8-K
FTI CONSULTING, INC DC false 0000887936 0000887936 2022-02-24 2022-02-24

 

 

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): February 24, 2022

 

 

FTI CONSULTING, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Maryland   001-14875   52-1261113

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

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

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

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

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

 

Title of each class

 

Trading

symbol(s)

 

Name of each exchange

on which registered

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

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

Emerging growth company

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

 

 

 


ITEM 2.02. Results of Operations and Financial Condition

On February 24, 2022, FTI Consulting, Inc. (“FTI Consulting”) announced financial results for the three-months and year ended December 31, 2021 and guidance for the year ending December 31, 2022. A copy of the press release (including accompanying financial tables) (the “Press Release”) is attached as Exhibit 99.1 to this Current Report on Form 8-K and hereby is incorporated by reference herein.

ITEM 7.01. Regulation FD Disclosure

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

 

   

Total Segment Operating Income

 

   

Adjusted EBITDA

 

   

Total Adjusted Segment EBITDA

 

   

Adjusted EBITDA Margin

 

   

Adjusted Net Income

 

   

Adjusted Earnings per Diluted Share

 

   

Free Cash Flow

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

FTI Consulting defines “Total Adjusted Segment EBITDA,” which is a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. FTI Consulting defines “Adjusted EBITDA,” which is a non-GAAP financial measure, as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, gain or loss on sale of a business, and losses on early extinguishment of debt. FTI Consulting defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. FTI Consulting believes that the non-GAAP financial measures, which exclude the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges, when considered together with its GAAP financial results and GAAP financial measures, provide management and investors with a more complete

 

1


understanding of FTI Consulting’s operating results, including underlying trends. In addition, EBITDA is a common alternative measure of operating performance used by many of FTI Consulting’s competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in FTI Consulting’s industry. Therefore, FTI Consulting also believes that these measures, considered along with corresponding GAAP financial measures, provide management and investors with additional information for comparison of its operating results with the operating results of other companies.

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

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 February 24, 2022 of FTI Consulting, Inc.

104 The Cover Page from FTI Consulting’s Current Report on Form 8-K dated February 24, 2022, formatted in Inline XBRL.

 

2


SIGNATURES

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

 

    FTI CONSULTING, INC.
Dated: February 25, 2022     By:  

/s/ CURTIS P. LU

    Curtis P. Lu
    General Counsel

 

3

EX-99.1

Exhibit 99.1

FTI Consulting, Inc.

555 12th Street NW

Washington, DC 20004

+1.202.312.9100

Investor & Media Contact:

Mollie Hawkes

+1.617.747.1791

mollie.hawkes@fticonsulting.com

FTI Consulting Reports Fourth Quarter and Full Year 2021 Financial Results

 

   

Fourth Quarter 2021 Revenues of $676.2 Million, Up 8% Compared to $626.6 Million in Prior Year Quarter

 

   

Fourth Quarter 2021 EPS of $1.07, Down 32% Compared to $1.57 in Prior Year Quarter; Fourth Quarter 2021 Adjusted EPS of $1.13, Down 30% Compared to $1.61 in Prior Year Quarter

 

   

Full Year 2021 Revenues of $2.776 Billion, Up 13% Compared to $2.461 Billion in Prior Year

 

   

Full Year 2021 EPS of $6.65, Up 17% Compared to $5.67 in Prior Year; Full Year 2021 Adjusted EPS of $6.76, Up 13% Compared to $5.99 in Prior Year

 

   

Introduces 2022 Guidance

Washington, D.C., February 24, 2022 — FTI Consulting, Inc. (NYSE: FCN) today released financial results for the fourth quarter and full year ended December 31, 2021.

For the full year 2021, revenues of $2.776 billion increased $314.9 million, or 12.8%, compared to revenues of $2.461 billion in the prior year. Excluding the estimated positive impact from foreign currency (“FX”) translation, revenues increased $265.1 million, or 10.8%, compared to the prior year. Acquisition-related revenues contributed $11.5 million of the increase in revenues compared to the prior year. Excluding the estimated positive impact of FX and acquisition-related revenues, revenues increased $253.6 million, or 10.3%, compared to the prior year. The increase in revenues was due to higher demand across all business segments. Net income of $235.0 million compared to $210.7 million in the prior year. The increase in net income was primarily due to higher revenues, FX remeasurement gains, and a $7.1 million special charge in full year 2020, which was partially offset by an increase in compensation expenses, which includes the impact of a 7.3% increase in total headcount and higher variable compensation, an increase in selling, general and administrative (“SG&A”) expenses, and a higher effective tax rate compared to the prior year. Adjusted EBITDA of $354.0 million, or 12.8% of revenues, compared to $332.3 million, or 13.5% of revenues, in the prior year.

Full year 2021 earnings per diluted share (“EPS”) of $6.65 compared to $5.67 in the prior year. 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 2020 EPS included the aforementioned $7.1 million special charge, which reduced EPS by $0.14, and $9.1 million of non-cash interest expense, which reduced EPS by $0.18. Full year 2021 Adjusted EPS of $6.76, which excludes the non-cash interest expense and the fair value remeasurement, compared to Adjusted EPS of $5.99 in the prior year.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our powerful results in 2021 reflect the resilience of our platform, its relevance to clients looking at their most significant opportunities and challenges, and the commitment of our more than 6,700 employees across the globe to deliver for our clients each day.”


Cash Position and Capital Allocation

Net cash provided by operating activities of $355.5 million for the year ended December 31, 2021 compared to $327.1 million for the year ended December 31, 2020. The year-over-year increase in net cash provided by operating activities was largely due to higher cash collections combined with lower income tax payments, which was partially offset by an increase in compensation.

Cash and cash equivalents of $494.5 million at December 31, 2021 compared to $295.0 million at December 31, 2020 and $342.5 million at September 30, 2021. Total debt, net of cash, of ($178.2) million at December 31, 2021 compared to $21.3 million at December 31, 2020 and ($1.3) million at September 30, 2021. The sequential decrease in total debt, net of cash, was primarily due to an increase in net cash provided by operating activities and the repayment of borrowings under the Company’s senior secured bank revolving credit facility.

There were no share repurchases during the quarter ended December 31, 2021. In full year 2021, the Company repurchased 421,725 shares of its common stock at an average price per share of $109.37 for a total cost of $46.1 million. As of December 31, 2021, approximately $167.1 million remained available for common stock repurchases under the Company’s stock repurchase authorization.

Fourth Quarter 2021 Results

Fourth quarter 2021 revenues of $676.2 million increased $49.7 million, or 7.9%, compared to revenues of $626.6 million in the prior year quarter. The increase in revenues was driven by higher demand across all business segments. Net income of $38.2 million compared to $55.6 million in the prior year quarter. The decrease in net income was primarily due to an increase in compensation expenses, which includes the impact of a 7.3% increase in total headcount, higher SG&A expenses and a higher effective tax rate compared to the prior year quarter. In the fourth quarter of 2020, the lower effective tax rate was primarily related to a combined $11.2 million benefit from the use of foreign tax credits and a deferred tax benefit arising from an intracompany intellectual property license agreement. Adjusted EBITDA of $62.0 million, or 9.2% of revenues, compared to $82.3 million, or 13.1% of revenues, in the prior year quarter.

Fourth quarter 2021 EPS of $1.07 compared to $1.57 in the prior year quarter. Fourth quarter 2021 EPS included $2.4 million of non-cash interest expense related to the Company’s 2023 Convertible Notes, which reduced EPS by $0.06. Fourth quarter 2020 EPS included $2.3 million of non-cash interest expense related to the Company’s 2023 Convertible Notes, which reduced EPS by $0.04. Fourth quarter 2021 Adjusted EPS of $1.13, which excludes the non-cash interest expense, compared to Adjusted EPS of $1.61 in the prior year quarter. The aforementioned $11.2 million tax benefit increased fourth quarter 2020 EPS and Adjusted EPS by $0.32.

Fourth Quarter 2021 Segment Results

Corporate Finance & Restructuring

Revenues in the Corporate Finance & Restructuring segment increased $11.7 million, or 5.3%, to $231.5 million in the quarter, compared to $219.8 million in the prior year quarter. The increase in revenues was due to higher demand for business transformation and transactions services, as well as an increase in pass-through revenues and success fees, which was partially offset by lower demand for restructuring services compared to the prior year quarter. Adjusted Segment EBITDA of $22.2 million, or 9.6% of segment revenues,


compared to $35.4 million, or 16.1% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to higher compensation, which was primarily related to an increase in variable compensation, and an increase in SG&A expenses compared to the prior year quarter.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased $10.8 million, or 8.5%, to $138.0 million in the quarter, compared to $127.2 million in the prior year quarter. Acquisition-related revenues contributed $2.8 million in the quarter. Excluding acquisition-related revenues, revenues increased $8.0 million, or 6.3%, in the quarter. The increase in revenues was primarily due to higher demand for health solutions and investigations services compared to the prior year quarter. Adjusted Segment EBITDA of $8.5 million, or 6.2% of segment revenues, compared to $7.6 million, or 6.0% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by an increase in SG&A expenses and compensation compared to the prior year quarter.

Economic Consulting

Revenues in the Economic Consulting segment increased $11.8 million, or 7.4%, to $172.3 million in the quarter, compared to $160.5 million in the prior year quarter. The increase in revenues was primarily due to higher demand for non-merger and acquisition (“M&A”)-related antitrust and financial economics services, which was partially offset by lower demand for M&A-related antitrust services compared to the prior year quarter. Adjusted Segment EBITDA of $30.0 million, or 17.4% of segment revenues, compared to $31.3 million, or 19.5% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to higher compensation compared to the prior year quarter.

Technology

Revenues in the Technology segment increased $6.0 million, or 10.2%, to $64.6 million in the quarter, compared to $58.6 million in the prior year quarter. The increase in revenues was primarily due to higher demand for investigations and litigation services compared to the prior year quarter. Adjusted Segment EBITDA of $7.8 million, or 12.1% of segment revenues, compared to $10.2 million, or 17.3% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to higher compensation, which includes an increase in variable compensation and the impact of a 14.7% increase in billable headcount, as well as higher SG&A expenses compared to the prior year quarter.

Strategic Communications

Revenues in the Strategic Communications segment increased $9.4 million, or 15.5%, to $69.9 million in the quarter, compared to $60.5 million in the prior year quarter. The increase in revenues was primarily due to higher demand for corporate reputation and public affairs services compared to the prior year quarter. Adjusted Segment EBITDA of $14.9 million, or 21.4% of segment revenues, compared to $11.7 million, or 19.4% 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 SG&A expenses compared to the prior year quarter.

2022 Guidance

The Company estimates that revenues for full year 2022 will range between $2.920 billion and $3.045 billion. The Company estimates that full year 2022 EPS will range between $6.40 and $7.20. The Company does not currently expect Adjusted EPS to differ from EPS. In prior years, Adjusted EPS has excluded non-cash interest expense in respect of the Company’s 2023 Convertible Notes. As a result of the Company’s adoption of Accounting Standards Update 2020-06 (“ASU 2020-06”), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is effective as of January 1, 2022, the Company will not recognize any non-cash interest expense after January 1, 2022.


In light of a change to the terms of the Company’s 2023 Convertible Notes, effective January 1, 2022, the Company does not expect the adoption of ASU 2020-06 to have a material impact on the determination of the Company’s fully diluted weighted average shares outstanding. Pursuant to the first supplemental indenture for the Company’s 2023 Convertible Notes, the principal amount of the 2023 Convertible Notes, at conversion, is required to be paid in cash, and only the premium due upon conversion, if any, is permitted to be settled in shares, cash or a combination of shares and cash. Consequently, the if-converted method for determining fully diluted weighted average shares outstanding, which is required pursuant to ASU 2020-06, will produce a similar result as the treasury stock method, which was the method used prior to January 1, 2022.

Fourth Quarter and Full Year 2021 Conference Call

FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year 2021 financial results at 3:00 p.m. Eastern Time on Thursday, February 24, 2022. The call can be accessed live and will be available for replay over the internet for 90 days by logging onto the Company’s investor relations website here.

About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 6,700 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 $2.78 billion in revenues during fiscal year 2021. More information can be found at www.fticonsulting.com.

Non-GAAP Financial Measures

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

 

   

Total Segment Operating Income

 

   

Adjusted EBITDA

 

   

Total Adjusted Segment EBITDA

 

   

Adjusted EBITDA Margin

 

   

Adjusted Net Income

 

   

Adjusted Earnings per Diluted Share

 

   

Free Cash Flow

We have included the definitions of Segment Operating Income and Adjusted Segment EBITDA, which are GAAP financial measures, below in order to more fully define the components of certain non-GAAP financial measures presented in this press release. We define Segment Operating Income as a segment’s share of consolidated operating income. We define Total Segment Operating Income, which is a non-GAAP financial measure, as the total of Segment Operating Income for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. We


define Adjusted Segment EBITDA as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We use Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of our segments because we believe it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.

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

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

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

Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable with other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Income and 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, policies and practices, 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, new or changes to laws and regulations, including U.S. and foreign tax laws, environmental, social and governance (“ESG”)-related issues, scientific or 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,” “aspires,” “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, intentions, aspirations, 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, 2021 filed with the SEC on February 24, 2022 and in the Company’s other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW

# # #


FTI CONSULTING, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

     December 31,
2021
    December 31,
2020
 

Assets

    

Current assets

    

Cash and cash equivalents

   $ 494,485     $ 294,953  

Accounts receivable, net

     754,120       711,357  

Current portion of notes receivable

     30,256       35,253  

Prepaid expenses and other current assets

     91,166       88,144  
  

 

 

   

 

 

 

Total current assets

     1,370,027       1,129,707  

Property and equipment, net

     142,163       101,642  

Operating lease assets

     215,995       156,645  

Goodwill

     1,232,791       1,234,879  

Intangible assets, net

     31,990       41,550  

Notes receivable, net

     53,539       61,121  

Other assets

     54,404       51,819  
  

 

 

   

 

 

 

Total assets

   $ 3,100,909     $ 2,777,363  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable, accrued expenses and other

   $ 165,025     $ 170,066  

Accrued compensation

     507,556       455,933  

Billings in excess of services provided

     45,535       44,172  
  

 

 

   

 

 

 

Total current liabilities

     718,116       670,171  

Long-term debt, net

     297,158       286,131  

Noncurrent operating lease liabilities

     236,026       161,677  

Deferred income taxes

     170,612       158,342  

Other liabilities

     95,676       100,861  
  

 

 

   

 

 

 

Total liabilities

     1,517,588       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 — 34,333 (2021) and 34,481 (2020)

     343       345  

Additional paid-in capital

     13,662       —    

Retained earnings

     1,698,156       1,506,271  

Accumulated other comprehensive loss

     (128,840     (106,435
  

 

 

   

 

 

 

Total stockholders’ equity

     1,583,321       1,400,181  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 3,100,909     $ 2,777,363  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Three Months Ended
December 31,
 
     2021     2020  
     (Unaudited)  

Revenues

   $ 676,231     $ 626,581  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     484,126       440,274  

Selling, general and administrative expenses

     138,768       112,422  

Amortization of intangible assets

     2,308       2,947  
  

 

 

   

 

 

 
     625,202       555,643  
  

 

 

   

 

 

 

Operating income

     51,029       70,938  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     896       (4,291

Interest expense

     (5,130     (4,636
  

 

 

   

 

 

 
     (4,234     (8,927
  

 

 

   

 

 

 

Income before income tax provision

     46,795       62,011  

Income tax provision

     8,587       6,422  
  

 

 

   

 

 

 

Net income

   $ 38,208     $ 55,589  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 1.14     $ 1.63  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     33,519       34,198  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.07     $ 1.57  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     35,550       35,484  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

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

   $ (4,363   $ 34,616  
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     (4,363     34,616  
  

 

 

   

 

 

 

Comprehensive income

   $ 33,845     $ 90,205  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

 

     Year Ended December 31,  
     2021     2020  

Revenues

   $ 2,776,222     $ 2,461,275  
  

 

 

   

 

 

 

Operating expenses

    

Direct cost of revenues

     1,915,507       1,672,711  

Selling, general and administrative expenses

     537,844       488,411  

Special charges

     —         7,103  

Amortization of intangible assets

     10,823       10,387  
  

 

 

   

 

 

 
     2,464,174       2,178,612  
  

 

 

   

 

 

 

Operating income

     312,048       282,663  
  

 

 

   

 

 

 

Other income (expense)

    

Interest income and other

     6,193       (412

Interest expense

     (20,294     (19,805
  

 

 

   

 

 

 
     (14,101     (20,217
  

 

 

   

 

 

 

Income before income tax provision

     297,947       262,446  

Income tax provision

     62,981       51,764  
  

 

 

   

 

 

 

Net income

   $ 234,966     $ 210,682  
  

 

 

   

 

 

 

Earnings per common share — basic

   $ 7.02     $ 5.92  
  

 

 

   

 

 

 

Weighted average common shares outstanding — basic

     33,489       35,602  
  

 

 

   

 

 

 

Earnings per common share — diluted

   $ 6.65     $ 5.67  
  

 

 

   

 

 

 

Weighted average common shares outstanding — diluted

     35,337       37,149  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax

    

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

   $ (22,405   $ 34,412  
  

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     (22,405     34,412  
  

 

 

   

 

 

 

Comprehensive income

   $ 212,561     $ 245,094  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2021     2020     2021     2020  
     (Unaudited)        

Net income

   $ 38,208     $ 55,589     $ 234,966     $ 210,682  

Add back:

        

Remeasurement of acquisition-related contingent consideration

     —         —         (3,130     —    

Special charges

     —         —         —         7,103  

Tax impact of special charges

     —         —         —         (1,847

Non-cash interest expense on convertible notes

     2,445       2,317       9,586       9,083  

Tax impact of non-cash interest expense on convertible notes

     (636     (602     (2,492     (2,361
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income

   $ 40,017     $ 57,304     $ 238,930     $ 222,660  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share — diluted

   $ 1.07     $ 1.57     $ 6.65     $ 5.67  

Add back:

        

Remeasurement of acquisition-related contingent consideration

     —         —         (0.09     —    

Special charges

     —         —         —         0.19  

Tax impact of special charges

     —         —         —         (0.05

Non-cash interest expense on convertible notes

     0.08       0.06       0.27       0.24  

Tax impact of non-cash interest expense on convertible notes

     (0.02     (0.02     (0.07     (0.06
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per common share — diluted

   $ 1.13     $ 1.61     $ 6.76     $ 5.99  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding — diluted

     35,550       35,484       35,337       37,149  
  

 

 

   

 

 

   

 

 

   

 

 

 


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.

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

 

Three Months Ended December 31, 2020

(Unaudited)

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

Net income

                    $ 55,589  

Interest income and other

                      4,291  

Interest expense

                      4,636  

Income tax provision

                      6,422  
                   

 

 

 

Operating income

   $ 32,182      $ 6,046      $ 29,774      $ 7,227      $ 10,244      $ (14,535   $ 70,938  

Depreciation and amortization

     1,359        1,403        1,342        2,928        776        654       8,462  

Amortization of intangible assets

     1,864        173        192        —          718        —         2,947  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 35,405      $ 7,622      $ 31,308      $ 10,155      $ 11,738      $ (13,881   $ 82,347  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Year Ended December 31, 2020

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

Net income

                    $ 210,682  

Interest income and other

                      412  

Interest expense

                      19,805  

Income tax provision

                      51,764  
                   

 

 

 

Operating income

   $ 205,029      $ 23,899      $ 85,690      $ 30,869      $ 31,639      $ (94,463   $ 282,663  

Depreciation and amortization

     4,485        5,191        5,382        11,867        2,456        2,737       32,118  

Amortization of intangible assets

     6,455        800        325        1        2,806        —         10,387  

Special charges

     861        3,484        35        276        2,074        373       7,103  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 216,830      $ 33,374      $ 91,432      $ 43,013      $ 38,975      $ (91,353   $ 332,271  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 


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, 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       
     

 

 

          

Three Months Ended December 31, 2020 (Unaudited)

              

Corporate Finance & Restructuring

   $ 219,809      $ 35,405       16.1     52   $ 472        1,655  

Forensic and Litigation Consulting

     127,193        7,622       6.0     51   $ 340        1,343  

Economic Consulting

     160,479        31,308       19.5     65   $ 529        891  

Technology (1)

     58,624        10,155       17.3     N/M       N/M        408  

Strategic Communications (1)

     60,476        11,738       19.4     N/M       N/M        770  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 626,581      $ 96,228       15.4          5,067  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (13,881         
     

 

 

          

Adjusted EBITDA

      $ 82,347       13.1       
     

 

 

          

Year Ended December 31, 2020

              

Corporate Finance & Restructuring

   $ 910,184      $ 216,830       23.8     63   $ 468        1,655  

Forensic and Litigation Consulting

     500,275        33,374       6.7     51   $ 335        1,343  

Economic Consulting

     599,088        91,432       15.3     68   $ 494        891  

Technology (1)

     223,016        43,013       19.3     N/M       N/M        408  

Strategic Communications (1)

     228,712        38,975       17.0     N/M       N/M        770  
  

 

 

    

 

 

   

 

 

        

 

 

 
   $ 2,461,275      $ 423,624       17.2          5,067  
  

 

 

    

 

 

   

 

 

        

 

 

 

Unallocated Corporate

        (91,353         
     

 

 

          

Adjusted EBITDA

      $ 332,271       13.5       
     

 

 

          

 

N/M -

Not meaningful

(1)

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


FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Year Ended December 31,  
     2021     2020  

Operating activities

    

Net income

   $ 234,966     $ 210,682  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     34,269       32,661  

Amortization and impairment of intangible assets

     10,823       10,387  

Acquisition-related contingent consideration

     (324     5,593  

Provision for expected credit losses

     16,151       19,692  

Share-based compensation

     23,051       22,904  

Amortization of debt discount and issuance costs and other

     11,701       11,259  

Deferred income taxes

     4,958       (9,132

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

    

Accounts receivable, billed and unbilled

     (61,274     (26,800

Notes receivable

     12,645       8,029  

Prepaid expenses and other assets

     (1,165     4,640  

Accounts payable, accrued expenses and other

     (2,102     13,901  

Income taxes

     10,523       (22,549

Accrued compensation

     59,566       38,627  

Billings in excess of services provided

     1,695       7,175  
  

 

 

   

 

 

 

Net cash provided by operating activities

     355,483       327,069  
  

 

 

   

 

 

 

Investing activities

    

Payments for acquisition of businesses, net of cash received

     (10,428     (25,271

Purchases of property and equipment and other

     (68,665     (34,849
  

 

 

   

 

 

 

Net cash used in investing activities

     (79,093     (60,120
  

 

 

   

 

 

 

Financing activities

    

Borrowings under revolving line of credit

     402,500       289,500  

Repayments under revolving line of credit

     (402,500     (289,500

Purchase and retirement of common stock

     (46,133     (353,593

Share-based compensation tax withholdings and other

     (9,246     (5,823

Payments for business acquisition liabilities

     (7,496     (3,948

Deposits

     1,201       3,311  
  

 

 

   

 

 

 

Net cash used in financing activities

     (61,674     (360,053
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (15,184     18,684  
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     199,532       (74,420

Cash and cash equivalents, beginning of period

     294,953       369,373  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 494,485     $ 294,953  
  

 

 

   

 

 

 


FTI CONSULTING, INC.

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

(in thousands)

 

     Year Ended December 31,  
     2021     2020  

Net cash provided by operating activities

   $ 355,483     $ 327,069  

Purchases of property and equipment

     (68,569     (34,866
  

 

 

   

 

 

 

Free Cash Flow

   $ 286,914     $ 292,203