FTI Consulting, Inc. (NYSE: FCN) today released financial results
for the third quarter ended September 30, 2023.
Third quarter 2023 revenues of $893.3 million increased $117.4
million, or 15.1%, compared to revenues of $775.9 million in the
prior year quarter. Excluding the estimated positive impact from
foreign currency translation ("FX"), revenues increased $105.4
million, or 13.6%, compared to the prior year quarter. The increase
in revenues was primarily due to higher demand in the Corporate
Finance & Restructuring, Forensic and Litigation Consulting,
Strategic Communications and Technology segments. Net income of
$83.3 million compared to $77.3 million in the prior year quarter.
The increase in net income was due to higher revenues, which was
partially offset by an increase in direct compensation, which
includes the impact of a 7.8% increase in billable headcount,
higher selling, general and administrative (“SG&A”) expenses, a
higher effective tax rate and a decline in FX remeasurement gains
compared to the prior year quarter. Adjusted EBITDA of $118.7
million, or 13.3% of revenues, compared to $99.0 million, or 12.8%
of revenues, in the prior year quarter. Third quarter 2023 earnings
per diluted share (“EPS”) of $2.34 compared to $2.15 in the prior
year quarter.
Steven H. Gunby, President and Chief Executive Officer of FTI
Consulting, commented, “This quarter we, yet again, delivered
record revenues and earnings, reflecting our multi-year commitment
to attract and develop the best professionals and, in turn, support
their commitment to deliver for our clients as they face their
greatest opportunities and challenges.”
Cash Position and Capital Allocation
Net cash provided by operating activities of $106.7 million for
the quarter ended September 30, 2023 compared to $128.3 million for
the quarter ended September 30, 2022. The year-over-year decrease
in net cash provided by operating activities was primarily due to
cash collections not keeping pace with the increase in revenues and
not sufficiently offsetting the increase in salaries and other
employee cash compensation, largely related to headcount growth, as
well as higher operating expenses.
Cash and cash equivalents of $201.1 million at September 30,
2023 compared to $327.0 million at September 30, 2022 and $203.5
million at June 30, 2023. Total debt, net of cash and short-term
investments, of $59.4 million at September 30, 2023 compared to
($10.8) million at September 30, 2022 and $137.2 million at
June 30, 2023. The sequential decrease in total debt, net of cash
and short-term investments, was primarily due to the repayment of
the $315.8 million principal amount of the Company’s 2.0%
convertible senior notes due 2023 at maturity, which was partially
offset by an increase in net borrowings of $285.0 million
under the Company’s senior secured bank revolving credit
facility.
There were no share repurchases during the quarter ended
September 30, 2023. As of September 30, 2023, approximately
$460.7 million remained available for common stock repurchases
under the Company’s stock repurchase program.
Third Quarter 2023 Segment
Results
Corporate Finance & RestructuringRevenues
in the Corporate Finance & Restructuring segment increased
$65.5 million, or 23.2%, to $347.6 million in the quarter compared
to $282.0 million in the prior year quarter. Excluding the
estimated positive impact from FX, revenues increased $62.5
million, or 22.2%, compared to the prior year quarter. The increase
in revenues was primarily due to higher realized bill rates and
demand for restructuring and business transformation & strategy
services, as well as an increase in success fees. Adjusted Segment
EBITDA of $68.1 million, or 19.6% of segment revenues, compared to
$53.5 million, or 19.0% of segment revenues, in the prior year
quarter. The increase in Adjusted Segment EBITDA was primarily due
to higher revenues, which was partially offset by higher
compensation, which includes the impact of a 9.8% increase in
billable headcount, and higher SG&A expenses compared to the
prior year quarter.
Forensic and Litigation ConsultingRevenues in
the Forensic and Litigation Consulting segment increased $22.8
million, or 15.9%, to $166.1 million in the quarter compared to
$143.3 million in the prior year quarter. The increase in revenues
was primarily due to higher demand for investigations, data &
analytics and construction solutions services. Adjusted Segment
EBITDA of $21.5 million, or 12.9% of segment revenues, compared to
$16.2 million, or 11.3% of segment revenues, in the prior year
quarter. The increase in Adjusted Segment EBITDA was primarily due
to higher revenues, which was partially offset by an increase in
compensation and higher SG&A expenses compared to the prior
year quarter.
Economic ConsultingRevenues in the Economic
Consulting segment increased $0.7 million, or 0.4%, to $193.9
million in the quarter compared to $193.2 million in the prior year
quarter. Excluding the estimated positive impact from FX, revenues
decreased $3.5 million, or 1.8%, compared to the prior year
quarter. The decrease in revenues was due to a decline in
non-merger and acquisition (“M&A”)-related antitrust revenues,
which was partially offset by an increase in international
arbitration and M&A-related antitrust revenues. Adjusted
Segment EBITDA of $27.8 million, or 14.3% of segment revenues,
compared to $32.9 million, or 17.0% of segment revenues, in the
prior year quarter. The decrease in Adjusted Segment EBITDA was
primarily due to higher SG&A expenses, which was partially
offset by lower compensation compared to the prior year
quarter.
TechnologyRevenues in the Technology segment
increased $13.9 million, or 16.4%, to $98.9 million in the quarter
compared to $84.9 million in the prior year quarter. Excluding the
estimated positive impact from FX, revenues increased $12.5
million, or 14.7%, compared to the prior year quarter. The increase
in revenues was primarily due to higher demand for investigations
and litigation services, which was partially offset by lower demand
for M&A-related “second request” services. Adjusted Segment
EBITDA of $14.9 million, or 15.0% of segment revenues, compared to
$13.2 million, or 15.6% of segment revenues, in the prior year
quarter. The increase in Adjusted Segment EBITDA was primarily due
to higher revenues, which was partially offset by an increase in
compensation, which includes the impact of a 14.8% increase in
billable headcount, and higher SG&A expenses compared to the
prior year quarter.
Strategic CommunicationsRevenues in the
Strategic Communications segment increased $14.4 million, or 19.9%,
to $86.8 million in the quarter compared to $72.4 million in the
prior year quarter. Excluding the estimated positive impact from
FX, revenues increased $12.1 million, or 16.7%, compared to the
prior year quarter. The increase in revenues was primarily due to
higher demand for corporate reputation and public affairs services.
Adjusted Segment EBITDA of $13.5 million, or 15.5% of segment
revenues, compared to $12.9 million, or 17.9% of segment revenues,
in the prior year quarter. The increase in Adjusted Segment EBITDA
was primarily due to higher revenues, which was partially offset by
an increase in compensation, which includes the impact of a 6.2%
increase in billable headcount, and higher SG&A expenses
compared to the prior year quarter.
Health Solutions Practice RealignmentEffective
July 1, 2023, FTI Consulting modified the composition of two of the
Company’s reportable segments to reflect changes in how FTI
Consulting operates its business. The Company transferred 127
billable professionals from the health solutions practice within
the Forensic and Litigation Consulting segment who focus on
business transformation services in the healthcare and life
sciences sector to the business transformation & strategy
practice in the Corporate Finance & Restructuring segment. This
change aligns this group of professionals with the broader business
transformation capabilities within the Corporate Finance &
Restructuring segment. Eighty-three billable professionals who
focus on advisory and managed care services within the health
solutions practice remained in the Forensic and Litigation
Consulting segment. Prior period Corporate Finance &
Restructuring and Forensic and Litigation Consulting segment
financial information presented in the following Financial Tables
has been reclassified to conform to the current period
presentation.
2023 GuidanceThe Company is raising the lower
end of its full year 2023 guidance ranges for revenues and EPS. The
Company now estimates revenues for full year 2023 will range
between $3.350 billion and $3.400 billion, which compares to the
prior range of between $3.330 billion and $3.400 billion. The
Company now estimates EPS for full year 2023 will range between
$6.70 and $7.20, which compares to the prior range of between $6.50
and $7.20. The Company does not currently expect Adjusted EPS to
differ from EPS.
Third Quarter
2023 Conference CallFTI
Consulting will host a conference call for analysts and investors
to discuss third quarter 2023 financial results at 9:00 a.m.
Eastern Time on Thursday, October 26, 2023. The call can be
accessed live and will be available for replay over the internet
for 90 days by logging onto the Company’s investor relations
website here.
About FTI ConsultingFTI Consulting, Inc. is a
global business advisory firm dedicated to helping organizations
manage change, mitigate risk and resolve disputes: financial,
legal, operational, political & regulatory, reputational and
transactional. With more than 8,000 employees located in 31
countries, FTI Consulting professionals work closely with clients
to anticipate, illuminate and overcome complex business challenges
and make the most of opportunities. The Company generated $3.03
billion in revenues during fiscal year 2022. More information can
be found at www.fticonsulting.com.
Non-GAAP Financial MeasuresIn the accompanying
analysis of financial information, we sometimes use information
derived from consolidated and segment financial information that
may not be presented in our financial statements or prepared in
accordance with generally accepted accounting principles in the
United States ("GAAP"). Certain of these financial measures are
considered not in conformity with GAAP ("non-GAAP financial
measures") under the United States Securities and Exchange
Commission ("SEC") rules. Specifically, we have referred to the
following non-GAAP financial measures:
- Total Segment
Operating Income
- Adjusted EBITDA
- Total Adjusted
Segment EBITDA
- Adjusted EBITDA
Margin
- Adjusted Net
Income
- Adjusted Earnings
per Diluted Share
- Free Cash Flow
We have included the definitions of Segment Operating Income and
Adjusted Segment EBITDA, which are GAAP financial measures, below
in order to more fully define the components of certain non-GAAP
financial measures presented in this press release. We define
Segment Operating Income as a segment’s share of consolidated
operating income. We define Total Segment Operating Income, which
is a non-GAAP financial measure, as the total of Segment Operating
Income for all segments, which excludes unallocated corporate
expenses. We use Segment Operating Income for the purpose of
calculating Adjusted Segment EBITDA. We define Adjusted Segment
EBITDA as a segment’s share of consolidated operating income before
depreciation, amortization of intangible assets, remeasurement of
acquisition-related contingent consideration, special charges and
goodwill impairment charges. We use Adjusted Segment EBITDA as a
basis to internally evaluate the financial performance of our
segments because we believe it reflects current core operating
performance and provides an indicator of the segment’s ability to
generate cash.
We define Total Adjusted Segment EBITDA, which is a non-GAAP
financial measure, as the total of Adjusted Segment EBITDA for all
segments, which excludes unallocated corporate expenses. We define
Adjusted EBITDA, which is a non-GAAP financial measure, as
consolidated net income before income tax provision, other
non-operating income (expense), depreciation, amortization of
intangible assets, remeasurement of acquisition-related contingent
consideration, special charges, goodwill impairment charges, gain
or loss on sale of a business and losses on early extinguishment of
debt. We believe that these non-GAAP financial measures, when
considered together with our GAAP financial results and GAAP
financial measures, provide management and investors with a more
complete understanding of our operating results, including
underlying trends. In addition, EBITDA is a common alternative
measure of operating performance used by many of our competitors.
It is used by investors, financial analysts, rating agencies and
others to value and compare the financial performance of companies
in our industry. Therefore, we also believe that these non-GAAP
financial measures, considered along with corresponding GAAP
financial measures, provide management and investors with
additional information for comparison of our operating results with
the operating results of other companies. We define Adjusted EBITDA
Margin, which is a non-GAAP financial measure, as Adjusted EBITDA
as a percentage of total revenues.
We define Adjusted Net Income and Adjusted Earnings per Diluted
Share ("Adjusted EPS"), which are non-GAAP financial measures, as
net income and EPS, respectively, excluding the impact of
remeasurement of acquisition-related contingent consideration,
special charges, goodwill impairment charges, losses on early
extinguishment of debt, non-cash interest expense on convertible
notes and the gain or loss on sale of a business. We use Adjusted
Net Income for the purpose of calculating Adjusted EPS. Management
uses Adjusted EPS to assess total Company operating performance on
a consistent basis. We believe that these non-GAAP financial
measures, when considered together with our GAAP financial results
and GAAP financial measures, provide management and investors with
an additional understanding of our business operating results,
including underlying trends.
We define Free Cash Flow, which is a non-GAAP financial measure,
as net cash provided by (used in) operating activities less cash
payments for purchases of property and equipment. We believe this
non-GAAP financial measure, when considered together with our GAAP
financial results, provides management and investors with an
additional understanding of the Company’s ability to generate cash
for ongoing business operations and other capital deployment.
Non-GAAP financial measures are not defined in the same manner
by all companies and may not be comparable with other similarly
titled measures of other companies. Non-GAAP financial measures
should be considered in addition to, but not as a substitute for or
superior to, the information contained in our Condensed
Consolidated Statements of Comprehensive Income and Condensed
Consolidated Statements of Cash Flows. Reconciliations of these
non-GAAP financial measures to the most directly comparable GAAP
financial measures are included in the financial tables
accompanying this press release.
Safe Harbor Statement
This press release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which involve uncertainties and risks. Forward-looking
statements include statements concerning our plans, initiatives,
projections, prospects, policies and practices, objectives, goals,
commitments, strategies, future events, future revenues, future
results and performance, expectations, plans or intentions relating
to acquisitions, share repurchases and other matters, business
trends, new or changes to laws and regulations, including U.S. and
foreign tax laws, environmental, social and governance
("ESG")-related issues, climate change-related matters, scientific
and technological developments, and other information that is not
historical, including statements regarding estimates of our future
financial results. When used in this press release, words such as
"estimates," "expects," "anticipates," "projects," "plans,"
"intends," "believes," "commits," "aspires," "forecasts," "future,"
"goal," "seeks" and variations of such words or similar expressions
are intended to identify forward-looking statements. All
forward-looking statements, including, without limitation,
estimates of our future financial results, are based upon our
expectations at the time we make them and various assumptions. Our
actual financial results, performance or achievements and outcomes
could differ materially from those expressed in, or implied by, any
forward-looking statements. Further, unaudited quarterly results
are subject to normal year-end adjustments. The Company has
experienced fluctuating revenues, operating income and cash flows
in prior periods and expects that this will occur from time to time
in the future. Any references to standards of measurement and
performance made regarding our climate change-, ESG- or other
sustainability-related plans, goals, commitments, intentions,
aspirations, forecasts or projections, or expectations are
developing and based on assumptions. Our expectations, beliefs and
projections are expressed in good faith, and we believe there is a
reasonable basis for them. However, there can be no assurance that
management’s plans, expectations, intentions, aspirations, beliefs,
goals, estimates, forecasts and projections, including any that are
ESG- or sustainability-related, will result or be achieved. 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 or any future public health crisis, and related
events that are beyond our control, which could affect our
segments, practices and the geographic regions in which we conduct
business differently and adversely; and other future events, which
could impact each of our segments, practices and the geographic
regions in which we conduct business differently and could be
outside of our control; the pace and timing of the consummation and
integration of future acquisitions; the Company’s ability to
realize cost savings and efficiencies; competitive and general
economic conditions; retention of staff and clients; new laws and
regulations or changes thereto; and other risks described under the
heading "Item 1A, Risk Factors" in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2022 filed with the SEC
on February 23, 2023 and in the Company’s other filings with the
SEC. We are under no duty to update any of the forward-looking
statements to conform such statements to actual results or events
and do not intend to do so.
FINANCIAL TABLES FOLLOW
FTI Consulting, Inc. 555 12th Street
NWWashington, DC 20004+1.202.312.9100
Investor & Media Contact:Mollie
Hawkes+1.617.747.1791mollie.hawkes@fticonsulting.com
|
FTI CONSULTING, INC.CONDENSED CONSOLIDATED
BALANCE SHEETS (in thousands, except per share
amounts) |
|
|
|
|
|
September 30, |
|
December 31, |
|
2023 |
|
2022 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
201,148 |
|
|
$ |
491,688 |
|
Accounts receivable, net |
|
1,207,016 |
|
|
|
896,153 |
|
Current portion of notes receivable |
|
32,095 |
|
|
|
27,292 |
|
Prepaid expenses and other current assets |
|
126,967 |
|
|
|
95,469 |
|
Total current assets |
|
1,567,226 |
|
|
|
1,510,602 |
|
Property and equipment, net |
|
164,922 |
|
|
|
153,466 |
|
Operating lease assets |
|
202,505 |
|
|
|
203,764 |
|
Goodwill |
|
1,226,356 |
|
|
|
1,227,593 |
|
Intangible assets, net |
|
19,233 |
|
|
|
25,514 |
|
Notes receivable, net |
|
73,673 |
|
|
|
55,978 |
|
Other assets |
|
64,911 |
|
|
|
64,490 |
|
Total assets |
$ |
3,318,826 |
|
|
$ |
3,241,407 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable, accrued expenses and other |
$ |
170,518 |
|
|
$ |
173,953 |
|
Accrued compensation |
|
481,007 |
|
|
|
541,892 |
|
Billings in excess of services provided |
|
57,006 |
|
|
|
53,646 |
|
Total current liabilities |
|
708,531 |
|
|
|
769,491 |
|
Long-term debt, net |
|
285,000 |
|
|
|
315,172 |
|
Noncurrent operating lease liabilities |
|
217,755 |
|
|
|
221,604 |
|
Deferred income taxes |
|
157,724 |
|
|
|
162,374 |
|
Other liabilities |
|
85,321 |
|
|
|
91,045 |
|
Total liabilities |
|
1,454,331 |
|
|
|
1,559,686 |
|
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 — 35,510 (2023) and 34,026
(2022) |
|
355 |
|
|
|
340 |
|
Additional paid-in capital |
|
9,712 |
|
|
|
— |
|
Retained earnings |
|
2,033,132 |
|
|
|
1,858,103 |
|
Accumulated other comprehensive loss |
|
(178,704 |
) |
|
|
(176,722 |
) |
Total stockholders’ equity |
|
1,864,495 |
|
|
|
1,681,721 |
|
Total liabilities and stockholders’ equity |
$ |
3,318,826 |
|
|
$ |
3,241,407 |
|
|
|
FTI CONSULTING, INC.CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME(in thousands,
except per share data) |
|
|
|
Three Months EndedSeptember
30, |
|
|
2023 |
|
2022 |
|
(Unaudited) |
Revenues |
$ |
893,261 |
|
|
$ |
775,865 |
|
Operating
expenses |
|
|
|
Direct cost of revenues |
|
598,804 |
|
|
|
526,654 |
|
Selling, general and administrative expenses |
|
186,088 |
|
|
|
159,186 |
|
Amortization of intangible assets |
|
1,340 |
|
|
|
2,315 |
|
|
|
786,232 |
|
|
|
688,155 |
|
Operating
income |
|
107,029 |
|
|
|
87,710 |
|
Other income
(expense) |
|
|
|
Interest income and other |
|
5,147 |
|
|
|
7,771 |
|
Interest expense |
|
(4,474 |
) |
|
|
(2,378 |
) |
|
|
673 |
|
|
|
5,393 |
|
Income before income
tax provision |
|
107,702 |
|
|
|
93,103 |
|
Income tax
provision |
|
24,385 |
|
|
|
15,836 |
|
Net
income |
$ |
83,317 |
|
|
$ |
77,267 |
|
Earnings per common
share ― basic |
$ |
2.44 |
|
|
$ |
2.29 |
|
Weighted average
common shares outstanding ― basic |
|
34,128 |
|
|
|
33,812 |
|
Earnings per common
share ― diluted |
$ |
2.34 |
|
|
$ |
2.15 |
|
Weighted average
common shares outstanding ― diluted |
|
35,656 |
|
|
|
35,918 |
|
Other comprehensive
loss, net of tax |
|
|
|
Foreign currency translation adjustments, net of tax expense of
$0 |
$ |
(18,228 |
) |
|
$ |
(48,475 |
) |
Total other
comprehensive loss, net of tax |
|
(18,228 |
) |
|
|
(48,475 |
) |
Comprehensive
income |
$ |
65,089 |
|
|
$ |
28,792 |
|
|
|
FTI CONSULTING, INC.CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME(in thousands,
except per share data) |
|
|
|
Nine Months Ended September
30, |
|
|
2023 |
|
2022 |
|
(Unaudited) |
Revenues |
$ |
2,564,558 |
|
|
$ |
2,254,477 |
|
Operating
expenses |
|
|
|
Direct cost of revenues |
|
1,740,407 |
|
|
|
1,539,838 |
|
Selling, general and administrative expenses |
|
556,672 |
|
|
|
476,097 |
|
Amortization of intangible assets |
|
4,939 |
|
|
|
7,320 |
|
|
|
2,302,018 |
|
|
|
2,023,255 |
|
Operating
income |
|
262,540 |
|
|
|
231,222 |
|
Other income
(expense) |
|
|
|
Interest income and other |
|
3,221 |
|
|
|
10,418 |
|
Interest expense |
|
(10,435 |
) |
|
|
(7,468 |
) |
|
|
(7,214 |
) |
|
|
2,950 |
|
Income before income
tax provision |
|
255,326 |
|
|
|
234,172 |
|
Income tax
provision |
|
62,067 |
|
|
|
46,156 |
|
Net
income |
$ |
193,259 |
|
|
$ |
188,016 |
|
Earnings per common
share ― basic |
$ |
5.75 |
|
|
$ |
5.57 |
|
Weighted average
common shares outstanding ― basic |
|
33,599 |
|
|
|
33,741 |
|
Earnings per common
share ― diluted |
$ |
5.43 |
|
|
$ |
5.25 |
|
Weighted average
common shares outstanding ― diluted |
|
35,599 |
|
|
|
35,825 |
|
Other comprehensive
loss, net of tax |
|
|
|
Foreign currency translation adjustments, net of tax expense of
$0 |
$ |
(1,982 |
) |
|
$ |
(95,345 |
) |
Total other
comprehensive loss, net of tax |
|
(1,982 |
) |
|
|
(95,345 |
) |
Comprehensive
income |
$ |
191,277 |
|
|
$ |
92,671 |
|
|
|
FTI CONSULTING, INC.RECONCILIATION OF NET
INCOME AND OPERATING INCOME TO ADJUSTED EBITDA(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30,
2023(Unaudited) |
|
Corporate Finance & Restructuring |
|
Forensic and Litigation Consulting |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Unallocated Corporate |
|
Total |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
83,317 |
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,147 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,474 |
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,385 |
|
Operating income |
|
$ |
64,633 |
|
$ |
19,708 |
|
$ |
26,293 |
|
$ |
11,481 |
|
$ |
12,503 |
|
$ |
(27,589 |
) |
|
$ |
107,029 |
|
Depreciation and amortization |
|
|
2,414 |
|
|
1,548 |
|
|
1,463 |
|
|
3,392 |
|
|
882 |
|
|
680 |
|
|
|
10,379 |
|
Amortization of intangible assets |
|
|
1,047 |
|
|
224 |
|
|
— |
|
|
— |
|
|
69 |
|
|
— |
|
|
|
1,340 |
|
Adjusted
EBITDA |
|
$ |
68,094 |
|
$ |
21,480 |
|
$ |
27,756 |
|
$ |
14,873 |
|
$ |
13,454 |
|
$ |
(26,909 |
) |
|
$ |
118,748 |
|
Nine Months EndedSeptember 30,
2023(Unaudited) |
|
Corporate Finance & Restructuring |
|
Forensic and Litigation Consulting |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Unallocated Corporate |
|
Total |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
193,259 |
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,221 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,435 |
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,067 |
|
Operating income |
|
$ |
154,724 |
|
$ |
63,881 |
|
$ |
73,017 |
|
$ |
39,803 |
|
$ |
32,464 |
|
$ |
(101,349 |
) |
|
$ |
262,540 |
|
Depreciation and amortization |
|
|
6,657 |
|
|
4,349 |
|
|
4,455 |
|
|
10,523 |
|
|
2,570 |
|
|
1,372 |
|
|
|
29,926 |
|
Amortization of intangible assets |
|
|
4,069 |
|
|
631 |
|
|
— |
|
|
— |
|
|
239 |
|
|
— |
|
|
|
4,939 |
|
Adjusted
EBITDA |
|
$ |
165,450 |
|
$ |
68,861 |
|
$ |
77,472 |
|
$ |
50,326 |
|
$ |
35,273 |
|
$ |
(99,977 |
) |
|
$ |
297,405 |
|
Three Months EndedSeptember 30,
2022(Unaudited) |
|
Corporate Finance & Restructuring
(1) |
|
Forensic and Litigation Consulting
(1) |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Unallocated Corporate |
|
Total |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
77,267 |
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,771 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,378 |
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,836 |
|
Operating income |
|
$ |
49,865 |
|
$ |
14,653 |
|
$ |
31,674 |
|
$ |
9,833 |
|
$ |
12,155 |
|
$ |
(30,470 |
) |
|
$ |
87,710 |
|
Depreciation and amortization |
|
|
1,745 |
|
|
1,280 |
|
|
1,239 |
|
|
3,380 |
|
|
629 |
|
|
676 |
|
|
|
8,949 |
|
Amortization of intangible assets |
|
|
1,909 |
|
|
242 |
|
|
— |
|
|
— |
|
|
163 |
|
|
1 |
|
|
|
2,315 |
|
Adjusted
EBITDA |
|
$ |
53,519 |
|
$ |
16,175 |
|
$ |
32,913 |
|
$ |
13,213 |
|
$ |
12,947 |
|
$ |
(29,793 |
) |
|
$ |
98,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months EndedSeptember 30,
2022(Unaudited) |
|
Corporate Finance & Restructuring
(1) |
|
Forensic and Litigation Consulting
(1) |
|
Economic Consulting |
|
Technology |
|
Strategic Communications |
|
Unallocated Corporate |
|
Total |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
188,016 |
|
Interest income and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,418 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,468 |
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,156 |
|
Operating
income |
|
$ |
154,416 |
|
$ |
41,646 |
|
$ |
72,056 |
|
$ |
25,005 |
|
$ |
37,623 |
|
$ |
(99,524 |
) |
|
$ |
231,222 |
|
Depreciation and amortization |
|
|
5,231 |
|
|
4,083 |
|
|
3,698 |
|
|
9,935 |
|
|
1,962 |
|
|
2,136 |
|
|
|
27,045 |
|
Amortization of intangible assets |
|
|
6,036 |
|
|
735 |
|
|
— |
|
|
— |
|
|
548 |
|
|
1 |
|
|
|
7,320 |
|
Adjusted
EBITDA |
|
$ |
165,683 |
|
$ |
46,464 |
|
$ |
75,754 |
|
$ |
34,940 |
|
$ |
40,133 |
|
$ |
(97,387 |
) |
|
$ |
265,587 |
|
(1) Effective July 1, 2023, Corporate Finance &
Restructuring and Forensic and Litigation Consulting segment
information for the prior periods has been recast in this press
release to include the reclassification of the portion of the
Company’s health solutions practice in the Forensic and Litigation
Consulting segment to the Company’s business transformation &
strategy practice within the Corporate Finance & Restructuring
segment.
|
FTI CONSULTING, INC.OPERATING RESULTS BY
BUSINESS SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Revenues |
|
AdjustedEBITDA |
|
Adjusted EBITDAMargin |
|
Utilization |
|
Average
BillableRate |
|
Revenue-GeneratingHeadcount |
|
(in thousands) |
|
|
|
|
|
|
|
(at period end) |
Three Months Ended
September 30, 2023(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance & Restructuring |
$ |
347,560 |
|
$ |
68,094 |
|
|
19.6 |
% |
|
60 |
% |
|
$ |
514 |
|
2,251 |
Forensic and Litigation Consulting |
|
166,137 |
|
|
21,480 |
|
|
12.9 |
% |
|
57 |
% |
|
$ |
388 |
|
1,503 |
Economic Consulting |
|
193,866 |
|
|
27,756 |
|
|
14.3 |
% |
|
65 |
% |
|
$ |
559 |
|
1,085 |
Technology (1) |
|
98,860 |
|
|
14,873 |
|
|
15.0 |
% |
|
N/M |
|
N/M |
|
629 |
Strategic Communications (1) |
|
86,838 |
|
|
13,454 |
|
|
15.5 |
% |
|
N/M |
|
N/M |
|
1,010 |
|
$ |
893,261 |
|
$ |
145,657 |
|
|
16.3 |
% |
|
|
|
|
|
6,478 |
Unallocated Corporate |
|
|
|
(26,909 |
) |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
$ |
118,748 |
|
|
13.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2023(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance & Restructuring |
$ |
981,124 |
|
$ |
165,450 |
|
|
16.9 |
% |
|
59 |
% |
|
$ |
492 |
|
2,251 |
Forensic and Litigation Consulting |
|
488,636 |
|
|
68,861 |
|
|
14.1 |
% |
|
58 |
% |
|
$ |
384 |
|
1,503 |
Economic Consulting |
|
565,283 |
|
|
77,472 |
|
|
13.7 |
% |
|
67 |
% |
|
$ |
533 |
|
1,085 |
Technology (1) |
|
286,922 |
|
|
50,326 |
|
|
17.5 |
% |
|
N/M |
|
N/M |
|
629 |
Strategic Communications (1) |
|
242,593 |
|
|
35,273 |
|
|
14.5 |
% |
|
N/M |
|
N/M |
|
1,010 |
|
$ |
2,564,558 |
|
$ |
397,382 |
|
|
15.5 |
% |
|
|
|
|
|
6,478 |
Unallocated Corporate |
|
|
|
(99,977 |
) |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
$ |
297,405 |
|
|
11.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2022(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance & Restructuring (2) |
$ |
282,029 |
|
$ |
53,519 |
|
|
19.0 |
% |
|
61 |
% |
|
$ |
445 |
|
2,050 |
Forensic and Litigation Consulting (2) |
|
143,289 |
|
|
16,175 |
|
|
11.3 |
% |
|
53 |
% |
|
$ |
360 |
|
1,464 |
Economic Consulting |
|
193,183 |
|
|
32,913 |
|
|
17.0 |
% |
|
67 |
% |
|
$ |
579 |
|
998 |
Technology (1) |
|
84,915 |
|
|
13,213 |
|
|
15.6 |
% |
|
N/M |
|
N/M |
|
548 |
Strategic Communications (1) |
|
72,449 |
|
|
12,947 |
|
|
17.9 |
% |
|
N/M |
|
N/M |
|
951 |
|
$ |
775,865 |
|
$ |
128,767 |
|
|
16.6 |
% |
|
|
|
|
|
6,011 |
Unallocated Corporate |
|
|
|
(29,793 |
) |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
$ |
98,974 |
|
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2022(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Corporate Finance & Restructuring (2) |
$ |
841,804 |
|
$ |
165,683 |
|
|
19.7 |
% |
|
62 |
% |
|
$ |
448 |
|
2,050 |
Forensic and Litigation Consulting (2) |
|
432,054 |
|
|
46,464 |
|
|
10.8 |
% |
|
55 |
% |
|
$ |
355 |
|
1,464 |
Economic Consulting |
|
523,201 |
|
|
75,754 |
|
|
14.5 |
% |
|
70 |
% |
|
$ |
506 |
|
998 |
Technology (1) |
|
243,181 |
|
|
34,940 |
|
|
14.4 |
% |
|
N/M |
|
N/M |
|
548 |
Strategic Communications (1) |
|
214,237 |
|
|
40,133 |
|
|
18.7 |
% |
|
N/M |
|
N/M |
|
951 |
|
$ |
2,254,477 |
|
$ |
362,974 |
|
|
16.1 |
% |
|
|
|
|
|
6,011 |
Unallocated Corporate |
|
|
|
(97,387 |
) |
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
$ |
265,587 |
|
|
11.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/M Not meaningful (1) The majority of the Technology and
Strategic Communications segments' revenues are not generated based
on billable hours. Accordingly, utilization and average billable
rate metrics are not presented as they are not meaningful as a
segment-wide metric.(2) Effective July 1, 2023, Corporate
Finance & Restructuring and Forensic and Litigation Consulting
segment information for the prior periods has been recast in this
press release to include the reclassification of the portion of the
Company’s health solutions practice in the Forensic and Litigation
Consulting segment to the Company’s business transformation &
strategy practice within the Corporate Finance & Restructuring
segment.
|
FTI CONSULTING, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(in
thousands) |
|
|
|
Nine Months Ended September
30, |
|
|
2023 |
|
2022 |
|
(Unaudited) |
Operating
activities |
|
|
|
Net income |
$ |
193,259 |
|
|
$ |
188,016 |
|
Adjustments to reconcile net
income to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
|
29,926 |
|
|
|
27,045 |
|
Amortization of intangible assets |
|
4,939 |
|
|
|
7,320 |
|
Acquisition-related contingent consideration |
|
4,263 |
|
|
|
863 |
|
Provision for expected credit losses |
|
21,347 |
|
|
|
13,101 |
|
Share-based compensation |
|
21,412 |
|
|
|
18,491 |
|
Amortization of debt issuance costs and other |
|
1,722 |
|
|
|
1,588 |
|
Deferred income taxes |
|
(4,602 |
) |
|
|
(9,140 |
) |
Changes in operating assets and liabilities, net of effects from
acquisitions: |
|
|
|
Accounts receivable, billed and unbilled |
|
(333,713 |
) |
|
|
(251,280 |
) |
Notes receivable |
|
(22,600 |
) |
|
|
838 |
|
Prepaid expenses and other assets |
|
(3,252 |
) |
|
|
(3,066 |
) |
Accounts payable, accrued expenses and other |
|
(8,895 |
) |
|
|
21,936 |
|
Income taxes |
|
(347 |
) |
|
|
3,940 |
|
Accrued compensation |
|
(65,394 |
) |
|
|
(67,763 |
) |
Billings in excess of services provided |
|
3,410 |
|
|
|
7,672 |
|
Net cash used in operating activities |
|
(158,525 |
) |
|
|
(40,439 |
) |
Investing
activities |
|
|
|
Payments for acquisition of businesses, net of cash received |
|
— |
|
|
|
(6,742 |
) |
Purchases of property and equipment and other |
|
(43,224 |
) |
|
|
(38,935 |
) |
Purchase of short-term investment |
|
(24,356 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(67,580 |
) |
|
|
(45,677 |
) |
Financing
activities |
|
|
|
Borrowings under revolving line of credit |
|
725,000 |
|
|
|
165,000 |
|
Repayments under revolving line of credit |
|
(440,000 |
) |
|
|
(165,000 |
) |
Repayment of convertible notes |
|
(315,763 |
) |
|
|
— |
|
Purchase and retirement of common stock |
|
(20,982 |
) |
|
|
(23,530 |
) |
Share-based compensation tax withholdings and other |
|
(14,003 |
) |
|
|
(15,663 |
) |
Payments for business acquisition liabilities |
|
(3,651 |
) |
|
|
(4,848 |
) |
Deposits and other |
|
2,319 |
|
|
|
7,092 |
|
Net cash used in financing activities |
|
(67,080 |
) |
|
|
(36,949 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
2,645 |
|
|
|
(44,373 |
) |
Net decrease in cash and cash
equivalents |
|
(290,540 |
) |
|
|
(167,438 |
) |
Cash and cash equivalents,
beginning of period |
|
491,688 |
|
|
|
494,485 |
|
Cash and cash equivalents, end
of period |
$ |
201,148 |
|
|
$ |
327,047 |
|
FTI Consulting (NYSE:FCN)
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