FTI CONSULTING, INC. WASHINGTON, July 31, 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 June 30, 2014.
For the quarter, revenues increased 9.6 percent to $454.3 million compared to $414.6 million in the prior year quarter. Fully diluted earnings per share ("EPS") were $0.42 compared to $0.58 in the prior year quarter. EPS for the quarter included a special charge of $9.4 million related to the closure of the Company's West Palm Beach office and the termination of a corporate plane lease which reduced EPS by $0.14. Adjusted EPS for the quarter were $0.55. Adjusted EBITDA for the quarter was $59.9 million or 13.2 percent of revenues compared to $66.0 million or 15.9 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 second quarter results are in line with the focus and expectations we discussed at our June investor day, including a focus on organic growth and continued investment to build the business."
Cash and Capital Allocation
Net cash provided by operating activities for the quarter was $33.7 million compared to $21.7 million in the prior year. Cash and cash equivalents were $94.4 million at June 30, 2014.
Second Quarter Segment Results
Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 7.6 percent to $104.0 million in the quarter compared to $96.7 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 partially offset by continued softness in global bankruptcy engagements. Adjusted Segment EBITDA was $19.1 million or 18.4 percent of segment revenues compared to $17.8 million or 18.5 percent of segment revenues in the prior year quarter.
Economic Consulting
Revenues in the Economic Consulting segment increased 5.6 percent to $117.2 million in the quarter compared to $111.0 million in the prior year quarter. The increase in revenues was due to higher demand in the segment's Europe, Middle East and Africa ("EMEA") antitrust litigation practice and higher demand and realized pricing in its EMEA international arbitration, regulatory and valuation practices. Adjusted Segment EBITDA was $18.1 million or 15.4 percent of segment revenues compared to $20.8 million or 18.7 percent of segment revenues in the prior year quarter. The decline in Adjusted Segment EBITDA margin was due largely to increased compensation expense related to extensions of employment contracts entered into late last year with key senior client-service professionals and lower utilization in the financial economics practice in North America.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased 13.3 percent to $119.1 million in the quarter compared to $105.1 million in the prior year quarter. Revenues increased organically by 10.4 percent due to increased demand related primarily to disputes and investigations in the segment's North America and Asia Pacific regions. Adjusted Segment EBITDA was $22.3 million or 18.7 percent of segment revenues compared to $18.8 million or 17.9 percent of segment revenues in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to strong utilization and employee leverage in the aforementioned practices, which was partially offset by higher performance-based compensation costs as well as lower success fees and lower utilization as a result of increased hiring in our health solutions practice.
Technology
Revenues in the Technology segment increased 18.6 percent to $60.7 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 $15.1 million or 24.9 percent of segment revenues compared to $16.9 million or 33.0 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 increased investment in business development activities.
Strategic Communications
Revenues in the Strategic Communications segment increased 5.4 percent to $53.3 million in the quarter compared to $50.6 million in the prior year quarter. Favorable foreign currency translation resulted in a revenues increase of 2.8 percent and the remaining growth resulted from increases in the number of retainer-based relationships in EMEA. Adjusted Segment EBITDA was $5.8 million or 10.9 percent of segment revenues compared to $5.2 million or 10.3 percent of segment revenues in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to the favorable foreign currency translation impact and higher margins on pass-through revenues.
Second Quarter 2014 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss second quarter 2014 financial results at 9:00 a.m. Eastern Time on July 31, 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 as a segment's share of consolidated operating income. We define Total Segment Operating Income 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 EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We define Adjusted 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. 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.
FTI Consulting, Inc.
1101 K Street NW
Washington, D.C. 20005
+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 STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(in thousands, except per share data)
(unaudited)
----------
Six Months Ended
June 30,
--------
2014 2013
---- ----
Revenues $879,876 $821,791
-------- --------
Operating expenses
Direct cost of revenues 569,824 518,008
Selling, general and administrative
expense 215,419 192,972
Special charges 9,364 427
Acquisition-related contingent
consideration (1,848) (6,721)
Amortization of other intangible
assets 8,068 11,517
800,827 716,203
------- -------
Operating income 79,049 105,588
------ -------
Other income (expense)
Interest income and other 2,451 550
Interest expense (25,563) (25,786)
(23,112) (25,236)
------- -------
Income before income tax provision 55,937 80,352
Income tax provision 20,573 33,186
------ ------
Net income $35,364 $47,166
======= =======
Earnings per common share - basic $0.89 $1.20
===== =====
Earnings per common share - diluted $0.87 $1.17
===== =====
Weighted average common shares
outstanding -basic 39,560 39,272
====== ======
Weighted average common shares
outstanding -diluted 40,604 40,456
====== ======
Other comprehensive income (loss), net of tax:
Foreign currency translation
adjustments, net of tax of $0 $12,422 $(27,223)
------- --------
Total other comprehensive income
(loss), net of tax 12,422 (27,223)
------ -------
Comprehensive income $47,786 $19,943
======= =======
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(in thousands, except per share data)
(unaudited)
----------
Three Months Ended
June 30,
--------
2014 2013
---- ----
Revenues $454,324 $414,613
-------- --------
Operating expenses
Direct cost of revenues 295,549 259,528
Selling, general and
administrative expense 107,032 96,325
Special charges 9,364 -
Acquisition-related contingent
consideration (5) (7,452)
Amortization of other intangible
assets 3,452 5,953
415,392 354,354
------- -------
Operating income 38,932 60,259
------ ------
Other income (expense)
Interest income and other 1,448 (387)
Interest expense (12,908) (13,071)
(11,460) (13,458)
------- -------
Income before income tax provision 27,472 46,801
Income tax provision 10,225 23,315
------ ------
Net income $17,247 $23,486
======= =======
Earnings per common share - basic $0.43 $0.60
===== =====
Earnings per common share -
diluted $0.42 $0.58
===== =====
Weighted average common shares
outstanding -basic 39,681 39,143
====== ======
Weighted average common shares
outstanding -diluted 40,750 40,293
====== ======
Other comprehensive income (loss), net of tax:
Foreign currency translation
adjustments, net of tax of $0 $7,694 $(11,714)
------ --------
Total other comprehensive income
(loss), net of tax 7,694 (11,714)
----- -------
Comprehensive income $24,941 $11,772
======= =======
FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
Average Revenue-
Adjusted Billable Generating
Revenues EBITDA (1) Margin(1) Utilization Rate Headcount
-------- --------- -------- ----------- ---- ---------
(in thousands) (at period end)
Three Months Ended June 30, 2014
Corporate Finance/Restructuring $104,020 $19,133 18.4% 71% $412 713
Forensic and Litigation Consulting 119,081 22,271 18.7% 71% $323 1,059
Economic Consulting 117,227 18,043 15.4% 78% $522 525
Technology (2) 60,720 15,104 24.9% N/M N/M 328
Strategic Communications (2) 53,276 5,834 11.0% N/M N/M 566
------ -----
$454,324 80,385 17.7% 3,191
======== =====
Corporate (20,482)
-------
Adjusted EBITDA(1) $59,903 13.2%
=======
Six Months Ended June 30, 2014
Corporate Finance/Restructuring $198,002 $30,084 15.2% 71% $396 713
Forensic and Litigation Consulting 240,510 48,765 20.3% 73% $319 1,059
Economic Consulting 224,078 31,073 13.9% 75% $519 525
Technology (2) 120,783 32,452 26.9% N/M N/M 328
Strategic Communications (2) 96,503 8,563 8.9% N/M N/M 566
------ -----
$879,876 150,937 17.2% 3,191
======== =====
Corporate (39,838)
-------
Adjusted EBITDA(1) $111,099 12.6%
========
Three Months Ended June 30, 2013
Corporate Finance/Restructuring $96,714 $17,848 18.5% 62% $416 718
Forensic and Litigation Consulting 105,120 18,752 17.8% 67% $307 969
Economic Consulting 111,014 20,803 18.7% 82% $505 499
Technology (2) 51,196 16,888 33.0% N/M N/M 285
Strategic Communications (2) 50,569 5,219 10.3% N/M N/M 611
------ -----
$414,613 79,510 19.2% 3,082
======== =====
Corporate (13,498)
-------
Adjusted EBITDA(1) $66,012 15.9%
=======
Six Months Ended June 30. 2013
Corporate Finance/Restructuring $195,794 $36,933 18.9% 66% $412 718
Forensic and Litigation Consulting 205,844 31,563 15.3% 65% $314 969
Economic Consulting 226,208 46,997 20.8% 86% $501 499
Technology (2) 97,900 30,604 31.3% N/M N/M 285
Strategic Communications (2) 96,045 8,773 9.1% N/M N/M 611
------ -----
$821,791 154,870 18.8% 3,082
======== =====
Corporate (29,532)
-------
Adjusted EBITDA(1) $125,338 15.3%
========
(1) We define Adjusted EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. Amounts presented in the Adjusted EBITDA
column for each segment reflect the segments' respective 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 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. Adjusted
EBITDA and Adjusted Segment EBITDA are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Margin is equal to Adjusted Segment EBITDA divided by the respective Segment Revenues. These 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. See also our reconciliation of GAAP to non-GAAP financial measures.
(2) 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 SIX MONTHS ENDED JUNE, 2014 AND 2013
(in thousands, except per share data)
------------------------------------
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2014 2013 2014 2013
---- ---- ---- ----
Net income $17,247 $23,486 $35,364 $47,166
Add back:
Special charges, net of tax effect (1) 5,523 - 5,523 253
Remeasurement of acquisition-related contingent consideration, net of tax effect (2) (164) (8,216) (1,514) (8,216)
Adjusted Net Income (3) $22,606 $15,270 $39,373 $39,203
======= ======= ======= =======
Earnings per common share - diluted $0.42 $0.58 $0.87 $1.17
Add back:
Special charges, net of tax effect (1) 0.14 - 0.14 -
Remeasurement of acquisition-related contingent consideration, net of tax effect (2) (0.01) (0.20) (0.04) (0.20)
Adjusted earnings per common share - diluted (3) $0.55 $0.38 $0.97 $0.97
===== ===== ===== =====
Weighted average number of common shares outstanding - diluted 40,750 40,293 40,604 40,456
====== ====== ====== ======
(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 six months ended June 30, 2014 was 41.0%. The tax expense related to the adjustment for
special charges for the three and six months ended June 30, 2014 were $3.8 million or a $0.09 impact on diluted earnings per share. The effective tax rate for the adjustments related to special charges for the six months ended June 30, 2013 was 40.7%. The tax expense related to the adjustment for special charges for the six months
ended June 30, 2013 was $0.2 million with no impact on diluted earnings per share. In the three months ended June 30, 2013, there were no special charges.
(2)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 three and six months ended June 30, 2014 were
37.2% and 36.5%, respectively. The tax expense related to the remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2014 was $0.1 million with no impact on diluted earnings per share and $0.9 million or a $0.02 impact on diluted earnings per share. The adjustments related to
remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2013 were not taxable.
(3)We define Adjusted Net Income and Adjusted Earnings per Diluted Share 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 Earnings per Diluted Share. Management uses Adjusted Earnings per Diluted Share 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.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)
Three Months Ended June 30, 2014 Corporate Finance Forensic and Economic Technology Strategic Corp HQ Total
/ Restructuring Litigation Consulting Communications
Consulting
----------
Net income $17,247
Interest income and other (1,448)
Interest expense 12,908
Income tax provision 10,225
Operating income (1) $17,068 $20,839 $16,840 $10,905 $4,030 $(30,750) $38,932
Depreciation and amortization 854 1,019 981 3,981 677 904 8,416
Amortization of other intangible
assets 1,211 674 222 218 1,127 - 3,452
Special charges - - - - - 9,364 9,364
Remeasurement of acquisition-
related contingent consideration - (261) - - - - (261)
Adjusted EBITDA (2) $19,133 $22,271 $18,043 $15,104 $5,834 $(20,482) $59,903
======= ======= ======= ======= ====== ======== =======
Six Months Ended June 30, 2014
Net income $35,364
Interest income and other (2,451)
Interest expense 25,563
Income tax provision 20,573
Operating income (1) $25,675 $46,241 $29,270 $23,971 $5,035 $(51,143) $79,049
Depreciation and amortization 1,645 2,034 2,062 8,045 1,274 1,941 17,001
Amortization of other intangible assets 3,426 1,424 528 436 2,254 - 8,068
Special charges - - - - - 9,364 9,364
Remeasurement of acquisition-
related contingent consideration (662) (934) (787) - - - (2,383)
Adjusted EBITDA (2) $30,084 $48,765 $31,073 $32,452 $8,563 $(39,838) $111,099
======= ======= ======= ======= ====== ======== ========
Three Months Ended June 30, 2013 Corporate Finance Forensic and Economic Technology Strategic Corp HQ Total
/ Restructuring Litigation Consulting Communications
Consulting
----------
Net income $23,486
Interest income and other 387
Interest expense 13,071
Income tax provision 23,315
Operating income (1) $21,436 $19,177 $19,530 $11,292 $3,394 $(14,570) $60,259
Depreciation and amortization 855 937 863 3,611 678 1,072 8,016
Amortization of other intangible
assets 1,832 579 410 1,985 1,147 - 5,953
Remeasurement of acquisition-
related contingent consideration (6,275) (1,941) - - - - (8,216)
Adjusted EBITDA (2) $17,848 $18,752 $20,803 $16,888 $5,219 $(13,498) $66,012
======= ======= ======= ======= ====== ======== =======
Six Months Ended June 30, 2013
Net income $47,166
Interest income and other (550)
Interest expense 25,786
Income tax provision 33,186
Operating income (1) $38,135 $30,279 $44,525 $19,374 $5,121 $(31,846) $105,588
Depreciation and amortization 1,622 1,961 1,668 7,246 1,323 2,202 16,022
Amortization of other intangible assets 3,383 1,091 808 3,970 2,265 - 11,517
Special charges 68 173 (4) 14 64 112 427
Remeasurement of acquisition-
related contingent consideration (6,275) (1,941) - - - - (8,216)
Adjusted EBITDA (2) $36,933 $31,563 $46,997 $30,604 $8,773 $(29,532) $125,338
======= ======= ======= ======= ====== ======== ========
(1) We define Segment Operating Income as a segment's share of consolidated operating income. We define Total Segment Operating Income 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.
(2) We define Adjusted EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. Amounts presented in the Adjusted EBITDA row for each segment reflect the segments' respective 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 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. Adjusted EBITDA and Adjusted Segment EBITDA are not defined
in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. These 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. See also our reconciliation of GAAP to non-GAAP financial measures.
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(in thousands)
(unaudited)
----------
Six Months Ended
June 30,
--------
2014 2013
---- ----
Operating activities
Net income $35,364 $47,166
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 18,138 16,022
Amortization of other intangible assets 8,068 11,517
Acquisition-related contingent consideration (1,848) (6,721)
Provision for doubtful accounts 8,671 7,478
Non-cash share-based compensation 15,194 17,046
Non-cash interest expense 1,348 1,349
Other (368) (197)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled (115,787) (58,827)
Notes receivable (22,559) (11,113)
Prepaid expenses and other assets 8,860 (1,485)
Accounts payable, accrued expenses and other 2,645 (1,354)
Income taxes 4,832 14,740
Accrued compensation (47,418) (10,467)
Billings in excess of services provided 7,756 (5,785)
Net cash (used in) provided by operating activities (77,104) 19,369
------- ------
Investing activities
Payments for acquisition of businesses, net of cash received (15,611) (40,512)
Purchases of property and equipment (21,778) (14,130)
Other (6) 21
--- ---
Net cash used in investing activities (37,395) (54,621)
------- -------
Financing activities
Purchase and retirement of common stock (4,367) (28,758)
Net issuance of common stock under equity compensation plans (2,692) 1,245
Deposits 11,580 -
Other (891) (616)
---- ----
Net cash used in financing activities 3,630 (28,129)
----- -------
Effect of exchange rate changes on cash and cash equivalents (552) (850)
---- ----
Net decrease in cash and cash equivalents (111,421) (64,231)
Cash and cash equivalents, beginning of period 205,833 156,785
------- -------
Cash and cash equivalents, end of period $94,412 $92,554
======= =======
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AT JUNE 30, 2014 AND DECEMBER 31, 2013
(in thousands, except per share amounts)
---------------------------------------
June 30, December 31,
2014 2013
---- ----
Assets (unaudited)
Current assets
Cash and cash equivalents $94,412 $205,833
Accounts receivable:
Billed receivables 423,058 352,411
Unbilled receivables 296,299 233,307
Allowance for doubtful accounts and unbilled services (139,620) (109,273)
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Accounts receivable, net 579,737 476,445
Current portion of notes receivable 29,911 33,093
Prepaid expenses and other current assets 52,162 61,800
Current portion of deferred tax assets 29,046 26,690
Total current assets 785,268 803,861
Property and equipment, net of accumulated depreciation 83,495 79,007
Goodwill 1,225,403 1,218,733
Other intangible assets, net of amortization 86,270 97,148
Notes receivable, net of current portion 131,707 108,298
Other assets 61,097 57,900
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Total assets $2,373,240 $2,364,947
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Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other $96,005 $126,886
Accrued compensation 169,923 222,738
Current portion of long-term debt 6,000 6,014
Billings in excess of services provided 36,946 28,692
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Total current liabilities 308,874 384,330
Long-term debt, net of current portion 711,000 711,000
Deferred income taxes 149,130 137,697
Other liabilities 96,316 89,661
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Total liabilities 1,265,320 1,322,688
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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 409 405
outstanding ?40,936 (2014) and 40,526 (2013)
Additional paid-in capital 380,193 362,322
Retained earnings 765,985 730,621
Accumulated other comprehensive loss (38,667) (51,089)
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Total stockholders' equity 1,107,920 1,042,259
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Total liabilities and stockholders' equity $2,373,240 $2,364,947
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SOURCE FTI Consulting, Inc.
