA was $15.5 million or 15.5 percent of segment revenues compared to $19.4 million or 20.6 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was due to lower realized price associated with non-distressed work, declines in bankruptcy work and higher performance-based compensation.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased 7.7 percent to $121.7 million in the quarter compared to $113.1 million in the prior year quarter. Revenues increased organically by 4.8 percent due to increased demand in the North America investigations practice and global construction solutions and disputes practices, which was partially offset by lower success fees and lower revenues in the segment's health solutions practice. Adjusted Segment EBITDA was $22.3 million or 18.3 percent of segment revenues compared to $25.4 million or 22.4 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was the result of lower success fees, weaker performance in health solutions and higher performance-based compensation expense.

Economic Consulting 
Revenues in the Economic Consulting segment increased 6.6 percent to $120.5 million in the quarter compared to $113.1 million in the prior year quarter with 1.1 percent of the increase from positive impacts of foreign currency translation. The remaining increase in revenues was due to higher demand for mergers and acquisition ("M&A") related services and higher pricing in the segment's international arbitration practice due to staff and engagement mix. Adjusted Segment EBITDA was $18.4 million or 15.3 percent of segment revenues compared to $23.2 million or 20.5 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was due largely to increased compensation expense related to extensions of employment contracts entered into with certain key senior client-service professionals.

Technology
Revenues in the Technology segment increased 21.8 percent to $62.4 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 $17.8 million or 28.6 percent of segment revenues compared to $15.4 million or 30.0 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 investments in global data centers and operations support, business development, research and development and marketing activities.

Strategic Communications
Revenues in the Strategic Communications segment increased 7.5 percent to $46.6 million in the quarter compared to $43.3 million in the prior year quarter with 2.3 percent of the increase from favorable impacts of foreign currency translation. The remaining growth resulted from increased project work in the North America and Asia Pacific regions. Adjusted Segment EBITDA was $6.6 million or 14.2 percent of segment revenues compared to $4.0 million or 9.3 percent of segment revenues in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to the mix of more profitable project work and reductions in overhead expenses.

Cash Position
Net cash provided by operating activities for the quarter was $97.6 million compared to $84.4 million in the prior year. Cash and cash equivalents were $178.8 million at September 30, 2014.

2014 Guidance
Based on current market conditions and the outlook for the remainder of the year, the Company has increased its prior guidance and now estimates that its revenue for 2014 will be between $1.755 billion and $1.770 billion and Adjusted EPS will be between $1.85 and $2.00.

Third Quarter 2014 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2014 financial results at 9:00 a.m. Eastern Time on October 30, 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 (Loss) as a segment's share of consolidated operating income (loss). We define Total Segment Operating Income (Loss) as the total of Segment Operating Income (Loss) 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 (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 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 (Loss). 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.

FINANCIAL TABLES FOLLOW

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

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

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(in thousands, except per share data)

(unaudited)

       
 

Three Months Ended

 

September 30,

 

2014

 

2013

       

Revenues

$               451,178

 

$              414,643

       

Operating expenses

     

Direct cost of revenues

293,244

 

255,152

Selling, general and administrative expense

102,461

 

94,513

Special charges

5,347

 

10,419

Acquisition-related contingent consideration

257

 

630

Amortization of other intangible assets

3,398

 

5,776

Goodwill impairment charge

-

 

83,752

 

404,707

 

450,242

       

Operating income (loss)

46,471

 

(35,599)

       

Other income (expense)

     

Interest income and other

1,014

 

1,152

Interest expense

(12,634)

 

(12,814)

 

(11,620)

 

(11,662)

       

Income (loss) before income tax provision

34,851

 

(47,261)

       

Income tax provision

12,329

 

3,360

       

Net income (loss)

$                 22,522

 

$              (50,621)

       

Earnings (loss) per common share - basic

$                     0.57

 

$                  (1.29)

Earnings (loss) per common share - diluted

$                     0.55

 

$                  (1.29)

       

Weighted average common shares outstanding - basic

39,789

 

39,094

Weighted average common shares outstanding - diluted

40,819

 

39,094

       

Other comprehensive income (loss), net of tax:

     

Foreign currency translation adjustments, net of tax of $0

$               (22,542)

 

$                17,115

Total other comprehensive income (loss), net of tax

(22,542)

 

17,115

Comprehensive loss

$                      (20)

 

$              (33,506)

 

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(in thousands, except per share data)

(unaudited)

       
 

Nine Months Ended

 

September 30,

 

2014

 

2013

       

Revenues

$            1,331,054

 

$           1,236,434

       

Operating expenses

     

Direct cost of revenues

863,068

 

773,160

Selling, general and administrative expense

317,880

 

287,485

Special charges

14,711

 

10,846

Acquisition-related contingent consideration

(1,591)

 

(6,091)

Amortization of other intangible assets

11,466

 

17,293

Goodwill impairment charge

-

 

83,752

 

1,205,534

 

1,166,445

       

Operating income

125,520

 

69,989

       

Other income (expense)

     

Interest income and other

3,465

 

1,702

Interest expense

(38,197)

 

(38,600)

 

(34,732)

 

(36,898)

       

Income before income tax provision

90,788

 

33,091

       

Income tax provision

32,902

 

36,546

       

Net income (loss)

$                 57,886

 

$                (3,455)

       

Earnings (loss) per common share - basic

$                     1.46

 

$                  (0.09)

Earnings (loss) per common share - diluted

$                     1.43

 

$                  (0.09)

       

Weighted average common shares outstanding - basic

39,637

 

39,212

Weighted average common shares outstanding - diluted

40,608

 

39,212

       

Other comprehensive income (loss), net of tax:

     

Foreign currency translation adjustments, net of tax of $0

$               (10,120)

 

$              (10,108)

Total other comprehensive income (loss), net of tax

(10,120)

 

(10,108)

Comprehensive income (loss)

$                 47,766

 

$              (13,563)

 

 

 

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

 
                   

  Average  

 

Revenue-

       

Adjusted

         

 Billable 

 

Generating

   

Revenues

 

EBITDA 

 

Margin

 

Utilization

 

Rate

 

Headcount

   

  (in thousands)  

             

(at period end)

Three Months Ended September 30, 2014

                       

Corporate Finance/Restructuring

 

$                 100,041

 

$                        15,534

 

15.5%

 

70%

 

$          396

 

722

Forensic and Litigation Consulting 

 

121,732

 

22,260

 

18.3%

 

68%

 

$          323

 

1,135

Economic Consulting

 

120,494

 

18,426

 

15.3%

 

77%

 

$          535

 

551

Technology  (1)

 

62,359

 

17,835

 

28.6%

 

N/M

 

N/M

 

335

Strategic Communications  (1)

 

46,552

 

6,605

 

14.2%

 

N/M

 

N/M

 

549

   

$                 451,178

 

80,660

 

17.9%

         

3,292

   Corporate 

     

(17,265)

               

Adjusted EBITDA

     

$                        63,395

 

14.1%

           
                         

Nine Months Ended September 30, 2014

                       

Corporate Finance/Restructuring

 

$                 298,043

 

$                        45,618

 

15.3%

 

71%

 

$          388

 

722

Forensic and Litigation Consulting

 

362,242

 

71,025

 

19.6%

 

71%

 

$          323

 

1,135

Economic Consulting

 

344,572

 

49,499

 

14.4%

 

77%

 

$          517

 

551

Technology  (1)

 

183,142

 

50,287

 

27.5%

 

N/M

 

N/M

 

335

Strategic Communications  (1)

 

143,055

 

15,168

 

10.6%

 

N/M

 

N/M

 

549

   

$              1,331,054

 

231,597

 

17.4%

         

3,292

   Corporate 

     

(57,103)

               

Adjusted EBITDA

     

$                      174,494

 

13.1%

           
                         

Three Months Ended September 30, 2013

                       

Corporate Finance/Restructuring

 

$                   93,981

 

$                        19,402

 

20.6%

 

64%

 

$          396

 

732

Forensic and Litigation Consulting 

 

113,068

 

25,362

 

22.4%

 

67%

 

$          324

 

999

Economic Consulting

 

113,069

 

23,225

 

20.5%

 

79%

 

$          512

 

528

Technology  (1)

 

51,201

 

15,381

 

30.0%

 

N/M

 

N/M

 

297

Strategic Communications  (1)

 

43,324

 

4,036

 

9.3%

 

N/M

 

N/M

 

617

   

$                 414,643

 

87,406

 

21.1%

         

3,173

   Corporate 

     

(14,862)

               

Adjusted EBITDA

     

$                        72,544

 

17.5%

           
                         

Nine Months Ended September 30. 2013

                       

Corporate Finance/Restructuring 

 

$                 289,775

 

$                        56,335

 

19.4%

 

66%

 

$          407

 

732

Forensic and Litigation Consulting

 

318,912

 

56,925

 

17.8%

 

68%

 

$          315

 

999

Economic Consulting

 

339,277

 

70,222

 

20.7%

 

84%

 

$          509

 

528

Technology  (1)

 

149,101

 

45,985

 

30.8%

 

N/M

 

N/M

 

297

Strategic Communications  (1)

 

139,369

 

12,809

 

9.2%

 

N/M

 

N/M

 

617

   

$              1,236,434

 

242,276

 

19.6%

         

3,173

   Corporate 

     

(44,394)

               

Adjusted EBITDA

     

$                      197,882

 

16.0%

           
                         

 

(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.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER, 2014 AND 2013

(in thousands, except per share data)

                       
         

Three Months Ended September 30,

 

Nine Months Ended September 30,

         

2014

 

2013

 

2014

 

2013

               

Net income (loss)

     

$                      22,522

 

$                     (50,621)

 

$                      57,886

 

$                       (3,455)

Add back:

                     

Special charges, net of tax effect (1)

 

3,154

 

6,847

 

8,676

 

7,100

Goodwill impairment charges  (2)

 

-

 

83,752

 

-

 

83,752

Remeasurement of acquisition-related contingent consideration, net of tax effect (3)

-

 

-

 

(1,514)

 

(8,216)

Less:

                     

    Interim period impact of including goodwill impairment charges in the annual
    effective tax rate, net of tax

 

-

 

(10,805)

 

-

 

(10,805)

Adjusted Net Income 

     

$                      25,676

 

$                      29,173

 

$                      65,048

 

$                      68,376

                       

Earnings (loss) per common share – diluted

 

$                          0.55

 

$                         (1.29)

 

$                          1.43

 

$                         (0.09)

Add back:

                     

Special charges, net of tax effect (1)

 

0.08

 

0.18

 

0.21

 

0.18

Goodwill impairment charges  (2)

 

-

 

2.14

 

-

 

2.14

Remeasurement of acquisition-related contingent consideration, net of tax effect (3)

-

 

-

 

(0.04)

 

(0.21)

Less:

                     

    Interim period impact of including goodwill impairment charges in the annual
    effective tax rate, net of tax

 

-

 

(0.27)

 

-

 

(0.28)

   Impact of denominator for diluted EPS(4)

 

-

 

(0.04)

 

-

 

(0.05)

Adjusted EPS – diluted

     

$                          0.63

 

$                          0.72

 

$                          1.60

 

$                          1.69

                       

Weighted average number of common shares outstanding – diluted

40,819

 

40,244

 

40,608

 

40,385

 

(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 nine months ended September 30, 2014 was 41.0%. The tax expense related to the adjustment for special charges for the three and nine months ended September 30, 2014 was $2.2 million, or a $0.05 impact on diluted earnings per share, and $6.0 million, or a $0.15 impact on diluted earnings per share, respectively. The effective tax rates for the adjustments related to special charges for the three and nine months ended September 30, 2013 were 34.3% and 34.5%, respectively. The tax expense related to the adjustment for special charges for the three and nine months ended September 30, 2013 was $3.6 million, or a $0.09 impact on diluted earnings per share, and $3.7 million, or $0.10 impact on diluted earnings per share, respectively.

 

(2) The goodwill impairment charge was non-deductible for income tax purposes and resulted in no tax benefit for the year ended December 31, 2013.

 

(3) 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 nine months ended September 30, 2014 was 36.5%. The tax expense related to the remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2014 was $0.9 million, or a $0.02 impact on diluted earnings per share. The adjustment related to remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2013 was not taxable. There were no adjustments related to remeasurement of acquisition-related contingent consideration for the three months ended September 30, 2014 and 2013.

 

(4) For the three and nine months ended September 30, 2013, the Company reported a net loss. For those periods, the number of basic weighted average common shares outstanding equals the number of diluted weighted average common shares outstanding for purposes of calculating GAAP earnings per share because potentially dilutive securities would be antidilutive. For non-GAAP purposes, the total per share and share amounts presented herein reflect the impact of the inclusion of share-based awards that are considered dilutive based on the impact of the add backs included in Adjusted Net Income above.

 

 

 

RECONCILIATION OF NET INCOME AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

(in thousands)

 
                                     

Three Months Ended September 30, 2014

 

Corporate Finance / Restructuring

 

Forensic and Litigation Consulting

 

Economic Consulting

 

Technology 

 

Strategic Communications

 

Corp HQ

 

Total

 
                                     

Net income

                             

$             22,522

 
 

Interest income and other

                         

(1,014)

 
 

Interest expense

                           

12,634

 
 

Income tax provision

                           

12,329

 

Operating income

     

$                   13,406

 

$                   20,276

 

$                   17,245

 

$                   13,741

 

$                     4,875

 

$                 (23,072)

 

$             46,471

 
 

Depreciation and amortization

 

869

 

1,023

 

934

 

3,857

 

610

 

886

 

8,179

 
 

Amortization of other intangible assets

1,175

 

653

 

235

 

218

 

1,117

 

-

 

3,398

 
 

Special charges

   

84

 

308

 

12

 

19

 

3

 

4,921

 

5,347

 

Adjusted EBITDA 

     

$                   15,534

 

$                   22,260

 

$                   18,426

 

$                   17,835

 

$                     6,605

 

$                 (17,265)

 

$             63,395

 
                                     
                                     
                                     

Nine Months Ended September 30, 2014

                             
                                     

Net income

                             

$             57,886

 
 

Interest income and other

                         

(3,465)

 
 

Interest expense

                           

38,197

 
 

Income tax provision

                           

32,902

 

Operating income

     

$                   39,081

 

$                   66,517

 

$                   46,515

 

$                   37,712

 

$                     9,910

 

$                 (74,215)

 

$           125,520

 
 

Depreciation and amortization

 

2,514

 

3,057

 

2,996

 

11,902

 

1,884

 

2,827

 

25,180

 
 

Amortization of other intangible assets

     

4,601

 

2,077

 

763

 

654

 

3,371

 

-

 

11,466

 
 

Special charges

   

84

 

308

 

12

 

19

 

3

 

14,285

 

14,711

 
 

Remeasurement of acquisition-related contingent consideration

(662)

 

(934)

 

(787)

 

-

 

-

 

-

 

(2,383)

 

Adjusted EBITDA 

     

$                   45,618

 

$                   71,025

 

$                   49,499

 

$                   50,287

 

$                   15,168

 

$                 (57,103)

 

$           174,494

 
                                     
                                     

Three Months Ended September 30, 2013

 

Corporate Finance / Restructuring

 

Forensic and Litigation Consulting

 

Economic Consulting

 

Technology 

 

Strategic Communications

 

Corp HQ

 

Total

 
                                     

Net income (loss)

                             

$           (50,621)

 
 

Interest income and other

                         

(1,152)

 
 

Interest expense

                           

12,814

 
 

Income tax provision

                           

3,360

 

Operating income (loss) 

   

$                   10,590

 

$                   21,915

 

$                   21,708

 

$                     9,755

 

$                 (81,490)

 

$                 (18,077)

 

$           (35,599)

 
 

Depreciation and amortization

 

919

 

997

 

979

 

3,642

 

575

 

1,084

 

8,196

 
 

Amortization of other intangible assets

1,562

 

512

 

523

 

1,982

 

1,197

 

-

 

5,776

 
 

Special charges

   

6,331

 

1,938

 

15

 

2

 

2

 

2,131

 

10,419

 
 

Goodwill

     

-

 

-

 

-

 

-

 

83,752

 

-

 

83,752

 

Adjusted EBITDA 

     

$                   19,402

 

$                   25,362

 

$                   23,225

 

$                   15,381

 

$                     4,036

 

$                 (14,862)

 

$             72,544

 
                                     
                                     
                                     

Nine Months Ended September 30, 2013

                             
                                     

Net income (loss)

                             

$             (3,455)

 
 

Interest income and other

                         

(1,702)

 
 

Interest expense

                           

38,600

 
 

Income tax provision

                           

36,546

 

Operating income (loss) 

   

$                   48,725

 

$                   52,194

 

$                   66,233

 

$                   29,129

 

$                 (76,369)

 

$                 (49,923)

 

$             69,989

 
 

Depreciation and amortization

 

2,541

 

2,958

 

2,647

 

10,888

 

1,898

 

3,286

 

24,218

 
 

Amortization of other intangible assets

     

4,945

 

1,603

 

1,331

 

5,952

 

3,462

 

-

 

17,293

 
 

Special charges

   

6,399

 

2,111

 

11

 

16

 

66

 

2,243

 

10,846

 
 

Goodwill

     

-

 

-

 

-

 

-

 

83,752

 

-

 

83,752

 
 

Remeasurement of acquisition-related contingent consideration

(6,275)

 

(1,941)

 

-

 

-

 

-

 

-

 

(8,216)

 

Adjusted EBITDA 

     

$                   56,335

 

$                   56,925

 

$                   70,222

 

$                   45,985

 

$                   12,809

 

$                 (44,394)

 

$           197,882

 
                                     

 

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(in thousands)

(unaudited)

       
 

Nine Months Ended

 

September 30,

 

2014

 

2013

Operating activities

     

Net income (loss)

$           57,886

 

$            (3,455)

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

     

Depreciation and amortization

26,318

 

24,218

Amortization of other intangible assets

11,466

 

17,293

Goodwill impairment charge

-

 

83,752

Acquisition-related contingent consideration

(1,591)

 

(6,091)

Provision for doubtful accounts 

11,896

 

10,404

Non-cash share-based compensation 

18,930

 

22,544

Non-cash interest expense

2,020

 

2,024

Other

(358)

 

(286)

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

     

Accounts receivable, billed and unbilled

(107,847)

 

(72,266)

Notes receivable

(18,266)

 

(9,644)

Prepaid expenses and other assets

7,099

 

(2,313)

Accounts payable, accrued expenses and other

10,538

 

16,822

Income taxes 

8,315

 

12,989

Accrued compensation

(16,958)

 

13,198

Billings in excess of services provided

11,031

 

(5,383)

                           Net cash provided by operating activities

20,479

 

103,806

       

Investing activities

     

Payments for acquisition of businesses, net of cash received 

(15,684)

 

(40,766)

Purchases of property and equipment

(31,797)

 

(22,994)

Other

69

 

24

                          Net cash used in investing activities

(47,412)

 

(63,736)

       

Financing activities

     

Payments of long-term debt

(6,014)

 

(6,000)

Purchase and retirement of common stock

(4,367)

 

(48,769)

Net issuance of common stock under equity compensation plans

(29)

 

6,208

Deposits

12,956

 

-

Other

(1,036)

 

(800)

                          Net cash provided by (used in) financing activities

1,510

 

(49,361)

       

Effect of exchange rate changes on cash and cash equivalents

(1,632)

 

432

       

Net decrease in cash and cash equivalents

(27,055)

 

(8,859)

Cash and cash equivalents, beginning of period

205,833

 

156,785

Cash and cash equivalents, end of period

$         178,778

 

$         147,926

 

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AT SEPTEMBER 30, 2014 AND DECEMBER 31, 2013

(in thousands, except per share amounts)

       
 

September 30,

 

December 31,

 

2014

 

2013

Assets

(unaudited)

   

Current assets

     

   Cash and cash equivalents

$          178,778

 

$                    205,833

   Accounts receivable:

     

       Billed receivables

401,696

 

352,411

       Unbilled receivables

305,572

 

233,307

       Allowance for doubtful accounts and unbilled services

(141,611)

 

(109,273)

          Accounts receivable, net

565,657

 

476,445

   Current portion of notes receivable

28,757

 

33,093

   Prepaid expenses and other current assets

54,045

 

61,800

   Current portion of deferred tax assets

29,731

 

26,690

Total current assets

856,968

 

803,861

Property and equipment, net of accumulated depreciation

83,520

 

79,007

Goodwill

1,213,809

 

1,218,733

Other intangible assets, net of amortization

80,913

 

97,148

Notes receivable, net of current portion

126,561

 

108,298

Other assets

53,120

 

57,900

Total assets

$       2,414,891

 

$                 2,364,947

       

Liabilities and Stockholders' Equity

     

Current liabilities

     

    Accounts payable, accrued expenses and other

$            99,857

 

$                    126,886

Accrued compensation

200,513

 

222,738

Current portion of long-term debt

6,000

 

6,014

    Billings in excess of services provided

39,492

 

28,692

Total current liabilities

345,862

 

384,330

Long-term debt, net of current portion

705,000

 

711,000

Deferred income taxes

152,583

 

137,697

Other liabilities

98,147

 

89,661

Total liabilities

1,301,592

 

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 ―41,027 (2014) and 40,526 (2013)

410

 

405

Additional paid-in capital

385,591

 

362,322

Retained earnings

788,507

 

730,621

Accumulated other comprehensive loss

(61,209)

 

(51,089)

Total stockholders' equity

1,113,299

 

1,042,259

Total liabilities and stockholders' equity

$       2,414,891

 

$                 2,364,947

 

SOURCE FTI Consulting, Inc.

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Mollie Hawkes

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+1 617.747.1791

Megan McLaughlin Hawkins

Manager of Investor Relations & Corporate Citizenship

+1 617.747.1740