8-K
FTI CONSULTING, INC DC false 0000887936 0000887936 2021-07-29 2021-07-29

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 29, 2021

 

 

FTI CONSULTING, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Maryland   001-14875   52-1261113

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

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

(202) 312-9100

Registrant’s Telephone Number, Including Area Code

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

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

 

Title of each class

 

Trading

symbol(s)

 

Name of each exchange

on which registered

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

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

Emerging growth company  

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

 

 

 


ITEM 2.02.

Results of Operations and Financial Condition

On July 29, 2021, FTI Consulting, Inc. (“FTI Consulting”) announced financial results for the three-months and six-months ended June 30, 2021 and updated guidance for the year ending December 31, 2021. A copy of the press release (including accompanying financial tables) (the “Press Release”) is attached as Exhibit 99.1 to this Current Report on Form 8-K and hereby is incorporated by reference herein.

 

ITEM 7.01.

Regulation FD Disclosure

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

 

   

Total Segment Operating Income

 

   

Adjusted EBITDA

 

   

Total Adjusted Segment EBITDA

 

   

Adjusted EBITDA Margin

 

   

Adjusted Net Income

 

   

Adjusted Earnings per Diluted Share

 

   

Free Cash Flow

FTI Consulting has included the definitions of “Segment Operating Income” and “Adjusted Segment EBITDA,” which are financial measures presented in accordance with GAAP, in order to more fully define the components of certain non-GAAP financial measures. FTI Consulting evaluates the performance of its operating segments based on Adjusted Segment EBITDA, and Segment Operating Income is a component of the definition of Adjusted Segment EBITDA. FTI Consulting defines “Segment Operating Income” as a segment’s share of consolidated operating income. FTI Consulting defines “Total Segment Operating Income,” which is a non-GAAP financial measure, as the total of Segment Operating Income for all segments, which excludes unallocated corporate expenses. FTI Consulting uses Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. FTI Consulting defines “Adjusted Segment EBITDA” as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. FTI Consulting uses Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of its segments because FTI Consulting believes it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.

FTI Consulting defines “Total Adjusted Segment EBITDA,” which is a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. FTI Consulting defines “Adjusted EBITDA,” which is a non-GAAP financial measure, as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, gain or loss on sale of a business, and losses on early extinguishment of debt. FTI Consulting defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. FTI Consulting believes that the non-GAAP financial measures, which exclude the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges, when considered together with its GAAP financial results and GAAP financial measures, provide management and investors with a more complete understanding of FTI Consulting’s operating results, including underlying trends. In addition, EBITDA is a common alternative measure of operating performance used by many of FTI Consulting’s competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in FTI Consulting’s industry. Therefore, FTI Consulting also believes that these measures, considered along with corresponding GAAP financial measures, provide management and investors with additional information for comparison of its operating results with the operating results of other companies.

FTI Consulting defines “Adjusted Net Income” and “Adjusted Earnings per Diluted Share” (“Adjusted EPS”), which are non-GAAP financial measures, as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt, non-

 

1


cash interest expense on convertible notes and gain or loss on sale of a business. FTI Consulting uses Adjusted Net Income for the purpose of calculating Adjusted EPS. Management of FTI Consulting uses Adjusted EPS to assess total company operating performance on a consistent basis. FTI Consulting believes that these non-GAAP financial measures, when considered together with its corresponding GAAP financial results and GAAP financial measures, provides management and investors with an additional understanding of its business operating results, including underlying trends.

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

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

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

 

ITEM 9.01.

Financial Statements and Exhibits

(d) Exhibits

 

99.1    Press Release dated July 29, 2021 of FTI Consulting, Inc.
104    The Cover Page from FTI Consulting’s Current Report on Form 8-K dated July 29, 2021, formatted in Inline XBRL.

 

2


SIGNATURES

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

 

        FTI CONSULTING, INC.
Dated: July 30, 2021     By:  

/s/ CURTIS P. LU

      Curtis P. Lu
            General Counsel

 

3

EX-99.1

Exhibit 99.1

FTI Consulting, Inc.

555 12th Street NW

Washington, DC 20004

+1.202.312.9100

Investor & Media Contact:

Mollie Hawkes

+1.617.747.1791

mollie.hawkes@fticonsulting.com

FTI Consulting Reports Second Quarter 2021 Financial Results

 

 

Second Quarter 2021 Revenues of $711.5 Million, Up 17.0% Compared to $607.9 Million in Prior Year Quarter

 

 

Second Quarter 2021 EPS of $1.77, Up 39.4% Compared to $1.27 in Prior Year Quarter; Second Quarter 2021 Adjusted EPS of $1.74, Up 31.8% Compared to $1.32 in Prior Year Quarter

 

 

Company Raises Full Year 2021 Guidance Ranges for Revenues and EPS and Raises Lower End of Guidance Range for Full Year 2021 Adjusted EPS

Washington, D.C., July 29, 2021 — FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended June 30, 2021.

Second quarter 2021 revenues of $711.5 million increased $103.6 million, or 17.0%, compared to revenues of $607.9 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation (“FX”), revenues increased $78.9 million, or 13.0%, compared to the prior year quarter. Acquisition-related revenues contributed $19.1 million in the quarter. Excluding the estimated positive impact of FX and acquisition-related revenues, revenues increased $59.8 million, or 9.8%, compared to the prior year quarter, primarily due to higher demand in the Forensic and Litigation Consulting, Technology and Economic Consulting segments. Net income of $62.8 million compared to $48.2 million in the prior year quarter. The increase in net income was primarily due to higher operating profits in the Forensic and Litigation Consulting, Technology and Economic Consulting segments, which was partially offset by lower operating profits in the Corporate Finance & Restructuring segment compared to the prior year quarter.

Adjusted EBITDA of $92.3 million, or 13.0% of revenues, compared to $75.8 million, or 12.5% of revenues, in the prior year quarter. The increase in Adjusted EBITDA was due to higher revenues, which was partially offset by higher compensation, primarily related to a 10.1% increase in billable headcount and higher variable compensation, as well as an increase in selling, general and administrative (“SG&A”) expenses compared to the prior year quarter.

Second quarter 2021 diluted earnings per share (“EPS”) of $1.77 compared to $1.27 in the prior year quarter. Second quarter 2021 EPS included a $3.1 million fair value remeasurement of acquisition-related contingent consideration, which increased EPS by $0.09 and $2.4 million of non-cash interest expense related to the Company’s 2.0% convertible senior notes due 2023 (“2023 Convertible Notes”), which decreased EPS by $0.06. Second quarter 2021 Adjusted EPS of $1.74, which excludes the fair value remeasurement and non-cash interest expense, compared to Adjusted EPS of $1.32 in the prior year quarter.


Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our continued strong results reflect our multi-year commitment to attract, develop and support the best professionals and thereby invest behind our leading positions and emerging adjacencies. That powerful trajectory leaves me ever more convinced of our ability going forward to help our clients with an ever-increasing share of their most significant challenges and opportunities.”

Cash Position and Capital Allocation

Net cash provided by operating activities of $125.6 million for the quarter ended June 30, 2021 compared to $153.0 million for the quarter ended June 30, 2020. The year-over-year decrease in net cash provided by operating activities was largely due to an increase in salaries, primarily related to headcount growth, which was partially offset by an increase in cash collected compared to the prior year quarter.

Cash and cash equivalents of $256.9 million at June 30, 2021 compared to $304.2 million at June 30, 2020 and $233.4 million at March 31, 2021. Total debt, net of cash, of $159.4 million at June 30, 2021 compared to $47.0 million at June 30, 2020 and $252.8 million at March 31, 2021. The sequential decrease in total debt, net of cash, was primarily due to repayment of borrowings under the Company’s senior secured bank revolving credit facility.

There were no share repurchases during the quarter ended June 30, 2021. As of June 30, 2021, approximately $167.1 million remained available for common stock repurchases under the Company’s stock repurchase authorization.

Second Quarter 2021 Segment Results

Corporate Finance & Restructuring

Revenues in the Corporate Finance & Restructuring segment decreased $15.0 million, or 6.1%, to

$231.0 million in the quarter, compared to $246.0 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues decreased $24.9 million, or 10.1%, compared to the prior year quarter. Acquisition-related revenues contributed $17.0 million in the quarter. Excluding the estimated positive impact from FX and acquisition-related revenues, revenues decreased $41.9 million, or 17.0%, due to lower demand for restructuring services, which was partially offset by higher demand for transactions and business transformation services compared to the prior year quarter. Adjusted Segment EBITDA of $40.2 million, or 17.4% of segment revenues, compared to $76.3 million, or 31.0% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to lower revenues and higher compensation, primarily related to a 19.8% increase in billable headcount compared to the prior year quarter.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased $44.4 million, or 41.7%, to $150.7 million in the quarter, compared to $106.4 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $41.3 million, or 38.8%. Acquisition-related revenues contributed $2.1 million in the quarter. Excluding the estimated positive impact from FX and acquisition-related revenues, revenues increased $39.2 million, or 36.9%, primarily due to higher demand for investigations and disputes services. Adjusted Segment EBITDA of $18.0 million, or 11.9% of segment revenues, compared to a loss of $9.0 million in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by higher compensation related to an increase in variable compensation and a 5.5% increase in billable headcount compared to the prior year quarter.


Economic Consulting

Revenues in the Economic Consulting segment increased $31.8 million, or 21.0%, to $183.3 million in the quarter, compared to $151.5 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $25.3 million, or 16.7%, primarily due to higher demand for non-merger and acquisition (“M&A”)-related antitrust and financial economics services, which was partially offset by lower realized rates and demand for M&A-related antitrust services compared to the prior year quarter. Adjusted Segment EBITDA of $30.7 million, or 16.7% of segment revenues, compared to $21.7 million, or 14.3% 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, related to an increase in variable compensation and a 9.1% increase in billable headcount compared to the prior year quarter.

Technology

Revenues in the Technology segment increased $31.6 million, or 67.0%, to $78.6 million in the quarter, compared to $47.1 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $29.9 million, or 63.4%, primarily due to higher demand for cross-border investigations, litigation and M&A-related “second request” services compared to the prior year quarter. Adjusted Segment EBITDA of $18.5 million, or 23.5% of segment revenues, compared to $6.4 million, or 13.7% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation and higher SG&A expenses compared to the prior year quarter.

Strategic Communications

Revenues in the Strategic Communications segment increased $10.9 million, or 19.2%, to $67.8 million in the quarter, compared to $56.9 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $7.3 million, or 12.9%, primarily due to higher demand for corporate reputation and public affairs services compared to the prior year quarter. Adjusted Segment EBITDA of $13.5 million, or 19.9% of segment revenues, compared to $10.0 million, or 17.6% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation and higher SG&A expenses compared to the prior year quarter.

2021 Guidance

After a record first half of 2021, the Company is raising its full year 2021 guidance ranges for revenues and EPS, and raising the lower end of its Adjusted EPS guidance range for full year 2021. The Company now estimates that revenues will range between $2.700 billion and $2.800 billion. This compares to the previous range of between $2.575 billion and $2.700 billion. The Company now estimates that EPS will range between $5.89 and $6.39. This compares to the previous range of between $5.60 and $6.30. The Company now estimates that Adjusted EPS will range between $6.00 and $6.50. This compares to the previous range of between $5.80 and $6.50. The $0.11 per share variance between EPS and Adjusted EPS guidance for full year 2021 includes estimated non-cash interest expense of $0.20 per share related to the Company’s 2023 Convertible Notes and the second quarter 2021 $0.09 per share gain related to the fair value remeasurement of acquisition-related contingent consideration.

Second Quarter 2021 Conference Call

FTI Consulting will host a conference call for analysts and investors to discuss second quarter 2021 financial results at 9:00 a.m. Eastern Time on Thursday, July 29, 2021. The call can be accessed live and will be available for replay over the internet for 90 days by logging onto the Company’s investor relations website here.


About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 6,400 employees located in 29 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $2.46 billion in revenues during fiscal year 2020. 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 (Loss) 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 (Loss) 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 (Loss) for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income (Loss) 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, 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, 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, 2020, filed with the SEC, and in the Company’s other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW

# # #


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

     June 30,     December 31,  
     2021     2020  
     (Unaudited)        

Assets

    

Current assets

    

Cash and cash equivalents

   $ 256,875   $ 294,953

Accounts receivable, net

     846,121     711,357

Current portion of notes receivable

     32,093     35,253

Prepaid expenses and other current assets

     78,373     88,144
  

 

 

   

 

 

 

Total current assets

     1,213,462     1,129,707

Property and equipment, net

     117,477     101,642

Operating lease assets

     223,618     156,645

Goodwill

     1,240,057     1,234,879

Intangible assets, net

     37,653     41,550

Notes receivable, net

     55,675     61,121

Other assets

     50,485     51,819
  

 

 

   

 

 

 

Total assets

   $ 2,938,427   $ 2,777,363
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable, accrued expenses and other

   $ 156,736   $ 170,066

Accrued compensation

     368,882     455,933

Billings in excess of services provided

     36,944     44,172
  

 

 

   

 

 

 

Total current liabilities

     562,562     670,171

Long-term debt, net

     391,581     286,131

Noncurrent operating lease liabilities

     230,133     161,677

Deferred income taxes

     169,009     158,342

Other liabilities

     95,932     100,861
  

 

 

   

 

 

 

Total liabilities

     1,449,217     1,377,182
  

 

 

   

 

 

 

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 — 34,282 (2021) and 34,481 (2020)

     343     345

Additional paid-in capital

     4,270     —    

Retained earnings

     1,590,467     1,506,271

Accumulated other comprehensive loss

     (105,870     (106,435
  

 

 

   

 

 

 

Total stockholders’ equity

     1,489,210     1,400,181
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,938,427   $ 2,777,363
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Three Months Ended
June 30,
 
     2021     2020  
     (Unaudited)  

Revenues

   $ 711,486   $ 607,852
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     490,722     413,011

Selling, general and administrative expenses

     133,930     126,928

Amortization of intangible assets

     2,854     2,314
  

 

 

   

 

 

 
     627,506     542,253
  

 

 

   

 

 

 

Operating income

     83,980     65,599
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     (912     2,202

Interest expense

     (5,294     (5,157
  

 

 

   

 

 

 
     (6,206     (2,955
  

 

 

   

 

 

 

Income before income tax provision

     77,774     62,644

Income tax provision

     14,992     14,470
  

 

 

   

 

 

 

Net income

   $ 62,782   $ 48,174
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 1.88   $ 1.33
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     33,458     36,169
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.77   $ 1.27
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     35,374     37,852
  

 

 

   

 

 

 

Other comprehensive income, net of tax

    

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

   $ 5,807   $ 9,568
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     5,807     9,568
  

 

 

   

 

 

 

Comprehensive income

   $ 68,589   $ 57,742
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Six Months Ended
June 30,
 
     2021     2020  
     (Unaudited)  

Revenues

   $ 1,397,763   $ 1,212,445
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     959,146     815,258

Selling, general and administrative expenses

     260,476     253,887

Amortization of intangible assets

     5,655     4,645
  

 

 

   

 

 

 
     1,225,277     1,073,790
  

 

 

   

 

 

 

Operating income

     172,486     138,655
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     122     7,219

Interest expense

     (10,091     (10,018
  

 

 

   

 

 

 
     (9,969     (2,799
  

 

 

   

 

 

 

Income before income tax provision

     162,517     135,856

Income tax provision

     35,239     30,935
  

 

 

   

 

 

 

Net income

   $ 127,278   $ 104,921
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 3.80   $ 2.89
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     33,470     36,292
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 3.61   $ 2.76
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     35,218     38,021
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

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

   $ 565   $ (21,534
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     565     (21,534
  

 

 

   

 

 

 

Comprehensive income

   $ 127,843   $ 83,387
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2021     2020     2021     2020  
     (Unaudited)     (Unaudited)  

Net income

   $ 62,782   $ 48,174   $ 127,278   $ 104,921

Add back:

        

Remeasurement of acquisition-related contingent consideration

     (3,130     —         (3,130     —    

Non-cash interest expense on convertible notes

     2,380     2,255     4,728     4,480

Tax impact of non-cash interest expense on convertible notes

     (619     (586     (1,229     (1,165
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income

   $ 61,413   $ 49,843   $ 127,647   $ 108,236
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.77   $ 1.27   $ 3.61   $ 2.76

Add back:

        

Remeasurement of acquisition-related contingent consideration

     (0.09     —         (0.09     —    

Non-cash interest expense on convertible notes

     0.07     0.06     0.13     0.12

Tax impact of non-cash interest expense on convertible notes

     (0.01     (0.01     (0.03     (0.03
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per common share — diluted

   $ 1.74   $ 1.32   $ 3.62   $ 2.85
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding — diluted

     35,374     37,852     35,218     38,021
  

 

 

   

 

 

   

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF EPS GUIDANCE TO ADJUSTED EPS GUIDANCE

 

     Year Ended December 31, 2021  
     Low     High  

Guidance on estimated earnings per common share — diluted (GAAP) (1)

   $ 5.89   $ 6.39

Remeasurement of acquisition-related contingent consideration

     (0.09     (0.09

Non-cash interest expense on convertible notes, net of tax

     0.20     0.20
  

 

 

   

 

 

 

Guidance on estimated adjusted earnings per common share (non-GAAP) (1)

   $ 6.00   $ 6.50
  

 

 

   

 

 

 

 

(1)

The forward-looking guidance on estimated 2021 EPS and Adjusted EPS does not reflect other gains and losses (all of which would be excluded from Adjusted EPS) related to the future impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt, or gain or loss on sale of a business as these items are dependent on future events that are uncertain and difficult to predict. The forward-looking guidance excludes any shares of common stock potentially issuable upon conversion of the 2023 Convertible Notes from the calculation of EPS.


FTI CONSULTING, INC.

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended June 30, 2021

(Unaudited)

  Corporate
Finance &

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

Net income

              $ 62,782

Interest income and other

                912

Interest expense

                5,294

Income tax provision

                14,992
             

 

 

 

Operating income

  $ 40,103   $ 16,492   $ 29,204   $ 15,340   $ 12,198   $ (29,357   $ 83,980

Depreciation and amortization

    1,317     1,286     1,495     3,178     558     770     8,604

Amortization of intangible assets

    1,884     224     —         —         745     1     2,854

Remeasurement of acquisition-related contingent consideration

    (3,130     —         —         —         —         —         (3,130
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 40,174   $ 18,002   $ 30,699   $ 18,518   $ 13,501   $ (28,586   $ 92,308
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Six Months Ended June 30, 2021

(Unaudited)

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

Net income

              $ 127,278

Interest income and other

                (122

Interest expense

                10,091

Income tax provision

                35,239
             

 

 

 

Operating income

  $ 74,402   $ 44,498   $ 54,436   $ 33,899   $ 21,318   $ (56,067   $ 172,486

Depreciation and amortization

    2,570     2,538     2,842     6,217     1,097     1,501     16,765

Amortization of intangible assets

    3,771     398     —         —         1,484     2     5,655

Remeasurement of acquisition-related contingent consideration

    (3,130     —         —         —         —         —         (3,130
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 77,613   $ 47,434   $ 57,278   $ 40,116   $ 23,899   $ (54,564   $ 191,776
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


FTI CONSULTING, INC.

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

(in thousands)

 

Three Months Ended June 30, 2020

(Unaudited)

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

Net income

              $ 48,174

Interest income and other

                (2,202

Interest expense

                5,157

Income tax provision

                14,470
             

 

 

 

Operating income (loss)

  $ 73,811   $ (10,382   $ 20,216   $ 3,432   $ 8,798   $ (30,276   $ 65,599

Depreciation and amortization

    1,038     1,165     1,433     3,003     552     693     7,884

Amortization of intangible assets

    1,415     170     45     —         684     —         2,314
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 76,264   $ (9,047   $ 21,694   $ 6,435   $ 10,034   $ (29,583   $ 75,797
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Six Months Ended June 30, 2020

(Unaudited)

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

Net income

              $ 104,921

Interest income and other

                (7,219

Interest expense

                10,018

Income tax provision

                30,935
             

 

 

 

Operating income

  $ 120,475   $ 9,124   $ 31,612   $ 15,021   $ 16,290   $ (53,867   $ 138,655

Depreciation and amortization

    2,017     2,581     2,703     5,898     1,138     1,370     15,707

Amortization of intangible assets

    2,718     456     89     —         1,382     —         4,645
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 125,210   $ 12,161   $ 34,404   $ 20,919   $ 18,810   $ (52,497   $ 159,007
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


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 June 30, 2021 (Unaudited)

              

Corporate Finance & Restructuring

   $ 230,971    $ 40,174     17.4     59   $ 456      1,632

Forensic and Litigation Consulting

     150,746      18,002     11.9     60   $ 344      1,399

Economic Consulting

     183,306      30,699     16.7     75   $ 524      884

Technology (1)

     78,646      18,518     23.5     N/M       N/M        429

Strategic Communications (1)

     67,817      13,501     19.9     N/M       N/M        771
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 711,486    $ 120,894     17.0          5,115
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (28,586         
     

 

 

          

Adjusted EBITDA

      $ 92,308     13.0       
     

 

 

          

Six Months Ended June 30, 2021 (Unaudited)

              

Corporate Finance & Restructuring

   $ 457,174    $ 77,613     17.0     59   $ 456      1,632

Forensic and Litigation Consulting

     301,567      47,434     15.7     60   $ 350      1,399

Economic Consulting

     352,579      57,278     16.2     75   $ 504      884

Technology (1)

     158,105      40,116     25.4     N/M       N/M        429

Strategic Communications (1)

     128,338      23,899     18.6     N/M       N/M        771
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 1,397,763    $ 246,340     17.6          5,115
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (54,564         
     

 

 

          

Adjusted EBITDA

      $ 191,776     13.7       
     

 

 

          

Three Months Ended June 30, 2020 (Unaudited)

              

Corporate Finance & Restructuring

   $ 246,011    $ 76,264     31.0     71   $ 494      1,362

Forensic and Litigation Consulting

     106,381      (9,047     (8.5 )%      46   $ 327      1,326

Economic Consulting

     151,493      21,694     14.3     73   $ 508      810

Technology (1)

     47,084      6,435     13.7     N/M       N/M        386

Strategic Communications (1)

     56,883      10,034     17.6     N/M       N/M        761
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 607,852    $ 105,380     17.3          4,645
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (29,583         
     

 

 

          

Adjusted EBITDA

      $ 75,797     12.5       
     

 

 

          

Six Months Ended June 30, 2020 (Unaudited)

              

Corporate Finance & Restructuring

   $ 453,760    $ 125,210     27.6     70   $ 473      1,362

Forensic and Litigation Consulting

     253,978      12,161     4.8     52   $ 332      1,326

Economic Consulting

     283,631      34,404     12.1     70   $ 478      810

Technology (1)

     105,807      20,919     19.8     N/M       N/M        386

Strategic Communications (1)

     115,269      18,810     16.3     N/M       N/M        761
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 1,212,445    $ 211,504     17.4          4,645
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (52,497         
     

 

 

          

Adjusted EBITDA

      $ 159,007     13.1       
     

 

 

          

 

N/M-

Not meaningful

(1)

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


FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Six Months Ended
June 30,
 
     2021     2020  
     (Unaudited)  

Operating activities

    

Net income

   $ 127,278   $ 104,921

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

    

Depreciation and amortization

     16,765     15,707

Amortization and impairment of intangible assets

     5,655     4,645

Acquisition-related contingent consideration

     (1,130     1,120

Provision for expected credit losses

     8,236     11,624

Share-based compensation

     12,190     12,147

Amortization of debt discount and issuance costs and other

     5,685     6,000

Deferred income taxes

     9,802     4,128

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

    

Accounts receivable, billed and unbilled

     (138,838     (42,804

Notes receivable

     8,921     5,993

Prepaid expenses and other assets

     6,728     8,979

Accounts payable, accrued expenses and other

     (13,518     2,230

Income taxes

     6,695     (2,344

Accrued compensation

     (88,024     (107,217

Billings in excess of services provided

     (7,471     4,285
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (41,026     29,414
  

 

 

   

 

 

 

Investing activities

    

Payments for acquisition of businesses, net of cash received

     (9,833     —    

Purchases of property and equipment and other

     (27,696     (13,885
  

 

 

   

 

 

 

Net cash used in investing activities

     (37,529     (13,885
  

 

 

   

 

 

 

Financing activities

    

Borrowings under revolving line of credit

     292,500     90,000

Repayments under revolving line of credit

     (192,500     (55,000

Purchase and retirement of common stock

     (46,133     (99,678

Share-based compensation tax withholdings and other

     (7,475     (6,523

Payments for business acquisition liabilities

     (7,496     (3,948

Deposits

     602     5,098
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     39,498     (70,051
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     979     (10,645
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (38,078     (65,167

Cash and cash equivalents, beginning of period

     294,953     369,373
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 256,875   $ 304,206
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW

(in thousands)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2021     2020     2021     2020  

Net cash provided by (used in) operating activities

   $ 125,558   $ 152,976   $ (41,026   $ 29,414

Purchases of property and equipment

     (19,724     (5,663     (27,725     (13,899
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

   $ 105,834   $ 147,313   $ (68,751   $ 15,515