FTI Consulting, Inc. Reports 2012 Third Quarter Results - Revenues $386.1 Million

- Adjusted EPS $0.60

- Net Cash Provided by Operating Activities $70.9 Million

- $20 Million of Share Repurchases During the Quarter

WEST PALM BEACH, Fla., Nov. 8, 2012 /PRNewswire/ -- FTI Consulting, Inc. (NYSE: FCN), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value (the "Company"), today reported its financial results for the quarter ended September 30, 2012.

For the quarter, revenues were $386.1 million, down 6.7 percent from record quarterly revenues in the prior year quarter. Adjusted EBITDA was $62.3 million or 16.1 percent of revenues compared to $72.7 million or 17.6 percent of revenues in the prior year quarter. Fully diluted earnings per share ("EPS") for the quarter were $0.55, including a special charge of $2.8 million related to the reduction of leased office space in four locations initiated in the second quarter and concluded in September, reducing EPS by $0.05. Adjusted EPS were $0.60 compared to $0.70 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.

Net cash provided by operating activities in the quarter was $70.9 million compared to $59.7 million in the prior year quarter, and the Company repurchased and retired 757,650 shares of its common stock at an average price of $26.40 for a total purchase price of $20 million.

Commenting on these results, Jack Dunn, President and Chief Executive Officer of FTI Consulting said, "Third quarter results were in line with our expectations and guidance. We also began to see the benefit of the expense reduction program we implemented in the second quarter and recently concluded. Going forward we will continue to invest capital in growth opportunities such as our industry initiatives and in geographic opportunities such as our recent acquisition of a restructuring practice in Australia.  We will also repurchase our shares under the $250 million program authorized by our board in June."

Third Quarter Segment Results

Corporate Finance/Restructuring
Corporate Finance/Restructuring revenues were $110.2 million, approximately equal to revenues in the prior year quarter. In terms of mix, we saw slightly higher success fees and lower chargeable hours in our North America bankruptcy and restructuring practice, stronger demand in our healthcare practice and lower demand in real estate.

Adjusted Segment EBITDA was $25.0 million, or 22.7 percent of segment revenues, compared to $27.5 million, or 24.9 percent of segment revenues, in the prior year quarter due to higher headcount.

Economic Consulting
Economic Consulting revenues were $96.4 million compared to $95.7 million in the prior year quarter. Revenues were driven by continued strong performance in antitrust litigation, financial economics, international arbitration and regulatory consulting engagements, particularly in the energy and transportation industries, with some slowing in the mergers and acquisitions ("M&A") market and increased pricing pressure in our international arbitration and valuation practices in the Europe, Middle East and Africa ("EMEA") region.

Adjusted Segment EBITDA was $19.1 million, or 19.8 percent of segment revenues, compared to $18.7 million, or 19.5 percent of segment revenues in the prior year quarter.

Forensic and Litigation Consulting
Forensic and Litigation Consulting revenues were $83.4 million compared to all-time record revenues of $99.1 million in the prior year quarter. The segment's global risk and investigations practice in Latin America continued to grow, while the North America region, including financial and enterprise data analytics, experienced a decline from the record levels in the prior year quarter.

Adjusted Segment EBITDA was $13.2 million in the quarter or 15.8 percent of segment revenues compared to $19.1 million or 19.3 percent of segment revenues in the prior year quarter as a result of reduced revenue despite the favorable impact of headcount reductions taken in the second quarter of 2012.

Technology
Technology revenues were $50.3 million compared to $57.0 million in the prior year quarter. Revenues were negatively impacted by lower pricing in the quarter due to competitive factors and business mix and the wind down of certain large investigation and litigation related matters.

Adjusted Segment EBITDA for the quarter was $15.7 million, or 31.2 percent of segment revenues, compared to $19.6 million, or 34.4 percent of segment revenues, in the prior year quarter, as the impact of lower revenues was partially offset by lower overhead and research and development costs.

Strategic Communications
Strategic Communications revenues were $45.8 million compared to $51.8 million in the prior year quarter. The estimated impact of foreign currency translation reduced revenues in the quarter by 2.3 percent. Revenues declined due to fewer M&A and natural resource related projects in the Asia Pacific region, lower project income in the North America region and continued pricing pressure on retainer fees and depressed capital markets activity worldwide.

Adjusted Segment EBITDA was $6.8 million, or 14.8 percent of segment revenues, compared to $7.4 million, or 14.3 percent of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA margin was primarily due to lower variable compensation expenses.

Third Quarter Conference Call
FTI Consulting, Inc. will hold a conference call for analysts and investors to discuss third quarter financial results at 9:00 AM Eastern Time on November 8, 2012. 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, 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 3,800 employees located in 24 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 $1.57 billion in revenues during fiscal year 2011. More information can be found at www.fticonsulting.com.

Use of Non-GAAP Measures
Note: We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets and special charges. We define Adjusted Segment EBITDA as a segment's share of consolidated operating income before depreciation, amortization of intangible assets and special charges. We define Adjusted Net Income and Adjusted EPS as net income and earnings per diluted share, respectively, excluding the net impact of any special charges and any loss on early extinguishment of debt that were incurred in that period. Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted EPS and Adjusted Net Income 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 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 (Loss). We believe that these measures can be useful operating performance measures for evaluating our results of operations as compared from period-to-period and as compared to our competitors. EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies to value and compare the financial performance of companies in our industry. We use Adjusted EBITDA and Adjusted Segment EBITDA to evaluate and compare the operating performance of our segments. Reconciliations of GAAP to Non-GAAP financial measures are included in the accompanying tables to this press release. EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies to value and compare the financial performance of companies in our industry.

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 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 and in the Company's other filings with the Securities and Exchange Commission, including the risks set forth under "Risks Related to Our Business 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.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands, except per share data)

(unaudited)






Nine Months Ended


September 30,


2012


2011





Revenues

$ 1,177,526


$ 1,176,055





Operating expenses




Direct cost of revenues

735,452


723,903

Selling, general and administrative expense

283,958


280,364

Special charges

29,557


15,212

Acquisition-related contingent consideration

(2,581)


2,538

Amortization of other intangible assets

16,773


16,795


1,063,159


1,038,812





Operating income

114,367


137,243





Other income (expense)




Interest income and other

4,503


5,409

Interest expense

(43,607)


(44,129)


(39,104)


(38,720)





Income before income tax provision

75,263


98,523





Income tax provision

26,372


34,501





Net income 

$      48,891


$      64,022





Earnings  per common share - basic

$          1.21


$          1.54

Weighted average common shares outstanding - basic

40,446


41,535





Earnings per common share - diluted

$          1.17


$          1.47

Weighted average common shares outstanding - diluted

41,882


43,671





Other comprehensive income, net of tax:




Foreign currency translation adjustments, including tax expense




   (benefit) of $0 and ($1,568) in 2012 and 2011, respectively

$      14,620


$           782

Other comprehensive income, net of tax

14,620


782

Comprehensive income

$      63,511


$      64,804





 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands, except per share data)

(unaudited)






Three Months Ended


September 30,


2012


2011





Revenues

$ 386,055


$ 413,802





Operating expenses




Direct cost of revenues

241,614


249,975

Selling, general and administrative expense

88,909


97,618

Special charges

2,775


-

Acquisition-related contingent consideration

403


944

Amortization of other intangible assets

5,766


5,843


339,467


354,380





Operating income

46,588


59,422





Other income (expense)




Interest income and other

1,584


486

Interest expense

(13,208)


(14,319)


(11,624)


(13,833)





Income before income tax provision

34,964


45,589





Income tax provision

12,251


16,150





Net income 

$   22,713


$   29,439





Earnings  per common share - basic

$       0.56


$       0.73

Weighted average common shares outstanding - basic

40,387


40,182





Earnings per common share - diluted

$       0.55


$       0.70

Weighted average common shares outstanding - diluted

41,102


42,267





Other comprehensive income (loss), net of tax:




Foreign currency translation adjustments, including tax expense




   of $0 and $500 in 2012 and 2011, respectively

$   12,731


$ (15,873)

Other comprehensive income (loss), net of tax

12,731


(15,873)

Comprehensive income

$   35,444


$   13,566