FTI Consulting Reports Third Quarter 2014 Results
- Third Quarter Revenues of $451.2 Million
- Third Quarter Adjusted EPS of $0.63; Fully Diluted EPS of $0.55
- Increases Full Year Adjusted EPS Guidance Range to Between $1.85 and $2.00
WASHINGTON, Oct. 30, 2014 /PRNewswire/ -- FTI Consulting, Inc. (NYSE: FCN) (the "Company"), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today released its financial results for the quarter ended September 30, 2014.
For the quarter, revenues increased 8.8 percent to $451.2 million compared to $414.6 million in the prior year quarter. Fully diluted earnings per share ("EPS") were $0.55 compared to a fully diluted loss per share of ($1.29) in the prior year quarter. EPS for the current quarter included a special charge of $5.3 million, which includes the net cost of certain contractual arrangements for key executive officers who departed the business in the quarter. The special charge reduced EPS by $0.08. Loss per share in the prior year quarter included a goodwill impairment charge related to the Strategic Communications segment of $83.8 million and a special charge of $10.4 million. Adjusted EPS were $0.63 for the quarter compared to $0.72 in the prior year quarter. Adjusted EBITDA for the quarter was $63.4 million or 14.1 percent of revenues compared to $72.5 million or 17.5 percent of revenues in the prior year quarter.
Adjusted EPS, Adjusted EBITDA and Adjusted Segment EBITDA are non-GAAP measures defined elsewhere in this press release and are reconciled to GAAP measures in the financial tables that accompany this press release.
Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting said, "Our third quarter performance was driven by very high demand from major clients in our Technology and Forensic and Litigation Consulting segments, supported by continued progress in Economic Consulting and Strategic Communications. These results, combined with a slower ramp up of investment spending, produced an outstanding quarter, which exceeded our expectations."
Mr. Gunby continued, "More important, but much less visible, is our continuing work to deliver the vision for FTI outlined at our investor day in June. The investments we make in 2014 and through the balance of 2015 will continue to build a franchise to deliver sustainable earnings growth in 2016 and beyond."
Third Quarter Segment Results
Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 6.4 percent to $100.0 million in the quarter compared to $94.0 million in the prior year quarter. The increase in revenues was driven by higher demand for the segment's North America non-distressed service offerings and growth in the European transaction advisory and tax practices, which were partially offset by declines in global bankruptcy and restructuring engagements. Adjusted Segment EBITDA was $15.5 million or 15.5 percent of segment revenues compared to $19.4 million or 20.6 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was due to lower realized price associated with non-distressed work, declines in bankruptcy work and higher performance-based compensation.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased 7.7 percent to $121.7 million in the quarter compared to $113.1 million in the prior year quarter. Revenues increased organically by 4.8 percent due to increased demand in the North America investigations practice and global construction solutions and disputes practices, which was partially offset by lower success fees and lower revenues in the segment's health solutions practice. Adjusted Segment EBITDA was $22.3 million or 18.3 percent of segment revenues compared to $25.4 million or 22.4 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was the result of lower success fees, weaker performance in health solutions and higher performance-based compensation expense.
Economic Consulting
Revenues in the Economic Consulting segment increased 6.6 percent to $120.5 million in the quarter compared to $113.1 million in the prior year quarter with 1.1 percent of the increase from positive impacts of foreign currency translation. The remaining increase in revenues was due to higher demand for mergers and acquisition ("M&A") related services and higher pricing in the segment's international arbitration practice due to staff and engagement mix. Adjusted Segment EBITDA was $18.4 million or 15.3 percent of segment revenues compared to $23.2 million or 20.5 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was due largely to increased compensation expense related to extensions of employment contracts entered into with certain key senior client-service professionals.
Technology
Revenues in the Technology segment increased 21.8 percent to $62.4 million in the quarter compared to $51.2 million in the prior year quarter. The increase in revenues was primarily due to increased demand related to large scale complex global investigations. Adjusted Segment EBITDA was $17.8 million or 28.6 percent of segment revenues compared to $15.4 million or 30.0 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was due to an increase in the mix of lower margin services and investments in global data centers and operations support, business development, research and development and marketing activities.
Strategic Communications
Revenues in the Strategic Communications segment increased 7.5 percent to $46.6 million in the quarter compared to $43.3 million in the prior year quarter with 2.3 percent of the increase from favorable impacts of foreign currency translation. The remaining growth resulted from increased project work in the North America and Asia Pacific regions. Adjusted Segment EBITDA was $6.6 million or 14.2 percent of segment revenues compared to $4.0 million or 9.3 percent of segment revenues in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to the mix of more profitable project work and reductions in overhead expenses.
Cash Position
Net cash provided by operating activities for the quarter was $97.6 million compared to $84.4 million in the prior year. Cash and cash equivalents were $178.8 million at September 30, 2014.
2014 Guidance
Based on current market conditions and the outlook for the remainder of the year, the Company has increased its prior guidance and now estimates that its revenue for 2014 will be between $1.755 billion and $1.770 billion and Adjusted EPS will be between $1.85 and $2.00.
Third Quarter 2014 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2014 financial results at 9:00 a.m. Eastern Time on October 30, 2014. The call can be accessed live and will be available for replay over the Internet for 90 days by logging onto the Company's website at www.fticonsulting.com.
About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. With more than 4,200 employees located in 26 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management, strategic communications and restructuring. The company generated $1.65 billion in revenues during fiscal year 2013. More information can be found at www.fticonsulting.com.
Note: We define Segment Operating Income (Loss) as a segment's share of consolidated operating income (loss). We define Total Segment Operating Income (Loss) as the total of Segment Operating Income (Loss) for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted EBITDA as consolidated net income (loss) 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 Segment EBITDA as a segment's share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We define Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment's ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, provide management and investors with a more complete understanding of our operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges, and goodwill impairment charges. 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 to the operating results of other companies.
We define Adjusted Net Income and Adjusted Earnings per Diluted Share ("Adjusted EPS") as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results, provides management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable to 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 (Loss). Reconciliations of GAAP to non-GAAP financial measures are included elsewhere in 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 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 flow 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, adverse financial, real estate or other market and general economic conditions, which could impact each of our segments differently, the pace and timing of the consummation and integration of past and future acquisitions, the Company's ability to realize cost savings and efficiencies, competitive and general economic conditions, retention of staff and clients and other risks described under the heading "Item 1A Risk Factors" in the Company's most recent Form 10-K filed with the SEC and in the Company's other filings with the SEC, including the risks set forth under "Risks Related to Our Reportable Segments" and "Risks Related to Our Operations". 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.
1101 K Street NW
Washington, DC 20005
+1.202.312.9100
Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
[email protected]
| FTI CONSULTING, INC. |
|||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
|||
| FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 |
|||
| (in thousands, except per share data) |
|||
| (unaudited) |
|||
| Three Months Ended |
|||
| September 30, |
|||
| 2014 |
2013 |
||
| Revenues |
$ 451,178 |
$ 414,643 |
|
| Operating expenses |
|||
| Direct cost of revenues |
293,244 |
255,152 |
|
| Selling, general and administrative expense |
102,461 |
94,513 |
|
| Special charges |
5,347 |
10,419 |
|
| Acquisition-related contingent consideration |
257 |
630 |
|
| Amortization of other intangible assets |
3,398 |
5,776 |
|
| Goodwill impairment charge |
- |
83,752 |
|
| 404,707 |
450,242 |
||
| Operating income (loss) |
46,471 |
(35,599) |
|
| Other income (expense) |
|||
| Interest income and other |
1,014 |
1,152 |
|
| Interest expense |
(12,634) |
(12,814) |
|
| (11,620) |
(11,662) |
||
| Income (loss) before income tax provision |
34,851 |
(47,261) |
|
| Income tax provision |
12,329 |
3,360 |
|
| Net income (loss) |
$ 22,522 |
$ (50,621) |
|
| Earnings (loss) per common share - basic |
$ 0.57 |
$ (1.29) |
|
| Earnings (loss) per common share - diluted |
$ 0.55 |
$ (1.29) |
|
| Weighted average common shares outstanding - basic |
39,789 |
39,094 |
|
| Weighted average common shares outstanding - diluted |
40,819 |
39,094 |
|
| Other comprehensive income (loss), net of tax: |
|||
| Foreign currency translation adjustments, net of tax of $0 |
$ (22,542) |
$ 17,115 |
|
| Total other comprehensive income (loss), net of tax |
(22,542) |
17,115 |
|
| Comprehensive loss |
$ (20) |
$ (33,506) |
|
| FTI CONSULTING, INC. |
|||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
|||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 |
|||
| (in thousands, except per share data) |
|||
| (unaudited) |
|||
| Nine Months Ended |
|||
| September 30, |
|||
| 2014 |
2013 |
||
| Revenues |
$ 1,331,054 |
$ 1,236,434 |
|
| Operating expenses |
|||
| Direct cost of revenues |
863,068 |
773,160 |
|
| Selling, general and administrative expense |
317,880 |
287,485 |
|
| Special charges |
14,711 |
10,846 |
|
| Acquisition-related contingent consideration |
(1,591) |
(6,091) |
|
| Amortization of other intangible assets |
11,466 |
17,293 |
|
| Goodwill impairment charge |
- |
83,752 |
|
| 1,205,534 |
1,166,445 |
||
| Operating income |
125,520 |
69,989 |
|
| Other income (expense) |
|||
| Interest income and other |
3,465 |
1,702 |
|
| Interest expense |
(38,197) |
(38,600) |
|
| (34,732) |
(36,898) |
||
| Income before income tax provision |
90,788 |
33,091 |
|
| Income tax provision |
32,902 |
36,546 |
|
| Net income (loss) |
$ 57,886 |
$ (3,455) |
|
| Earnings (loss) per common share - basic |
$ 1.46 |
$ (0.09) |
|
| Earnings (loss) per common share - diluted |
$ 1.43 |
$ (0.09) |
|
| Weighted average common shares outstanding - basic |
39,637 |
39,212 |
|
| Weighted average common shares outstanding - diluted |
40,608 |
39,212 |
|
| Other comprehensive income (loss), net of tax: |
|||
| Foreign currency translation adjustments, net of tax of $0 |
$ (10,120) |
$ (10,108) |
|
| Total other comprehensive income (loss), net of tax |
(10,120) |
(10,108) |
|
| Comprehensive income (loss) |
$ 47,766 |
$ (13,563) |
|
| FTI CONSULTING, INC. |
||||||||||||
| OPERATING RESULTS BY BUSINESS SEGMENT |
||||||||||||
| Average |
Revenue- |
|||||||||||
| Adjusted |
Billable |
Generating |
||||||||||
| Revenues |
EBITDA |
Margin |
Utilization |
Rate |
Headcount |
|||||||
| (in thousands) |
(at period end) |
|||||||||||
| Three Months Ended September 30, 2014 |
||||||||||||
| Corporate Finance/Restructuring |
$ 100,041 |
$ 15,534 |
15.5% |
70% |
$ 396 |
722 |
||||||
| Forensic and Litigation Consulting |
121,732 |
22,260 |
18.3% |
68% |
$ 323 |
1,135 |
||||||
| Economic Consulting |
120,494 |
18,426 |
15.3% |
77% |
$ 535 |
551 |
||||||
| Technology (1) |
62,359 |
17,835 |
28.6% |
N/M |
N/M |
335 |
||||||
| Strategic Communications (1) |
46,552 |
6,605 |
14.2% |
N/M |
N/M |
549 |
||||||
| $ 451,178 |
80,660 |
17.9% |
3,292 |
|||||||||
| Corporate |
(17,265) |
|||||||||||
| Adjusted EBITDA |
$ 63,395 |
14.1% |
||||||||||
| Nine Months Ended September 30, 2014 |
||||||||||||
| Corporate Finance/Restructuring |
$ 298,043 |
$ 45,618 |
15.3% |
71% |
$ 388 |
722 |
||||||
| Forensic and Litigation Consulting |
362,242 |
71,025 |
19.6% |
71% |
$ 323 |
1,135 |
||||||
| Economic Consulting |
344,572 |
49,499 |
14.4% |
77% |
$ 517 |
551 |
||||||
| Technology (1) |
183,142 |
50,287 |
27.5% |
N/M |
N/M |
335 |
||||||
| Strategic Communications (1) |
143,055 |
15,168 |
10.6% |
N/M |
N/M |
549 |
||||||
| $ 1,331,054 |
231,597 |
17.4% |
3,292 |
|||||||||
| Corporate |
(57,103) |
|||||||||||
| Adjusted EBITDA |
$ 174,494 |
13.1% |
||||||||||
| Three Months Ended September 30, 2013 |
||||||||||||
| Corporate Finance/Restructuring |
$ 93,981 |
$ 19,402 |
20.6% |
64% |
$ 396 |
732 |
||||||
| Forensic and Litigation Consulting |
113,068 |
25,362 |
22.4% |
67% |
$ 324 |
999 |
||||||
| Economic Consulting |
113,069 |
23,225 |
20.5% |
79% |
$ 512 |
528 |
||||||
| Technology (1) |
51,201 |
15,381 |
30.0% |
N/M |
N/M |
297 |
||||||
| Strategic Communications (1) |
43,324 |
4,036 |
9.3% |
N/M |
N/M |
617 |
||||||
| $ 414,643 |
87,406 |
21.1% |
3,173 |
|||||||||
| Corporate |
(14,862) |
|||||||||||
| Adjusted EBITDA |
$ 72,544 |
17.5% |
||||||||||
| Nine Months Ended September 30. 2013 |
||||||||||||
| Corporate Finance/Restructuring |
$ 289,775 |
$ 56,335 |
19.4% |
66% |
$ 407 |
732 |
||||||
| Forensic and Litigation Consulting |
318,912 |
56,925 |
17.8% |
68% |
$ 315 |
999 |
||||||
| Economic Consulting |
339,277 |
70,222 |
20.7% |
84% |
$ 509 |
528 |
||||||
| Technology (1) |
149,101 |
45,985 |
30.8% |
N/M |
N/M |
297 |
||||||
| Strategic Communications (1) |
139,369 |
12,809 |
9.2% |
N/M |
N/M |
617 |
||||||
| $ 1,236,434 |
242,276 |
19.6% |
3,173 |
|||||||||
| Corporate |
(44,394) |
|||||||||||
| Adjusted EBITDA |
$ 197,882 |
16.0% |
||||||||||
| (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. |
|||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|||||||||||
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER, 2014 AND 2013 |
|||||||||||
| (in thousands, except per share data) |
|||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
| 2014 |
2013 |
2014 |
2013 |
||||||||
| Net income (loss) |
$ 22,522 |
$ (50,621) |
$ 57,886 |
$ (3,455) |
|||||||
| Add back: |
|||||||||||
| Special charges, net of tax effect (1) |
3,154 |
6,847 |
8,676 |
7,100 |
|||||||
| Goodwill impairment charges (2) |
- |
83,752 |
- |
83,752 |
|||||||
| Remeasurement of acquisition-related contingent consideration, net of tax effect (3) |
- |
- |
(1,514) |
(8,216) |
|||||||
| Less: |
|||||||||||
| Interim period impact of including goodwill impairment charges in the annual |
- |
(10,805) |
- |
(10,805) |
|||||||
| Adjusted Net Income |
$ 25,676 |
$ 29,173 |
$ 65,048 |
$ 68,376 |
|||||||
| Earnings (loss) per common share – diluted |
$ 0.55 |
$ (1.29) |
$ 1.43 |
$ (0.09) |
|||||||
| Add back: |
|||||||||||
| Special charges, net of tax effect (1) |
0.08 |
0.18 |
0.21 |
0.18 |
|||||||
| Goodwill impairment charges (2) |
- |
2.14 |
- |
2.14 |
|||||||
| Remeasurement of acquisition-related contingent consideration, net of tax effect (3) |
- |
- |
(0.04) |
(0.21) |
|||||||
| Less: |
|||||||||||
| Interim period impact of including goodwill impairment charges in the annual |
- |
(0.27) |
- |
(0.28) |
|||||||
| Impact of denominator for diluted EPS(4) |
- |
(0.04) |
- |
(0.05) |
|||||||
| Adjusted EPS – diluted |
$ 0.63 |
$ 0.72 |
$ 1.60 |
$ 1.69 |
|||||||
| Weighted average number of common shares outstanding – diluted |
40,819 |
40,244 |
40,608 |
40,385 |
|||||||
| (1) The tax effect takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). As a result, the effective tax rate for the adjustments related to special charges for the three and nine months ended September 30, 2014 was 41.0%. The tax expense related to the adjustment for special charges for the three and nine months ended September 30, 2014 was $2.2 million, or a $0.05 impact on diluted earnings per share, and $6.0 million, or a $0.15 impact on diluted earnings per share, respectively. The effective tax rates for the adjustments related to special charges for the three and nine months ended September 30, 2013 were 34.3% and 34.5%, respectively. The tax expense related to the adjustment for special charges for the three and nine months ended September 30, 2013 was $3.6 million, or a $0.09 impact on diluted earnings per share, and $3.7 million, or $0.10 impact on diluted earnings per share, respectively. |
| (2) The goodwill impairment charge was non-deductible for income tax purposes and resulted in no tax benefit for the year ended December 31, 2013. |
| (3) The tax effect takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). As a result, the effective tax rates for the adjustments related to the remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2014 was 36.5%. The tax expense related to the remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2014 was $0.9 million, or a $0.02 impact on diluted earnings per share. The adjustment related to remeasurement of acquisition-related contingent consideration for the nine months ended September 30, 2013 was not taxable. There were no adjustments related to remeasurement of acquisition-related contingent consideration for the three months ended September 30, 2014 and 2013. |
| (4) For the three and nine months ended September 30, 2013, the Company reported a net loss. For those periods, the number of basic weighted average common shares outstanding equals the number of diluted weighted average common shares outstanding for purposes of calculating GAAP earnings per share because potentially dilutive securities would be antidilutive. For non-GAAP purposes, the total per share and share amounts presented herein reflect the impact of the inclusion of share-based awards that are considered dilutive based on the impact of the add backs included in Adjusted Net Income above. |
| RECONCILIATION OF NET INCOME AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA |
||||||||||||||||||
| (in thousands) |
||||||||||||||||||
| Three Months Ended September 30, 2014 |
Corporate Finance / Restructuring |
Forensic and Litigation Consulting |
Economic Consulting |
Technology |
Strategic Communications |
Corp HQ |
Total |
|||||||||||
| Net income |
$ 22,522 |
|||||||||||||||||
| Interest income and other |
(1,014) |
|||||||||||||||||
| Interest expense |
12,634 |
|||||||||||||||||
| Income tax provision |
12,329 |
|||||||||||||||||
| Operating income |
$ 13,406 |
$ 20,276 |
$ 17,245 |
$ 13,741 |
$ 4,875 |
$ (23,072) |
$ 46,471 |
|||||||||||
| Depreciation and amortization |
869 |
1,023 |
934 |
3,857 |
610 |
886 |
8,179 |
|||||||||||
| Amortization of other intangible assets |
1,175 |
653 |
235 |
218 |
1,117 |
- |
3,398 |
|||||||||||
| Special charges |
84 |
308 |
12 |
19 |
3 |
4,921 |
5,347 |
|||||||||||
| Adjusted EBITDA |
$ 15,534 |
$ 22,260 |
$ 18,426 |
$ 17,835 |
$ 6,605 |
$ (17,265) |
$ 63,395 |
|||||||||||
| Nine Months Ended September 30, 2014 |
||||||||||||||||||
| Net income |
$ 57,886 |
|||||||||||||||||
| Interest income and other |
(3,465) |
|||||||||||||||||
| Interest expense |
38,197 |
|||||||||||||||||
| Income tax provision |
32,902 |
|||||||||||||||||
| Operating income |
$ 39,081 |
$ 66,517 |
$ 46,515 |
$ 37,712 |
$ 9,910 |
$ (74,215) |
$ 125,520 |
|||||||||||
| Depreciation and amortization |
2,514 |
3,057 |
2,996 |
11,902 |
1,884 |
2,827 |
25,180 |
|||||||||||
| Amortization of other intangible assets |
4,601 |
2,077 |
763 |
654 |
3,371 |
- |
11,466 |
|||||||||||
| Special charges |
84 |
308 |
12 |
19 |
3 |
14,285 |
14,711 |
|||||||||||
| Remeasurement of acquisition-related contingent consideration |
(662) |
(934) |
(787) |
- |
- |
- |
(2,383) |
|||||||||||
| Adjusted EBITDA |
$ 45,618 |
$ 71,025 |
$ 49,499 |
$ 50,287 |
$ 15,168 |
$ (57,103) |
$ 174,494 |
|||||||||||
| Three Months Ended September 30, 2013 |
Corporate Finance / Restructuring |
Forensic and Litigation Consulting |
Economic Consulting |
Technology |
Strategic Communications |
Corp HQ |
Total |
|||||||||||
| Net income (loss) |
$ (50,621) |
|||||||||||||||||
| Interest income and other |
(1,152) |
|||||||||||||||||
| Interest expense |
12,814 |
|||||||||||||||||
| Income tax provision |
3,360 |
|||||||||||||||||
| Operating income (loss) |
$ 10,590 |
$ 21,915 |
$ 21,708 |
$ 9,755 |
$ (81,490) |
$ (18,077) |
$ (35,599) |
|||||||||||
| Depreciation and amortization |
919 |
997 |
979 |
3,642 |
575 |
1,084 |
8,196 |
|||||||||||
| Amortization of other intangible assets |
1,562 |
512 |
523 |
1,982 |
1,197 |
- |
5,776 |
|||||||||||
| Special charges |
6,331 |
1,938 |
15 |
2 |
2 |
2,131 |
10,419 |
|||||||||||
| Goodwill |
- |
- |
- |
- |
83,752 |
- |
83,752 |
|||||||||||
| Adjusted EBITDA |
$ 19,402 |
$ 25,362 |
$ 23,225 |
$ 15,381 |
$ 4,036 |
$ (14,862) |
$ 72,544 |
|||||||||||
| Nine Months Ended September 30, 2013 |
||||||||||||||||||
| Net income (loss) |
$ (3,455) |
|||||||||||||||||
| Interest income and other |
(1,702) |
|||||||||||||||||
| Interest expense |
38,600 |
|||||||||||||||||
| Income tax provision |
36,546 |
|||||||||||||||||
| Operating income (loss) |
$ 48,725 |
$ 52,194 |
$ 66,233 |
$ 29,129 |
$ (76,369) |
$ (49,923) |
$ 69,989 |
|||||||||||
| Depreciation and amortization |
2,541 |
2,958 |
2,647 |
10,888 |
1,898 |
3,286 |
24,218 |
|||||||||||
| Amortization of other intangible assets |
4,945 |
1,603 |
1,331 |
5,952 |
3,462 |
- |
17,293 |
|||||||||||
| Special charges |
6,399 |
2,111 |
11 |
16 |
66 |
2,243 |
10,846 |
|||||||||||
| Goodwill |
- |
- |
- |
- |
83,752 |
- |
83,752 |
|||||||||||
| Remeasurement of acquisition-related contingent consideration |
(6,275) |
(1,941) |
- |
- |
- |
- |
(8,216) |
|||||||||||
| Adjusted EBITDA |
$ 56,335 |
$ 56,925 |
$ 70,222 |
$ 45,985 |
$ 12,809 |
$ (44,394) |
$ 197,882 |
|||||||||||
| FTI CONSULTING, INC. |
|||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 |
|||
| (in thousands) |
|||
| (unaudited) |
|||
| Nine Months Ended |
|||
| September 30, |
|||
| 2014 |
2013 |
||
| Operating activities |
|||
| Net income (loss) |
$ 57,886 |
$ (3,455) |
|
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|||
| Depreciation and amortization |
26,318 |
24,218 |
|
| Amortization of other intangible assets |
11,466 |
17,293 |
|
| Goodwill impairment charge |
- |
83,752 |
|
| Acquisition-related contingent consideration |
(1,591) |
(6,091) |
|
| Provision for doubtful accounts |
11,896 |
10,404 |
|
| Non-cash share-based compensation |
18,930 |
22,544 |
|
| Non-cash interest expense |
2,020 |
2,024 |
|
| Other |
(358) |
(286) |
|
| Changes in operating assets and liabilities, net of effects from acquisitions: |
|||
| Accounts receivable, billed and unbilled |
(107,847) |
(72,266) |
|
| Notes receivable |
(18,266) |
(9,644) |
|
| Prepaid expenses and other assets |
7,099 |
(2,313) |
|
| Accounts payable, accrued expenses and other |
10,538 |
16,822 |
|
| Income taxes |
8,315 |
12,989 |
|
| Accrued compensation |
(16,958) |
13,198 |
|
| Billings in excess of services provided |
11,031 |
(5,383) |
|
| Net cash provided by operating activities |
20,479 |
103,806 |
|
| Investing activities |
|||
| Payments for acquisition of businesses, net of cash received |
(15,684) |
(40,766) |
|
| Purchases of property and equipment |
(31,797) |
(22,994) |
|
| Other |
69 |
24 |
|
| Net cash used in investing activities |
(47,412) |
(63,736) |
|
| Financing activities |
|||
| Payments of long-term debt |
(6,014) |
(6,000) |
|
| Purchase and retirement of common stock |
(4,367) |
(48,769) |
|
| Net issuance of common stock under equity compensation plans |
(29) |
6,208 |
|
| Deposits |
12,956 |
- |
|
| Other |
(1,036) |
(800) |
|
| Net cash provided by (used in) financing activities |
1,510 |
(49,361) |
|
| Effect of exchange rate changes on cash and cash equivalents |
(1,632) |
432 |
|
| Net decrease in cash and cash equivalents |
(27,055) |
(8,859) |
|
| Cash and cash equivalents, beginning of period |
205,833 |
156,785 |
|
| Cash and cash equivalents, end of period |
$ 178,778 |
$ 147,926 |
|
| FTI CONSULTING, INC. |
|||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
| AT SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 |
|||
| (in thousands, except per share amounts) |
|||
| September 30, |
December 31, |
||
| 2014 |
2013 |
||
| Assets |
(unaudited) |
||
| Current assets |
|||
| Cash and cash equivalents |
$ 178,778 |
$ 205,833 |
|
| Accounts receivable: |
|||
| Billed receivables |
401,696 |
352,411 |
|
| Unbilled receivables |
305,572 |
233,307 |
|
| Allowance for doubtful accounts and unbilled services |
(141,611) |
(109,273) |
|
| Accounts receivable, net |
565,657 |
476,445 |
|
| Current portion of notes receivable |
28,757 |
33,093 |
|
| Prepaid expenses and other current assets |
54,045 |
61,800 |
|
| Current portion of deferred tax assets |
29,731 |
26,690 |
|
| Total current assets |
856,968 |
803,861 |
|
| Property and equipment, net of accumulated depreciation |
83,520 |
79,007 |
|
| Goodwill |
1,213,809 |
1,218,733 |
|
| Other intangible assets, net of amortization |
80,913 |
97,148 |
|
| Notes receivable, net of current portion |
126,561 |
108,298 |
|
| Other assets |
53,120 |
57,900 |
|
| Total assets |
$ 2,414,891 |
$ 2,364,947 |
|
| Liabilities and Stockholders' Equity |
|||
| Current liabilities |
|||
| Accounts payable, accrued expenses and other |
$ 99,857 |
$ 126,886 |
|
| Accrued compensation |
200,513 |
222,738 |
|
| Current portion of long-term debt |
6,000 |
6,014 |
|
| Billings in excess of services provided |
39,492 |
28,692 |
|
| Total current liabilities |
345,862 |
384,330 |
|
| Long-term debt, net of current portion |
705,000 |
711,000 |
|
| Deferred income taxes |
152,583 |
137,697 |
|
| Other liabilities |
98,147 |
89,661 |
|
| Total liabilities |
1,301,592 |
1,322,688 |
|
| 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 |
410 |
405 |
|
| Additional paid-in capital |
385,591 |
362,322 |
|
| Retained earnings |
788,507 |
730,621 |
|
| Accumulated other comprehensive loss |
(61,209) |
(51,089) |
|
| Total stockholders' equity |
1,113,299 |
1,042,259 |
|
| Total liabilities and stockholders' equity |
$ 2,414,891 |
$ 2,364,947 |
|
SOURCE FTI Consulting, Inc.
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