• FTI Consulting Reports Record First Quarter 2024 Financial Results

    Source: Nasdaq GlobeNewswire / 25 Apr 2024 07:30:00   America/New_York

    • First Quarter 2024 Revenues of $928.6 Million, Up 15% Compared to $806.7 Million in Prior Year Quarter
    • First Quarter 2024 EPS of $2.23, Up 66% Compared to $1.34 in Prior Year Quarter

    WASHINGTON, April 25, 2024 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the first quarter ended March 31, 2024.

    First quarter 2024 revenues of $928.6 million increased $121.8 million, or 15.1%, compared to revenues of $806.7 million in the prior year quarter. The increase in revenues was primarily due to higher demand across all business segments. Net income of $80.0 million compared to $47.5 million in the prior year quarter. The increase in net income was primarily due to higher revenues, a lower effective tax rate and lower FX remeasurement losses compared to the prior year quarter, which was partially offset by an increase in compensation and selling, general and administrative (“SG&A”) expenses compared to the prior year quarter. Adjusted EBITDA of $111.1 million, or 12.0% of revenues, compared to $78.4 million, or 9.7% of revenues, in the prior year quarter. First quarter 2024 earnings per diluted share (“EPS”) of $2.23 compared to $1.34 in the prior year quarter.

    Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, "Our sustained double-digit organic revenue growth this quarter reflects strong underlying business performance, which, in turn, reflects continued progress on our twin overriding goals: continuing to help clients with their most fundamental opportunities and challenges, and continuing to attract and develop terrific professionals."

    Cash Position and Capital Allocation

    Net cash used in operating activities of $274.8 million for the quarter ended March 31, 2024 compared to $254.2 million for the quarter ended March 31, 2023. The year-over-year increase in net cash used in operating activities was primarily due to an increase in salaries, higher annual bonus payments and an increase in forgivable loan issuances, which was partially offset by higher cash collections compared to the prior year quarter.

    Cash and cash equivalents of $244.0 million at March 31, 2024 compared to $238.5 million at March 31, 2023 and $303.2 million at December 31, 2023. Total debt, net of cash and short-term investments, of ($39.0) million at March 31, 2024 compared to $122.7 million at March 31, 2023 and ($328.7) million at December 31, 2023. The sequential increase in total debt, net of cash and short-term investments, was primarily due to higher borrowings under the Company's senior secured bank revolving credit facility, which were primarily used for annual bonus payments.

    There were no share repurchases during the quarter ended March 31, 2024. As of March 31, 2024, approximately $460.7 million remained available for common stock repurchases under the Company’s stock repurchase program.

    First Quarter 2024 Segment Results

    Corporate Finance & Restructuring
    Revenues in the Corporate Finance & Restructuring segment increased $50.4 million, or 16.0%, to $366.0 million in the quarter compared to $315.7 million in the prior year quarter. The increase in revenues was primarily due to higher restructuring, business transformation & strategy and transactions revenues. Adjusted Segment EBITDA of $75.2 million, or 20.6% of segment revenues, compared to $51.8 million, or 16.4% 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 and SG&A expenses compared to the prior year quarter.

    Forensic and Litigation Consulting
    Revenues in the Forensic and Litigation Consulting segment increased $18.3 million, or 11.6%, to $176.1 million in the quarter compared to $157.7 million in the prior year quarter. Acquisition-related revenues contributed $0.5 million in the quarter. The increase in revenues was primarily due to higher demand and realized bill rates for investigations and disputes services. Adjusted Segment EBITDA of $33.7 million, or 19.1% of segment revenues, compared to $21.8 million, or 13.8% 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 compared to the prior year quarter.

    Economic Consulting
    Revenues in the Economic Consulting segment increased $35.0 million, or 20.6%, to $204.5 million in the quarter compared to $169.6 million in the prior year quarter. The increase in revenues was primarily due to higher demand and realized bill rates for non-merger and acquisition (“M&A”)-related antitrust and financial economics services. Adjusted Segment EBITDA of $14.2 million, or 6.9% of segment revenues, compared to $14.2 million, or 8.4% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to an increase in compensation, which includes an increase in variable compensation and the impact of a 5.8% increase in billable headcount, higher contractor costs and an increase in SG&A expenses, primarily related to an increase in bad debt, compared to the prior year quarter.

    Technology
    Revenues in the Technology segment increased $10.1 million, or 11.1%, to $100.7 million in the quarter compared to $90.6 million in the prior year quarter. The increase in revenues was primarily due to higher demand for M&A-related “second request” and information governance, privacy & security services, which was partially offset by lower demand for investigations services. Adjusted Segment EBITDA of $14.6 million, or 14.5% of segment revenues, compared to $15.4 million, or 17.0% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to an increase in compensation, which includes the impact of an 11.2% increase in billable headcount, higher as-needed consultant costs and an increase in SG&A expenses compared to the prior year quarter.

    Strategic Communications
    Revenues in the Strategic Communications segment increased $8.1 million, or 11.1%, to $81.2 million in the quarter compared to $73.1 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation, revenues increased $7.1 million, or 9.7%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for public affairs and corporate reputation services. Adjusted Segment EBITDA of $12.4 million, or 15.3% of segment revenues, compared to $9.6 million, or 13.1% 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 and higher SG&A expenses compared to the prior year quarter.

    First Quarter 2024 Conference Call
    FTI Consulting will host a conference call for analysts and investors to discuss first quarter 2024 financial results at 9:00 a.m. Eastern Time on Thursday, April 25, 2024. 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 8,000 employees located in 33 countries and territories, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated $3.49 billion in revenues during fiscal year 2023. 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

    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.

    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, processes 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, including relating to new and emerging technologies, such as Artificial Intelligence and machine learning, 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 public health crises 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, 2023 filed with the SEC on February 22, 2024 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.

    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

    FINANCIAL TABLES FOLLOW


    FTI CONSULTING, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands, except per share amounts)
      March 31, December 31,
       2024   2023 
      (Unaudited)  
    Assets    
    Current assets    
    Cash and cash equivalents $243,960  $303,222 
    Accounts receivable, net  1,157,465   1,102,142 
    Current portion of notes receivable  45,211   30,997 
    Prepaid expenses and other current assets  98,062   119,092 
    Total current assets  1,544,698   1,555,453 
    Property and equipment, net  152,949   159,662 
    Operating lease assets  199,596   208,910 
    Goodwill  1,230,645   1,234,569 
    Intangible assets, net  19,455   18,285 
    Notes receivable, net  96,806   75,431 
    Other assets  80,379   73,568 
    Total assets $3,324,528  $3,325,878 
    Liabilities and Stockholders’ Equity    
    Current liabilities    
    Accounts payable, accrued expenses and other $226,787  $223,758 
    Accrued compensation  332,677   601,074 
    Billings in excess of services provided  68,236   67,937 
    Total current liabilities  627,700   892,769 
    Long-term debt, net  205,000    
    Noncurrent operating lease liabilities  213,576   223,774 
    Deferred income taxes  136,065   140,976 
    Other liabilities  87,831   86,939 
    Total liabilities  1,270,172   1,344,458 
    Stockholders’ equity    
    Preferred stock, $0.01 par value; shares authorized — 5,000; none
    outstanding
          
    Common stock, $0.01 par value; shares authorized — 75,000; shares
    issued and outstanding — 35,697 (2024) and 35,521 (2023)
      357   355 
    Additional paid-in capital  21,162   16,760 
    Retained earnings  2,194,730   2,114,765 
    Accumulated other comprehensive loss  (161,893)  (150,460)
    Total stockholders’ equity  2,054,356   1,981,420 
    Total liabilities and stockholders’ equity $3,324,528  $3,325,878 


    FTI CONSULTING, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (in thousands, except per share data)
     Three Months Ended
    March 31,
     
      2024   2023 
     (Unaudited)
    Revenues$928,553  $806,706 
    Operating expenses   
    Direct cost of revenues 626,034   553,509 
    Selling, general and administrative expenses 201,870   184,213 
    Amortization of intangible assets 1,016   2,182 
      828,920   739,904 
    Operating income 99,633   66,802 
    Other income (expense)   
    Interest income and other 1,581   (1,342)
    Interest expense (1,719)  (2,939)
      (138)  (4,281)
    Income before income tax provision 99,495   62,521 
    Income tax provision 19,530   14,974 
    Net income$79,965  $47,547 
    Earnings per common share ― basic$2.29  $1.43 
    Weighted average common shares outstanding ― basic 34,977   33,301 
    Earnings per common share ― diluted$2.23  $1.34 
    Weighted average common shares outstanding ― diluted 35,787   35,482 
    Other comprehensive income, net of tax   
    Foreign currency translation adjustments, net of tax expense of $— and $—$(11,433) $9,850 
    Total other comprehensive income, net of tax (11,433)  9,850 
    Comprehensive income$68,532  $57,397 


    FTI CONSULTING, INC.
    RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
    (in thousands)
    Three Months Ended March 31, 2024
    (Unaudited)
     Corporate Finance & Restructuring Forensic and Litigation Consulting Economic Consulting Technology  Strategic Communications Unallocated Corporate Total
    Net income             $79,965 
    Interest income and other              (1,581)
    Interest expense              1,719 
    Income tax provision              19,530 
    Operating income  $71,919 $31,967 $12,865 $10,939 $11,474 $(39,531) $99,633 
    Depreciation and amortization  2,473  1,629  1,285  3,642  882  513   10,424 
    Amortization of intangible assets  833  113      70     1,016 
    Adjusted EBITDA $75,225 $33,709 $14,150 $14,581 $12,426 $(39,018) $111,073 


    Three Months Ended March 31, 2023
    (Unaudited)
     Corporate Finance & Restructuring (1) Forensic and Litigation Consulting (1) Economic Consulting Technology Strategic Communications Unallocated Corporate Total
    Net income             $47,547 
    Interest income and other              1,342 
    Interest expense              2,939 
    Income tax provision              101,537 
    Operating income $47,976 $20,288 $12,700 $11,890 $8,683 $(34,735) $66,802 
    Depreciation and amortization  1,959  1,312  1,493  3,476  787  416   9,443 
    Amortization of intangible assets  1,912  184      86     2,182 
    Adjusted EBITDA $51,847 $21,784 $14,193 $15,366 $9,556 $(34,319) $78,427 


       
    (1)Effective July 1, 2023, prior period segment information for the Corporate Finance & Restructuring and Forensic and Litigation Consulting segments has been recast in this press release to include the reclassification of a portion of the Company’s health solutions practice in the Forensic and Litigation Consulting segment to the Company's realigned business transformation & strategy practice within the Corporate Finance & Restructuring segment.


    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 March 31, 2024 (Unaudited)            
    Corporate Finance & Restructuring$366,010 $75,225  20.6% 62%  $515 2,185 
    Forensic and Litigation Consulting 176,074  33,709  19.1% 59%  $406 1,463 
    Economic Consulting 204,548  14,150  6.9% 68%  $533 1,091 
    Technology (1) 100,713  14,581  14.5% N/M  N/M 646 
    Strategic Communications (1) 81,208  12,426  15.3% N/M  N/M 981 
     $928,553 $150,091  16.2%     6,366 
    Unallocated Corporate   (39,018)         
    Adjusted EBITDA  $111,073  12.0%       
                 
    Three Months Ended March 31, 2023 (Unaudited)            
    Corporate Finance & Restructuring (2)$315,652 $51,847  16.4% 59%  $478 2,152 
    Forensic and Litigation Consulting (2) 157,739  21,784  13.8% 57%  $375 1,427 
    Economic Consulting 169,595  14,193  8.4% 68%  $458 1,031 
    Technology (1) 90,618  15,366  17.0% N/M  N/M 581 
    Strategic Communications (1) 73,102  9,556  13.1% N/M  N/M 995 
     $806,706 $112,746  14.0%     6,186 
    Unallocated Corporate   (34,319)         
    Adjusted EBITDA  $78,427  9.7%       


       
    N/MNot 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, prior period segment information for the Corporate Finance & Restructuring and Forensic and Litigation Consulting segments has been recast in this press release to include the reclassification of a 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)
     Three Months Ended
    March 31,
     
      2024   2023 
     (Unaudited)
    Operating activities   
    Net income$79,965  $47,547 
    Adjustments to reconcile net income to net cash used in operating activities:   
    Depreciation and amortization 10,424   9,443 
    Amortization of intangible assets 1,016   2,182 
    Provision for expected credit losses 11,420   7,012 
    Share-based compensation 8,812   6,365 
    Deferred income taxes (8,107)  (3,016)
    Acquisition-related contingent consideration 660   1,284 
    Amortization of debt issuance costs and other 236   646 
    Changes in operating assets and liabilities, net of effects from acquisitions:   
    Accounts receivable, billed and unbilled (73,201)  (93,739)
    Notes receivable (35,937)  (6,851)
    Prepaid expenses and other assets (5,612)  321 
    Accounts payable, accrued expenses and other 4,317   1,315 
    Income taxes 1,691   5,658 
    Accrued compensation (271,044)  (230,967)
    Billings in excess of services provided 542   (1,406)
    Net cash used in operating activities (274,818)  (254,206)
    Investing activities   
    Purchases of property and equipment and other (4,640)  (18,012)
    Maturity of short-term investment 25,246    
    Net cash provided by (used in) investing activities 20,606   (18,012)
    Financing activities   
    Borrowings under revolving line of credit 280,000   90,000 
    Repayments under revolving line of credit (75,000)  (45,000)
    Purchase and retirement of common stock    (20,982)
    Share-based tax withholdings net of option exercises (8,712)  (9,064)
    Deposits and other 2,297   813 
    Net cash provided by financing activities 198,585   15,767 
    Effect of exchange rate changes on cash and cash equivalents (3,635)  3,302 
    Net decrease in cash and cash equivalents (59,262)  (253,149)
    Cash and cash equivalents, beginning of period 303,222   491,688 
    Cash and cash equivalents, end of period$243,960  $238,539 

     


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