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FTI Consulting Reports Fourth Quarter and Full Year 2017 Financial Results
  • Record Fourth Quarter 2017 Revenues of $467.7 million, up 5.8% compared to Prior Year Quarter
  • Fourth Quarter Fully Diluted EPS of $1.78 compared to $0.17 in Prior Year Quarter; Favorable Impact of $44.9 million from the 2017 U.S. Tax Cuts and Jobs Act
  • Adjusted EPS of $0.78 compared to $0.24 in Prior Year Quarter

WASHINGTON, Feb. 22, 2018 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN) today released its financial results for the fourth quarter and full year ended December 31, 2017.

Full Year 2017 Results

  • Revenues of $1.808 billion were down 0.1% compared to the prior year 
  • Net income of $108.0 million was up 26.2% compared to the prior year
  • Adjusted EBITDA of $192.0 million was down 5.4% compared to the prior year
  • Fully diluted EPS of $2.75 was up 34.1% compared to the prior year
  • Adjusted EPS of $2.32 was up 3.6% compared to the prior year
  • $168.0 million returned through share repurchases during full year 2017

Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “We are, of course, pleased with our very strong results in both the third and fourth quarters. These results reflect, in part, actions we took earlier in the year, but more fundamentally, they reflect the deep focus that our professionals have on helping our clients successfully navigate the largest and most significant issues they face.”

For the full year 2017, revenues of $1.808 billion declined $2.7 million, or 0.1%, compared to $1.810 billion in the prior year. The decline in revenues was primarily due to lower demand in the Economic Consulting and Technology segments, which was partially offset by higher demand in the Forensic and Litigation Consulting segment. Net income increased 26.2% to $108.0 million compared to $85.5 million in the prior year. The increase was largely due to a $44.9 million discrete tax benefit recorded in the fourth quarter, resulting from the adoption of the 2017 U.S. Tax Cuts and Jobs Act (“2017 Tax Act”). This benefit was partially offset by $40.9 million of special charges, $10.8 million of which were recorded in the fourth quarter, reflecting targeted headcount and real estate reduction actions. Adjusted EBITDA was $192.0 million, or 10.6% of revenues, compared to $203.0 million, or 11.2% of revenues, in the prior year. The Adjusted EBITDA decline resulted primarily from lower revenues during the first half of 2017. Adjusted EBITDA significantly improved during the second half of 2017, primarily as a result of revenue growth and cost-cutting actions taken at the end of the second quarter of 2017.

Full year 2017 fully diluted earnings per share (“EPS”) of $2.75 compared to $2.05 in the prior year. Full year 2017 EPS included the $44.9 million 2017 Tax Act benefit, which increased EPS by $1.14, and the $40.9 million special charge related to headcount and real estate reductions, which reduced EPS by $0.70. Full year 2017 Adjusted EPS, which excludes the 2017 Tax Act benefit and the special charges, of $2.32 compared to $2.24 in the prior year.

Cash Position and Capital Allocation

Net cash provided by operating activities of $147.6 million for the year ended December 31, 2017 compared to $233.5 million for the year ended December 31, 2016. The year-over-year difference in operating cash flows was primarily due to increased compensation payments, including severance, and lower cash receipts.

In 2017, the Company used approximately $168.0 million to repurchase 4,674,418 shares of its common stock at an average price per share of $35.94. As of December 31, 2017, approximately $113.3 million remained available for stock repurchases under the Company’s $300.0 million share repurchase authorization.

The Company increased the balance drawn on its credit facility by $30.0 million during 2017. Total debt of $400.0 million at December 31, 2017 compared to total debt of $370.0 million at December 31, 2016. Cash and cash equivalents were $190.0 million at December 31, 2017 compared to $216.2 million at December 31, 2016. Total debt, net of cash, was $210.0 million at December 31, 2017, up from $153.8 million at December 31, 2016.

Fourth Quarter 2017 Results

Fourth quarter 2017 revenues of $467.7 million increased $25.8 million, or 5.8%, compared to revenues of $441.9 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation (“FX”), revenues increased by $19.2 million, or 4.3%, compared to the prior year quarter. The increase in revenues was primarily driven by higher demand within the Corporate Finance & Restructuring and Forensic and Litigation Consulting segments, which was partially offset by reduced demand in the Economic Consulting segment. Net income of $66.9 million compared to $7.1 million in the prior year quarter. The increase was largely due to the $44.9 million 2017 Tax Act benefit and higher revenues. Adjusted EBITDA was $55.5 million, or 11.9% of revenues, compared to $30.3 million, or 6.9% of revenues, in the prior year quarter. The increase in Adjusted EBITDA was primarily due to higher revenues, improved utilization and lower general and administrative costs.

Fourth quarter 2017 EPS of $1.78 compared to $0.17 in the prior year quarter. Fourth quarter 2017 EPS included the 2017 Tax Act benefit of $44.9 million, which increased EPS by $1.19, and the $10.8 million special charge related to headcount reductions, which reduced EPS by $0.19. Fourth quarter 2017 Adjusted EPS, which excludes the 2017 Tax Act benefit and special charge, of $0.78 compared to $0.24 in the prior year quarter.

Fourth Quarter 2017 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $17.2 million, or 15.2%, to $130.5 million in the quarter compared to $113.4 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $15.7 million, or 13.8%, compared to the prior year quarter. The increase in revenues was due to higher demand for restructuring, business transformation and transaction services. Adjusted Segment EBITDA was $25.8 million, or 19.7% of segment revenues, compared to $16.3 million, or 14.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $15.4 million, or 14.6%, to $120.9 million in the quarter, compared to $105.5 million in the prior year quarter. The increase in revenues was driven by improved demand for global investigations, construction solutions and dispute services, which was partially offset by lower demand for health solutions services. Adjusted Segment EBITDA was $23.6 million, or 19.5% of segment revenues, compared to $6.3 million, or 6.0% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.

Economic Consulting
Revenues in the Economic Consulting segment decreased $8.2 million, or 6.4%, to $121.1 million in the quarter compared to $129.3 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues decreased $10.3 million, or 8.0%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for antitrust services. Adjusted Segment EBITDA was $14.3 million, or 11.8% of segment revenues, compared to $19.0 million, or 14.7% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues and higher bad debt expense, which was partially offset by lower compensation.

Technology
Revenues in the Technology segment decreased $2.6 million, or 5.9%, to $40.9 million in the quarter compared to $43.5 million in the prior year quarter. The decrease in revenues was primarily due to lower demand for managed review services, which was partially offset by higher demand for consulting services. Adjusted Segment EBITDA was $3.0 million, or 7.3% of segment revenues, compared to $5.6 million, or 12.8% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues.

Strategic Communications
Revenues in the Strategic Communications segment increased $4.0 million, or 8.0%, to $54.3 million in the quarter compared to $50.3 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $2.2 million, or 4.3%, compared to the prior year quarter. The increase in revenues was primarily driven by higher retained revenues from public affairs and corporate reputation services in Europe, the Middle East and Africa. Adjusted Segment EBITDA was $10.5 million, or 19.4% of segment revenues, compared to $8.4 million, or 16.7% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by higher compensation costs.

2018 Guidance
The Company estimates that revenues for full year 2018 will be in the range of $1.825 billion and $1.875 billion. The Company estimates that full year 2018 EPS will be in the range of $2.35 and $2.65. The Company does not expect Adjusted EPS to differ from EPS.

Fourth Quarter and Full Year 2017 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year 2017 financial results at 9:00 a.m. Eastern Time on February 22, 2018. 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 4,600 employees located in 28 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $1.81 billion in revenues during fiscal year 2017. More information can be found at http://www.fticonsulting.com/.

Use of Non-GAAP Measures
In the accompanying analysis of financial information, we sometimes use information derived from consolidated and segment financial information that may not be presented in our financial statements or prepared in accordance with generally accepted accounting principles (“GAAP”). Certain of these measures are considered “non-GAAP financial measures” under the Securities and Exchange Commission (“SEC”) rules. Specifically, we have referred to the following non-GAAP 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 below in order to more fully define the components of certain non-GAAP financial measures presented in this earnings 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 and losses on early extinguishment of debt. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. We believe 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 our GAAP financial results and GAAP 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 measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results with the operating results of other companies.

We define Adjusted Net Income and Adjusted Earnings per Diluted Share (“Adjusted EPS”), which are non-GAAP financial measures, as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the adjustment related to the adoption of the 2017 U.S. Tax Cuts and Jobs Act (“2017 Tax Act”). We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that this non-GAAP financial measure, which excludes the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the 2017 Tax Act, when considered together with our GAAP financial results, provides management and investors with an additional understanding of our business operating results, including underlying trends.

We define 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 the Company's ability to generate cash for ongoing business operations and other capital deployment.

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

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

FINANCIAL TABLES FOLLOW


FTI CONSULTING, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
 
    December 31,
    2017   2016
Assets        
Current assets        
Cash and cash equivalents   $ 189,961     $ 216,158  
Accounts receivable:        
Billed receivables   390,996     365,385  
Unbilled receivables   312,569     288,331  
Allowances for doubtful accounts and unbilled services   (180,687 )   (178,819 )
Accounts receivable, net   522,878     474,897  
Current portion of notes receivable   25,691     31,864  
Prepaid expenses and other current assets   55,649     60,252  
Total current assets   794,179     783,171  
Property and equipment, net of accumulated depreciation   75,075     61,856  
Goodwill   1,204,803     1,180,001  
Other intangible assets, net of amortization   44,150     52,120  
Notes receivable, net of current portion   98,105     104,524  
Other assets   40,929     43,696  
Total assets   $ 2,257,241     $ 2,225,368  
Liabilities and Stockholders' Equity        
Current liabilities        
Accounts payable, accrued expenses and other   $ 94,873     $ 87,320  
Accrued compensation   268,513     261,500  
Billings in excess of services provided   46,942     29,635  
Total current liabilities   410,328     378,455  
Long-term debt, net   396,284     365,528  
Deferred income taxes   124,471     173,799  
Other liabilities   134,187     100,228  
Total liabilities   1,065,270     1,018,010  
Stockholders' equity        
Preferred stock, $0.01 par value; shares authorized — 5,000; none
outstanding
       
Common stock, $0.01 par value; shares authorized — 75,000; shares
issued and outstanding — 37,729 (2017) and  42,037 (2016)
  377     420  
Additional paid-in capital   266,035     416,816  
Retained earnings   1,045,774     941,001  
Accumulated other comprehensive loss   (120,215 )   (150,879 )
Total stockholders' equity   1,191,971     1,207,358  
Total liabilities and stockholders' equity   $ 2,257,241     $ 2,225,368  


FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended
  December 31,
  2017   2016
Revenues $ 467,711     $ 441,920  
Operating expenses      
Direct cost of revenues 307,566     308,239  
Selling, general and administrative expenses 111,176     116,478  
Special charges 10,811     3,634  
Acquisition-related contingent consideration 867     623  
Amortization of other intangible assets 2,766     2,265  
  433,186     431,239  
Operating income 34,525     10,681  
Other income (expense)      
Interest income and other 452     571  
Interest expense (6,547 )   (5,983 )
  (6,095 )   (5,412 )
Income before income tax benefit 28,430     5,269  
Income tax benefit (38,458 )   (1,832 )
Net income $ 66,888     $ 7,101  
Earnings per common share ― basic $ 1.81     $ 0.17  
Weighted average common shares outstanding ― basic 36,906     41,201  
Earnings per common share ― diluted $ 1.78     $ 0.17  
Weighted average common shares outstanding ― diluted 37,643     42,018  
       
Other comprehensive income (loss), net of tax      
Foreign currency translation adjustments, net of tax expense of $0 $ 1,886     $ (18,239 )
Total other comprehensive income (loss), net of tax 1,886     (18,239 )
Comprehensive income (loss) $ 68,774     $ (11,138 )


FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
 
  Year Ended
  December 31,
  2017   2016
Revenues $ 1,807,732     $ 1,810,394  
Operating expenses      
Direct cost of revenues 1,215,560     1,210,771  
Selling, general and administrative expenses 429,722     434,552  
Special charges 40,885     10,445  
Acquisition-related contingent consideration 2,291     2,164  
Amortization of other intangible assets 10,563     10,306  
  1,699,021     1,668,238  
Operating income 108,711     142,156  
Other income (expense)      
Interest income and other 3,752     10,466  
Interest expense (25,358 )   (24,819 )
  (21,606 )   (14,353 )
Income before income tax provision (benefit) 87,105     127,803  
Income tax provision (benefit) (20,857 )   42,283  
Net income $ 107,962     $ 85,520  
Earnings per common share ― basic $ 2.79     $ 2.09  
Weighted average common shares outstanding ― basic 38,697     40,943  
Earnings per common share ― diluted $ 2.75     $ 2.05  
Weighted average common shares outstanding ― diluted 39,192     41,709  
Other comprehensive income (loss), net of tax      
Foreign currency translation adjustments, net of tax expense of $0 $ 30,664     $ (41,884 )
Total other comprehensive income (loss), net of tax 30,664     (41,884 )
Comprehensive income $ 138,626     $ 43,636  


FTI CONSULTING, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
 
    Three Months Ended
December 31,
  Year Ended 
December 31,
    2017   2016   2017   2016
    (Unaudited)    
                 
Net income   $ 66,888     $ 7,101     $ 107,962     $ 85,520  
Add back:                
Special charges   10,811     3,634     40,885     10,445  
Tax impact of special charges   (3,635 )   (1,113 )   (13,570 )   (3,595 )
Remeasurement of acquisition-related contingent consideration       423     702     1,403  
Tax impact of remeasurement of acquisition-related contingent consideration       (165 )   (269 )   (546 )
Impact of 2017 Tax Act   (44,870 )       (44,870 )    
Adjusted net income   $ 29,194     $ 9,880     $ 90,840     $ 93,227  
Earnings per common share — diluted   $ 1.78     $ 0.17     $ 2.75     $ 2.05  
Add back:                
Special charges   0.29     0.09     1.04     0.25  
Tax impact of special charges   (0.10 )   (0.03 )   (0.34 )   (0.08 )
Remeasurement of acquisition-related contingent consideration       0.01     0.02     0.03  
Tax impact of remeasurement of acquisition-related contingent consideration           (0.01 )   (0.01 )
Impact of 2017 Tax Act   (1.19 )       (1.14 )    
Adjusted earnings per common share — diluted   $ 0.78     $ 0.24     $ 2.32     $ 2.24  
Weighted average number of common shares outstanding ― diluted   37,643     42,018     39,192     41,709  


FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA 
(in thousands)
 
Three Months Ended December 31, 2017
(unaudited)
  Corporate
Finance &
Restructuring
  Forensic and
Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 66,888  
Interest income and other                           (452 )
Interest expense                           6,547  
Income tax benefit                           (38,458 )
Operating income (loss)   $ 21,332     $ 20,286     $ 12,120     $ (1,079 )   $ 4,840     $ (22,974 )   $ 34,525  
Depreciation and amortization   815     1,042     1,316     2,664     673     899     7,409  
Amortization of other intangible assets   1,218     396     134     158     860         2,766  
Special charges   2,391     1,889     714     1,230     4,153     434     10,811  
Adjusted EBITDA   $ 25,756     $ 23,613     $ 14,284     $ 2,973     $ 10,526     $ (21,641 )   $ 55,511  
                             
Year Ended December 31, 2017   Corporate
Finance &
Restructuring
  Forensic and
Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 107,962  
Interest income and other                           (3,752 )
Interest expense                           25,358  
Income tax benefit                           (20,857 )
Operating income   $ 70,234     $ 54,520     $ 49,154     $ 4,795     $ 13,148     $ (83,140 )   $ 108,711  
Depreciation and amortization   3,175     4,259     5,589     11,684     2,405     4,065     31,177  
Amortization of other intangible assets   4,014     1,592     597     635     3,725         10,563  
Special charges   5,440     12,334     6,624     5,057     7,752     3,678     40,885  
Remeasurement of acquisition-related contingent consideration                   702         702  
Adjusted EBITDA   $ 82,863     $ 72,705     $ 61,964     $ 22,171     $ 27,732     $ (75,397 )   $ 192,038  
                             
Three Months Ended December 31, 2016
(unaudited)
  Corporate
Finance &
Restructuring
  Forensic and
Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 7,101  
Interest income and other                           (571 )
Interest expense                           5,983  
Income tax provision                           (1,832 )
Operating income (loss)   $ 14,741     $ 4,083     $ 17,452     $ (4,752 )   $ 6,449     $ (27,292 )   $ 10,681  
Depreciation and amortization   722     1,212     1,442     7,919     641     1,405     13,341  
Amortization of other intangible assets   819     481     154     (77 )   888         2,265  
Special charges       554         2,468         612     3,634  
Remeasurement of acquisition-related contingent consideration                   423         423  
Adjusted EBITDA   $ 16,282     $ 6,330     $ 19,048     $ 5,558     $ 8,401     $ (25,275 )   $ 30,344  
                             
Year Ended December 31, 2016   Corporate
Finance &
Restructuring
  Forensic and
Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 85,520  
Interest income and other                           (10,466 )
Interest expense                           24,819  
Income tax provision                           42,283  
Operating income (loss)   $ 91,481     $ 49,088     $ 68,842     $ (2,183 )   $ 23,110     $ (88,182 )   $ 142,156  
Depreciation and amortization   2,897     4,490     4,614     19,820     2,243     4,636     38,700  
Amortization of other intangible assets   3,310     2,000     646     648     3,702         10,306  
Special charges       2,304         7,529         612     10,445  
Remeasurement of acquisition-related contingent consideration                   1,403         1,403  
Adjusted EBITDA   $ 97,688     $ 57,882     $ 74,102     $ 25,814     $ 30,458     $ (82,934 )   $ 203,010  


FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
 
  Segment
Revenues
  Adjusted
EBITDA
  Adjusted EBITDA
Margin
  Utilization    Average
Billable
Rate
  Revenue-
Generating
Headcount
   (in thousands)               (at period end)
Three Months Ended December 31, 2017
(unaudited)
                     
Corporate Finance & Restructuring $ 130,532     $ 25,756     19.7 %   62 %   $ 434     901  
Forensic and Litigation Consulting 120,869     23,613     19.5 %   63 %   $ 330     1,067  
Economic Consulting 121,051     14,284     11.8 %   64 %   $ 542     683  
Technology (1) 40,915     2,973     7.3 %   N/M       N/M     292  
Strategic Communications (1) 54,344     10,526     19.4 %   N/M       N/M     630  
  $ 467,711     $ 77,152     16.5 %             3,573  
Unallocated Corporate     (21,641 )                    
Adjusted EBITDA     $ 55,511     11.9 %              
                           
Year Ended December 31, 2017                          
Corporate Finance & Restructuring $ 482,041     $ 82,863     17.2 %   61 %   $ 396     901  
Forensic and Litigation Consulting 462,324     72,705     15.7 %   61 %   $ 321     1,067  
Economic Consulting 496,029     61,964     12.5 %   67 %   $ 524     683  
Technology (1) 174,850     22,171     12.7 %   N/M       N/M     292  
Strategic Communications (1) 192,488     27,732     14.4 %   N/M       N/M     630  
  $ 1,807,732     $ 267,435     14.8 %             3,573  
Unallocated Corporate     (75,397 )                    
Adjusted EBITDA     $ 192,038     10.6 %            
                           
Three Months Ended December 31, 2016
(unaudited)
                         
Corporate Finance & Restructuring $ 113,354     $ 16,282     14.4 %   55 %   $ 408     895  
Forensic and Litigation Consulting 105,492     6,330     6.0 %   55 %   $ 322     1,110  
Economic Consulting 129,270     19,048     14.7 %   71 %   $ 522     656  
Technology (1) 43,485     5,558     12.8 %   N/M       N/M     288  
Strategic Communications (1) 50,319     8,401     16.7 %   N/M       N/M     647  
  $ 441,920     $ 55,619     12.6 %             3,596  
Unallocated Corporate     (25,275 )                    
Adjusted EBITDA     $ 30,344     6.9 %              
                           
Year Ended December 31, 2016                          
Corporate Finance & Restructuring $ 483,269     $ 97,688     20.2 %   65 %   $ 392     895  
Forensic and Litigation Consulting 457,734     57,882     12.6 %   59 %   $ 327     1,110  
Economic Consulting 500,487     74,102     14.8 %   73 %   $ 517     656  
Technology (1) 177,720     25,814     14.5 %   N/M       N/M     288  
Strategic Communications (1) 191,184     30,458     15.9 %   N/M       N/M     647  
  $ 1,810,394     $ 285,944     15.8 %             3.596  
Unallocated Corporate     (82,934 )                    
Adjusted EBITDA     $ 203,010     11.2 %              
                         
                       
N/M Not meaningful                      
(1) The majority of the Technology and Strategic Communications segments' revenues are not generated based on billable hours. Accordingly, utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric.


FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
  Year Ended
  December 31,
  2017   2016
Operating activities      
Net income $ 107,962     $ 85,520  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 31,177     38,700  
Amortization and impairment of other intangible assets 10,563     10,306  
Acquisition-related contingent consideration 2,291     2,164  
Provision for doubtful accounts 15,386     8,912  
Non-cash share-based compensation 16,030     16,920  
Non-cash interest expense 1,984     1,985  
Other 611     (1,204 )
Changes in operating assets and liabilities, net of effects from acquisitions:      
Accounts receivable, billed and unbilled (50,831 )   3,471  
Notes receivable 14,928     3,145  
Prepaid expenses and other assets 629     (2,840 )
Accounts payable, accrued expenses and other 4,421     3,268  
Income taxes (25,768 )   22,012  
Accrued compensation 1,795     40,350  
Billings in excess of services provided 16,447     779  
Net cash provided by operating activities 147,625     233,488  
Investing activities      
Payments for acquisition of businesses, net of cash received (8,929 )   (1,251 )
Purchases of property and equipment (32,004 )   (28,935 )
Other 295     54  
Net cash used in investing activities (40,638 )   (30,132 )
Financing activities      
Borrowings (repayments) under revolving line of credit, net 30,000     (130,000 )
Deposits 2,825     4,006  
Purchase and retirement of common stock (168,094 )   (21,489 )
Net issuance of common stock under equity compensation plans (504 )   21,708  
Payments for acquisition-related contingent consideration (5,161 )   (866 )
Other     1,331  
Net cash used in financing activities (140,934 )   (125,310 )
Effect of exchange rate changes on cash and cash equivalents 7,750     (11,648 )
Net increase (decrease) in cash and cash equivalents (26,197 )   66,398  
Cash and cash equivalents, beginning of period 216,158     149,760  
Cash and cash equivalents, end of period $ 189,961     $ 216,158  
               

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

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FTI Consulting, Inc.