- Record Fourth Quarter 2017 Revenues of $467.7 million, up 5.8% compared to Prior Year Quarter
- Fourth Quarter Fully Diluted EPS of $1.78 compared to $0.17 in Prior Year Quarter; Favorable Impact of $44.9 million from the 2017 U.S. Tax Cuts and Jobs Act
- Adjusted EPS of $0.78 compared to $0.24 in Prior Year Quarter
WASHINGTON, Feb. 22, 2018 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN) today released its financial results for the fourth quarter and full year ended December 31, 2017.
Full Year 2017 Results
- Revenues of $1.808 billion were down 0.1% compared to the prior year
- Net income of $108.0 million was up 26.2% compared to the prior year
- Adjusted EBITDA of $192.0 million was down 5.4% compared to the prior year
- Fully diluted EPS of $2.75 was up 34.1% compared to the prior year
- Adjusted EPS of $2.32 was up 3.6% compared to the prior year
- $168.0 million returned through share repurchases during full year 2017
Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “We are, of course, pleased with our very strong results in both the third and fourth quarters. These results reflect, in part, actions we took earlier in the year, but more fundamentally, they reflect the deep focus that our professionals have on helping our clients successfully navigate the largest and most significant issues they face.”
For the full year 2017, revenues of $1.808 billion declined $2.7 million, or 0.1%, compared to $1.810 billion in the prior year. The decline in revenues was primarily due to lower demand in the Economic Consulting and Technology segments, which was partially offset by higher demand in the Forensic and Litigation Consulting segment. Net income increased 26.2% to $108.0 million compared to $85.5 million in the prior year. The increase was largely due to a $44.9 million discrete tax benefit recorded in the fourth quarter, resulting from the adoption of the 2017 U.S. Tax Cuts and Jobs Act (“2017 Tax Act”). This benefit was partially offset by $40.9 million of special charges, $10.8 million of which were recorded in the fourth quarter, reflecting targeted headcount and real estate reduction actions. Adjusted EBITDA was $192.0 million, or 10.6% of revenues, compared to $203.0 million, or 11.2% of revenues, in the prior year. The Adjusted EBITDA decline resulted primarily from lower revenues during the first half of 2017. Adjusted EBITDA significantly improved during the second half of 2017, primarily as a result of revenue growth and cost-cutting actions taken at the end of the second quarter of 2017.
Full year 2017 fully diluted earnings per share (“EPS”) of $2.75 compared to $2.05 in the prior year. Full year 2017 EPS included the $44.9 million 2017 Tax Act benefit, which increased EPS by $1.14, and the $40.9 million special charge related to headcount and real estate reductions, which reduced EPS by $0.70. Full year 2017 Adjusted EPS, which excludes the 2017 Tax Act benefit and the special charges, of $2.32 compared to $2.24 in the prior year.
Cash Position and Capital Allocation
Net cash provided by operating activities of $147.6 million for the year ended December 31, 2017 compared to $233.5 million for the year ended December 31, 2016. The year-over-year difference in operating cash flows was primarily due to increased compensation payments, including severance, and lower cash receipts.
In 2017, the Company used approximately $168.0 million to repurchase 4,674,418 shares of its common stock at an average price per share of $35.94. As of December 31, 2017, approximately $113.3 million remained available for stock repurchases under the Company’s $300.0 million share repurchase authorization.
The Company increased the balance drawn on its credit facility by $30.0 million during 2017. Total debt of $400.0 million at December 31, 2017 compared to total debt of $370.0 million at December 31, 2016. Cash and cash equivalents were $190.0 million at December 31, 2017 compared to $216.2 million at December 31, 2016. Total debt, net of cash, was $210.0 million at December 31, 2017, up from $153.8 million at December 31, 2016.
Fourth Quarter 2017 Results
Fourth quarter 2017 revenues of $467.7 million increased $25.8 million, or 5.8%, compared to revenues of $441.9 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation (“FX”), revenues increased by $19.2 million, or 4.3%, compared to the prior year quarter. The increase in revenues was primarily driven by higher demand within the Corporate Finance & Restructuring and Forensic and Litigation Consulting segments, which was partially offset by reduced demand in the Economic Consulting segment. Net income of $66.9 million compared to $7.1 million in the prior year quarter. The increase was largely due to the $44.9 million 2017 Tax Act benefit and higher revenues. Adjusted EBITDA was $55.5 million, or 11.9% of revenues, compared to $30.3 million, or 6.9% of revenues, in the prior year quarter. The increase in Adjusted EBITDA was primarily due to higher revenues, improved utilization and lower general and administrative costs.
Fourth quarter 2017 EPS of $1.78 compared to $0.17 in the prior year quarter. Fourth quarter 2017 EPS included the 2017 Tax Act benefit of $44.9 million, which increased EPS by $1.19, and the $10.8 million special charge related to headcount reductions, which reduced EPS by $0.19. Fourth quarter 2017 Adjusted EPS, which excludes the 2017 Tax Act benefit and special charge, of $0.78 compared to $0.24 in the prior year quarter.
Fourth Quarter 2017 Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $17.2 million, or 15.2%, to $130.5 million in the quarter compared to $113.4 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $15.7 million, or 13.8%, compared to the prior year quarter. The increase in revenues was due to higher demand for restructuring, business transformation and transaction services. Adjusted Segment EBITDA was $25.8 million, or 19.7% of segment revenues, compared to $16.3 million, or 14.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $15.4 million, or 14.6%, to $120.9 million in the quarter, compared to $105.5 million in the prior year quarter. The increase in revenues was driven by improved demand for global investigations, construction solutions and dispute services, which was partially offset by lower demand for health solutions services. Adjusted Segment EBITDA was $23.6 million, or 19.5% of segment revenues, compared to $6.3 million, or 6.0% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues with improved utilization.
Economic Consulting
Revenues in the Economic Consulting segment decreased $8.2 million, or 6.4%, to $121.1 million in the quarter compared to $129.3 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues decreased $10.3 million, or 8.0%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for antitrust services. Adjusted Segment EBITDA was $14.3 million, or 11.8% of segment revenues, compared to $19.0 million, or 14.7% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues and higher bad debt expense, which was partially offset by lower compensation.
Technology
Revenues in the Technology segment decreased $2.6 million, or 5.9%, to $40.9 million in the quarter compared to $43.5 million in the prior year quarter. The decrease in revenues was primarily due to lower demand for managed review services, which was partially offset by higher demand for consulting services. Adjusted Segment EBITDA was $3.0 million, or 7.3% of segment revenues, compared to $5.6 million, or 12.8% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues.
Strategic Communications
Revenues in the Strategic Communications segment increased $4.0 million, or 8.0%, to $54.3 million in the quarter compared to $50.3 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $2.2 million, or 4.3%, compared to the prior year quarter. The increase in revenues was primarily driven by higher retained revenues from public affairs and corporate reputation services in Europe, the Middle East and Africa. Adjusted Segment EBITDA was $10.5 million, or 19.4% of segment revenues, compared to $8.4 million, or 16.7% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by higher compensation costs.
2018 Guidance
The Company estimates that revenues for full year 2018 will be in the range of $1.825 billion and $1.875 billion. The Company estimates that full year 2018 EPS will be in the range of $2.35 and $2.65. The Company does not expect Adjusted EPS to differ from EPS.
Fourth Quarter and Full Year 2017 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year 2017 financial results at 9:00 a.m. Eastern Time on February 22, 2018. The call can be accessed live and will be available for replay over the Internet for 90 days by logging onto the Company’s investor relations website here.
About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 4,600 employees located in 28 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 $1.81 billion in revenues during fiscal year 2017. More information can be found at http://www.fticonsulting.com/.
Use of Non-GAAP 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 (“GAAP”). Certain of these measures are considered “non-GAAP financial measures” under the Securities and Exchange Commission (“SEC”) rules. Specifically, we have referred to the following non-GAAP 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 below in order to more fully define the components of certain non-GAAP financial measures presented in this earnings 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 and losses on early extinguishment of debt. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. We believe that the non-GAAP financial measures, which exclude the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges, when considered together with our GAAP financial results and GAAP 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 measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results with the operating results of other companies.
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, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the adjustment related to the adoption of the 2017 U.S. Tax Cuts and Jobs Act (“2017 Tax Act”). 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 this non-GAAP financial measure, which excludes the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt and the 2017 Tax Act, when considered together with our GAAP financial results, provides management and investors with an additional understanding of our business operating results, including underlying trends.
We define Free Cash Flow as net cash provided by operating activities less cash payments for purchases of property and equipment. We believe this non-GAAP financial measure, when considered together with our GAAP financial results, provides management and investors with an additional understanding of the Company's ability to generate cash for ongoing business operations and other capital deployment.
Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable with other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Income. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.
Safe Harbor Statement
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve uncertainties and risks. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions, share repurchases and other matters, business trends and other information that is not historical, including statements regarding estimates of our future financial results. When used in this press release, words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, estimates of our future financial results, are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and estimates will be achieved, and the Company's actual results may differ materially from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flows in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer, the mix of the geographic locations where our clients are located or where services are performed, fluctuations in the price per share of our common stock, adverse financial, real estate, or other market and general economic conditions, and other future events, which could impact each of our segments 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, including the 2017 U.S. Tax Cuts and Jobs Act (“2017 Tax Act”), 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, 2017, filed with the SEC, including the risks set forth under “Risks Related to Our Reportable Segments” and “Risks Related to Our Operations,” and in the Company's other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.
FINANCIAL TABLES FOLLOW
| FTI CONSULTING, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except per share amounts) | ||||||||
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 189,961 | $ | 216,158 | ||||
| Accounts receivable: | ||||||||
| Billed receivables | 390,996 | 365,385 | ||||||
| Unbilled receivables | 312,569 | 288,331 | ||||||
| Allowances for doubtful accounts and unbilled services | (180,687 | ) | (178,819 | ) | ||||
| Accounts receivable, net | 522,878 | 474,897 | ||||||
| Current portion of notes receivable | 25,691 | 31,864 | ||||||
| Prepaid expenses and other current assets | 55,649 | 60,252 | ||||||
| Total current assets | 794,179 | 783,171 | ||||||
| Property and equipment, net of accumulated depreciation | 75,075 | 61,856 | ||||||
| Goodwill | 1,204,803 | 1,180,001 | ||||||
| Other intangible assets, net of amortization | 44,150 | 52,120 | ||||||
| Notes receivable, net of current portion | 98,105 | 104,524 | ||||||
| Other assets | 40,929 | 43,696 | ||||||
| Total assets | $ | 2,257,241 | $ | 2,225,368 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable, accrued expenses and other | $ | 94,873 | $ | 87,320 | ||||
| Accrued compensation | 268,513 | 261,500 | ||||||
| Billings in excess of services provided | 46,942 | 29,635 | ||||||
| Total current liabilities | 410,328 | 378,455 | ||||||
| Long-term debt, net | 396,284 | 365,528 | ||||||
| Deferred income taxes | 124,471 | 173,799 | ||||||
| Other liabilities | 134,187 | 100,228 | ||||||
| Total liabilities | 1,065,270 | 1,018,010 | ||||||
| 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 — 37,729 (2017) and 42,037 (2016) | 377 | 420 | ||||||
| Additional paid-in capital | 266,035 | 416,816 | ||||||
| Retained earnings | 1,045,774 | 941,001 | ||||||
| Accumulated other comprehensive loss | (120,215 | ) | (150,879 | ) | ||||
| Total stockholders' equity | 1,191,971 | 1,207,358 | ||||||
| Total liabilities and stockholders' equity | $ | 2,257,241 | $ | 2,225,368 | ||||
| FTI CONSULTING, INC. | |||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||
| (in thousands, except per share data) | |||||||
| (unaudited) | |||||||
| Three Months Ended | |||||||
| December 31, | |||||||
| 2017 | 2016 | ||||||
| Revenues | $ | 467,711 | $ | 441,920 | |||
| Operating expenses | |||||||
| Direct cost of revenues | 307,566 | 308,239 | |||||
| Selling, general and administrative expenses | 111,176 | 116,478 | |||||
| Special charges | 10,811 | 3,634 | |||||
| Acquisition-related contingent consideration | 867 | 623 | |||||
| Amortization of other intangible assets | 2,766 | 2,265 | |||||
| 433,186 | 431,239 | ||||||
| Operating income | 34,525 | 10,681 | |||||
| Other income (expense) | |||||||
| Interest income and other | 452 | 571 | |||||
| Interest expense | (6,547 | ) | (5,983 | ) | |||
| (6,095 | ) | (5,412 | ) | ||||
| Income before income tax benefit | 28,430 | 5,269 | |||||
| Income tax benefit | (38,458 | ) | (1,832 | ) | |||
| Net income | $ | 66,888 | $ | 7,101 | |||
| Earnings per common share ― basic | $ | 1.81 | $ | 0.17 | |||
| Weighted average common shares outstanding ― basic | 36,906 | 41,201 | |||||
| Earnings per common share ― diluted | $ | 1.78 | $ | 0.17 | |||
| Weighted average common shares outstanding ― diluted | 37,643 | 42,018 | |||||
| Other comprehensive income (loss), net of tax | |||||||
| Foreign currency translation adjustments, net of tax expense of $0 | $ | 1,886 | $ | (18,239 | ) | ||
| Total other comprehensive income (loss), net of tax | 1,886 | (18,239 | ) | ||||
| Comprehensive income (loss) | $ | 68,774 | $ | (11,138 | ) | ||
| FTI CONSULTING, INC. | |||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
| (in thousands, except per share data) | |||||||
| Year Ended | |||||||
| December 31, | |||||||
| 2017 | 2016 | ||||||
| Revenues | $ | 1,807,732 | $ | 1,810,394 | |||
| Operating expenses | |||||||
| Direct cost of revenues | 1,215,560 | 1,210,771 | |||||
| Selling, general and administrative expenses | 429,722 | 434,552 | |||||
| Special charges | 40,885 | 10,445 | |||||
| Acquisition-related contingent consideration | 2,291 | 2,164 | |||||
| Amortization of other intangible assets | 10,563 | 10,306 | |||||
| 1,699,021 | 1,668,238 | ||||||
| Operating income | 108,711 | 142,156 | |||||
| Other income (expense) | |||||||
| Interest income and other | 3,752 | 10,466 | |||||
| Interest expense | (25,358 | ) | (24,819 | ) | |||
| (21,606 | ) | (14,353 | ) | ||||
| Income before income tax provision (benefit) | 87,105 | 127,803 | |||||
| Income tax provision (benefit) | (20,857 | ) | 42,283 | ||||
| Net income | $ | 107,962 | $ | 85,520 | |||
| Earnings per common share ― basic | $ | 2.79 | $ | 2.09 | |||
| Weighted average common shares outstanding ― basic | 38,697 | 40,943 | |||||
| Earnings per common share ― diluted | $ | 2.75 | $ | 2.05 | |||
| Weighted average common shares outstanding ― diluted | 39,192 | 41,709 | |||||
| Other comprehensive income (loss), net of tax | |||||||
| Foreign currency translation adjustments, net of tax expense of $0 | $ | 30,664 | $ | (41,884 | ) | ||
| Total other comprehensive income (loss), net of tax | 30,664 | (41,884 | ) | ||||
| Comprehensive income | $ | 138,626 | $ | 43,636 | |||
| FTI CONSULTING, INC. | ||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Net income | $ | 66,888 | $ | 7,101 | $ | 107,962 | $ | 85,520 | ||||||||
| Add back: | ||||||||||||||||
| Special charges | 10,811 | 3,634 | 40,885 | 10,445 | ||||||||||||
| Tax impact of special charges | (3,635 | ) | (1,113 | ) | (13,570 | ) | (3,595 | ) | ||||||||
| Remeasurement of acquisition-related contingent consideration | — | 423 | 702 | 1,403 | ||||||||||||
| Tax impact of remeasurement of acquisition-related contingent consideration | — | (165 | ) | (269 | ) | (546 | ) | |||||||||
| Impact of 2017 Tax Act | (44,870 | ) | — | (44,870 | ) | — | ||||||||||
| Adjusted net income | $ | 29,194 | $ | 9,880 | $ | 90,840 | $ | 93,227 | ||||||||
| Earnings per common share — diluted | $ | 1.78 | $ | 0.17 | $ | 2.75 | $ | 2.05 | ||||||||
| Add back: | ||||||||||||||||
| Special charges | 0.29 | 0.09 | 1.04 | 0.25 | ||||||||||||
| Tax impact of special charges | (0.10 | ) | (0.03 | ) | (0.34 | ) | (0.08 | ) | ||||||||
| Remeasurement of acquisition-related contingent consideration | — | 0.01 | 0.02 | 0.03 | ||||||||||||
| Tax impact of remeasurement of acquisition-related contingent consideration | — | — | (0.01 | ) | (0.01 | ) | ||||||||||
| Impact of 2017 Tax Act | (1.19 | ) | — | (1.14 | ) | — | ||||||||||
| Adjusted earnings per common share — diluted | $ | 0.78 | $ | 0.24 | $ | 2.32 | $ | 2.24 | ||||||||
| Weighted average number of common shares outstanding ― diluted | 37,643 | 42,018 | 39,192 | 41,709 | ||||||||||||
| FTI CONSULTING, INC. | ||||||||||||||||||||||||||||
| RECONCILIATION OF NET INCOME AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA | ||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
| Three Months Ended December 31, 2017 (unaudited) | Corporate Finance & Restructuring | Forensic and Litigation Consulting | Economic Consulting | Technology | Strategic Communications | Unallocated Corporate | Total | |||||||||||||||||||||
| Net income | $ | 66,888 | ||||||||||||||||||||||||||
| Interest income and other | (452 | ) | ||||||||||||||||||||||||||
| Interest expense | 6,547 | |||||||||||||||||||||||||||
| Income tax benefit | (38,458 | ) | ||||||||||||||||||||||||||
| Operating income (loss) | $ | 21,332 | $ | 20,286 | $ | 12,120 | $ | (1,079 | ) | $ | 4,840 | $ | (22,974 | ) | $ | 34,525 | ||||||||||||
| Depreciation and amortization | 815 | 1,042 | 1,316 | 2,664 | 673 | 899 | 7,409 | |||||||||||||||||||||
| Amortization of other intangible assets | 1,218 | 396 | 134 | 158 | 860 | — | 2,766 | |||||||||||||||||||||
| Special charges | 2,391 | 1,889 | 714 | 1,230 | 4,153 | 434 | 10,811 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 25,756 | $ | 23,613 | $ | 14,284 | $ | 2,973 | $ | 10,526 | $ | (21,641 | ) | $ | 55,511 | |||||||||||||
| Year Ended December 31, 2017 | Corporate Finance & Restructuring | Forensic and Litigation Consulting | Economic Consulting | Technology | Strategic Communications | Unallocated Corporate | Total | |||||||||||||||||||||
| Net income | $ | 107,962 | ||||||||||||||||||||||||||
| Interest income and other | (3,752 | ) | ||||||||||||||||||||||||||
| Interest expense | 25,358 | |||||||||||||||||||||||||||
| Income tax benefit | (20,857 | ) | ||||||||||||||||||||||||||
| Operating income | $ | 70,234 | $ | 54,520 | $ | 49,154 | $ | 4,795 | $ | 13,148 | $ | (83,140 | ) | $ | 108,711 | |||||||||||||
| Depreciation and amortization | 3,175 | 4,259 | 5,589 | 11,684 | 2,405 | 4,065 | 31,177 | |||||||||||||||||||||
| Amortization of other intangible assets | 4,014 | 1,592 | 597 | 635 | 3,725 | — | 10,563 | |||||||||||||||||||||
| Special charges | 5,440 | 12,334 | 6,624 | 5,057 | 7,752 | 3,678 | 40,885 | |||||||||||||||||||||
| Remeasurement of acquisition-related contingent consideration | — | — | — | — | 702 | — | 702 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 82,863 | $ | 72,705 | $ | 61,964 | $ | 22,171 | $ | 27,732 | $ | (75,397 | ) | $ | 192,038 | |||||||||||||
| Three Months Ended December 31, 2016 (unaudited) | Corporate Finance & Restructuring | Forensic and Litigation Consulting | Economic Consulting | Technology | Strategic Communications | Unallocated Corporate | Total | |||||||||||||||||||||
| Net income | $ | 7,101 | ||||||||||||||||||||||||||
| Interest income and other | (571 | ) | ||||||||||||||||||||||||||
| Interest expense | 5,983 | |||||||||||||||||||||||||||
| Income tax provision | (1,832 | ) | ||||||||||||||||||||||||||
| Operating income (loss) | $ | 14,741 | $ | 4,083 | $ | 17,452 | $ | (4,752 | ) | $ | 6,449 | $ | (27,292 | ) | $ | 10,681 | ||||||||||||
| Depreciation and amortization | 722 | 1,212 | 1,442 | 7,919 | 641 | 1,405 | 13,341 | |||||||||||||||||||||
| Amortization of other intangible assets | 819 | 481 | 154 | (77 | ) | 888 | — | 2,265 | ||||||||||||||||||||
| Special charges | — | 554 | — | 2,468 | — | 612 | 3,634 | |||||||||||||||||||||
| Remeasurement of acquisition-related contingent consideration | — | — | — | — | 423 | — | 423 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 16,282 | $ | 6,330 | $ | 19,048 | $ | 5,558 | $ | 8,401 | $ | (25,275 | ) | $ | 30,344 | |||||||||||||
| Year Ended December 31, 2016 | Corporate Finance & Restructuring | Forensic and Litigation Consulting | Economic Consulting | Technology | Strategic Communications | Unallocated Corporate | Total | |||||||||||||||||||||
| Net income | $ | 85,520 | ||||||||||||||||||||||||||
| Interest income and other | (10,466 | ) | ||||||||||||||||||||||||||
| Interest expense | 24,819 | |||||||||||||||||||||||||||
| Income tax provision | 42,283 | |||||||||||||||||||||||||||
| Operating income (loss) | $ | 91,481 | $ | 49,088 | $ | 68,842 | $ | (2,183 | ) | $ | 23,110 | $ | (88,182 | ) | $ | 142,156 | ||||||||||||
| Depreciation and amortization | 2,897 | 4,490 | 4,614 | 19,820 | 2,243 | 4,636 | 38,700 | |||||||||||||||||||||
| Amortization of other intangible assets | 3,310 | 2,000 | 646 | 648 | 3,702 | — | 10,306 | |||||||||||||||||||||
| Special charges | — | 2,304 | — | 7,529 | — | 612 | 10,445 | |||||||||||||||||||||
| Remeasurement of acquisition-related contingent consideration | — | — | — | — | 1,403 | — | 1,403 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 97,688 | $ | 57,882 | $ | 74,102 | $ | 25,814 | $ | 30,458 | $ | (82,934 | ) | $ | 203,010 | |||||||||||||
| FTI CONSULTING, INC. | ||||||||||||||||||||
| OPERATING RESULTS BY BUSINESS SEGMENT | ||||||||||||||||||||
| Segment Revenues | Adjusted EBITDA | Adjusted EBITDA Margin | Utilization | Average Billable Rate | Revenue- Generating Headcount | |||||||||||||||
| (in thousands) | (at period end) | |||||||||||||||||||
| Three Months Ended December 31, 2017 (unaudited) | ||||||||||||||||||||
| Corporate Finance & Restructuring | $ | 130,532 | $ | 25,756 | 19.7 | % | 62 | % | $ | 434 | 901 | |||||||||
| Forensic and Litigation Consulting | 120,869 | 23,613 | 19.5 | % | 63 | % | $ | 330 | 1,067 | |||||||||||
| Economic Consulting | 121,051 | 14,284 | 11.8 | % | 64 | % | $ | 542 | 683 | |||||||||||
| Technology (1) | 40,915 | 2,973 | 7.3 | % | N/M | N/M | 292 | |||||||||||||
| Strategic Communications (1) | 54,344 | 10,526 | 19.4 | % | N/M | N/M | 630 | |||||||||||||
| $ | 467,711 | $ | 77,152 | 16.5 | % | 3,573 | ||||||||||||||
| Unallocated Corporate | (21,641 | ) | ||||||||||||||||||
| Adjusted EBITDA | $ | 55,511 | 11.9 | % | ||||||||||||||||
| Year Ended December 31, 2017 | ||||||||||||||||||||
| Corporate Finance & Restructuring | $ | 482,041 | $ | 82,863 | 17.2 | % | 61 | % | $ | 396 | 901 | |||||||||
| Forensic and Litigation Consulting | 462,324 | 72,705 | 15.7 | % | 61 | % | $ | 321 | 1,067 | |||||||||||
| Economic Consulting | 496,029 | 61,964 | 12.5 | % | 67 | % | $ | 524 | 683 | |||||||||||
| Technology (1) | 174,850 | 22,171 | 12.7 | % | N/M | N/M | 292 | |||||||||||||
| Strategic Communications (1) | 192,488 | 27,732 | 14.4 | % | N/M | N/M | 630 | |||||||||||||
| $ | 1,807,732 | $ | 267,435 | 14.8 | % | 3,573 | ||||||||||||||
| Unallocated Corporate | (75,397 | ) | ||||||||||||||||||
| Adjusted EBITDA | $ | 192,038 | 10.6 | % | ||||||||||||||||
| Three Months Ended December 31, 2016 (unaudited) | ||||||||||||||||||||
| Corporate Finance & Restructuring | $ | 113,354 | $ | 16,282 | 14.4 | % | 55 | % | $ | 408 | 895 | |||||||||
| Forensic and Litigation Consulting | 105,492 | 6,330 | 6.0 | % | 55 | % | $ | 322 | 1,110 | |||||||||||
| Economic Consulting | 129,270 | 19,048 | 14.7 | % | 71 | % | $ | 522 | 656 | |||||||||||
| Technology (1) | 43,485 | 5,558 | 12.8 | % | N/M | N/M | 288 | |||||||||||||
| Strategic Communications (1) | 50,319 | 8,401 | 16.7 | % | N/M | N/M | 647 | |||||||||||||
| $ | 441,920 | $ | 55,619 | 12.6 | % | 3,596 | ||||||||||||||
| Unallocated Corporate | (25,275 | ) | ||||||||||||||||||
| Adjusted EBITDA | $ | 30,344 | 6.9 | % | ||||||||||||||||
| Year Ended December 31, 2016 | ||||||||||||||||||||
| Corporate Finance & Restructuring | $ | 483,269 | $ | 97,688 | 20.2 | % | 65 | % | $ | 392 | 895 | |||||||||
| Forensic and Litigation Consulting | 457,734 | 57,882 | 12.6 | % | 59 | % | $ | 327 | 1,110 | |||||||||||
| Economic Consulting | 500,487 | 74,102 | 14.8 | % | 73 | % | $ | 517 | 656 | |||||||||||
| Technology (1) | 177,720 | 25,814 | 14.5 | % | N/M | N/M | 288 | |||||||||||||
| Strategic Communications (1) | 191,184 | 30,458 | 15.9 | % | N/M | N/M | 647 | |||||||||||||
| $ | 1,810,394 | $ | 285,944 | 15.8 | % | 3.596 | ||||||||||||||
| Unallocated Corporate | (82,934 | ) | ||||||||||||||||||
| Adjusted EBITDA | $ | 203,010 | 11.2 | % | ||||||||||||||||
| N/M — Not meaningful | ||||||||||||||||||||
| (1) The majority of the Technology and Strategic Communications segments' revenues are not generated based on billable hours. Accordingly, utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric. | ||||||||||||||||||||
| FTI CONSULTING, INC. | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (in thousands) | |||||||
| Year Ended | |||||||
| December 31, | |||||||
| 2017 | 2016 | ||||||
| Operating activities | |||||||
| Net income | $ | 107,962 | $ | 85,520 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 31,177 | 38,700 | |||||
| Amortization and impairment of other intangible assets | 10,563 | 10,306 | |||||
| Acquisition-related contingent consideration | 2,291 | 2,164 | |||||
| Provision for doubtful accounts | 15,386 | 8,912 | |||||
| Non-cash share-based compensation | 16,030 | 16,920 | |||||
| Non-cash interest expense | 1,984 | 1,985 | |||||
| Other | 611 | (1,204 | ) | ||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||
| Accounts receivable, billed and unbilled | (50,831 | ) | 3,471 | ||||
| Notes receivable | 14,928 | 3,145 | |||||
| Prepaid expenses and other assets | 629 | (2,840 | ) | ||||
| Accounts payable, accrued expenses and other | 4,421 | 3,268 | |||||
| Income taxes | (25,768 | ) | 22,012 | ||||
| Accrued compensation | 1,795 | 40,350 | |||||
| Billings in excess of services provided | 16,447 | 779 | |||||
| Net cash provided by operating activities | 147,625 | 233,488 | |||||
| Investing activities | |||||||
| Payments for acquisition of businesses, net of cash received | (8,929 | ) | (1,251 | ) | |||
| Purchases of property and equipment | (32,004 | ) | (28,935 | ) | |||
| Other | 295 | 54 | |||||
| Net cash used in investing activities | (40,638 | ) | (30,132 | ) | |||
| Financing activities | |||||||
| Borrowings (repayments) under revolving line of credit, net | 30,000 | (130,000 | ) | ||||
| Deposits | 2,825 | 4,006 | |||||
| Purchase and retirement of common stock | (168,094 | ) | (21,489 | ) | |||
| Net issuance of common stock under equity compensation plans | (504 | ) | 21,708 | ||||
| Payments for acquisition-related contingent consideration | (5,161 | ) | (866 | ) | |||
| Other | — | 1,331 | |||||
| Net cash used in financing activities | (140,934 | ) | (125,310 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | 7,750 | (11,648 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (26,197 | ) | 66,398 | ||||
| Cash and cash equivalents, beginning of period | 216,158 | 149,760 | |||||
| Cash and cash equivalents, end of period | $ | 189,961 | $ | 216,158 | |||
FTI Consulting, Inc.
555 12th Street NW
Washington, DC 20004
+1.202.312.9100
Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com