8-K
FTI CONSULTING, INC DC false 0000887936 0000887936 2022-04-28 2022-04-28

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 28, 2022

 

 

FTI CONSULTING, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Maryland   001-14875   52-1261113

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

555 12th Street NW, Washington, D.C . 20004
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (202) 312-9100

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
symbol(s)

 

Name of each exchange
on which registered

Common Stock, par value $0.01 per share   FCN   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


ITEM 2.02.

Results of Operations and Financial Condition

On April 28, 2022, FTI Consulting, Inc. (“FTI Consulting”) announced financial results for the three-months ended March 31, 2022. A copy of the press release (including accompanying financial tables) (the “Press Release”) is attached as Exhibit 99.1 to this Current Report on Form 8-K and hereby is incorporated by reference herein.

 

ITEM 7.01.

Regulation FD Disclosure

In the Press Release, FTI Consulting uses information derived from consolidated and segment financial information that may not be presented in its financial statements or prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Certain of these measures are considered “non-GAAP financial measures” under rules promulgated by the Securities and Exchange Commission. Specifically, FTI Consulting has 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

FTI Consulting has included the definitions of “Segment Operating Income” and “Adjusted Segment EBITDA,” which are financial measures presented in accordance with GAAP, in order to more fully define the components of certain non-GAAP financial measures. FTI Consulting evaluates the performance of its operating segments based on Adjusted Segment EBITDA, and Segment Operating Income is a component of the definition of Adjusted Segment EBITDA. FTI Consulting defines “Segment Operating Income” as a segment’s share of consolidated operating income. FTI Consulting defines “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. FTI Consulting uses Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. FTI Consulting defines “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. FTI Consulting uses Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of its segments because FTI Consulting believes it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.

FTI Consulting defines “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. FTI Consulting defines “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. FTI Consulting defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. FTI Consulting believes that the non-GAAP financial measures, which exclude the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges, when considered together with its GAAP financial results and GAAP financial measures, provide management and investors with a more complete understanding of FTI Consulting’s operating results, including underlying trends. In addition, EBITDA is a common alternative measure of operating performance used by many of FTI Consulting’s competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in FTI Consulting’s industry. Therefore, FTI Consulting also believes that these measures, considered along with corresponding GAAP financial measures, provide management and investors with additional information for comparison of its operating results with the operating results of other companies.

FTI Consulting defines “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, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt, non-cash interest expense on convertible notes and gain or loss on sale of a business. FTI Consulting uses Adjusted Net Income for the purpose of calculating Adjusted EPS. Management of FTI Consulting uses Adjusted EPS to assess total company operating performance on a consistent basis. FTI Consulting believes that these non-GAAP financial measures, when considered together with its corresponding GAAP financial results and GAAP financial measures, provides management and investors with an additional understanding of its business operating results, including underlying trends.

 

1


FTI Consulting defines “Free Cash Flow” 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 FTI Consulting’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 FTI Consulting’s Consolidated Statements of Comprehensive Income. Reconciliations of Non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the accompanying tables to the Press Release.

The information included herein, including Exhibit 99.1 furnished herewith, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing, except as expressly set forth by specific reference in such filing.

 

ITEM 9.01.

Financial Statements and Exhibits

(d) Exhibits

 

99.1    Press Release dated April 28, 2022 of FTI Consulting, Inc.
104    The Cover Page from FTI Consulting’s Current Report on Form 8-K dated April 28, 2022, formatted in Inline XBRL

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, FTI Consulting, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  FTI CONSULTING, INC.
Dated: May 2, 2022     By:  

/s/ CURTIS P. LU

      Curtis P. Lu
      General Counsel

 

3

EX-99.1

Exhibit 99.1

FTI Consulting, Inc.

555 12th Street NW

Washington, DC 20004

+1.202.312.9100

Investor & Media Contact:

Mollie Hawkes

+1.617.747.1791

mollie.hawkes@fticonsulting.com

FTI Consulting Reports First Quarter 2022 Financial Results

 

   

First Quarter 2022 Revenues of $723.6 Million, Up 5% Compared to $686.3 Million in Prior Year Quarter

 

   

First Quarter 2022 EPS of $1.66, Down 10% Compared to $1.84 in Prior Year Quarter; First Quarter 2022 Adjusted EPS of $1.66, Down 12% Compared to $1.89 in Prior Year Quarter

Washington, D.C., April 28, 2022 — FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended March 31, 2022.

First quarter 2022 revenues of $723.6 million increased $37.3 million, or 5.4%, compared to revenues of $686.3 million in the prior year quarter. Excluding the estimated negative impact from foreign currency translation (“FX”), revenues increased $46.3 million, or 6.7%, compared to the prior year quarter. Acquisition-related revenues contributed $6.0 million of the increase in revenues compared to the prior year quarter. Excluding the estimated negative impact of FX and acquisition-related revenues, revenues increased $40.3 million, or 5.9%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand in the Corporate Finance & Restructuring and Strategic Communications segments. Net income of $59.3 million compared to $64.5 million in the prior year quarter. Net income declined compared to the prior year quarter, as the increase in revenues was more than offset by higher selling, general and administrative (“SG&A”) and compensation expenses, which included the impact of an 8.4% increase in billable headcount. Adjusted EBITDA of $90.5 million, or 12.5% of revenues, compared to $99.5 million, or 14.5% of revenues, in the prior year quarter.

First quarter 2022 earnings per diluted share (“EPS”) of $1.66 compared to $1.84 in the prior year quarter. First quarter 2021 EPS included $2.3 million of non-cash interest expense related to the Company’s 2.0% convertible senior notes due 2023, which decreased EPS by $0.05. First quarter 2022 Adjusted EPS of $1.66 compared to Adjusted EPS of $1.89 in the prior year quarter.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our results this quarter demonstrate the power of our focus to invest behind and support great professionals and great positions to enhance our ability to serve our clients navigating their most significant opportunities and challenges.”

Cash Position and Capital Allocation

Net cash used in operating activities of $203.8 million for the quarter ended March 31, 2022 compared to $166.6 million for the quarter ended March 31, 2021. The year-over-year increase in net cash used in operating activities was largely due to higher annual bonus payments, an increase in salaries related to headcount growth and higher operating expenses, which was partially offset by an increase in cash collected resulting from higher revenues.


Cash and cash equivalents of $271.1 million at March 31, 2022 compared to $233.4 million at March 31, 2021 and $494.5 million at December 31, 2021. Total debt, net of cash, of $60.1 million at March 31, 2022 compared to $252.8 million at March 31, 2021 and ($178.2) million at December 31, 2021. The sequential increase in total debt, net of cash, was primarily due to an increase in cash used in operating activities, which included annual bonus payments.

During the quarter, the Company repurchased 21,611 shares of its common stock at an average price per share of $143.36 for a total cost of $3.1 million. As of March 31, 2022, approximately $164.0 million remained available for common stock repurchases under the Company’s stock repurchase authorization.

First Quarter 2022 Segment Results

Corporate Finance & Restructuring

Revenues in the Corporate Finance & Restructuring segment increased $27.1 million, or 12.0%, to $253.3 million in the quarter compared to $226.2 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $29.8 million, or 13.2%, compared to the prior year quarter. Acquisition-related revenues contributed $2.2 million in the quarter. Excluding the estimated negative impact from FX and acquisition-related revenues, revenues increased $27.6 million, or 12.2%. The increase in revenues was primarily due to higher demand for business transformation and transactions services, which was partially offset by lower demand for restructuring services, compared to the prior year quarter. Adjusted Segment EBITDA of $53.5 million, or 21.1% of segment revenues, compared to $37.4 million, or 16.6% 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 SG&A expenses and higher compensation, which includes the impact of a 4.3% increase in billable headcount, compared to the prior year quarter.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased $3.1 million, or 2.0%, to $153.9 million in the quarter compared to $150.8 million in the prior year quarter. Acquisition-related revenues contributed $3.7 million in the quarter. Excluding acquisition-related revenues, revenues decreased $0.7 million, or 0.4% in the quarter. The decrease in revenues was primarily due to lower demand for data & analytics and disputes services, which was partially offset by higher realized bill rates and demand for investigations services, compared to the prior year quarter. Adjusted Segment EBITDA of $17.3 million, or 11.2% of segment revenues, compared to $29.4 million, or 19.5% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to higher compensation, which includes the impact of a 10.7% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Economic Consulting

Revenues in the Economic Consulting segment decreased $3.3 million, or 1.9%, to $166.0 million in the quarter, compared to $169.3 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $0.3 million, or 0.1%, in the quarter. The decrease in revenues was primarily due to a decline in demand for M&A-related antitrust services, which was partially offset by an increase in demand for non-M&A-related antitrust services, compared to the prior year quarter. Adjusted Segment EBITDA of $21.2 million, or 12.8% of segment revenues, compared to $26.6 million, or 15.7% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues and higher SG&A expenses compared to the prior year quarter.


Technology

Revenues in the Technology segment increased $1.0 million, or 1.3%, to $80.5 million in the quarter compared to $79.5 million in the prior year quarter. The increase in revenues was primarily due to higher demand for information governance, privacy and security, cross-border investigations and litigation services, which was partially offset by a decline in M&A-related “second request” services compared to the prior year quarter. Adjusted Segment EBITDA of $13.4 million, or 16.6% of segment revenues, compared to $21.6 million, or 27.2% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to an increase in compensation, which includes the impact of a 17.3% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Strategic Communications

Revenues in the Strategic Communications segment increased $9.4 million, or 15.6%, to $69.9 million in the quarter compared to $60.5 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $11.0 million, or 18.2%. The increase in revenues was primarily due to higher demand for corporate reputation services compared to the prior year quarter. Adjusted Segment EBITDA of $15.7 million, or 22.5% of segment revenues, compared to $10.4 million, or 17.2% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues, which was partially offset by an increase in SG&A and compensation expenses, which includes the impact of a 10.0% increase in billable headcount, compared to the prior year quarter.

First Quarter 2022 Conference Call

FTI Consulting will host a conference call for analysts and investors to discuss first quarter 2022 financial results at 9:00 a.m. Eastern Time on Thursday, April 28, 2022. The call can be accessed live and will be available for replay over the internet for 90 days by logging onto the Company’s investor relations website here.

About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 6,900 employees located in 30 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 $2.78 billion in revenues during fiscal year 2021. More information can be found at www.fticonsulting.com.

Non-GAAP Financial Measures

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

 

   

Total Segment Operating Income

 

   

Adjusted EBITDA

 

   

Total Adjusted Segment EBITDA

 

   

Adjusted EBITDA Margin

 

   

Adjusted Net Income


   

Adjusted Earnings per Diluted Share

 

   

Free Cash Flow

We have included the 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 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 EBITDA Margin, which is a non-GAAP financial measure, as Adjusted EBITDA as a percentage of total revenues.

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

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


Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable with other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows. Reconciliations of these 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, initiatives, projections, prospects, policies and practices, objectives, goals, commitments, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions, share repurchases and other matters, business trends, new or changes to laws and regulations, including U.S. and foreign tax laws, environmental, social and governance (“ESG”)-related issues, climate change-related matters, scientific and technological developments, 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,” “commits,” “aspires,” “forecasts,” “future,” “goal,” “seeks” 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 plans, expectations, intentions, aspirations, beliefs, goals, estimates, forecasts and projections will result or be achieved. Our actual financial results, performance or achievements and outcomes could differ materially from those expressed in, or implied by, any forward-looking statements. Further, unaudited quarterly results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flows in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer; the mix of the geographic locations where our clients are located or where services are performed; fluctuations in the price per share of our common stock; adverse financial, real estate or other market and general economic conditions; the impact of the COVID-19 pandemic and related events that are beyond our control, which could affect our segments, practices and the geographic regions in which we conduct business differently and adversely; and other future events, which could impact each of our segments, practices and the geographic regions in which we conduct business differently and could be outside of our control; the pace and timing of the consummation and integration of future acquisitions; the Company’s ability to realize cost savings and efficiencies; competitive and general economic conditions; retention of staff and clients; new laws and regulations or changes thereto; and other risks described under the heading “Item 1A, Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022 and in the Company’s other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.


FINANCIAL TABLES FOLLOW

# # #


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

     March 31,     December 31,  
     2022     2021  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 271,143     $ 494,485  

Accounts receivable, net

     823,932       754,120  

Current portion of notes receivable

     29,301       30,256  

Prepaid expenses and other current assets

     97,015       91,166  
  

 

 

   

 

 

 

Total current assets

     1,221,391       1,370,027  

Property and equipment, net

     141,236       142,163  

Operating lease assets

     206,673       215,995  

Goodwill

     1,243,972       1,232,791  

Intangible assets, net

     29,647       31,990  

Notes receivable, net

     53,072       53,539  

Other assets

     53,300       54,404  
  

 

 

   

 

 

 

Total assets

   $ 2,949,291     $ 3,100,909  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable, accrued expenses and other

   $ 173,356     $ 165,025  

Accrued compensation

     296,461       507,556  

Billings in excess of services provided

     40,113       45,535  
  

 

 

   

 

 

 

Total current liabilities

     509,930       718,116  

Long-term debt, net

     328,936       297,158  

Noncurrent operating lease liabilities

     225,386       236,026  

Deferred income taxes

     165,913       170,612  

Other liabilities

     97,108       95,676  
  

 

 

   

 

 

 

Total liabilities

     1,327,273       1,517,588  
  

 

 

   

 

 

 

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 34,471 (2022) and 34,333 (2021)

     345       343  

Additional paid-in capital

     —         13,662  

Retained earnings

     1,756,704       1,698,156  

Accumulated other comprehensive loss

     (135,031     (128,840
  

 

 

   

 

 

 

Total stockholders’ equity

     1,622,018       1,583,321  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,949,291     $ 3,100,909  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Three Months Ended
March 31,
 
     2022     2021  
              
     (Unaudited)  

Revenues

   $ 723,620     $ 686,277  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     493,104       468,424  

Selling, general and administrative expenses

     148,971       126,546  

Amortization of intangible assets

     2,268       2,801  
  

 

 

   

 

 

 
     644,343       597,771  
  

 

 

   

 

 

 

Operating income

     79,277       88,506  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     (347     1,034  

Interest expense

     (2,642     (4,797
  

 

 

   

 

 

 
     (2,989     (3,763
  

 

 

   

 

 

 

Income before income tax provision

     76,288       84,743  

Income tax provision

     16,967       20,247  
  

 

 

   

 

 

 

Net income

   $ 59,321     $ 64,496  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 1.76     $ 1.93  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     33,619       33,483  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.66     $ 1.84  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     35,646       35,063  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

Foreign currency translation adjustments, net of tax expense of $0

   $ (6,191   $ (5,242
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     (6,191     (5,242
  

 

 

   

 

 

 

Comprehensive income

   $ 53,130     $ 59,254  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

 

     Three Months Ended
March 31,
 
     2022      2021  
               
     (Unaudited)  

Net income

   $ 59,321      $ 64,496  

Add back:

     

Non-cash interest expense on convertible notes

     —          2,348  

Tax impact of non-cash interest expense on convertible notes

     —          (611
  

 

 

    

 

 

 

Adjusted Net Income

   $ 59,321      $ 66,233  
  

 

 

    

 

 

 

Earnings per common share — diluted

   $ 1.66      $ 1.84  

Add back:

     

Non-cash interest expense on convertible notes

     —          0.07  

Tax impact of non-cash interest expense on convertible notes

     —          (0.02
  

 

 

    

 

 

 

Adjusted earnings per common share — diluted

   $ 1.66      $ 1.89  
  

 

 

    

 

 

 

Weighted average number of common shares outstanding — diluted

     35,646        35,063  
  

 

 

    

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended March 31, 2022

(Unaudited)                                             

   Corporate
Finance &
Restructuring
     Forensic and
Litigation
Consulting
     Economic
Consulting
     Technology      Strategic
Communications
     Unallocated
Corporate
    Total  

Net income

                    $ 59,321  

Interest income and other

                      347  

Interest expense

                      2,642  

Income tax provision

                      16,967  
                   

 

 

 

Operating income

   $ 50,053      $ 15,542      $ 19,943      $ 10,243      $ 14,834      $ (31,338   $ 79,277  

Depreciation and amortization

     1,666        1,467        1,252        3,120        679        723       8,907  

Amortization of intangible assets

     1,820        248        —          —          200        —         2,268  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 53,539      $ 17,257      $ 21,195      $ 13,363      $ 15,713      $ (30,615   $ 90,452  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

Three Months Ended March 31, 2021

(Unaudited)                                             

   Corporate
Finance &
Restructuring
     Forensic and
Litigation
Consulting
     Economic
Consulting
     Technology      Strategic
Communications
     Unallocated
Corporate
    Total  

Net income

                    $ 64,496  

Interest income and other

                      (1,034

Interest expense

                      4,797  

Income tax provision

                      20,247  
                   

 

 

 

Operating income

   $ 34,299      $ 28,006      $ 25,232      $ 18,559      $ 9,120      $ (26,710   $ 88,506  

Depreciation and amortization

     1,253        1,252        1,347        3,039        539        731       8,161  

Amortization of intangible assets

     1,887        174        —          —          739        1       2,801  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 37,439      $ 29,432      $ 26,579      $ 21,598      $ 10,398      $ (25,978   $ 99,468  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 


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 March 31, 2022

(Unaudited)

                                      

Corporate Finance & Restructuring

   $ 253,329      $ 53,539       21.1     63   $ 450        1,757  

Forensic and Litigation Consulting

     153,896        17,257       11.2     55   $ 357        1,513  

Economic Consulting

     165,977        21,195       12.8     72   $ 484        950  

Technology (1)

     80,484        13,363       16.6     N/M       N/M        496  

Strategic Communications (1)

     69,934        15,713       22.5     N/M       N/M        856  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 723,620      $ 121,067       16.7          5,572  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (30,615         
     

 

 

          

Adjusted EBITDA

      $ 90,452       12.5       
     

 

 

          

Three Months Ended March 31, 2021

(Unaudited)

                                      

Corporate Finance & Restructuring

   $ 226,203      $ 37,439       16.6     59   $ 462        1,684  

Forensic and Litigation Consulting

     150,821        29,432       19.5     60   $ 357        1,367  

Economic Consulting

     169,273        26,579       15.7     75   $ 494        890  

Technology (1)

     79,459        21,598       27.2     N/M       N/M        423  

Strategic Communications (1)

     60,521        10,398       17.2     N/M       N/M        778  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 686,277      $ 125,446       18.3          5,142  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (25,978         
     

 

 

          

Adjusted EBITDA

      $ 99,468       14.5       
     

 

 

          

 

N/M -

Not meaningful

(1)

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


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Three Months Ended
March 31,
 
     2022     2021  

Operating activities

    

Net income

   $ 59,321     $ 64,496  

Adjustments to reconcile net income to net cash used in operating activities:

    

Depreciation and amortization

     8,907       8,161  

Amortization and impairment of intangible assets

     2,268       2,801  

Acquisition-related contingent consideration

     (979     1,289  

Provision for expected credit losses

     4,859       4,832  

Share-based compensation

     5,967       7,242  

Amortization of debt discount and issuance costs and other

     527       2,815  

Deferred income taxes

     2,379       3,612  

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

    

Accounts receivable, billed and unbilled

     (66,471     (93,396

Notes receivable

     1,345       1,899  

Prepaid expenses and other assets

     (3,829     1,900  

Accounts payable, accrued expenses and other

     3,096       (7,803

Income taxes

     1,116       9,355  

Accrued compensation

     (216,560     (172,042

Billings in excess of services provided

     (5,724     (1,745
  

 

 

   

 

 

 

Net cash used in operating activities

     (203,778     (166,584
  

 

 

   

 

 

 

Investing activities

    

Payments for acquisition of businesses, net of cash received

     (6,698     —    

Purchases of property and equipment and other

     (12,607     (7,976
  

 

 

   

 

 

 

Net cash used in investing activities

     (19,305     (7,976
  

 

 

   

 

 

 

Financing activities

    

Borrowings under revolving line of credit

     155,000       197,500  

Repayments under revolving line of credit

     (140,000     (27,500

Purchase and retirement of common stock

     (3,098     (46,133

Share-based compensation tax withholdings and other

     (6,916     (6,798

Payments for business acquisition liabilities

     (2,680     (3,374

Deposits and other

     1,855       2,721  
  

 

 

   

 

 

 

Net cash provided by financing activities

     4,161       116,416  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (4,420     (3,388
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (223,342     (61,532

Cash and cash equivalents, beginning of period

     494,485       294,953  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 271,143     $ 233,421  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(in thousands)

 

     Three Months Ended
March 31,
 
     2022     2021  

Net cash used in operating activities

   $ (203,778   $ (166,584

Purchases of property and equipment

     (12,607     (8,001
  

 

 

   

 

 

 

Free Cash Flow

   $ (216,385   $ (174,585