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FTI Consulting Reports Record Third Quarter 2022 Financial Results

FTI Consulting, Inc.
FTI Consulting, Inc.
  • Third Quarter 2022 Revenues of $775.9 Million, Up 10.5% Compared to $702.2 Million in Prior Year Quarter; Excluding Estimated Negative Impact of FX, Third Quarter 2022 Revenues Up 14.8% Compared to Prior Year Quarter

  • Third Quarter 2022 EPS of $2.15, Up 9.7% Compared to $1.96 in Prior Year Quarter; Third Quarter 2022 Adjusted EPS of $2.15, Up 6.4% Compared to $2.02 in Prior Year Quarter

  • Company Narrows 2022 Guidance Ranges for Revenues and EPS

WASHINGTON, Oct. 27, 2022 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended September 30, 2022.

Third quarter 2022 revenues of $775.9 million increased $73.6 million, or 10.5%, compared to revenues of $702.2 million in the prior year quarter. Excluding the estimated negative impact from foreign currency translation ("FX"), revenues increased $103.7 million, or 14.8%, compared to the prior year quarter. Acquisition-related revenues contributed $3.1 million during the quarter. The increase in revenues was due to higher realization, which includes the recognition of revenues previously deferred, and higher demand across all business segments. Net income of $77.3 million compared to $69.5 million in the prior year quarter. The increase in net income was primarily due to higher revenues, a lower effective tax rate, an increase in FX remeasurement gains and lower interest expense, which was partially offset by an increase in compensation, including the impact of a 12.4% increase in total headcount, and higher selling, general and administrative ("SG&A") expenses compared to the prior year quarter. The lower effective tax rate was primarily related to a combined $8.3 million benefit from the use of foreign tax credits and a deferred tax benefit arising from an intracompany intellectual property license agreement. Adjusted EBITDA of $99.0 million, or 12.8% of revenues, compared to $100.3 million, or 14.3% of revenues, in the prior year quarter.

Third quarter 2022 earnings per diluted share ("EPS") of $2.15 compared to $1.96 in the prior year quarter. Third quarter 2021 EPS included $2.4 million of non-cash interest expense related to the Company's 2.0% convertible senior notes due 2023 ("2023 Convertible Notes"), which decreased EPS by $0.06. Third quarter 2022 Adjusted EPS of $2.15 compared to Adjusted EPS of $2.02 in the prior year quarter. Third quarter 2021 Adjusted EPS excluded the non-cash interest expense related to the 2023 Convertible Notes. The aforementioned $8.3 million tax benefit increased third quarter 2022 EPS and Adjusted EPS by $0.23.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, "Our record results this quarter reflect the combination of solid underlying business performance in aggregate, together with some one-time benefits. As always, our focus remains on driving the powerful multi-year trajectory our firm has been on by continuing to invest behind our strong positions and the ambitions of our people."

Cash Position and Capital Allocation

Net cash provided by operating activities of $128.3 million for the quarter ended September 30, 2022 compared to $196.9 million for the quarter ended September 30, 2021. The year-over-year decrease in net cash provided by operating activities was largely due to an increase in compensation, primarily related to headcount growth, as well as a decrease in cash collections compared to the same period in the prior year.

Cash and cash equivalents of $327.0 million at September 30, 2022 compared to $342.5 million at September 30, 2021 and $255.7 million at June 30, 2022. FX translation unfavorably impacted cash and cash equivalents at September 30, 2022 compared to September 30, 2021 and June 30, 2022. Total debt, net of cash, of ($10.8) million at September 30, 2022 compared to ($1.3) million at September 30, 2021 and $60.5 million at June 30, 2022. The sequential decrease in total debt, net of cash, was due to an increase in cash and cash equivalents.

During the quarter, the Company repurchased 127,791 shares of its common stock at an average price per share of $159.87 for a total cost of $20.4 million. As of September 30, 2022, approximately $143.5 million remained available for common stock repurchases under the Company’s stock repurchase authorization.

Third Quarter 2022 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $15.0 million, or 6.0%, to $265.4 million in the quarter compared to $250.3 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $24.1 million, or 9.6%, compared to the prior year quarter. Acquisition-related revenues contributed $3.1 million in the quarter. The increase in revenues was primarily due to higher demand for restructuring and business transformation services, which was partially offset by lower demand for transactions services and a decline in success fees compared to the prior year quarter. Adjusted Segment EBITDA of $51.5 million, or 19.4% of segment revenues, compared to $55.6 million, or 22.2% of segment revenues, in the prior year quarter. Adjusted Segment EBITDA declined compared to the prior year quarter, as the increase in revenues was more than offset by higher compensation, which includes the impact of an 11.5% increase in billable headcount, and higher SG&A expenses.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $14.7 million, or 10.1%, to $159.9 million in the quarter compared to $145.3 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $18.4 million, or 12.7%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for health solutions and investigations services and higher realization, which was partially offset by lower demand for disputes services compared to the prior year quarter. Adjusted Segment EBITDA of $18.2 million, or 11.4% of segment revenues, compared to $16.6 million, or 11.4% 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 9.3% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Economic Consulting
Revenues in the Economic Consulting segment increased $20.6 million, or 12.0%, to $193.2 million in the quarter compared to $172.5 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $30.1 million, or 17.4%, compared to the prior year quarter. The increase in revenues was due to higher realization, primarily from the recognition of revenues previously deferred and higher demand for non-merger and acquisition ("M&A")-related antitrust services, which was partially offset by lower demand for M&A-related antitrust services compared to the prior year quarter. Adjusted Segment EBITDA of $32.9 million, or 17.0% of segment revenues, compared to $29.9 million, or 17.3% 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 higher compensation expenses, primarily related to an increase in variable compensation, and the impact of a 7.9% increase in billable headcount compared to the prior year quarter.

Technology
Revenues in the Technology segment increased $20.3 million, or 31.3%, to $84.9 million in the quarter compared to $64.7 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $22.6 million, or 34.9%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for M&A-related "second request" and investigations services compared to the prior year quarter. Adjusted Segment EBITDA of $13.2 million, or 15.6% of segment revenues, compared to $7.8 million, or 12.1% 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 23.7% increase in billable headcount and an increase in contractors, as well as higher SG&A expenses compared to the prior year quarter.

Strategic Communications
Revenues in the Strategic Communications segment increased $3.0 million, or 4.3%, to $72.4 million in the quarter compared to $69.4 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $8.5 million, or 12.2%, compared to the prior year quarter. The increase in revenues was primarily due to increased demand for corporate reputation services compared to the prior year quarter. Adjusted Segment EBITDA of $12.9 million, or 17.9% of segment revenues, compared to $15.5 million, or 22.3% of segment revenues, in the prior year quarter. Adjusted Segment EBITDA declined compared to the prior year quarter, as the increase in revenues was more than offset by higher compensation, which includes the impact of a 16.4% increase in billable headcount, and higher SG&A expenses.

2022 Guidance
The Company is narrowing its full year 2022 guidance ranges for revenues and EPS. The Company now expects revenues to range between $2.965 billion and $3.025 billion, which compares to the previous range of between $2.920 billion and $3.045 billion. The Company now expects EPS to range between $6.40 and $6.80, which compares to the previous range of between $6.40 and $7.20. The Company does not currently expect Adjusted EPS to differ from EPS.

Third Quarter 2022 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2022 financial results at 9:00 a.m. Eastern Time on Thursday, October 27, 2022. The call can be accessed live and will be available for replay over the internet for 90 days by logging onto the Company’s investor relations website here.

About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 7,500 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 $2.78 billion in revenues during fiscal year 2021. More information can be found at www.fticonsulting.com.

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

  • Total Segment Operating Income

  • Adjusted EBITDA

  • Total Adjusted Segment EBITDA

  • Adjusted EBITDA Margin

  • Adjusted Net Income

  • Adjusted Earnings per Diluted Share

  • Free Cash Flow

We have included the definitions of Segment Operating Income and Adjusted Segment EBITDA, which are GAAP financial measures, below in order to more fully define the components of certain non-GAAP financial measures presented in this press release. We define Segment Operating Income as a segment’s share of consolidated operating income. We define Total Segment Operating Income, which is a non-GAAP financial measure, as the total of Segment Operating Income for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We use Adjusted Segment EBITDA as a basis to internally evaluate the financial performance of our segments because we believe it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.

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

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

We define Free Cash Flow, which is a non-GAAP financial measure, as net cash provided by (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 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 will result or be achieved. 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. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer; the mix of the geographic locations where our clients are located or where services are performed; fluctuations in the price per share of our common stock; adverse financial, real estate or other market and general economic conditions; the impact of the COVID-19 pandemic and related events that are beyond our control, which could affect our segments, practices and the geographic regions in which we conduct business differently and adversely; and other future events, which could impact each of our segments, practices and the geographic regions in which we conduct business differently and could be outside of our control; the pace and timing of the consummation and integration of future acquisitions; the Company’s ability to realize cost savings and efficiencies; competitive and general economic conditions; retention of staff and clients; new laws and regulations or changes thereto; and other risks described under the heading "Item 1A, Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022 and in the Company’s other filings with the SEC. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)

 

 

September 30,

 

December 31,

 

 

 

2022

 

 

 

2021

 

 

 

(Unaudited)

 

 

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

327,047

 

 

$

494,485

 

Accounts receivable, net

 

 

947,993

 

 

 

754,120

 

Current portion of notes receivable

 

 

27,198

 

 

 

30,256

 

Prepaid expenses and other current assets

 

 

91,187

 

 

 

91,166

 

Total current assets

 

 

1,393,425

 

 

 

1,370,027

 

Property and equipment, net

 

 

144,713

 

 

 

142,163

 

Operating lease assets

 

 

195,339

 

 

 

215,995

 

Goodwill

 

 

1,212,541

 

 

 

1,232,791

 

Intangible assets, net

 

 

25,673

 

 

 

31,990

 

Notes receivable, net

 

 

54,144

 

 

 

53,539

 

Other assets

 

 

56,259

 

 

 

54,404

 

Total assets

 

$

3,082,094

 

 

$

3,100,909

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable, accrued expenses and other

 

$

175,491

 

 

$

165,025

 

Accrued compensation

 

 

422,985

 

 

 

507,556

 

Billings in excess of services provided

 

 

50,523

 

 

 

45,535

 

Total current liabilities

 

 

648,999

 

 

 

718,116

 

Long-term debt, net

 

 

314,756

 

 

 

297,158

 

Noncurrent operating lease liabilities

 

 

213,449

 

 

 

236,026

 

Deferred income taxes

 

 

161,486

 

 

 

170,612

 

Other liabilities

 

 

98,821

 

 

 

95,676

 

Total liabilities

 

 

1,437,511

 

 

 

1,517,588

 

Stockholders' equity

 

 

 

 

Preferred stock, $0.01 par value; shares authorized — 5,000; none
  outstanding

 

 

 

 

 

 

Common stock, $0.01 par value; shares authorized — 75,000; shares
  issued and outstanding 34,422 (2022) and 34,333 (2021)

 

 

344

 

 

 

343

 

Additional paid-in capital

 

 

 

 

 

13,662

 

Retained earnings

 

 

1,868,424

 

 

 

1,698,156

 

Accumulated other comprehensive loss

 

 

(224,185

)

 

 

(128,840

)

Total stockholders' equity

 

 

1,644,583

 

 

 

1,583,321

 

Total liabilities and stockholders' equity

 

$

3,082,094

 

 

$

3,100,909

 


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)

 

Three Months Ended
September 30,

 

 

2022

 

 

 

2021

 

 

(Unaudited)

Revenues

$

775,865

 

 

$

702,228

 

Operating expenses

 

 

 

Direct cost of revenues

 

526,654

 

 

 

472,235

 

Selling, general and administrative expenses

 

159,186

 

 

 

138,600

 

Amortization of intangible assets

 

2,315

 

 

 

2,860

 

 

 

688,155

 

 

 

613,695

 

Operating income

 

87,710

 

 

 

88,533

 

Other income (expense)

 

 

 

Interest income and other

 

7,771

 

 

 

5,175

 

Interest expense

 

(2,378

)

 

 

(5,073

)

 

 

5,393

 

 

 

102

 

Income before income tax provision

 

93,103

 

 

 

88,635

 

Income tax provision

 

15,836

 

 

 

19,155

 

Net income

$

77,267

 

 

$

69,480

 

Earnings per common share ― basic

$

2.29

 

 

$

2.07

 

Weighted average common shares outstanding ― basic

 

33,812

 

 

 

33,495

 

Earnings per common share ― diluted

$

2.15

 

 

$

1.96

 

Weighted average common shares outstanding ― diluted

 

35,918

 

 

 

35,362

 

Other comprehensive loss, net of tax

 

 

 

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

$

(48,475

)

 

$

(18,607

)

Total other comprehensive loss, net of tax

 

(48,475

)

 

 

(18,607

)

Comprehensive income

$

28,792

 

 

$

50,873

 


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)

 

Nine Months Ended
September 30,

 

 

2022

 

 

 

2021

 

 

(Unaudited)

Revenues

$

2,254,477

 

 

$

2,099,991

 

Operating expenses

 

 

 

Direct cost of revenues

 

1,539,838

 

 

 

1,431,381

 

Selling, general and administrative expenses

 

476,097

 

 

 

399,076

 

Amortization of intangible assets

 

7,320

 

 

 

8,515

 

 

 

2,023,255

 

 

 

1,838,972

 

Operating income

 

231,222

 

 

 

261,019

 

Other income (expense)

 

 

 

Interest income and other

 

10,418

 

 

 

5,297

 

Interest expense

 

(7,468

)

 

 

(15,164

)

 

 

2,950

 

 

 

(9,867

)

Income before income tax provision

 

234,172

 

 

 

251,152

 

Income tax provision

 

46,156

 

 

 

54,394

 

Net income

$

188,016

 

 

$

196,758

 

Earnings per common share ― basic

$

5.57

 

 

$

5.88

 

Weighted average common shares outstanding ― basic

 

33,741

 

 

 

33,478

 

Earnings per common share ― diluted

$

5.25

 

 

$

5.58

 

Weighted average common shares outstanding ― diluted

 

35,825

 

 

 

35,265

 

Other comprehensive loss, net of tax

 

 

 

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

$

(95,345

)

 

$

(18,042

)

Total other comprehensive loss, net of tax

 

(95,345

)

 

 

(18,042

)

Comprehensive income

$

92,671

 

 

$

178,716

 


FTI CONSULTING, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

(Unaudited)

Net income

 

$

77,267

 

$

69,480

 

 

$

188,016

 

$

196,758

 

Add back:

 

 

 

 

 

 

 

 

Remeasurement of acquisition-related contingent
  consideration

 

 

 

 

 

 

 

 

 

(3,130

)

Non-cash interest expense on convertible notes

 

 

 

 

2,412

 

 

 

 

 

7,141

 

Tax impact of non-cash interest expense on
  convertible notes

 

 

 

 

(627

)

 

 

 

 

(1,857

)

Adjusted Net Income

 

$

77,267

 

$

71,265

 

 

$

188,016

 

$

198,912

 

Earnings per common share — diluted

 

$

2.15

 

$

1.96

 

 

$

5.25

 

$

5.58

 

Add back:

 

 

 

 

 

 

 

 

Remeasurement of acquisition-related contingent
  consideration

 

 

 

 

 

 

 

 

 

(0.09

)

Non-cash interest expense on convertible notes

 

 

 

 

0.08

 

 

 

 

 

0.20

 

Tax impact of non-cash interest expense on
  convertible notes

 

 

 

 

(0.02

)

 

 

 

 

(0.05

)

Adjusted earnings per common share — diluted

 

$

2.15

 

$

2.02

 

 

$

5.25

 

$

5.64

 

Weighted average number of common shares
  outstanding ― diluted

 

 

35,918

 

 

35,362

 

 

 

35,825

 

 

35,265

 


FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)

Three Months Ended September 30, 2022
(Unaudited)

 

Corporate
Finance &
Restructuring

 

Forensic and
Litigation
Consulting

 

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

 

$

47,948

 

$

16,570

 

$

31,674

 

$

9,833

 

$

12,155

 

$

(30,470

)

 

$

87,710

 

Depreciation and amortization

 

 

1,675

 

 

1,350

 

 

1,239

 

 

3,380

 

 

629

 

 

676

 

 

 

8,949

 

Amortization of intangible assets

 

 

1,909

 

 

242

 

 

 

 

 

 

163

 

 

1

 

 

 

2,315

 

Adjusted EBITDA

 

$

51,532

 

$

18,162

 

$

32,913

 

$

13,213

 

$

12,947

 

$

(29,793

)

 

$

98,974

 


Nine Months Ended September 30, 2022
(Unaudited)

 

Corporate
Finance &
Restructuring

 

Forensic and
Litigation
Consulting

 

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

 

$

148,936

 

$

47,126

 

$

72,056

 

$

25,005

 

$

37,623

 

$

(99,524

)

 

$

231,222

 

Depreciation and amortization

 

 

5,049

 

 

4,265

 

 

3,698

 

 

9,935

 

 

1,962

 

 

2,136

 

 

 

27,045

 

Amortization of intangible assets

 

 

6,036

 

 

735

 

 

 

 

 

 

548

 

 

1

 

 

 

7,320

 

Adjusted EBITDA

 

$

160,021

 

$

52,126

 

$

75,754

 

$

34,940

 

$

40,133

 

$

(97,387

)

 

$

265,587

 


FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)

Three Months Ended September 30, 2021
(Unaudited)

 

Corporate
Finance &
Restructuring

 

Forensic and
Litigation
Consulting

 

Economic
Consulting

 

Technology

 

Strategic
Communications

 

Unallocated
Corporate

 

Total

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

69,480

 

Interest income and other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,175

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,073

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,155

 

Operating income

 

$

52,316

 

 

$

15,101

 

$

28,455

 

$

4,416

 

$

14,219

 

$

(25,974

)

 

$

88,533

 

Depreciation and amortization

 

 

1,446

 

 

 

1,270

 

 

1,462

 

 

3,419

 

 

533

 

 

737

 

 

 

8,867

 

Amortization of intangible assets

 

 

1,873

 

 

 

249

 

 

 

 

 

 

737

 

 

1

 

 

 

2,860

 

Adjusted EBITDA

 

$

55,635

 

 

$

16,620

 

$

29,917

 

$

7,835

 

$

15,489

 

$

(25,236

)

 

$

100,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021
(Unaudited)

 

Corporate
Finance &
Restructuring

 

Forensic and
Litigation
Consulting

 

Economic
Consulting

 

Technology

 

Strategic
Communications

 

Unallocated
Corporate

 

Total

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

$

196,758

 

Interest income and other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,297

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,164

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54,394

 

Operating income

 

$

126,718

 

 

$

59,599

 

$

82,891

 

$

38,315

 

$

35,537

 

$

(82,041

)

 

$

261,019

 

Depreciation and amortization

 

 

4,016

 

 

 

3,808

 

 

4,304

 

 

9,636

 

 

1,630

 

 

2,237

 

 

 

25,631

 

Amortization of intangible assets

 

 

5,644

 

 

 

647

 

 

 

 

 

 

2,221

 

 

3

 

 

 

8,515

 

Remeasurement of acquisition-related
  contingent consideration

 

 

(3,130

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,130

)

Adjusted EBITDA

 

$

133,248

 

 

$

64,054

 

$

87,195

 

$

47,951

 

$

39,388

 

$

(79,801

)

 

$

292,035

 


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 September 30, 2022 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

$

265,370

 

$

51,532

 

 

19.4

%

 

61%

 

 

$

455

 

1,900

Forensic and Litigation Consulting

 

159,948

 

 

18,162

 

 

11.4

%

 

53%

 

 

$

368

 

1,614

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

$

795,766

 

$

160,021

 

 

20.1

%

 

62%

 

 

$

455

 

1,900

Forensic and Litigation Consulting

 

478,092

 

 

52,126

 

 

10.9

%

 

55%

 

 

$

360

 

1,614

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

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2021 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

$

250,321

 

$

55,635

 

 

22.2

%

 

62%

 

 

$

465

 

1,704

Forensic and Litigation Consulting

 

145,264

 

 

16,620

 

 

11.4

%

 

54%

 

 

$

355

 

1,476

Economic Consulting

 

172,543

 

 

29,917

 

 

17.3

%

 

68%

 

 

$

539

 

925

Technology (1)

 

64,657

 

 

7,835

 

 

12.1

%

 

N/M

 

 

N/M

 

443

Strategic Communications (1)

 

69,443

 

 

15,489

 

 

22.3

%

 

N/M

 

 

N/M

 

817

 

$

702,228

 

$

125,496

 

 

17.9

%

 

 

 

 

 

5,365

Unallocated Corporate

 

 

 

(25,236

)

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

$

100,260

 

 

14.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

$

707,495

 

$

133,248

 

 

18.8

%

 

60%

 

 

$

457

 

1,704

Forensic and Litigation Consulting

 

446,831

 

 

64,054

 

 

14.3

%

 

58%

 

 

$

350

 

1,476

Economic Consulting

 

525,122

 

 

87,195

 

 

16.6

%

 

73%

 

 

$

510

 

925

Technology (1)

 

222,762

 

 

47,951

 

 

21.5

%

 

N/M

 

 

N/M

 

443

Strategic Communications (1)

 

197,781

 

 

39,388

 

 

19.9

%

 

N/M

 

 

N/M

 

817

 

$

2,099,991

 

$

371,836

 

 

17.7

%

 

 

 

 

 

5,365

Unallocated Corporate

 

 

 

(79,801

)

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

$

292,035

 

 

13.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

___________________________

N/M

Not meaningful

(1)

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


FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 

Nine Months Ended
September 30,

 

 

2022

 

 

 

2021

 

 

(Unaudited)

Operating activities

 

 

 

Net income

$

188,016

 

 

$

196,758

 

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

 

 

 

Depreciation and amortization

 

27,045

 

 

 

25,631

 

Amortization and impairment of intangible assets

 

7,320

 

 

 

8,515

 

Acquisition-related contingent consideration

 

863

 

 

 

(1,014

)

Provision for expected credit losses

 

13,101

 

 

 

14,816

 

Share-based compensation

 

18,491

 

 

 

17,150

 

Amortization of debt discount and issuance costs and other

 

1,588

 

 

 

8,551

 

Deferred income taxes

 

(9,140

)

 

 

5,128

 

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

 

 

 

Accounts receivable, billed and unbilled

 

(251,280

)

 

 

(115,544

)

Notes receivable

 

838

 

 

 

4,392

 

Prepaid expenses and other assets

 

(3,066

)

 

 

1,145

 

Accounts payable, accrued expenses and other

 

21,936

 

 

 

(22,745

)

Income taxes

 

3,940

 

 

 

18,025

 

Accrued compensation

 

(67,763

)

 

 

2,803

 

Billings in excess of services provided

 

7,672

 

 

 

(7,691

)

Net cash provided by (used in) operating activities

 

(40,439

)

 

 

155,920

 

Investing activities

 

 

 

Payments for acquisition of businesses, net of cash received

 

(6,742

)

 

 

(9,833

)

Purchases of property and equipment and other

 

(38,935

)

 

 

(52,441

)

Net cash used in investing activities

 

(45,677

)

 

 

(62,274

)

Financing activities

 

 

 

Borrowings under revolving line of credit

 

165,000

 

 

 

377,500

 

Repayments under revolving line of credit

 

(165,000

)

 

 

(352,500

)

Purchase and retirement of common stock

 

(23,530

)

 

 

(46,133

)

Share-based compensation tax withholdings and other

 

(15,663

)

 

 

(8,277

)

Payments for business acquisition liabilities

 

(4,848

)

 

 

(7,496

)

Deposits and other

 

7,092

 

 

 

1,928

 

Net cash used in financing activities

 

(36,949

)

 

 

(34,978

)

Effect of exchange rate changes on cash and cash equivalents

 

(44,373

)

 

 

(11,094

)

Net increase (decrease) in cash and cash equivalents

 

(167,438

)

 

 

47,574

 

Cash and cash equivalents, beginning of period

 

494,485

 

 

 

294,953

 

Cash and cash equivalents, end of period

$

327,047

 

 

$

342,527

 


FTI CONSULTING, INC.
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net cash provided by (used in) operating activities

$

128,292

 

 

$

196,946

 

 

$

(40,439

)

 

$

155,920

 

Purchases of property and equipment

 

(13,316

)

 

 

(24,745

)

 

 

(38,951

)

 

 

(52,470

)

Free Cash Flow

$

114,976

 

 

$

172,201

 

 

$

(79,390

)

 

$

103,450

 


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