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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from   to                    
Commission File Number: 001-14875
 
FTI CONSULTING, INC.
(Exact Name of Registrant as Specified in its Charter) 

  
Maryland52-1261113
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
555 12th Street NW
Washington,
DC20004
(Address of Principal Executive Offices)(Zip Code)
(202) 312-9100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueFCNNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
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. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 
Class
Outstanding at April 18, 2024
Common Stock, $0.01 par value35,697,614



FTI CONSULTING, INC. AND SUBSIDIARIES
INDEX
 
  
Page 
   
  
 
  
 
  
 
  
 
  
 
  
  
  
 
  
  
  
  
  
  
  
 
2


PART I—FINANCIAL INFORMATION
FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
Item 1.Financial Statements
 
 March 31,December 31,
 20242023
(Unaudited)
Assets 
Current assets  
Cash and cash equivalents$243,960 $303,222 
 Accounts receivable, net1,157,465 1,102,142 
Current portion of notes receivable45,211 30,997 
Prepaid expenses and other current assets98,062 119,092 
Total current assets1,544,698 1,555,453 
Property and equipment, net152,949 159,662 
Operating lease assets199,596 208,910 
Goodwill1,230,645 1,234,569 
Intangible assets, net19,455 18,285 
Notes receivable, net96,806 75,431 
Other assets80,379 73,568 
Total assets$3,324,528 $3,325,878 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable, accrued expenses and other$226,787 $223,758 
Accrued compensation332,677 601,074 
Billings in excess of services provided68,236 67,937 
Total current liabilities627,700 892,769 
Long-term debt, net205,000  
Noncurrent operating lease liabilities213,576 223,774 
Deferred income taxes136,065 140,976 
Other liabilities87,831 86,939 
Total liabilities1,270,172 1,344,458 
Commitments and contingencies (Note 10)
Stockholders’ equity
Preferred stock, $0.01 par value; shares authorized — 5,000; none
outstanding
  
Common stock, $0.01 par value; shares authorized — 75,000; shares
issued and outstanding 35,697 (2024) and 35,521 (2023)
357 355 
Additional paid-in capital21,162 16,760 
Retained earnings2,194,730 2,114,765 
Accumulated other comprehensive loss(161,893)(150,460)
Total stockholders’ equity2,054,356 1,981,420 
Total liabilities and stockholders’ equity$3,324,528 $3,325,878 
 
See accompanying notes to condensed consolidated financial statements
3


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share data)
(Unaudited)
 
 Three Months Ended March 31,
 20242023
Revenues$928,553 $806,706 
Operating expenses
Direct cost of revenues626,034 553,509 
Selling, general and administrative expenses201,870 184,213 
Amortization of intangible assets1,016 2,182 
 828,920 739,904 
Operating income99,633 66,802 
Other income (expense)  
Interest income and other1,581 (1,342)
Interest expense(1,719)(2,939)
 (138)(4,281)
Income before income tax provision99,495 62,521 
Income tax provision19,530 14,974 
Net income$79,965 $47,547 
Earnings per common share — basic$2.29 $1.43 
Earnings per common share — diluted$2.23 $1.34 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax
expense of $0
$(11,433)$9,850 
Total other comprehensive income (loss), net of tax(11,433)9,850 
Comprehensive income$68,532 $57,397 
 
See accompanying notes to condensed consolidated financial statements
4


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(Unaudited)
Accumulated
Other
Comprehensive
Loss
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
 
 SharesAmountTotal
Balance at December 31, 202335,521 $355 $16,760 $2,114,765 $(150,460)$1,981,420 
Net income— $— $— $79,965 $— $79,965 
Other comprehensive loss:
Cumulative translation adjustment— — — — (11,433)(11,433)
Issuance of common stock in connection with:
Exercise of options106 1 3,897 — — 3,898 
Restricted share grants, less net
             settled shares of 57
70 1 (11,112)— — (11,111)
Stock units issued under incentive
             compensation plan
— — 2,805 — — 2,805 
Share-based compensation— — 8,812 — — 8,812 
Balance at March 31, 202435,697 $357 $21,162 $2,194,730 $(161,893)$2,054,356 
 
Accumulated
Other
Comprehensive
Loss
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
 
 SharesAmountTotal
Balance at December 31, 202234,026 $340 $ $1,858,103 $(176,722)$1,681,721 
Net income— $— $— $47,547 $— $47,547 
Other comprehensive income:
Cumulative translation adjustment— — — — 9,850 9,850 
Issuance of common stock in connection with:
Exercise of options14 — 449 — — 449 
Restricted share grants, less net
             settled shares of 55
55 1 (9,514)— — (9,513)
Stock units issued under incentive
             compensation plan
— — 2,274 — — 2,274 
Purchase and retirement of common stock(112)(1)(17,798)— — (17,799)
Conversion of convertible senior notes due 2023— — (6)— — (6)
Share-based compensation— — 6,365 — — 6,365 
Reclassification of negative additional paid-in capital— — 18,230 (18,230)—  
Balance at March 31, 202333,983 $340 $ $1,887,420 $(166,872)$1,720,888 


See accompanying notes to condensed consolidated financial statements
5


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
 Three Months Ended March 31,
20242023
Operating activities
Net income$79,965 $47,547 
Adjustments to reconcile net income to net cash used in operating activities:  
Depreciation and amortization10,424 9,443 
Amortization of intangible assets1,016 2,182 
Provision for expected credit losses11,420 7,012 
Share-based compensation8,812 6,365 
Deferred income taxes(8,107)(3,016)
Acquisition-related contingent consideration660 1,284 
Amortization of debt issuance costs and other236 646 
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled(73,201)(93,739)
Notes receivable(35,937)(6,851)
Prepaid expenses and other assets(5,612)321 
Accounts payable, accrued expenses and other4,317 1,315 
Income taxes1,691 5,658 
Accrued compensation(271,044)(230,967)
Billings in excess of services provided542 (1,406)
Net cash used in operating activities(274,818)(254,206)
Investing activities  
Purchases of property and equipment and other(4,640)(18,012)
Maturity of short-term investment25,246  
Net cash provided by (used in) investing activities20,606 (18,012)
Financing activities  
Borrowings under revolving line of credit280,000 90,000 
Repayments under revolving line of credit(75,000)(45,000)
Purchase and retirement of common stock (20,982)
Share-based tax withholdings net of option exercises(8,712)(9,064)
Deposits and other2,297 813 
Net cash provided by financing activities198,585 15,767 
Effect of exchange rate changes on cash and cash equivalents(3,635)3,302 
Net decrease in cash and cash equivalents(59,262)(253,149)
Cash and cash equivalents, beginning of period303,222 491,688 
Cash and cash equivalents, end of period$243,960 $238,539 
Supplemental cash flow disclosures
Cash paid for interest$765 $3,625 
Cash paid for income taxes and tax credits, net of refunds$25,943 $12,331 
Non-cash investing and financing activities:
Issuance of stock units under incentive compensation plans$2,805 $2,274 
See accompanying notes to condensed consolidated financial statements
6


FTI Consulting, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(dollar and share amounts in tables in thousands, except per share data)
(Unaudited)
 
1. Basis of Presentation and Significant Accounting Policies
The unaudited condensed consolidated financial statements of FTI Consulting, Inc., including its consolidated subsidiaries (collectively, the “Company,” “we,” “our” or “FTI Consulting”), presented herein, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and under the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Some of the information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. Certain prior period amounts have been reclassified to conform to the current period presentation. In management’s opinion, the interim financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods presented. All adjustments made were normal recurring accruals. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC.
Note 1 to the Consolidated Financial Statements included in Part II, Item 8, of our Annual Report on Form 10-K for the year ended December 31, 2023 describes the significant accounting policies and methods used in preparation of the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
2. New Accounting Standards
Accounting Standards Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands annual disclosures in an entity’s income tax rate reconciliation table and requires annual disclosures regarding cash taxes paid both in the U.S. (federal and state) and foreign jurisdictions. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
7


3. Earnings per Common Share
Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share adjusts basic earnings per common share for the effects of potentially dilutive common shares. Potentially dilutive common shares include the dilutive effects of shares issuable under our equity compensation plans, including stock options and share-based awards (restricted share awards, restricted stock units and performance stock units), each using the treasury stock method.
For the three months ended March 31, 2023, we used the if-converted method for calculating the potential dilutive effect of the conversion feature of the principal amount of our 2.0% convertible senior notes due 2023 (“2023 Convertible Notes”) on earnings per common share. The conversion feature had a dilutive impact on earnings per common share for the three months ended March 31, 2023, as the average market price per share of our common stock for the period exceeded the conversion price of $101.38 per share. During the three months ended March 31, 2024, there were no 2023 Convertible Notes outstanding.
 Three Months Ended March 31,
 20242023
Numerator — basic and diluted  
Net income$79,965 $47,547 
Denominator
Weighted average number of common shares outstanding — basic
34,977 33,301 
Effect of dilutive share-based awards549 576 
Effect of dilutive stock options261 305 
Effect of dilutive convertible notes 1,300 
Weighted average number of common shares outstanding — diluted
35,787 35,482 
Earnings per common share — basic$2.29 $1.43 
Earnings per common share — diluted$2.23 $1.34 
Antidilutive stock options and share-based awards25 8 
4. Revenues
We generate the majority of our revenues by providing consulting services to our clients. Revenues are recognized when we satisfy a performance obligation by transferring services promised in a contract to a customer and in an amount that reflects the consideration that we expect to receive in exchange for those services. Performance obligations in our contracts represent distinct or separate services that we provide to our customers. If, at the outset of an arrangement, we determine that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met.
Revenues recognized during the current period may include revenues from performance obligations satisfied or partially satisfied in previous periods. This primarily occurs when the estimated transaction price has changed based on our current probability assessment over whether the agreed-upon outcome for our performance-based and contingent arrangements will be achieved. The aggregate amount of revenues recognized related to a change in the transaction price in the current period, which related to performance obligations satisfied or partially satisfied in a prior period, was $6.4 million and $4.8 million for the three months ended March 31, 2024 and 2023, respectively.
Unfulfilled performance obligations primarily consist of fees not yet recognized on certain fixed-fee arrangements and performance-based and contingent arrangements. As of March 31, 2024 and December 31, 2023, the aggregate amount of the remaining contract transaction price allocated to unfulfilled performance obligations was $28.9 million and $34.6 million, respectively. We expect to recognize the majority of the related revenues over the next 36 months. We elected to utilize the optional exemption to exclude from this disclosure fixed-fee and performance-based and contingent arrangements with an original expected duration of one year or less and to exclude our time and expense arrangements for which revenues are recognized using the right-to-invoice practical expedient.
Contract assets are defined as assets for which we have recorded revenues but are not yet entitled to receive our fees because certain events, such as completion of the measurement period or client approval, must occur. The contract asset balance was immaterial as of March 31, 2024 and December 31, 2023.
8


Contract liabilities are defined as liabilities incurred when we have received consideration but have not yet performed the agreed-upon services. This may occur when clients pay fees before work begins. The contract liability balance was immaterial as of March 31, 2024 and December 31, 2023.
5. Accounts Receivable and Allowance for Expected Credit Losses
The following table summarizes the components of “Accounts receivable, net” as presented on the Condensed Consolidated Balance Sheets:
March 31, 2024December 31,
2023
Accounts receivable:
Billed receivables$804,914 $745,371 
Unbilled receivables422,372 421,488 
Allowance for expected credit losses(69,821)(64,717)
Accounts receivable, net$1,157,465 $1,102,142 
The following table summarizes the total provision for expected credit losses and write-offs:
 Three Months Ended March 31,
20242023
Provision for expected credit losses$11,420 $7,012 
Write-offs$10,370 $7,888 
Our provision for expected credit losses includes recoveries, direct write-offs and charges to other accounts. Billed accounts receivables are written off when the potential for recovery is considered remote.
6. Goodwill and Intangible Assets
Goodwill
The table below summarizes the changes in the carrying amount of goodwill by reportable segment:
Corporate
Finance &
  Restructuring (1)
Forensic and Litigation Consulting (1)
Economic
Consulting (1)
Technology (1)
Strategic
Communications (2)
Total
Balance at December 31, 2023$540,991 $213,415 $268,482 $96,802 $114,879 $1,234,569 
Foreign currency translation
adjustment
(2,738)(426)(158)(13)(589)(3,924)
Balance at March 31, 2024$538,253 $212,989 $268,324 $96,789 $114,290 $1,230,645 
(1)    There were no accumulated impairment losses for the Corporate Finance & Restructuring (“Corporate Finance”), Forensic and Litigation Consulting (“FLC”), Economic Consulting or Technology segments as of March 31, 2024 and December 31, 2023.
(2)    Amounts for our Strategic Communications segment include gross carrying values of $308.4 million and $309.0 million as of March 31, 2024 and December 31, 2023, respectively, and accumulated impairment losses of $194.1 million as of March 31, 2024 and December 31, 2023.
9


Intangible Assets
Intangible assets were as follows:
 March 31, 2024December 31, 2023
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortizing intangible assets      
Customer relationships$29,077 $17,045 $12,032 $27,000 $16,640 $10,360 
Trademarks9,497 7,371 2,126 9,712 7,129 2,583 
Acquired software and other868 671 197 888 646 242 
39,442 25,087 14,355 37,600 24,415 13,185 
Non-amortizing intangible assets
Trademarks 5,100 — 5,100 5,100 — 5,100 
Total$44,542 $25,087 $19,455 $42,700 $24,415 $18,285 
Intangible assets with finite lives are amortized over their estimated useful lives. We recorded amortization expense of $1.0 million and $2.2 million during the three months ended March 31, 2024 and 2023, respectively.
We estimate our future amortization expense for our intangible assets with finite lives to be as follows:
Year
As of
March 31, 2024 (1)
2024 (remaining)$3,006 
20253,336 
20262,193 
20272,122 
20281,717 
Thereafter1,981 
 $14,355 
(1)Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, impairments, changes in useful lives, or other relevant factors or changes.
7. Financial Instruments
We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted discounted cash flow model or a Monte Carlo pricing model. These fair value estimates represent Level 3 measurements as they are based on significant inputs not observed in the market and reflect our own assumptions. Significant increases (or decreases) in these unobservable inputs in isolation would result in significantly lower (or higher) fair values. We reassess the fair value of our acquisition-related contingent consideration at each reporting period based on additional information as it becomes available. The fair value of acquisition-related contingent consideration was $9.8 million and $12.8 million as of March 31, 2024 and December 31, 2023, respectively.
The fair values of all financial instruments are estimated to be equal to their carrying values as of March 31, 2024 and December 31, 2023. There were no other assets or liabilities subject to Level 3 fair value measurements as of March 31, 2024 and December 31, 2023.
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8. Debt
The table below presents the components of the Company’s debt: 
March 31, 2024December 31, 2023
Credit Facility$205,000 $ 
Long-term debt, net (1)
$205,000 $ 
(1)There were no current portions of long-term debt as of March 31, 2024 and December 31, 2023.
Credit Facility
In November 2022, we entered into the second amended and restated credit agreement governing our senior secured bank revolving credit facility (“Credit Facility”) to, among other things, (i) extend the maturity to November 21, 2027, (ii) increase the revolving line of credit limit from $550.0 million to $900.0 million, and (iii) increase the incremental facility from $150.0 million to a maximum of $300.0 million, subject to certain conditions, and incurred an additional $4.0 million of debt issuance costs. The Credit Facility is guaranteed by substantially all of our wholly owned domestic subsidiaries and is secured by a first priority security interest in substantially all of the assets of FTI Consulting and such domestic subsidiaries.
Borrowings under the Credit Facility bear interest at a rate equal to, in the case of: (i) U.S. Dollars (“USD”), at our option, Adjusted Term Secured Overnight Financing Rate (“SOFR”) or Adjusted Daily Simple SOFR, (ii) euro, Euro Interbank Offered Rate, (iii) British pound, Sterling Overnight Index Average Reference Rate, (iv) Australian dollars, Bank Bill Swap Reference Bid Rate, (v) Canadian dollars, Canadian Dollar Offered Rate, (vi) Swiss franc, Swiss Average Rate Overnight, and (vii) Japanese yen, Tokyo Interbank Offered Rate, in each case, plus an applicable margin that will fluctuate between 1.25% per annum and 2.00% per annum based upon the Company’s Consolidated Total Net Leverage Ratio (as defined in the Credit Facility) at such time or, in the case of USD borrowings, an alternative base rate plus an applicable margin that will fluctuate between 0.25% per annum and 1.00% per annum based upon the Company’s Consolidated Total Net Leverage Ratio at such time. The alternative base rate is a fluctuating rate per annum equal to the highest of (1) the federal funds rate plus the sum of 50 basis points, (2) the rate of interest in effect for such day as the prime rate announced by Bank of America, and (3) the one-month Term SOFR plus 100 basis points.
Under the Credit Facility, we are required to pay a commitment fee rate that fluctuates between 0.20% and 0.35% per annum and a letter of credit fee rate that fluctuates between 1.25% and 2.00% per annum, in each case, based upon the Company’s Consolidated Total Net Leverage Ratio.
The Company classified the borrowings under the Credit Facility as long-term debt in the accompanying Condensed Consolidated Balance Sheets, as we have the intent and unilateral ability to refinance any borrowings on a continuous basis through the maturity of the Credit Facility on November 21, 2027.
There were $3.2 million and $3.4 million of unamortized debt issuance costs related to the Credit Facility as of March 31, 2024 and December 31, 2023, respectively. These amounts are included in “Other assets” on our Condensed Consolidated Balance Sheets.
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9. Leases
We lease office space and equipment under non-cancelable operating leases. The table below summarizes the carrying amount of our operating lease assets and liabilities:
LeasesClassificationMarch 31, 2024December 31, 2023
Assets
  Operating lease assetsOperating lease assets$199,596 $208,910 
Total lease assets$199,596 $208,910 
Liabilities
Current
  Operating lease liabilities
Accounts payable, accrued expenses and other$34,731 $33,864 
Noncurrent
  Operating lease liabilitiesNoncurrent operating lease liabilities213,576 223,774 
Total lease liabilities$248,307 $257,638 
The table below summarizes total lease costs:
Three Months Ended March 31,
Lease Cost20242023
Operating lease costs$12,543 $12,983 
Short-term lease costs441 692 
Variable leases and other3,087 2,792 
Total lease cost, net$16,071 $16,467 
The maturity analysis below summarizes the remaining future undiscounted cash flows for our operating leases and includes a reconciliation to operating lease liabilities reported on the Condensed Consolidated Balance Sheets:
As of
March 31, 2024
2024 (remaining)
$40,029 
202547,383 
202642,765 
202741,696 
202832,480 
Thereafter108,340 
   Total future lease payments312,693 
   Less: imputed interest(64,386)
Total$248,307 
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The table below includes cash paid for our operating lease liabilities, other non-cash information, our weighted average remaining lease term and weighted average discount rate:
Three Months Ended March 31,
 20242023
Cash paid for amounts included in the measurement of operating lease liabilities$13,942$14,170
Operating lease assets obtained in exchange for lease liabilities$1,209$13,105
Weighted average remaining lease term (years)
   Operating leases7.78.3
Weighted average discount rate
   Operating leases
5.9 %5.7 %
10. Commitments and Contingencies
We lease office space and equipment under non-cancelable operating leases. See Note 9, “Leases” for future minimum lease commitments.
We are subject to legal actions arising in the ordinary course of business. In management’s opinion, we believe we have adequate legal defenses and/or insurance coverage with respect to the eventuality of such actions. We are not aware of any asserted or unasserted legal proceedings or claims that we believe would have a material adverse effect on our financial condition or results of our operations.
11. Share-Based Compensation
During the three months ended March 31, 2024, we granted 26,946 restricted share awards, 39,293 restricted stock units and 75,994 performance stock units under the FTI Consulting, Inc. 2017 Omnibus Incentive Compensation Plan, our employee equity compensation plan. Our performance stock units are presented at the maximum potential payout percentage of 150% of target shares granted. These awards are recorded as equity on the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2024, 5,464 shares of restricted stock and no stock options were forfeited prior to the completion of the applicable vesting requirements. Additionally, 988 performance stock units were forfeited during the three months ended March 31, 2024, arising from award targets that were not achieved.
Total share-based compensation expense, net of forfeitures is detailed in the following table:
 Three Months Ended March 31,
Income Statement Classification20242023
Direct cost of revenues$5,718 $4,699 
Selling, general and administrative expenses4,500 5,044 
Total share-based compensation expense$10,218 $9,743 
12. Stockholders’ Equity
On June 2, 2016, our Board of Directors authorized a stock repurchase program of up to $100.0 million (the “Repurchase Program”). On each of May 18, 2017, December 1, 2017, February 21, 2019 and February 20, 2020, our Board of Directors authorized an additional $100.0 million. On each of July 28, 2020 and December 3, 2020, our Board of Directors authorized an additional $200.0 million. On December 1, 2022, our Board of Directors authorized an additional $400.0 million, increasing the Repurchase Program to an aggregate authorization of $1.3 billion. No time limit has been established for the completion of the Repurchase Program, and the Repurchase Program may be suspended, discontinued or replaced by the Board of Directors at any time without prior notice. As of March 31, 2024, we had $460.7 million available under the Repurchase Program to repurchase additional shares.
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The following table details our stock repurchases under the Repurchase Program:
 Three Months Ended March 31,
 20242023
Shares of common stock repurchased and retired 112 
Average price paid per share$ $158.70 
Total cost$ $17,797 
As we repurchase our common shares, we reduce stated capital on our Condensed Consolidated Balance Sheets for the $0.01 of par value of the shares repurchased, with the excess purchase price over par value recorded as a reduction to additional paid-in capital. If additional paid-in capital is reduced to zero, we record the remainder of the excess purchase price over par value as a reduction of retained earnings.
Common stock outstanding was approximately 35.7 million shares and 35.5 million shares as of March 31, 2024 and December 31, 2023, respectively. Common stock outstanding includes unvested restricted stock awards, which are considered issued and outstanding under the terms of the restricted stock award agreements.
13. Segment Reporting
We manage our business in five reportable segments: Corporate Finance, FLC, Economic Consulting, Technology and Strategic Communications.
Our Corporate Finance segment focuses on the strategic, operational, financial, transactional and capital needs of our clients around the world. Our clients include companies, boards of directors, investors, private equity sponsors, lenders, governments and other financing sources and creditor groups, as well as other parties-in-interest. We deliver a wide range of services centered around four core offerings: Business Transformation, Strategy, Transactions and Turnaround & Restructuring.
Our FLC segment provides law firms, companies, boards of directors, government entities, private equity firms and other interested parties with a multidisciplinary and independent range of services across risk and investigations and disputes, supported by our data & analytics technology-enabled solutions, with a focus on highly regulated industries. Our services are centered around five core offerings: Construction, Projects & Assets and Environmental Solutions, Data & Analytics, Disputes, Healthcare Risk Management & Advisory and Risk and Investigations.
Our Economic Consulting segment, including subsidiary Compass Lexecon LLC, provides law firms, companies, government entities and other interested parties with analyses of complex economic issues for use in international arbitration, legal and regulatory proceedings, and strategic decision making and public policy debates around the world. We deliver a wide range of services centered around three core offerings: Antitrust & Competition Economics, Financial Economics and International Arbitration.
Our Technology segment provides companies, law firms, private equity firms and government entities with a comprehensive global portfolio of digital insights and risk management consulting services. Our professionals help organizations better address risk as the growing volume and variety of enterprise and emerging data intersects with legal, regulatory and compliance needs. We deliver a wide range of expert and analytics-powered solutions driven by investigations, litigation, antitrust and competition, merger & acquisition, restructuring and compliance and risk through three core offerings: Corporate Legal Department Consulting, E-discovery Services and Expertise, and Information Governance, Privacy & Security Services.
Our Strategic Communications segment develops and executes communications strategies to help management teams, boards of directors, law firms, governments and regulators manage change and mitigate risk surrounding transformational and disruptive events, including transactions, investigations, disputes, crises, regulation and legislation. We deliver a wide range of services centered around three core offerings: Corporate Reputation, Financial Communications and Public Affairs.
We evaluate the performance of our operating segments based on Adjusted Segment EBITDA, a GAAP financial measure. 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 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 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.
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The table below presents revenues and Adjusted Segment EBITDA for our reportable segments:
 Three Months Ended March 31,
 20242023
Revenues  
Corporate Finance (1)
$366,010 $315,652 
FLC (1)
176,074 157,739 
Economic Consulting204,548 169,595 
Technology100,713 90,618 
Strategic Communications81,208 73,102 
Total revenues$928,553 $806,706 
Adjusted Segment EBITDA  
Corporate Finance (1)
$75,225 $51,847 
FLC (1)
33,709 21,784 
Economic Consulting14,150 14,193 
Technology14,581 15,366 
Strategic Communications12,426 9,556 
Total Adjusted Segment EBITDA$150,091 $112,746 
(1)Effective July 1, 2023, prior period segment information for the Corporate Finance and FLC segments has been recast in this Quarterly Report on Form 10-Q to include the reclassification of a portion of the Company’s health solutions practice in the FLC segment to our realigned business transformation practice within our Corporate Finance segment.
The table below reconciles net income to Total Adjusted Segment EBITDA:
 Three Months Ended March 31,
 20242023
Net income$79,965 $47,547 
Add back:
Income tax provision19,530 14,974 
Interest income and other(1,581)1,342 
Interest expense1,719 2,939 
Unallocated corporate expenses39,531 34,735 
Segment depreciation expense9,911 9,027 
Amortization of intangible assets1,016 2,182 
Total Adjusted Segment EBITDA$150,091 $112,746 
    
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion and analysis of our consolidated financial condition, results of operations, and liquidity and capital resources for the three months ended March 31, 2024 and 2023, and significant factors that could affect our prospective financial condition and results of operations. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes and with our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”). In addition to historical information, the following discussion includes forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements.
BUSINESS OVERVIEW
FTI Consulting, Inc., including its consolidated subsidiaries (collectively, the “Company,” “we,” “our” or “FTI Consulting”), 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. Individually, each of our segments and practices is staffed with experts recognized for the depth of their knowledge and a track record of making an impact. Collectively, FTI Consulting offers a comprehensive suite of services designed to assist clients across the business cycle, from proactive risk management to rapid response to unexpected events and dynamic environments.
We report financial results for the following five reportable segments:
Our Corporate Finance & Restructuring (“Corporate Finance”) segment focuses on the strategic, operational, financial, transactional and capital needs of our clients around the world. Our clients include companies, boards of directors, investors, private equity sponsors, lenders, governments and other financing sources and creditor groups, as well as other parties-in-interest. We deliver a wide range of services centered around four core offerings: Business Transformation, Strategy, Transactions and Turnaround & Restructuring.
Our Forensic and Litigation Consulting (“FLC”) segment provides law firms, companies, boards of directors, government entities, private equity firms and other interested parties with a multidisciplinary and independent range of services across risk and investigations and disputes, supported by our data & analytics technology-enabled solutions, with a focus on highly regulated industries. Our services are centered around five core offerings: Construction, Projects & Assets and Environmental Solutions, Data & Analytics, Disputes, Healthcare Risk Management & Advisory and Risk and Investigations.
Our Economic Consulting segment, including subsidiary Compass Lexecon LLC, provides law firms, companies, government entities and other interested parties with analyses of complex economic issues for use in international arbitration, legal and regulatory proceedings, and strategic decision making and public policy debates around the world. We deliver a wide range of services centered around three core offerings: Antitrust & Competition Economics, Financial Economics and International Arbitration.
Our Technology segment provides companies, law firms, private equity firms and government entities with a comprehensive global portfolio of digital insights and risk management consulting services. Our professionals help organizations better address risk as the growing volume and variety of enterprise and emerging data intersects with legal, regulatory and compliance needs. We deliver a wide range of expert and analytics-powered solutions driven by investigations, litigation, antitrust and competition, merger & acquisition (“M&A”), restructuring and compliance and risk through three core offerings: Corporate Legal Department Consulting, E-discovery Services and Expertise, and Information Governance, Privacy & Security Services.
Our Strategic Communications segment develops and executes communications strategies to help management teams, boards of directors, law firms, governments and regulators manage change and mitigate risk surrounding transformational and disruptive events, including transactions, investigations, disputes, crises, regulation and legislation. We deliver a wide range of services centered around three core offerings: Corporate Reputation, Financial Communications and Public Affairs.
We derive substantially all of our revenues from providing professional services to both U.S. and international clients. Most of our services are rendered under time and expense contract arrangements, which require the client to pay us based on the number of hours worked at contractually agreed-upon rates. Under this arrangement, we typically bill our clients for reimbursable expenses, including those relating to travel, out-of-pocket expenses, outside consultants and other outside service costs. Certain contracts are rendered under fixed-fee arrangements, which require the client to pay a fixed fee in exchange for a predetermined set of professional services. Fixed-fee arrangements may require certain clients to pay us a recurring retainer.
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Our contract arrangements may also contain success fees or performance-based arrangements in which our fees are based on the attainment of contractually defined objectives with our client. This type of success fee may supplement a time and expense or fixed-fee arrangement. Success fee revenues may cause variations in our revenues and operating results due to the timing of when achieving the performance-based criteria becomes probable. Seasonal factors, such as the timing of our employees’ and clients’ vacations and holidays, may impact the timing of our revenues across our segments.
In our Technology segment, certain clients are billed based on the amount of data storage used or the volume of information processed. Unit-based revenues are defined as revenues billed on a per item, per page or another unit-based method and include revenues from data processing and hosting. Unit-based revenues include revenues associated with licensed software products made available to customers via a web browser (“on-demand”). On-demand revenues are charged on a unit or monthly basis and include, but are not limited to, processing and review related functions.
Our financial results are primarily driven by:
the number, size and type of engagements we secure;
the rate per hour or fixed charges we charge our clients for services;
the utilization rates of the revenue-generating professionals we employ;
the timing of revenue recognition related to revenues subject to certain performance-based contingencies;
the number of revenue-generating professionals;
the types of assignments we are working on at different times;
the length of the billing and collection cycles; and
the geographic locations of our clients or locations in which services are rendered.
We define acquisition growth as revenues of acquired companies in the first 12 months following the effective date of an acquisition. When significant, we identify the impact of acquisition-related revenue growth.
When significant, we identify the estimated impact of foreign currency (“FX”) driven by our businesses with functional currencies other than the U.S. dollar (“USD”). The estimated impact of FX on the period-to-period performance results is calculated as the difference between the prior period results, multiplied by the average FX exchange rates to USD in the current period and the prior period results, multiplied by the average FX exchange rates to USD in the prior period.
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 U.S. (“GAAP”). Certain of these financial measures are considered not in conformity with GAAP (“non-GAAP financial measures”) under the 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 in the accompanying analysis of financial information. As described in Note 13, “Segment Reporting” in Part I, Item 1, of this
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Quarterly Report on Form 10-Q, we evaluate the performance of our operating segments based on Adjusted Segment EBITDA, and Segment Operating Income is a component of the definition of Adjusted Segment EBITDA.
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 earnings per diluted share (“EPS”), respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, the gain or loss on sale of a business and losses on early extinguishment of debt. 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 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 elsewhere in this report.
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EXECUTIVE HIGHLIGHTS
 Three Months Ended March 31,
 20242023
 (dollar amounts in thousands, except per share data)
Revenues$928,553 $806,706 
Net income$79,965 $47,547 
Adjusted EBITDA$111,073 $78,427 
Earnings per common share — diluted$2.23 $1.34 
Adjusted earnings per common share — diluted$2.23 $1.34 
Net cash used in operating activities$(274,818)$(254,206)
Total number of employees8,055 7,794 
First Quarter 2024 Executive Highlights
Revenues
Revenues for the three months ended March 31, 2024 increased $121.8 million, or 15.1%, to $928.6 million, as compared to the three months ended March 31, 2023, primarily due to increased demand across all of our business segments, as well as higher realized bill rates, particularly in Corporate Finance and Economic Consulting.
Net income
Net income for the three months ended March 31, 2024 increased $32.4 million, or 68.2%, to $80.0 million, as compared to the three months ended March 31, 2023. The increase in net income was primarily due to higher revenues, a lower effective tax rate and a decrease in FX remeasurement losses compared to the prior year quarter, which was partially offset by an increase in direct compensation expenses, higher selling, general and administrative (“SG&A”) expenses, primarily due to higher compensation, which included the impact of a 5.0% increase in non-billable headcount, and an increase in bad debt expense and legal services as compared to the same quarter in the prior year.
Adjusted EBITDA
Adjusted EBITDA for the three months ended March 31, 2024 increased $32.6 million, or 41.6%, to $111.1 million, compared to the three months ended March 31, 2023. Adjusted EBITDA Margin of 12.0% for the three months ended March 31, 2024 compared to 9.7% for the three months ended March 31, 2023. The increase in Adjusted EBITDA was primarily due to higher revenues, which was partially offset by an increase in direct compensation expenses and higher SG&A expenses, primarily due to higher compensation, which included the impact of a 5.0% increase in non-billable headcount, and an increase in bad debt expense and legal services compared to the same quarter in the prior year.
EPS and Adjusted EPS
EPS for the three months ended March 31, 2024 increased $0.89 to $2.23 compared to $1.34 for the three months ended March 31, 2023. The increase in EPS was primarily due to higher net income as described above.
Adjusted EPS was equal to EPS for the three months ended March 31, 2024 and 2023, respectively.
Liquidity and Capital Allocation
Net cash used in operating activities for the three months ended March 31, 2024 increased $20.6 million to $274.8 million, compared to $254.2 million for the three months ended March 31, 2023. The increase in net cash used in operating activities was primarily due to an increase in salaries, higher annual bonus payments and an increase in forgivable loan issuances, which was partially offset by higher cash collections compared to the prior year period. Days sales outstanding (“DSO”) of 105 days at March 31, 2024 compared to 102 days at March 31, 2023. The increase in DSO was primarily due to cash collections that did not keep pace with higher revenues.
Free Cash Flow was an outflow of $279.5 million and $272.2 million for the three months ended March 31, 2024 and 2023, respectively. The decrease in Free Cash Flow for the three months ended March 31, 2024 was primarily due to higher net cash used in operating activities, as described above, partially offset by a decrease in net cash used for purchases of property and equipment.
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Headcount
The following table includes the net headcount additions (reductions) by segment and in total for the three months ended March 31, 2024.
Billable Headcount
Corporate
Finance
FLCEconomic ConsultingTechnologyStrategic
Communications
TotalNon-Billable HeadcountTotal Headcount
December 31, 20232,2151,4471,0896289716,3501,6407,990
Additions (reductions), net(30)1621810164965
March 31, 20242,1851,4631,0916469816,3661,6898,055
Percentage change in headcount from December 31, 2023(1.4)%1.1%0.2%2.9%1.0%0.3%3.0%0.8%
CONSOLIDATED RESULTS OF OPERATIONS
Segment and Consolidated Operating Results: 
 Three Months Ended March 31,
 20242023
 (in thousands, except per share data)
Revenues  
Corporate Finance (1)
$366,010 $315,652 
FLC (1)
176,074 157,739 
Economic Consulting204,548 169,595 
Technology100,713 90,618 
Strategic Communications81,208 73,102 
Total revenues$928,553 $806,706 
Segment operating income  
Corporate Finance (1)
$71,919 $47,976 
FLC (1)
31,967 20,288 
Economic Consulting12,865 12,700 
Technology10,939 11,890 
Strategic Communications11,474 8,683 
Total segment operating income139,164 101,537 
Unallocated corporate expenses(39,531)(34,735)
Operating income99,633 66,802 
Other income (expense) 
Interest income and other1,581 (1,342)
Interest expense(1,719)(2,939)
 (138)(4,281)
Income before income tax provision99,495 62,521 
Income tax provision19,530 14,974 
Net income$79,965 $47,547 
Earnings per common share — basic$2.29 $1.43 
Earnings per common share — diluted$2.23 $1.34 
(1)Effective July 1, 2023, prior period segment information for the Corporate Finance and FLC segments has been recast in this Quarterly Report on Form 10-Q to include the reclassification of a portion of the Company’s health solutions practice in the FLC segment to our realigned business transformation practice within our Corporate Finance segment.
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Reconciliation of Net Income to Adjusted EBITDA: 
 Three Months Ended March 31,
 20242023
 (in thousands)
Net income$79,965 $47,547 
Add back:
Income tax provision19,530 14,974 
Interest income and other(1,581)1,342 
Interest expense1,719 2,939 
Depreciation and amortization10,424 9,443 
Amortization of intangible assets1,016 2,182 
Adjusted EBITDA$111,073 $78,427 
Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS: 
Net Income and EPS were equal to Adjusted Net Income and Adjusted EPS, respectively, for the three months ended March 31, 2024 and 2023.
Reconciliation of Net Cash Used in Operating Activities to Free Cash Flow:
 Three Months Ended March 31,
 20242023
 (in thousands)
Net cash used in operating activities$(274,818)$(254,206)
Purchases of property and equipment(4,641)(18,033)
Free Cash Flow$(279,459)$(272,239)
Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023
Revenues and operating income
See “Segment Results” for an expanded discussion of revenues, gross profit and SG&A expenses.
Unallocated corporate expenses
Unallocated corporate expenses for the three months ended March 31, 2024 increased $4.8 million, or 13.8%, to $39.5 million compared to $34.7 million for the three months ended March 31, 2023. The increase was primarily due to higher compensation, investments related to artificial intelligence (“AI”) and higher legal services.
Interest income and other
Interest income and other, which includes FX gains and losses, increased $2.9 million to $1.6 million for the three months ended March 31, 2024 compared to a $1.3 million expense for the three months ended March 31, 2023. The increase was primarily due to a decrease of $3.8 million in FX losses, which was partially offset by a $0.8 million decrease in interest income.
FX gains and losses, both realized and unrealized, relate to the remeasurement or settlement of monetary assets and liabilities that are denominated in a currency other than an entity’s functional currency. These monetary assets and liabilities include cash, as well as third-party and intercompany receivables and payables.
Interest expense
Interest expense for the three months ended March 31, 2024 decreased $1.2 million, or 41.5%, to $1.7 million compared to $2.9 million for the three months ended March 31, 2023. The decrease was primarily due to lower borrowings, which was partially offset by higher interest rates on our borrowings. Our borrowings in the prior year quarter included amounts owed on our 2.0% convertible senior notes due 2023, which matured in August 2023, as well as our borrowings on our senior secured bank revolving credit facility (“Credit Facility”).
21


Income tax provision
Our income tax provision increased $4.6 million, or 30.4%, to $19.5 million for the three months ended March 31, 2024 compared to $15.0 million for the three months ended March 31, 2023. Our effective tax rate of 19.6% for the three months ended March 31, 2024 compared to 24.0% for the three months ended March 31, 2023. The increase in the income tax provision was due to an increase in income before income tax provision, which was partially offset by a decrease in the tax rate. The tax rate for the three months ended March 31, 2024 was impacted by a more favorable tax benefit related to share-based compensation and a decrease in foreign taxes as compared to the three months ended March 31, 2023. During the three months ended March 31, 2024, a larger number of non-qualified stock options were exercised as compared to the prior year quarter.
SEGMENT RESULTS
Total Adjusted Segment EBITDA
We evaluate the performance of each of our operating segments based on Adjusted Segment EBITDA, which is a GAAP financial measure. The following table reconciles net income to Total Adjusted Segment EBITDA, a non-GAAP financial measure, for the three months ended March 31, 2024 and 2023:
 Three Months Ended March 31,
 20242023
 (in thousands)
Net income$79,965 $47,547 
Add back:
Income tax provision19,530 14,974 
Interest income and other(1,581)1,342 
Interest expense1,719 2,939 
Unallocated corporate expenses39,531 34,735 
Total segment operating income139,164 101,537 
Add back:
Segment depreciation expense9,911 9,027 
Amortization of intangible assets1,016 2,182 
Total Adjusted Segment EBITDA$150,091 $112,746 
22


Other Segment Operating Data
 Three Months Ended March 31,
 20242023
Number of revenue-generating professionals (at period end):  
Corporate Finance (1)
2,185 2,152 
FLC (1)
1,463 1,427 
Economic Consulting1,091 1,031 
Technology (2)
646 581 
Strategic Communications981 995 
Total revenue-generating professionals6,366 6,186 
Utilization rates of billable professionals: (3)
  
Corporate Finance (1)
62 %59 %
FLC (1)
59 %57 %
Economic Consulting68 %68 %
Average billable rate per hour: (4)
  
Corporate Finance (1)
$515 $478 
FLC (1)
$406 $375 
Economic Consulting$533 $458 
(1)Effective July 1, 2023, prior period segment information for the Corporate Finance and FLC segments has been recast in this Quarterly Report on Form 10-Q to include the reclassification of a portion of the Company’s health solutions practice in the FLC segment to our realigned business transformation practice within our Corporate Finance segment.
(2)The number of revenue-generating professionals for the Technology segment excludes as-needed professionals, who we employ based on demand for the segment’s services. We employed an average of 727 as-needed employees during the three months ended March 31, 2024 compared with 499 as-needed employees during the three months ended March 31, 2023.
(3)We calculate the utilization rate for our billable professionals by dividing the number of hours that all of our billable professionals worked on client assignments during a period by the total available working hours for all of our billable professionals during the same period. Available hours are determined by the standard hours worked by each employee, adjusted for part-time hours, U.S. standard work weeks and local country holidays. Available working hours include vacation and professional training days, but exclude holidays. Utilization rates are presented for our segments that primarily bill clients on an hourly basis. We have not presented utilization rates for our Technology and Strategic Communications segments as most of the revenues of these segments are not generated on an hourly basis.
(4)For engagements where revenues are based on number of hours worked by our billable professionals and fixed-fee arrangements, average billable rate per hour is calculated by dividing revenues (excluding revenues from success fees, pass-through revenues and outside consultants) for a period by the number of hours worked on client assignments during the same period. We have not presented average billable rates per hour for our Technology and Strategic Communications segments as most of the revenues of these segments are not based on billable hours.

23


CORPORATE FINANCE & RESTRUCTURING
 Three Months Ended March 31,
 2024
2023 (1)
 (dollars in thousands, except rate per hour)
Revenues$366,010 $315,652 
Percentage change in revenues from prior year16.0 %19.1 %
Operating expenses
Direct cost of revenues238,190 213,648 
Selling, general and administrative expenses55,068 52,116 
Amortization of intangible assets833 1,912 
 294,091 267,676 
Segment operating income71,919 47,976 
Percentage change in segment operating income from prior year49.9 %-4.9 %
Add back:
Depreciation and amortization of intangible assets3,306 3,871 
Adjusted Segment EBITDA$75,225 $51,847 
Gross profit (2)
$127,820 $102,004 
Percentage change in gross profit from prior year25.3 %14.3 %
Gross profit margin (3)
34.9 %32.3 %
Adjusted Segment EBITDA as a percentage of revenues20.6 %16.4 %
Number of revenue-generating professionals (at period end)2,185 2,152 
Percentage change in number of revenue-generating professionals from prior year1.5 %14.0 %
Utilization rate of billable professionals62 %59 %
Average billable rate per hour$515 $478 
(1)Effective July 1, 2023, prior period segment information for the Corporate Finance and FLC segments has been recast in this Quarterly Report on Form 10-Q to include the reclassification of a portion of the Company’s health solutions practice in the FLC segment to our realigned business transformation practice within our Corporate Finance segment.
(2)Revenues less direct cost of revenues
(3)Gross profit as a percentage of revenues

Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023
Revenues increased $50.4 million, or 16.0%, to $366.0 million for the three months ended March 31, 2024, primarily due to higher realized bill rates and demand in our restructuring and transaction services as well as higher realized bill rates in our business transformation & strategy services.
Gross profit increased $25.8 million, or 25.3%, to $127.8 million for the three months ended March 31, 2024. Gross profit margin increased 2.6 percentage points for the three months ended March 31, 2024. The increase in gross profit margin was primarily due to the impact of higher realized bill rates, a 3 percentage point increase in utilization and higher success fees.
SG&A expenses increased $3.0 million, or 5.7%, to $55.1 million for the three months ended March 31, 2024. SG&A expenses of 15.0% of revenues for the three months ended March 31, 2024 compared with 16.5% of revenues for the three months ended March 31, 2023. The increase in SG&A expenses was primarily due to higher business development, compensation and infrastructure support, which was partially offset by lower recruiting costs.
24


FORENSIC AND LITIGATION CONSULTING
 Three Months Ended March 31,
 2024
2023 (1)
 (dollars in thousands, except rate per hour)
Revenues$176,074 $157,739 
Percentage change in revenues from prior year11.6 %10.9 %
Operating expenses
Direct cost of revenues112,394 106,241 
Selling, general and administrative expenses31,600 31,026 
Amortization of intangible assets113 184 
 144,107 137,451 
Segment operating income31,967 20,288 
Percentage change in segment operating income from prior year57.6 %34.2 %
Add back:
Depreciation and amortization of intangible assets1,742 1,496 
Adjusted Segment EBITDA$33,709 $21,784 
Gross profit (2)
$63,680 $51,498 
Percentage change in gross profit from prior year23.7 %24.8 %
Gross profit margin (3)
36.2 %32.6 %
Adjusted Segment EBITDA as a percentage of revenues19.1 %13.8 %
Number of revenue-generating professionals (at period end)1,463 1,427 
Percentage change in number of revenue-generating professionals from prior year2.5 %3.2 %
Utilization rate of billable professionals59 %57 %
Average billable rate per hour$406 $375 
(1)Effective July 1, 2023, Corporate Finance and FLC segment information for the prior periods has been recast in this Quarterly Report on Form 10-Q to include the reclassification of a portion of the Company’s health solutions practice in the FLC segment to our realigned business transformation practice within our Corporate Finance segment.
(2)Revenues less direct cost of revenues
(3)Gross profit as a percentage of revenues
Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023
Revenues increased $18.3 million, or 11.6%, to $176.1 million for the three months ended March 31, 2024, primarily due to higher demand and realized bill rates for our investigations and disputes services, primarily in North America.
Gross profit increased $12.2 million, or 23.7%, to $63.7 million for the three months ended March 31, 2024. Gross profit margin increased 3.5 percentage points for the three months ended March 31, 2024. The increase in gross profit margin was primarily due to a 2 percentage point increase in utilization.
SG&A expenses increased $0.6 million, or 1.9%, to $31.6 million for the three months ended March 31, 2024. SG&A expenses of 17.9% of revenues for the three months ended March 31, 2024 compared with 19.7% of revenues for the three months ended March 31, 2023. The increase in SG&A expenses was primarily driven by higher infrastructure support, travel and entertainment, and other general and administrative expenses, which was partially offset by favorable litigation settlements.
25


ECONOMIC CONSULTING
 Three Months Ended March 31,
 20242023
 (dollars in thousands, except rate per hour)
Revenues$204,548 $169,595 
Percentage change in revenues from prior year20.6 %2.2 %
Operating expenses
Direct cost of revenues159,440 131,846 
Selling, general and administrative expenses32,243 25,049 
 191,683 156,895 
Segment operating income12,865 12,700 
Percentage change in segment operating income from prior year1.3 %-36.3 %
Add back:
Depreciation and amortization1,285 1,493 
Adjusted Segment EBITDA$14,150 $14,193 
Gross profit (1)
$45,108 $37,749 
Percentage change in gross profit from prior year19.5 %-9.1 %
Gross profit margin (2)
22.1 %22.3 %
Adjusted Segment EBITDA as a percentage of revenues6.9 %8.4 %
Number of revenue-generating professionals (at period end)1,091 1,031 
Percentage change in number of revenue-generating professionals from prior year5.8 %8.5 %
Utilization rate of billable professionals68 %68 %
Average billable rate per hour$533 $458 
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues
Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023
Revenues increased $35.0 million, or 20.6%, to $204.5 million for the three months ended March 31, 2024, primarily due to higher demand and realized bill rates for our non-M&A-related antitrust and financial economics services.
Gross profit increased $7.4 million, or 19.5%, to $45.1 million for the three months ended March 31, 2024. Gross profit margin decreased 0.2 percentage points for the three months ended March 31, 2024. The slight decrease in gross profit margin was primarily due to an increase in compensation, which was partially offset by the positive impact of higher realized bill rates.
SG&A expenses increased $7.2 million, or 28.7%, to $32.2 million for the three months ended March 31, 2024. SG&A expenses of 15.8% of revenues for the three months ended March 31, 2024 compared with 14.8% of revenues for the three months ended March 31, 2023. The increase in SG&A expenses was primarily driven by higher bad debt expense.
26


TECHNOLOGY
 Three Months Ended March 31,
 20242023
 (dollars in thousands)
Revenues$100,713 $90,618 
Percentage change in revenues from prior year11.1 %12.6 %
Operating expenses
Direct cost of revenues64,069 53,978 
Selling, general and administrative expenses25,705 24,750 
 89,774 78,728 
Segment operating income10,939 11,890 
Percentage change in segment operating income from prior year-8.0 %16.1 %
Add back:
Depreciation and amortization3,642 3,476 
Adjusted Segment EBITDA$14,581 $15,366 
Gross profit (1)
$36,644 $36,640 
Percentage change in gross profit from prior year— %23.9 %
Gross profit margin (2)
36.4 %40.4 %
Adjusted Segment EBITDA as a percentage of revenues14.5 %17.0 %
Number of revenue-generating professionals (at period end) (3)
646 581 
Percentage change in number of revenue-generating professionals from prior year11.2 %17.1 %
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues
(3)Includes personnel involved in direct client assistance and revenue-generating consultants and excludes professionals employed on an as-needed basis.
Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023
Revenues increased $10.1 million, or 11.1%, to $100.7 million for the three months ended March 31, 2024, primarily due to higher demand for M&A-related “second request” and information governance, privacy & security services, which was partially offset by lower demand for investigations services.
Gross profit was flat at $36.6 million for the three months ended March 31, 2024. Gross profit margin decreased 4.0 percentage points for the three months ended March 31, 2024. The decrease in gross profit margin was primarily due to lower profitability in our consulting and data transformation & production services.
SG&A expenses increased $1.0 million, or 3.9%, to $25.7 million for the three months ended March 31, 2024. SG&A expenses of 25.5% of revenues for the three months ended March 31, 2024 compared with 27.3% of revenues for the three months ended March 31, 2023. The increase in SG&A expenses was primarily due to higher compensation, which was partially offset by lower bad debt expense.
27


STRATEGIC COMMUNICATIONS
 Three Months Ended March 31,
 20242023
 (dollars in thousands)
Revenues$81,208 $73,102 
Percentage change in revenues from prior year11.1 %4.5 %
Operating expenses
Direct cost of revenues51,941 47,804 
Selling, general and administrative expenses17,723 16,529 
Amortization of intangible assets70 86 
 69,734 64,419 
Segment operating income11,474 8,683 
Percentage change in segment operating income from prior year32.1 %-41.5 %
Add back:
Depreciation and amortization of intangible assets952 873 
Adjusted Segment EBITDA$12,426 $9,556 
Gross profit (1)
$29,267 $25,298 
Percentage change in gross profit from prior year15.7 %-12.6 %
Gross profit margin (2)
36.0 %34.6 %
Adjusted Segment EBITDA as a percentage of revenues15.3 %13.1 %
Number of revenue-generating professionals (at period end)981 995 
Percentage change in number of revenue-generating professionals from prior year-1.4 %16.2 %
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues

Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023
Revenues increased $8.1 million, or 11.1%, to $81.2 million for the three months ended March 31, 2024, which included a 1.4% estimated positive impact from FX. Excluding the estimated impact from FX, revenues increased $7.1 million, or 9.7%, primarily driven by higher demand for our public affairs and corporate reputation services.
Gross profit increased $4.0 million, or 15.7%, to $29.3 million for the three months ended March 31, 2024. Gross profit margin increased 1.4 percentage points for the three months ended March 31, 2024. The increase in gross profit margin was primarily driven by lower compensation expenses as a percentage of revenues.
SG&A expenses increased $1.2 million, or 7.2%, to $17.7 million for the three months ended March 31, 2024, which included a 1.2% estimated negative impact from FX. SG&A expenses of 21.8% of revenues for the three months ended March 31, 2024 compared with 22.6% of revenues for the three months ended March 31, 2023. The increase in SG&A expenses was primarily driven by higher compensation, infrastructure support, rent and occupancy, and travel and entertainment expenses.
28


CRITICAL ACCOUNTING ESTIMATES
Our discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Note 1 to the Consolidated Financial Statements included in Part II, Item 8, of our Annual Report on Form 10-K for the year ended December 31, 2023 describes the significant accounting policies and methods used in preparation of the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. We evaluate our estimates, including those related to revenues, goodwill and intangible assets, income taxes and contingencies, on an ongoing basis. Our estimates are based on current facts and circumstances, historical experience and various other assumptions that we believe are reasonable, which form the basis for making judgments about the values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting estimates that reflect our more significant judgments, and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results, include the following:
Revenue Recognition
Goodwill and Intangible Assets
There were no material changes to our critical accounting estimates from the information provided in “Critical Accounting Estimates” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, in Part II, Item 7, of our Annual Report on Form 10-K for the year ended December 31, 2023, or from the information provided in Part II, Item 8, of our Annual Report on Form 10-K for the year ended December 31, 2023.
SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS
See Note 2, “New Accounting Standards” in Part I, Item 1, of this Quarterly Report on Form 10-Q.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Our annual cash flows from operations generally exceed our cash needs for capital expenditures and debt service requirements. We typically finance our day-to-day operations, capital expenditures, acquisitions and share repurchases through cash flows from operations. During the first quarter of each fiscal year, our cash needs generally exceed our cash flows from operations due to the payment of annual incentive compensation. We believe that our cash flows from operations, supplemented by borrowings under our Credit Facility, as necessary, will provide adequate cash to fund our cash needs for at least the next 12 months.
Our operating assets and liabilities consist primarily of billed and unbilled accounts receivable, notes receivable from employees, accounts payable, accrued expenses and accrued compensation expenses. The timing of billings and collections of receivables, as well as compensation and vendor payments, affects the changes in these balances.
Results of operations for our non-U.S. subsidiaries are translated from the designated functional currency to our reporting currency of USD. Revenues and expenses are translated at average exchange rates for each month, while assets and liabilities are translated at balance sheet date exchange rates. Resulting net translation adjustments are recorded as a component of stockholders’ equity in “Accumulated other comprehensive loss.”
29


Uncertainties and Trends Affecting Liquidity
Our conclusion that we will be able to fund our cash requirements for at least the next 12 months by using existing capital resources and cash generated from operations does not take into account events beyond our control that could result in a material adverse impact on our business, the impact of any future acquisitions or unexpected significant changes in the number of employees or other unanticipated uses of cash. The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if events such as economic and workforce disruptions arise, including any future impact of future public health crises, or economic or business conditions change from those currently prevailing or from those now anticipated, or if unexpected circumstances or other events beyond our control arise that may have a material adverse effect on the cash flow or profitability of our business, including material negative changes in the health and welfare of our employees or those of our clients, and the operating performance or financial results of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding and could require us to borrow under our Credit Facility or raise additional debt or equity funding to meet those needs. Our ability to borrow or raise additional capital, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:

our future profitability;
the quality of our accounts receivable;
our relative levels of debt and equity;
the volatility and overall condition of the capital markets; and
the market prices of our securities.
Any new debt funding, if available, may be on terms less favorable to us than our Credit Facility. See “Forward-Looking Statements” in Part I, Item 2, of this Quarterly Report on Form 10-Q, and the information contained under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2023. 
Cash Flows
 Three Months Ended March 31,
20242023
Cash Flows(dollars in thousands)
Net cash used in operating activities$(274,818)$(254,206)
Net cash provided by (used in) investing activities$20,606 $(18,012)
Net cash provided by financing activities$198,585 $15,767 
Effect of exchange rate changes on cash and cash equivalents$(3,635)$3,302 
DSO (1)
105 102