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FTI Consulting Reports Fourth Quarter and Full Year 2022 Financial Results
  • Fourth Quarter 2022 Revenues of $774.4 Million, Up 15% Compared to $676.2 Million in Prior Year Quarter; Excluding Estimated Negative Impact of FX, Fourth Quarter 2022 Revenues Up 18% Compared to Prior Year Quarter
  • Fourth Quarter 2022 EPS of $1.33 Compared to $1.07 in Prior Year Quarter; Fourth Quarter 2022 Adjusted EPS of $1.52 Compared to $1.13 in Prior Year Quarter
  • Full Year 2022 Revenues of $3.029 Billion, Up 9% Compared to $2.776 Billion in Prior Year; Excluding Estimated Negative Impact of FX, Full Year 2022 Revenues Increased 12% Compared to Prior Year
  • Full Year 2022 EPS of $6.58 Compared to $6.65 in Prior Year; Full Year 2022 Adjusted EPS of $6.77 Compared to $6.76 in Prior Year
  • Introduces 2023 Guidance

WASHINGTON, Feb. 23, 2023 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the full year and fourth quarter ended December 31, 2022.

For the full year 2022, revenues of $3.029 billion increased $252.7 million, or 9.1%, compared to revenues of $2.776 billion in the prior year. Excluding the estimated negative impact from foreign currency translation ("FX"), revenues increased $339.8 million, or 12.2%, compared to the prior year. The increase in revenues was primarily due to higher demand in the Corporate Finance & Restructuring, Forensic and Litigation Consulting, Technology and Strategic Communications business segments. Net income of $235.5 million compared to $235.0 million in the prior year. The increase in net income was primarily due to higher revenues, which was largely offset by higher compensation, including the impact of a 12.3% increase in billable headcount, and a 19.2% increase in selling, general and administrative ("SG&A") expenses compared to the prior year. In full year 2022, there was an $8.3 million special charge recorded in the fourth quarter related to severance and other employee-related costs. Adjusted EBITDA, which excludes the special charge, of $357.6 million, or 11.8% of revenues, compared to $354.0 million, or 12.8% of revenues, in the prior year period.

Full year 2022 earnings per diluted share ("EPS") of $6.58 compared to $6.65 in the prior year. Full year 2022 EPS included the $8.3 million special charge, which reduced EPS by $0.19. Full year 2021 EPS included $9.6 million of non-cash interest expense related to the Company's 2.0% convertible senior notes due 2023 ("2023 Convertible Notes"), which reduced EPS by $0.20, and $3.1 million in fair value remeasurement of acquisition-related contingent consideration, which increased EPS by $0.09. Full year 2022 Adjusted EPS of $6.77 compared to Adjusted EPS of $6.76 in the prior year.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, "We are pleased that in 2022, we once again reported record revenues, Adjusted EBITDA and Adjusted EPS. That strength and durability, to me, are consequences of our teams’ commitment to invest behind our people and positions, independent of market conditions, a commitment which has allowed us to increasingly serve our clients as they face their most significant opportunities and challenges."

Cash Position and Capital Allocation

Net cash provided by operating activities of $188.8 million for the year ended December 31, 2022 compared to $355.5 million for the year ended December 31, 2021. The year-over-year decrease in net cash provided by operating activities was largely due to higher compensation, operating expenses and income taxes paid, which was partially offset by an increase in cash collected.

Cash and cash equivalents of $491.7 million at December 31, 2022 compared to $494.5 million at December 31, 2021 and $327.0 million at September 30, 2022. Total debt, net of cash, of ($175.5) million at December 31, 2022 compared to ($178.2) million at December 31, 2021 and ($10.8) million at September 30, 2022. The sequential decrease in total debt, net of cash, was primarily due to an increase in cash provided by operating activities, which was partially offset by share repurchases.

On December 1, 2022, FTI Consulting’s Board of Directors authorized the additional amount of $400.0 million to repurchase its outstanding shares of common stock under its stock repurchase program. During the quarter ended December 31, 2022, the Company repurchased 425,016 shares of its common stock at an average price per share of $153.09 for a total cost of $65.1 million. In full year 2022, the Company repurchased 574,418 shares of its common stock at an average price per share of $154.23 for a total cost of $88.6 million. As of December 31, 2022, approximately $478.5 million remained available for common stock repurchases under the Company’s stock repurchase program.

Fourth Quarter 2022 Results

Fourth quarter 2022 revenues of $774.4 million increased $98.2 million, or 14.5%, compared to revenues of $676.2 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $124.3 million, or 18.4%, compared to the prior year quarter. Acquisition-related revenues contributed $3.5 million during the quarter. The increase in revenues was primarily due to higher demand across the Corporate Finance & Restructuring, Forensic and Litigation Consulting and Technology segments. Net income of $47.5 million compared to $38.2 million in the prior year quarter. The increase in net income was primarily due to higher revenues, which was partially offset by an increase in compensation, including the impact of a 12.3% increase in billable headcount, higher SG&A expenses, the aforementioned $8.3 million special charge, an increase in FX remeasurement losses and a higher effective tax rate compared to the prior year quarter. Adjusted EBITDA, which excludes the special charge, of $92.0 million, or 11.9% of revenues, compared to $62.0 million, or 9.2% of revenues, in the prior year quarter.

Fourth quarter 2022 EPS of $1.33 compared to $1.07 in the prior year quarter. Fourth quarter 2022 EPS included the $8.3 million special charge, which decreased EPS by $0.19. Fourth quarter 2021 EPS included $2.4 million of non-cash interest expense related to the Company's 2023 Convertible Notes, which decreased EPS by $0.06. Fourth quarter 2022 Adjusted EPS of $1.52, which excludes the special charge, compared to Adjusted EPS of $1.13 in the prior year quarter. Fourth quarter 2021 Adjusted EPS excluded the non-cash interest expense related to the Company’s 2023 Convertible Notes.

Fourth Quarter 2022 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $61.3 million, or 26.5%, to $292.8 million in the quarter, compared to $231.5 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $68.4 million, or 29.5%, compared to the prior year quarter. Acquisition-related revenues contributed $3.5 million in the quarter. The increase in revenues was due to higher demand for restructuring and business transformation services. Adjusted Segment EBITDA of $52.4 million, or 17.9% of segment revenues, compared to $22.2 million, or 9.6% 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 compensation, which includes the impact of a 14.3% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $22.4 million, or 16.2%, to $160.4 million in the quarter, compared to $138.0 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $25.9 million, or 18.8%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for investigations, data & analytics and health solutions services. Adjusted Segment EBITDA of $13.8 million, or 8.6% of segment revenues, compared to $8.5 million, or 6.2% 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 compensation, which includes the impact of a 5.9% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Economic Consulting
Revenues in the Economic Consulting segment decreased $0.3 million, or 0.2%, to $172.0 million in the quarter, compared to $172.3 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $8.4 million, or 4.9%, compared to the prior year quarter. The increase in revenues was primarily due to higher realization for merger and acquisition ("M&A")-related antitrust and international arbitration services, which was partially offset by lower demand for financial economics services compared to the prior year quarter. Adjusted Segment EBITDA of $27.3 million, or 15.9% of segment revenues, compared to $30.0 million, or 17.4% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to higher SG&A expenses compared to the prior year quarter.

Technology
Revenues in the Technology segment increased $12.2 million, or 18.9%, to $76.8 million in the quarter, compared to $64.6 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $14.4 million, or 22.2%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for investigations and M&A-related “second request” services. Adjusted Segment EBITDA of $11.8 million, or 15.3% of segment revenues, compared to $7.8 million, or 12.1% 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 compensation, which includes the impact of an 18.8% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Strategic Communications
Revenues in the Strategic Communications segment increased $2.6 million, or 3.7%, to $72.4 million in the quarter, compared to $69.9 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $7.3 million, or 10.4%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for public affairs and financial communications services. Adjusted Segment EBITDA of $10.5 million, or 14.5% of segment revenues, compared to $14.9 million, or 21.4% 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 19.2% increase in billable headcount, and an increase in SG&A expenses compared to the prior year quarter.

2023 Guidance
The Company estimates that revenues for full year 2023 will range between $3.330 billion and $3.470 billion. The Company estimates that EPS for full year 2023 will range between $6.80 and $7.70. The Company does not currently expect Adjusted EPS to differ from EPS.

Fourth Quarter and Full Year 2022 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year 2022 financial results at 9:00 a.m. Eastern Time on Thursday, February 23, 2023. 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 7,600 employees located in 31 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 $3.0 billion in revenues during fiscal year 2022. 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 (used in) 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, 2022 filed with the SEC on February 23, 2023 and in the Company’s other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW

 

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

    December 31,   December 31,
      2022       2021  
Assets        
Current assets        
Cash and cash equivalents   $ 491,688     $ 494,485  
Accounts receivable, net     896,153       754,120  
Current portion of notes receivable     27,292       30,256  
Prepaid expenses and other current assets     95,469       91,166  
Total current assets     1,510,602       1,370,027  
Property and equipment, net     153,466       142,163  
Operating lease assets     203,764       215,995  
Goodwill     1,227,593       1,232,791  
Intangible assets, net     25,514       31,990  
Notes receivable, net     55,978       53,539  
Other assets     64,490       54,404  
Total assets   $ 3,241,407     $ 3,100,909  
Liabilities and Stockholders’ Equity        
Current liabilities        
Accounts payable, accrued expenses and other   $ 173,953     $ 165,025  
Accrued compensation     541,892       507,556  
Billings in excess of services provided     53,646       45,535  
Total current liabilities     769,491       718,116  
Long-term debt, net     315,172       297,158  
Noncurrent operating lease liabilities     221,604       236,026  
Deferred income taxes     162,374       170,612  
Other liabilities     91,045       95,676  
Total liabilities     1,559,686       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 — 34,026 (2022) and 34,333 (2021)
    340       343  
Additional paid-in capital           13,662  
Retained earnings     1,858,103       1,698,156  
Accumulated other comprehensive loss     (176,722 )     (128,840 )
Total stockholders’ equity     1,681,721       1,583,321  
Total liabilities and stockholders’ equity   $ 3,241,407     $ 3,100,909  



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

  Three Months Ended
December 31,
 
 
    2022       2021  
  (Unaudited)
Revenues $ 774,431     $ 676,231  
Operating expenses      
Direct cost of revenues   526,139       484,126  
Selling, general and administrative expenses   164,973       138,768  
Special charges   8,340        
Amortization of intangible assets   2,323       2,308  
    701,775       625,202  
Operating income   72,656       51,029  
Other income (expense)      
Interest income and other   (6,500 )     896  
Interest expense   (2,579 )     (5,130 )
    (9,079 )     (4,234 )
Income before income tax provision   63,577       46,795  
Income tax provision   16,079       8,587  
Net income $ 47,498     $ 38,208  
Earnings per common share ― basic $ 1.42     $ 1.14  
Weighted average common shares outstanding ― basic   33,552       33,519  
Earnings per common share ― diluted $ 1.33     $ 1.07  
Weighted average common shares outstanding ― diluted   35,658       35,550  
Other comprehensive income (loss), net of tax      
Foreign currency translation adjustments, net of tax expense of $— and $— $ 47,463     $ (4,363 )
Total other comprehensive income (loss), net of tax   47,463       (4,363 )
Comprehensive income $ 94,961     $ 33,845  



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

 

Year Ended December 31,
 
    2022       2021  
Revenues $ 3,028,908     $ 2,776,222  
Operating expenses      
Direct cost of revenues   2,065,977       1,915,507  
Selling, general and administrative expenses   641,070       537,844  
Special charges   8,340        
Amortization of intangible assets   9,643       10,823  
    2,725,030       2,464,174  
Operating income   303,878       312,048  
Other income (expense)      
Interest income and other   3,918       6,193  
Interest expense   (10,047 )     (20,294 )
    (6,129 )     (14,101 )
Income before income tax provision   297,749       297,947  
Income tax provision   62,235       62,981  
Net income $ 235,514     $ 234,966  
Earnings per common share ― basic $ 6.99     $ 7.02  
Weighted average common shares outstanding ― basic   33,693       33,489  
Earnings per common share ― diluted $ 6.58     $ 6.65  
Weighted average common shares outstanding ― diluted   35,783       35,337  
Other comprehensive loss, net of tax      
Foreign currency translation adjustments, net of tax expense of $— and $— $ (47,882 )   $ (22,405 )
Total other comprehensive loss, net of tax   (47,882 )     (22,405 )
Comprehensive income $ 187,632     $ 212,561  



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

    Three Months Ended
December 31,
  Year Ended
December 31,
     
      2022       2021       2022       2021  
    (Unaudited)    
Net income   $ 47,498     $ 38,208     $ 235,514     $ 234,966  
Add back:                
Remeasurement of acquisition-related contingent
consideration
                      (3,130 )
Special charges     8,340             8,340        
Tax impact of special charges     (1,584 )           (1,584 )      
Non-cash interest expense on convertible notes           2,445             9,586  
Tax impact of non-cash interest expense on
convertible notes
          (636 )           (2,492 )
Adjusted Net Income   $ 54,254     $ 40,017     $ 242,270     $ 238,930  
Earnings per common share — diluted   $ 1.33     $ 1.07     $ 6.58     $ 6.65  
Add back:                
Remeasurement of acquisition-related contingent consideration                       (0.09 )
Special charges     0.23             0.23        
Tax impact of special charges     (0.04 )           (0.04 )      
Non-cash interest expense on convertible notes           0.08             0.27  
Tax impact of non-cash interest expense on
convertible notes
          (0.02 )           (0.07 )
Adjusted earnings per common share — diluted   $ 1.52     $ 1.13     $ 6.77     $ 6.76  
Weighted average number of common shares
outstanding ― diluted
    35,658       35,550       35,783       35,337  



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

Three Months Ended December 31, 2022
(Unaudited)
  Corporate Finance &
Restructuring
  Forensic and
Litigation Consulting
  Economic
Consulting
  Technology   Strategic Communications   Unallocated
Corporate
  Total
Net income                           $ 47,498
Interest income and other                             6,500
Interest expense                             2,579
Income tax provision                             16,079
Operating income   $ 46,359   $ 7,696   $ 26,122   $ 8,425   $ 9,360   $ (25,306 )   $ 72,656
Depreciation and amortization     1,673     1,267     1,183     3,226     618     688       8,655
Amortization of intangible assets     1,940     242             141           2,323
Special charges     2,444     4,614     31     106     369     776       8,340
Adjusted EBITDA   $ 52,416   $ 13,819   $ 27,336   $ 11,757   $ 10,488   $ (23,842 )   $ 91,974
                             

 

Year Ended December 31, 2022   Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 235,514  
Interest income and other                             (3,918 )
Interest expense                             10,047  
Income tax provision                             62,235  
Operating income   $ 195,295   $ 54,822   $ 98,178   $ 33,431   $ 46,982   $ (124,830 )   $ 303,878  
Depreciation and amortization     6,722     5,532     4,881     13,161     2,580     2,821       35,697  
Amortization of intangible assets     7,976     977             689     1       9,643  
Special charges     2,444     4,614     31     106     369     776       8,340  
Adjusted EBITDA   $ 212,437   $ 65,945   $ 103,090   $ 46,698   $ 50,620   $ (121,232 )   $ 357,558  

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

Three Months Ended December 31, 2021
(Unaudited)
  Corporate Finance &
Restructuring
  Forensic and Litigation
Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 38,208  
Interest income and other                             (896 )
Interest expense                             5,130  
Income tax provision                             8,587  
Operating income   $ 19,047     $ 7,044   $ 28,571   $ 4,612   $ 14,171   $ (22,416 )   $ 51,029  
Depreciation and amortization     1,346       1,200     1,420     3,176     536     960       8,638  
Amortization of intangible assets     1,841       247             218     2       2,308  
Adjusted EBITDA   $ 22,234     $ 8,491   $ 29,991   $ 7,788   $ 14,925   $ (21,454 )   $ 61,975  
                             
Year Ended December 31, 2021   Corporate Finance &
Restructuring
  Forensic and
Litigation Consulting
  Economic
Consulting
  Technology   Strategic
Communications
  Unallocated
Corporate
  Total
Net income                           $ 234,966  
Interest income and other                             (6,193 )
Interest expense                             20,294  
Income tax provision                             62,981  
Operating income   $ 145,765     $ 66,643   $ 111,462   $ 42,927   $ 49,708   $ (104,457 )   $ 312,048  
Depreciation and amortization     5,362       5,008     5,724     12,812     2,166     3,197       34,269  
Amortization of intangible assets     7,485       894             2,439     5       10,823  
Remeasurement of acquisition-related
contingent consideration
    (3,130 )                           (3,130 )
Adjusted EBITDA   $ 155,482     $ 72,545   $ 117,186   $ 55,739   $ 54,313   $ (101,255 )   $ 354,010  



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, 2022 (Unaudited)                      
Corporate Finance & Restructuring $ 292,807   $ 52,416     17.9 %   58 %   $ 485   1,946
Forensic and Litigation Consulting   160,386     13,819     8.6 %   51 %   $ 369   1,584
Economic Consulting   172,007     27,336     15.9 %   63 %   $ 522   1,007
Technology (1)   76,802     11,757     15.3 %   N/M     N/M   556
Strategic Communications (1)   72,429     10,488     14.5 %   N/M     N/M   970
  $ 774,431   $ 115,816     15.0 %           6,063
Unallocated Corporate       (23,842 )                
Adjusted EBITDA     $ 91,974     11.9 %            
                       
Year Ended December 31, 2022                      
Corporate Finance & Restructuring $ 1,088,573   $ 212,437     19.5 %   61 %   $ 460   1,946
Forensic and Litigation Consulting   638,478     65,945     10.3 %   54 %   $ 361   1,584
Economic Consulting   695,208     103,090     14.8 %   68 %   $ 508   1,007
Technology (1)   319,983     46,698     14.6 %   N/M     N/M   556
Strategic Communications (1)   286,666     50,620     17.7 %   N/M     N/M   970
  $ 3,028,908   $ 478,790     15.8 %           6,063
Unallocated Corporate       (121,232 )                
Adjusted EBITDA     $ 357,558     11.8 %            
                       
Three Months Ended December 31, 2021 (Unaudited)                      
Corporate Finance & Restructuring $ 231,474   $ 22,234     9.6 %   55 %   $ 444   1,702
Forensic and Litigation Consulting   138,004     8,491     6.2 %   50 %   $ 353   1,496
Economic Consulting   172,283     29,991     17.4 %   69 %   $ 520   921
Technology (1)   64,604     7,788     12.1 %   N/M     N/M   468
Strategic Communications (1)   69,866     14,925     21.4 %   N/M     N/M   814
  $ 676,231   $ 83,429     12.3 %           5,401
Unallocated Corporate       (21,454 )                
Adjusted EBITDA     $ 61,975     9.2 %            
                       
Year Ended December 31, 2021                      
Corporate Finance & Restructuring $ 938,969   $ 155,482     16.6 %   59 %   $ 452   1,702
Forensic and Litigation Consulting   584,835     72,545     12.4 %   56 %   $ 350   1,496
Economic Consulting   697,405     117,186     16.8 %   72 %   $ 509   921
Technology (1)   287,366     55,739     19.4 %   N/M     N/M   468
Strategic Communications (1)   267,647     54,313     20.3 %   N/M     N/M   814
  $ 2,776,222   $ 455,265     16.4 %           5,401
Unallocated Corporate       (101,255 )                
Adjusted EBITDA     $ 354,010     12.8 %            
                       

_____________________
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,
 
 
    2022       2021  
Operating activities      
Net income $ 235,514     $ 234,966  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization   35,898       34,269  
Amortization and impairment of intangible assets   9,643       10,823  
Acquisition-related contingent consideration   2,172       (324 )
Provision for expected credit losses   19,684       16,151  
Share-based compensation   25,414       23,051  
Amortization of debt discount and issuance costs and other   2,224       11,701  
Deferred income taxes   (10,456 )     4,958  
Changes in operating assets and liabilities, net of effects from acquisitions:      
Accounts receivable, billed and unbilled   (182,667 )     (61,274 )
Notes receivable   (403 )     12,645  
Prepaid expenses and other assets   459       (1,165 )
Accounts payable, accrued expenses and other   8,430       (2,102 )
Income taxes   (4,322 )     10,523  
Accrued compensation   37,931       59,566  
Billings in excess of services provided   9,273       1,695  
Net cash provided by operating activities   188,794       355,483  
Investing activities      
Payments for acquisition of businesses, net of cash received   (6,742 )     (10,428 )
Purchases of property and equipment and other   (53,319 )     (68,665 )
Net cash used in investing activities   (60,061 )     (79,093 )
Financing activities      
Borrowings under revolving line of credit   165,000       402,500  
Repayments under revolving line of credit   (165,000 )     (402,500 )
Payments of debt issuance costs   (3,993 )      
Purchase and retirement of common stock   (85,424 )     (46,133 )
Share-based compensation tax withholdings and other   (15,330 )     (9,246 )
Payments for business acquisition liabilities   (4,848 )     (7,496 )
Deposits and other   3,583       1,201  
Net cash used in financing activities   (106,012 )     (61,674 )
Effect of exchange rate changes on cash and cash equivalents   (25,518 )     (15,184 )
Net increase (decrease) in cash and cash equivalents   (2,797 )     199,532  
Cash and cash equivalents, beginning of period   494,485       294,953  
Cash and cash equivalents, end of period $ 491,688     $ 494,485  



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

    Year Ended December 31,
      2022       2021  
Net cash provided by operating activities   $ 188,794     $ 355,483  
Purchases of property and equipment     (53,098 )     (68,569 )
Free Cash Flow   $ 135,696     $ 286,914  

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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Source: FTI Consulting, Inc.

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Investor Relations Contacts

Mollie Hawkes

Head of Marketing, Communications & Investor Relations

+1 617-747-1791

Megan McLaughlin Hawkins

Senior Director, Investor Relations & Communications

+1 617-747-1740