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FTI Consulting Reports Second Quarter 2022 Financial Results

  • Second Quarter 2022 Revenues of $755.0 Million, Up 6% Compared to $711.5 Million in Prior Year Quarter
  • Second Quarter 2022 EPS of $1.43, Down 19% Compared to $1.77 in Prior Year Quarter; Second Quarter 2022 Adjusted EPS of $1.43, Down 18% Compared to $1.74 in Prior Year Quarter
  • Reaffirms 2022 Guidance

WASHINGTON, July 28, 2022 (GLOBE NEWSWIRE) — FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended June 30, 2022.

Second quarter 2022 revenues of $755.0 million increased $43.5 million, or 6.1%, compared to revenues of $711.5 million in the prior year quarter. Excluding the estimated negative impact from foreign currency translation ("FX"), revenues increased $65.5 million, or 9.2%, compared to the prior year quarter. Acquisition-related revenues contributed $4.7 million during the quarter. The increase in revenues was primarily due to higher demand and realized rates in Corporate Finance & Restructuring and higher realized rates in Forensic and Litigation Consulting, which was partially offset by lower realization and demand in Economic Consulting. Net income of $51.4 million compared to $62.8 million in the prior year quarter. Net income declined compared to the prior year quarter, as the increase in revenues was more than offset by higher selling, general and administrative ("SG&A") and compensation expenses, which included the impact of a 9.4% increase in billable headcount. Adjusted EBITDA of $76.2 million, or 10.1% of revenues, compared to $92.3 million, or 13.0% of revenues, in the prior year quarter.

Second quarter 2022 earnings per diluted share ("EPS") of $1.43 compared to $1.77 in the prior year quarter. Second quarter 2021 EPS included a $3.1 million fair value remeasurement of acquisition-related contingent consideration, which increased EPS by $0.09 and $2.4 million of non-cash interest expense related to the Company’s 2.0% convertible senior notes due 2023, which decreased EPS by $0.06. Second quarter 2022 Adjusted EPS of $1.43 compared to Adjusted EPS of $1.74 in the prior year quarter. Second quarter 2021 Adjusted EPS excluded the fair value remeasurement and non-cash interest expense.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our solid results this quarter reflect the strength of our underlying business, together with our commitment to invest heavily to attract and support talented professionals to extend our global footprint and ensure we are able to continuously deliver on our clients’ ever-evolving needs.”

Cash Position and Capital Allocation

Net cash provided by operating activities of $35.0 million for the quarter ended June 30, 2022 compared to $125.6 million for the quarter ended June 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, higher operating expenses and income tax payments, as well as a decrease in cash collections compared to the same period in the prior year.

Cash and cash equivalents of $255.7 million at June 30, 2022 compared to $256.9 million at June 30, 2021 and $271.1 million at March 31, 2022. Total debt, net of cash, of $60.5 million at June 30, 2022 compared to $159.4 million at June 30, 2021 and $60.1 million at March 31, 2022.

There were no share repurchases during the quarter ended June 30, 2022. As of June 30, 2022, approximately $164.0 million remained available for common stock repurchases under the Company’s stock repurchase authorization.

Second Quarter 2022 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $46.1 million, or 20.0%, to $277.1 million in the quarter compared to $231.0 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $52.3 million, or 22.7%, compared to the prior year quarter. Acquisition-related revenues contributed $3.6 million in the quarter. The increase in revenues was primarily due to higher demand and realized rates for transactions, business transformation and restructuring services compared to the prior year quarter. Adjusted Segment EBITDA of $55.0 million, or 19.8% of segment revenues, compared to $40.2 million, or 17.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation, which includes the impact of an 8.4% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $13.5 million, or 9.0%, to $164.2 million in the quarter compared to $150.7 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $16.3 million, or 10.8%, compared to the prior year quarter. Acquisition-related revenues contributed $1.1 million in the quarter. The increase in revenues was primarily due to higher demand for health solutions services and higher realized rates for investigations services compared to the prior year quarter. Adjusted Segment EBITDA of $16.7 million, or 10.2% of segment revenues, compared to $18.0 million, or 11.9% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to higher compensation, which includes the impact of a 7.9% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Economic Consulting
Revenues in the Economic Consulting segment decreased $19.3 million, or 10.5%, to $164.0 million in the quarter compared to $183.3 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $12.2 million, or 6.6%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for merger and acquisition ("M&A")-related antitrust services and lower realization for non-M&A-related antitrust services, primarily related to revenue deferrals, which was partially offset by higher demand for non-M&A-related antitrust services compared to the prior year quarter. Adjusted Segment EBITDA of $21.6 million, or 13.2% of segment revenues, compared to $30.7 million, or 16.7% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to lower revenues and higher SG&A expenses, which was partially offset by lower variable compensation expenses compared to the prior year quarter.

Technology
Revenues in the Technology segment decreased $0.9 million, or 1.1%, to $77.8 million in the quarter compared to $78.6 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $1.1 million, or 1.4%, compared to the prior year quarter. The increase in revenues was primarily due to increased demand for information governance, privacy and security and investigations services, which was partially offset by lower demand for litigation and M&A-related "second request" services compared to the prior year quarter. Adjusted Segment EBITDA of $8.4 million, or 10.8% of segment revenues, compared to $18.5 million, or 23.5% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to higher compensation, which includes the impact of an 18.2% increase in billable headcount and an increase in as-needed contractors, as well as higher SG&A expenses compared to the prior year quarter.

Strategic Communications
Revenues in the Strategic Communications segment increased $4.0 million, or 6.0%, to $71.9 million in the quarter compared to $67.8 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $7.9 million, or 11.7%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for corporate reputation services compared to the prior year quarter. Adjusted Segment EBITDA of $11.5 million, or 16.0% of segment revenues, compared to $13.5 million, or 19.9% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to higher compensation, which includes the impact of a 13.7% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

2022 Guidance
The Company is reaffirming its full year 2022 revenue guidance of between $2.920 billion and $3.045 billion. The Company is also reaffirming its full year 2022 EPS guidance of between $6.40 and $7.20. The Company does not currently expect Adjusted EPS to differ from EPS.

Second Quarter 2022 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss second quarter 2022 financial results at 9:00 a.m. Eastern Time on Thursday, July 28, 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 7,000 employees located in 30 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.

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)

  June 30,   December 31,
    2022       2021  
  (Unaudited)    
Assets      
Current assets      
Cash and cash equivalents $ 255,730     $ 494,485  
Accounts receivable, net   905,548       754,120  
Current portion of notes receivable   29,773       30,256  
Prepaid expenses and other current assets   100,668       91,166  
Total current assets   1,291,719       1,370,027  
Property and equipment, net   144,053       142,163  
Operating lease assets   198,893       215,995  
Goodwill   1,227,837       1,232,791  
Intangible assets, net   28,613       31,990  
Notes receivable, net   55,230       53,539  
Other assets   56,823       54,404  
Total assets $ 3,003,168     $ 3,100,909  
Liabilities and Stockholders’ Equity      
Current liabilities      
Accounts payable, accrued expenses and other $ 165,455     $ 165,025  
Accrued compensation   357,222       507,556  
Billings in excess of services provided   48,217       45,535  
Total current liabilities   570,894       718,116  
Long-term debt, net   314,337       297,158  
Noncurrent operating lease liabilities   218,001       236,026  
Deferred income taxes   167,797       170,612  
Other liabilities   101,520       95,676  
Total liabilities   1,372,549       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 34,540 (2022) and 34,333 (2021)
  345       343  
Additional paid-in capital   499       13,662  
Retained earnings   1,805,485       1,698,156  
Accumulated other comprehensive loss   (175,710 )     (128,840 )
Total stockholders’ equity   1,630,619       1,583,321  
Total liabilities and stockholders’ equity $ 3,003,168     $ 3,100,909  



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

  Three Months Ended
June 30,
 
    2022       2021  
  (Unaudited)
Revenues $ 754,992     $ 711,486  
Operating expenses      
Direct cost of revenues   520,080       490,722  
Selling, general and administrative expenses   167,940       133,930  
Amortization of intangible assets   2,737       2,854  
    690,757       627,506  
Operating income   64,235       83,980  
Other income (expense)      
Interest income and other   2,994       (912 )
Interest expense   (2,448 )     (5,294 )
    546       (6,206 )
Income before income tax provision   64,781       77,774  
Income tax provision   13,353       14,992  
Net income $ 51,428     $ 62,782  
Earnings per common share ― basic $ 1.52     $ 1.88  
Weighted average common shares outstanding ― basic   33,790       33,458  
Earnings per common share ― diluted $ 1.43     $ 1.77  
Weighted average common shares outstanding ― diluted   35,909       35,374  
Other comprehensive income (loss), net of tax      
Foreign currency translation adjustments, net of tax expense of $0 $ (40,679 )   $ 5,807  
Total other comprehensive income (loss), net of tax   (40,679 )     5,807  
Comprehensive income $ 10,749     $ 68,589  



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

  Six Months Ended
June 30,
 
    2022       2021  
  (Unaudited)
Revenues $ 1,478,612     $ 1,397,763  
Operating expenses      
Direct cost of revenues   1,013,184       959,146  
Selling, general and administrative expenses   316,911       260,476  
Amortization of intangible assets   5,005       5,655  
    1,335,100       1,225,277  
Operating income   143,512       172,486  
Other income (expense)      
Interest income and other   2,647       122  
Interest expense   (5,090 )     (10,091 )
    (2,443 )     (9,969 )
Income before income tax provision   141,069       162,517  
Income tax provision   30,320       35,239  
Net income $ 110,749     $ 127,278  
Earnings per common share ― basic $ 3.29     $ 3.80  
Weighted average common shares outstanding ― basic   33,705       33,470  
Earnings per common share ― diluted $ 3.10     $ 3.61  
Weighted average common shares outstanding ― diluted   35,778       35,218  
Other comprehensive income (loss), net of tax      
Foreign currency translation adjustments, net of tax expense of $0 $ (46,870 )   $ 565  
Total other comprehensive income (loss), net of tax   (46,870 )     565  
Comprehensive income $ 63,879     $ 127,843  



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

    Three Months Ended
June 30,
  Six Months Ended
June 30,
      2022     2021       2022     2021  
    (Unaudited)   (Unaudited)
Net income   $ 51,428   $ 62,782     $ 110,749   $ 127,278  
Add back:                
Remeasurement of acquisition-related contingent
consideration
        (3,130 )         (3,130 )
Non-cash interest expense on convertible notes         2,380           4,728  
Tax impact of non-cash interest expense on
convertible notes
        (619 )         (1,229 )
Adjusted Net Income   $ 51,428   $ 61,413     $ 110,749   $ 127,647  
Earnings per common share — diluted   $ 1.43   $ 1.77     $ 3.10   $ 3.61  
Add back:                
Remeasurement of acquisition-related contingent consideration         (0.09 )         (0.09 )
Non-cash interest expense on convertible notes         0.07           0.13  
Tax impact of non-cash interest expense on
convertible notes
        (0.01 )         (0.03 )
Adjusted earnings per common share — diluted   $ 1.43   $ 1.74     $ 3.10   $ 3.62  
Weighted average number of common shares
outstanding ― diluted
    35,909     35,374       35,778     35,218  



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

Three Months Ended June 30, 2022
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 51,428  
Interest income and other                             (2,994 )
Interest expense                             2,448  
Income tax provision                             13,353  
Operating income   $ 50,935   $ 15,014   $ 20,439   $ 4,930   $ 10,633   $ (37,716 )   $ 64,235  
Depreciation and amortization     1,708     1,448     1,207     3,435     654     736       9,188  
Amortization of intangible assets     2,307     245             185           2,737  
Adjusted EBITDA   $ 54,950   $ 16,707   $ 21,646   $ 8,365   $ 11,472   $ (36,980 )   $ 76,160  
                             

Six Months Ended June 30, 2022
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 110,749  
Interest income and other                             (2,647 )
Interest expense                             5,090  
Income tax provision                             30,320  
Operating income   $ 100,989   $ 30,556   $ 40,382   $ 15,173   $ 25,467   $ (69,055 )   $ 143,512  
Depreciation and amortization     3,374     2,915     2,459     6,555     1,333     1,459       18,095  
Amortization of intangible assets     4,127     493             385           5,005  
Adjusted EBITDA   $ 108,490   $ 33,964   $ 42,841   $ 21,728   $ 27,185   $ (67,596 )   $ 166,612  



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

Three Months Ended June 30, 2021
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 62,782  
Interest income and other                             912  
Interest expense                             5,294  
Income tax provision                             14,992  
Operating income   $ 40,103     $ 16,492   $ 29,204   $ 15,340   $ 12,198   $ (29,357 )   $ 83,980  
Depreciation and amortization     1,317       1,286     1,495     3,178     558     770       8,604  
Amortization of intangible assets     1,884       224             745     1       2,854  
Remeasurement of acquisition-related
contingent consideration
    (3,130 )                           (3,130 )
Adjusted EBITDA   $ 40,174     $ 18,002   $ 30,699   $ 18,518   $ 13,501   $ (28,586 )   $ 92,308  
                             
Six Months Ended June 30, 2021
(Unaudited)
  Corporate Finance & Restructuring   Forensic and Litigation Consulting   Economic Consulting   Technology   Strategic Communications   Unallocated Corporate   Total
Net income                           $ 127,278  
Interest income and other                             (122 )
Interest expense                             10,091  
Income tax provision                             35,239  
Operating income   $ 74,402     $ 44,498   $ 54,436   $ 33,899   $ 21,318   $ (56,067 )   $ 172,486  
Depreciation and amortization     2,570       2,538     2,842     6,217     1,097     1,501       16,765  
Amortization of intangible assets     3,771       398             1,484     2       5,655  
Remeasurement of acquisition-related
contingent consideration
    (3,130 )                           (3,130 )
Adjusted EBITDA   $ 77,613     $ 47,434   $ 57,278   $ 40,116   $ 23,899   $ (54,564 )   $ 191,776  



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 June 30, 2022 (Unaudited)                      
Corporate Finance & Restructuring $ 277,067   $ 54,950     19.8 %   62 %   $ 471   1,769
Forensic and Litigation Consulting   164,248     16,707     10.2 %   56 %   $ 360   1,509
Economic Consulting   164,041     21,646     13.2 %   70 %   $ 477   935
Technology (1)   77,782     8,365     10.8 %   N/M   N/M   507
Strategic Communications (1)   71,854     11,472     16.0 %   N/M   N/M   877
  $ 754,992   $ 113,140     15.0 %           5,597
Unallocated Corporate       (36,980 )                
Adjusted EBITDA     $ 76,160     10.1 %            
                       
Six Months Ended June 30, 2022
(Unaudited)
                     
Corporate Finance & Restructuring $ 530,396   $ 108,490     20.5 %   62 %   $ 458   1,769
Forensic and Litigation Consulting   318,144     33,964     10.7 %   56 %   $ 357   1,509
Economic Consulting   330,018     42,841     13.0 %   71 %   $ 476   935
Technology (1)   158,266     21,728     13.7 %   N/M   N/M   507
Strategic Communications (1)   141,788     27,185     19.2 %   N/M   N/M   877
  $ 1,478,612   $ 234,208     15.8 %           5,597
Unallocated Corporate       (67,596 )                
Adjusted EBITDA     $ 166,612     11.3 %            
                       
Three Months Ended June 30, 2021 (Unaudited)                      
Corporate Finance & Restructuring $ 230,971   $ 40,174     17.4 %   59 %   $ 456   1,632
Forensic and Litigation Consulting   150,746     18,002     11.9 %   60 %   $ 344   1,399
Economic Consulting   183,306     30,699     16.7 %   75 %   $ 524   884
Technology (1)   78,646     18,518     23.5 %   N/M   N/M   429
Strategic Communications (1)   67,817     13,501     19.9 %   N/M   N/M   771
  $ 711,486   $ 120,894     17.0 %           5,115
Unallocated Corporate       (28,586 )                
Adjusted EBITDA     $ 92,308     13.0 %            
                       
Six Months Ended June 30, 2021
(Unaudited)
                     
Corporate Finance & Restructuring $ 457,174   $ 77,613     17.0 %   59 %   $ 456   1,632
Forensic and Litigation Consulting   301,567     47,434     15.7 %   60 %   $ 350   1,399
Economic Consulting   352,579     57,278     16.2 %   75 %   $ 504   884
Technology (1)   158,105     40,116     25.4 %   N/M   N/M   429
Strategic Communications (1)   128,338     23,899     18.6 %   N/M   N/M   771
  $ 1,397,763   $ 246,340     17.6 %           5,115
Unallocated Corporate       (54,564 )                
Adjusted EBITDA     $ 191,776     13.7 %            
                       

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)

  Six Months Ended
June 30,

 
    2022       2021  
  (Unaudited)
Operating activities      
Net income $ 110,749     $ 127,278  
Adjustments to reconcile net income to net cash used in operating activities:      
Depreciation and amortization   18,095       16,765  
Amortization and impairment of intangible assets   5,005       5,655  
Acquisition-related contingent consideration   133       (1,130 )
Provision for expected credit losses   8,752       8,236  
Share-based compensation   12,050       12,190  
Amortization of debt discount and issuance costs and other   1,068       5,685  
Deferred income taxes   2,713       9,802  
Changes in operating assets and liabilities, net of effects from acquisitions:      
Accounts receivable, billed and unbilled   (180,737 )     (138,838 )
Notes receivable   (1,985 )     8,921  
Prepaid expenses and other assets   (810 )     6,728  
Accounts payable, accrued expenses and other   13,854       (13,518 )
Income taxes   (14,834 )     6,695  
Accrued compensation   (147,209 )     (88,024 )
Billings in excess of services provided   4,425       (7,471 )
Net cash used in operating activities   (168,731 )     (41,026 )
Investing activities      
Payments for acquisition of businesses, net of cash received   (6,698 )     (9,833 )
Purchases of property and equipment and other   (25,637 )     (27,696 )
Net cash used in investing activities   (32,335 )     (37,529 )
Financing activities      
Borrowings under revolving line of credit   165,000       292,500  
Repayments under revolving line of credit   (165,000 )     (192,500 )
Purchase and retirement of common stock   (3,098 )     (46,133 )
Share-based compensation tax withholdings and other   (14,827 )     (7,475 )
Payments for business acquisition liabilities   (4,161 )     (7,496 )
Deposits and other   4,887       602  
Net cash provided by (used in) financing activities   (17,199 )     39,498  
Effect of exchange rate changes on cash and cash equivalents   (20,490 )     979  
Net decrease in cash and cash equivalents   (238,755 )     (38,078 )
Cash and cash equivalents, beginning of period   494,485       294,953  
Cash and cash equivalents, end of period $ 255,730     $ 256,875  



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

  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2022       2021       2022       2021  
Net cash provided by (used in) operating activities $ 35,047     $ 125,558     $ (168,731 )   $ (41,026 )
Purchases of property and equipment   (13,028 )     (19,724 )     (25,635 )     (27,725 )
Free Cash Flow $ 22,019     $ 105,834     $ (194,366 )   $ (68,751 )

 

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