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FTI Consulting Reports Record First Quarter 2024 Financial Results
  • First Quarter 2024 Revenues of $928.6 Million, Up 15% Compared to $806.7 Million in Prior Year Quarter
  • First Quarter 2024 EPS of $2.23, Up 66% Compared to $1.34 in Prior Year Quarter

WASHINGTON, April 25, 2024 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the first quarter ended March 31, 2024.

First quarter 2024 revenues of $928.6 million increased $121.8 million, or 15.1%, compared to revenues of $806.7 million in the prior year quarter. The increase in revenues was primarily due to higher demand across all business segments. Net income of $80.0 million compared to $47.5 million in the prior year quarter. The increase in net income was primarily due to higher revenues, a lower effective tax rate and lower FX remeasurement losses compared to the prior year quarter, which was partially offset by an increase in compensation and selling, general and administrative (“SG&A”) expenses compared to the prior year quarter. Adjusted EBITDA of $111.1 million, or 12.0% of revenues, compared to $78.4 million, or 9.7% of revenues, in the prior year quarter. First quarter 2024 earnings per diluted share (“EPS”) of $2.23 compared to $1.34 in the prior year quarter.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, "Our sustained double-digit organic revenue growth this quarter reflects strong underlying business performance, which, in turn, reflects continued progress on our twin overriding goals: continuing to help clients with their most fundamental opportunities and challenges, and continuing to attract and develop terrific professionals."

Cash Position and Capital Allocation

Net cash used in operating activities of $274.8 million for the quarter ended March 31, 2024 compared to $254.2 million for the quarter ended March 31, 2023. The year-over-year increase in net cash used in operating activities was primarily due to an increase in salaries, higher annual bonus payments and an increase in forgivable loan issuances, which was partially offset by higher cash collections compared to the prior year quarter.

Cash and cash equivalents of $244.0 million at March 31, 2024 compared to $238.5 million at March 31, 2023 and $303.2 million at December 31, 2023. Total debt, net of cash and short-term investments, of ($39.0) million at March 31, 2024 compared to $122.7 million at March 31, 2023 and ($328.7) million at December 31, 2023. The sequential increase in total debt, net of cash and short-term investments, was primarily due to higher borrowings under the Company's senior secured bank revolving credit facility, which were primarily used for annual bonus payments.

There were no share repurchases during the quarter ended March 31, 2024. As of March 31, 2024, approximately $460.7 million remained available for common stock repurchases under the Company’s stock repurchase program.

First Quarter 2024 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $50.4 million, or 16.0%, to $366.0 million in the quarter compared to $315.7 million in the prior year quarter. The increase in revenues was primarily due to higher restructuring, business transformation & strategy and transactions revenues. Adjusted Segment EBITDA of $75.2 million, or 20.6% of segment revenues, compared to $51.8 million, or 16.4% 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 and SG&A expenses compared to the prior year quarter.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $18.3 million, or 11.6%, to $176.1 million in the quarter compared to $157.7 million in the prior year quarter. Acquisition-related revenues contributed $0.5 million in the quarter. The increase in revenues was primarily due to higher demand and realized bill rates for investigations and disputes services. Adjusted Segment EBITDA of $33.7 million, or 19.1% of segment revenues, compared to $21.8 million, or 13.8% 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 compared to the prior year quarter.

Economic Consulting
Revenues in the Economic Consulting segment increased $35.0 million, or 20.6%, to $204.5 million in the quarter compared to $169.6 million in the prior year quarter. The increase in revenues was primarily due to higher demand and realized bill rates for non-merger and acquisition (“M&A”)-related antitrust and financial economics services. Adjusted Segment EBITDA of $14.2 million, or 6.9% of segment revenues, compared to $14.2 million, or 8.4% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to an increase in compensation, which includes an increase in variable compensation and the impact of a 5.8% increase in billable headcount, higher contractor costs and an increase in SG&A expenses, primarily related to an increase in bad debt, compared to the prior year quarter.

Technology
Revenues in the Technology segment increased $10.1 million, or 11.1%, to $100.7 million in the quarter compared to $90.6 million in the prior year quarter. The increase in revenues was primarily due to higher demand for M&A-related “second request” and information governance, privacy & security services, which was partially offset by lower demand for investigations services. Adjusted Segment EBITDA of $14.6 million, or 14.5% of segment revenues, compared to $15.4 million, or 17.0% 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 an 11.2% increase in billable headcount, higher as-needed consultant costs and an increase in SG&A expenses compared to the prior year quarter.

Strategic Communications
Revenues in the Strategic Communications segment increased $8.1 million, or 11.1%, to $81.2 million in the quarter compared to $73.1 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation, revenues increased $7.1 million, or 9.7%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for public affairs and corporate reputation services. Adjusted Segment EBITDA of $12.4 million, or 15.3% of segment revenues, compared to $9.6 million, or 13.1% 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 and higher SG&A expenses compared to the prior year quarter.

First Quarter 2024 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss first quarter 2024 financial results at 9:00 a.m. Eastern Time on Thursday, April 25, 2024. 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 8,000 employees located in 33 countries and territories, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $3.49 billion in revenues during fiscal year 2023. 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

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.

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, processes 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, including relating to new and emerging technologies, such as Artificial Intelligence and machine learning, 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 public health crises 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, 2023 filed with the SEC on February 22, 2024 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.

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

FINANCIAL TABLES FOLLOW


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
    March 31,   December 31,
      2024       2023  
    (Unaudited)    
Assets        
Current assets        
Cash and cash equivalents   $ 243,960     $ 303,222  
Accounts receivable, net     1,157,465       1,102,142  
Current portion of notes receivable     45,211       30,997  
Prepaid expenses and other current assets     98,062       119,092  
Total current assets     1,544,698       1,555,453  
Property and equipment, net     152,949       159,662  
Operating lease assets     199,596       208,910  
Goodwill     1,230,645       1,234,569  
Intangible assets, net     19,455       18,285  
Notes receivable, net     96,806       75,431  
Other assets     80,379       73,568  
Total assets   $ 3,324,528     $ 3,325,878  
Liabilities and Stockholders’ Equity        
Current liabilities        
Accounts payable, accrued expenses and other   $ 226,787     $ 223,758  
Accrued compensation     332,677       601,074  
Billings in excess of services provided     68,236       67,937  
Total current liabilities     627,700       892,769  
Long-term debt, net     205,000        
Noncurrent operating lease liabilities     213,576       223,774  
Deferred income taxes     136,065       140,976  
Other liabilities     87,831       86,939  
Total liabilities     1,270,172       1,344,458  
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 — 35,697 (2024) and 35,521 (2023)
    357       355  
Additional paid-in capital     21,162       16,760  
Retained earnings     2,194,730       2,114,765  
Accumulated other comprehensive loss     (161,893 )     (150,460 )
Total stockholders’ equity     2,054,356       1,981,420  
Total liabilities and stockholders’ equity   $ 3,324,528     $ 3,325,878  


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
  Three Months Ended
March 31,
 
    2024       2023  
  (Unaudited)
Revenues $ 928,553     $ 806,706  
Operating expenses      
Direct cost of revenues   626,034       553,509  
Selling, general and administrative expenses   201,870       184,213  
Amortization of intangible assets   1,016       2,182  
    828,920       739,904  
Operating income   99,633       66,802  
Other income (expense)      
Interest income and other   1,581       (1,342 )
Interest expense   (1,719 )     (2,939 )
    (138 )     (4,281 )
Income before income tax provision   99,495       62,521  
Income tax provision   19,530       14,974  
Net income $ 79,965     $ 47,547  
Earnings per common share ― basic $ 2.29     $ 1.43  
Weighted average common shares outstanding ― basic   34,977       33,301  
Earnings per common share ― diluted $ 2.23     $ 1.34  
Weighted average common shares outstanding ― diluted   35,787       35,482  
Other comprehensive income, net of tax      
Foreign currency translation adjustments, net of tax expense of $— and $— $ (11,433 )   $ 9,850  
Total other comprehensive income, net of tax   (11,433 )     9,850  
Comprehensive income $ 68,532     $ 57,397  


FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)
Three Months Ended March 31, 2024
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 79,965  
Interest income and other                             (1,581 )
Interest expense                             1,719  
Income tax provision                             19,530  
Operating income   $ 71,919   $ 31,967   $ 12,865   $ 10,939   $ 11,474   $ (39,531 )   $ 99,633  
Depreciation and amortization     2,473     1,629     1,285     3,642     882     513       10,424  
Amortization of intangible assets     833     113             70           1,016  
Adjusted EBITDA   $ 75,225   $ 33,709   $ 14,150   $ 14,581   $ 12,426   $ (39,018 )   $ 111,073  


Three Months Ended March 31, 2023
(Unaudited)
  Corporate Finance & Restructuring (1)   Forensic and Litigation Consulting (1)   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 47,547  
Interest income and other                             1,342  
Interest expense                             2,939  
Income tax provision                             101,537  
Operating income   $ 47,976   $ 20,288   $ 12,700   $ 11,890   $ 8,683   $ (34,735 )   $ 66,802  
Depreciation and amortization     1,959     1,312     1,493     3,476     787     416       9,443  
Amortization of intangible assets     1,912     184             86           2,182  
Adjusted EBITDA   $ 51,847   $ 21,784   $ 14,193   $ 15,366   $ 9,556   $ (34,319 )   $ 78,427  


     
(1) Effective July 1, 2023, prior period segment information for the Corporate Finance & Restructuring and Forensic and Litigation Consulting segments has been recast in this press release to include the reclassification of a portion of the Company’s health solutions practice in the Forensic and Litigation Consulting segment to the Company's realigned business transformation & strategy practice within the Corporate Finance & Restructuring segment.


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, 2024 (Unaudited)                        
Corporate Finance & Restructuring $ 366,010   $ 75,225     20.6 %   62%     $ 515   2,185  
Forensic and Litigation Consulting   176,074     33,709     19.1 %   59%     $ 406   1,463  
Economic Consulting   204,548     14,150     6.9 %   68%     $ 533   1,091  
Technology (1)   100,713     14,581     14.5 %   N/M     N/M   646  
Strategic Communications (1)   81,208     12,426     15.3 %   N/M     N/M   981  
  $ 928,553   $ 150,091     16.2 %           6,366  
Unallocated Corporate       (39,018 )                  
Adjusted EBITDA     $ 111,073     12.0 %              
                         
Three Months Ended March 31, 2023 (Unaudited)                        
Corporate Finance & Restructuring (2) $ 315,652   $ 51,847     16.4 %   59%     $ 478   2,152  
Forensic and Litigation Consulting (2)   157,739     21,784     13.8 %   57%     $ 375   1,427  
Economic Consulting   169,595     14,193     8.4 %   68%     $ 458   1,031  
Technology (1)   90,618     15,366     17.0 %   N/M     N/M   581  
Strategic Communications (1)   73,102     9,556     13.1 %   N/M     N/M   995  
  $ 806,706   $ 112,746     14.0 %           6,186  
Unallocated Corporate       (34,319 )                  
Adjusted EBITDA     $ 78,427     9.7 %              


     
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.
(2) Effective July 1, 2023, prior period segment information for the Corporate Finance & Restructuring and Forensic and Litigation Consulting segments has been recast in this press release to include the reclassification of a portion of the Company’s health solutions practice in the Forensic and Litigation Consulting segment to the Company’s business transformation & strategy practice within the Corporate Finance & Restructuring segment.


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
  Three Months Ended
March 31,
 
    2024       2023  
  (Unaudited)
Operating activities      
Net income $ 79,965     $ 47,547  
Adjustments to reconcile net income to net cash used in operating activities:      
Depreciation and amortization   10,424       9,443  
Amortization of intangible assets   1,016       2,182  
Provision for expected credit losses   11,420       7,012  
Share-based compensation   8,812       6,365  
Deferred income taxes   (8,107 )     (3,016 )
Acquisition-related contingent consideration   660       1,284  
Amortization of debt issuance costs and other   236       646  
Changes in operating assets and liabilities, net of effects from acquisitions:      
Accounts receivable, billed and unbilled   (73,201 )     (93,739 )
Notes receivable   (35,937 )     (6,851 )
Prepaid expenses and other assets   (5,612 )     321  
Accounts payable, accrued expenses and other   4,317       1,315  
Income taxes   1,691       5,658  
Accrued compensation   (271,044 )     (230,967 )
Billings in excess of services provided   542       (1,406 )
Net cash used in operating activities   (274,818 )     (254,206 )
Investing activities      
Purchases of property and equipment and other   (4,640 )     (18,012 )
Maturity of short-term investment   25,246        
Net cash provided by (used in) investing activities   20,606       (18,012 )
Financing activities      
Borrowings under revolving line of credit   280,000       90,000  
Repayments under revolving line of credit   (75,000 )     (45,000 )
Purchase and retirement of common stock         (20,982 )
Share-based tax withholdings net of option exercises   (8,712 )     (9,064 )
Deposits and other   2,297       813  
Net cash provided by financing activities   198,585       15,767  
Effect of exchange rate changes on cash and cash equivalents   (3,635 )     3,302  
Net decrease in cash and cash equivalents   (59,262 )     (253,149 )
Cash and cash equivalents, beginning of period   303,222       491,688  
Cash and cash equivalents, end of period $ 243,960     $ 238,539  

 


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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