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FTI Consulting Reports Record First Quarter 2021 Financial Results
- First Quarter 2021 Revenues of
$686.3 Million , Up 13.5% Compared to$604.6 Million in PriorYear Quarter - First Quarter 2021 EPS of
$1.84 , Up 23.5% Compared to$1.49 in PriorYear Quarter ; First Quarter 2021 Adjusted EPS of$1.89 , Up 23.5% Compared to$1.53 in PriorYear Quarter
First quarter 2021 revenues of
Adjusted EBITDA of
First quarter 2021 diluted earnings per share ("EPS") of
Cash Position and Capital Allocation
Net cash used in operating activities of
Cash and cash equivalents of
During the quarter, the Company repurchased 421,725 shares of its common stock at an average price per share of
First Quarter 2021 Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased
Revenues in the
Revenues in the
Technology
Revenues in the Technology segment increased
Revenues in the
First Quarter 2021 Conference Call
About
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
- 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 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, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions, share repurchases 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, 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
+1.202.312.9100
Investor & Media Contact:
+1.617.747.1791
mollie.hawkes@fticonsulting.com
FINANCIAL TABLES FOLLOW
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
2021 | 2020 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 233,421 | $ | 294,953 | |||
Accounts receivable, net | 798,516 | 711,357 | |||||
Current portion of notes receivable | 35,540 | 35,253 | |||||
Prepaid expenses and other current assets | 83,672 | 88,144 | |||||
Total current assets | 1,151,149 | 1,129,707 | |||||
Property and equipment, net | 100,686 | 101,642 | |||||
Operating lease assets | 148,322 | 156,645 | |||||
1,233,292 | 1,234,879 | ||||||
Intangible assets, net | 38,172 | 41,550 | |||||
Notes receivable, net | 59,049 | 61,121 | |||||
Other assets | 47,530 | 51,819 | |||||
Total assets | $ | 2,778,200 | $ | 2,777,363 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities | |||||||
Accounts payable, accrued expenses and other | $ | 167,818 | $ | 170,066 | |||
Accrued compensation | 285,528 | 455,933 | |||||
Billings in excess of services provided | 42,432 | 44,172 | |||||
Total current liabilities | 495,778 | 670,171 | |||||
Long-term debt, net | 458,840 | 286,131 | |||||
Noncurrent operating lease liabilities | 153,376 | 161,677 | |||||
Deferred income taxes | 157,861 | 158,342 | |||||
Other liabilities | 95,995 | 100,861 | |||||
Total liabilities | 1,361,850 | 1,377,182 | |||||
Stockholders' equity | |||||||
Preferred stock, outstanding |
— | — | |||||
Common stock, issued and outstanding — 34,228 (2021) and 34,481 (2020) |
342 | 345 | |||||
Additional paid-in capital | — | — | |||||
Retained earnings | 1,527,685 | 1,506,271 | |||||
Accumulated other comprehensive loss | (111,677 | ) | (106,435 | ) | |||
Total stockholders' equity | 1,416,350 | 1,400,181 | |||||
Total liabilities and stockholders' equity | $ | 2,778,200 | $ | 2,777,363 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
Three Months Ended March, 31 | |||||||
2021 | 2020 | ||||||
(Unaudited) | |||||||
Revenues | $ | 686,277 | $ | 604,593 | |||
Operating expenses | |||||||
Direct cost of revenues | 468,424 | 402,247 | |||||
Selling, general and administrative expenses | 126,546 | 126,959 | |||||
Amortization of intangible assets | 2,801 | 2,331 | |||||
597,771 | 531,537 | ||||||
Operating income | 88,506 | 73,056 | |||||
Other income (expense) | |||||||
Interest income and other | 1,034 | 5,017 | |||||
Interest expense | (4,797 | ) | (4,861 | ) | |||
(3,763 | ) | 156 | |||||
Income before income tax provision | 84,743 | 73,212 | |||||
Income tax provision | 20,247 | 16,465 | |||||
Net income | $ | 64,496 | $ | 56,747 | |||
Earnings per common share ― basic | $ | 1.93 | $ | 1.56 | |||
Weighted average common shares outstanding ― basic | 33,483 | 36,415 | |||||
Earnings per common share ― diluted | $ | 1.84 | $ | 1.49 | |||
Weighted average common shares outstanding ― diluted | 35,063 | 38,190 | |||||
Other comprehensive loss, net of tax | |||||||
Foreign currency translation adjustments, net of tax expense of |
$ | (5,242 | ) | $ | (31,102 | ) | |
Total other comprehensive loss, net of tax | (5,242 | ) | (31,102 | ) | |||
Comprehensive income | $ | 59,254 | $ | 25,645 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
Three Months Ended |
|||||||
2021 | 2020 | ||||||
(Unaudited) | |||||||
Net income | $ | 64,496 | $ | 56,747 | |||
Add back: | |||||||
Non-cash interest expense on convertible notes | 2,348 | 2,225 | |||||
Tax impact of non-cash interest expense on convertible notes | (611 | ) | (579 | ) | |||
Adjusted Net Income | $ | 66,233 | $ | 58,393 | |||
Earnings per common share — diluted | $ | 1.84 | $ | 1.49 | |||
Add back: | |||||||
Non-cash interest expense on convertible notes | 0.07 | 0.06 | |||||
Tax impact of non-cash interest expense on convertible notes | (0.02 | ) | (0.02 | ) | |||
Adjusted earnings per common share — diluted | $ | 1.89 | $ | 1.53 | |||
Weighted average number of common shares outstanding ― diluted | 35,063 | 38,190 |
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)
Three Months Ended (Unaudited) |
Corporate Finance & Restructuring |
Forensic and Litigation Consulting |
Economic Consulting |
Technology | Strategic Communications |
Unallocated Corporate |
Total | ||||||||||||||||||||||
Net income | $ | 64,496 | |||||||||||||||||||||||||||
Interest income and other | (1,034 | ) | |||||||||||||||||||||||||||
Interest expense | 4,797 | ||||||||||||||||||||||||||||
Income tax provision | 20,247 | ||||||||||||||||||||||||||||
Operating income | $ | 34,299 | $ | 28,006 | $ | 25,232 | $ | 18,559 | $ | 9,120 | $ | (26,710 | ) | $ | 88,506 | ||||||||||||||
Depreciation and amortization | 1,253 | 1,252 | 1,347 | 3,039 | 539 | 731 | 8,161 | ||||||||||||||||||||||
Amortization of intangible assets | 1,887 | 174 | — | — | 739 | 1 | 2,801 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 37,439 | $ | 29,432 | $ | 26,579 | $ | 21,598 | $ | 10,398 | $ | (25,978 | ) | $ | 99,468 | ||||||||||||||
Three Months Ended (Unaudited) |
Corporate Finance & Restructuring |
Forensic and Litigation Consulting |
Economic Consulting |
Technology | Strategic Communications |
Unallocated Corporate |
Total | ||||||||||||||||||||||
Net income | $ | 56,747 | |||||||||||||||||||||||||||
Interest income and other | (5,017 | ) | |||||||||||||||||||||||||||
Interest expense | 4,861 | ||||||||||||||||||||||||||||
Income tax provision | 16,465 | ||||||||||||||||||||||||||||
Operating income | $ | 46,664 | $ | 19,506 | $ | 11,396 | $ | 11,589 | $ | 7,492 | $ | (23,591 | ) | $ | 73,056 | ||||||||||||||
Depreciation and amortization | 979 | 1,416 | 1,270 | 2,895 | 586 | 677 | 7,823 | ||||||||||||||||||||||
Amortization of intangible assets | 1,303 | 286 | 44 | — | 698 | — | 2,331 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 48,946 | $ | 21,208 | $ | 12,710 | $ | 14,484 | $ | 8,776 | $ | (22,914 | ) | $ | 83,210 | ||||||||||||||
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 |
|||||||||||||||||||||
Corporate Finance & Restructuring | $ | 226,203 | $ | 37,439 | 16.6 | % | 59 % | $ | 462 | 1,684 | |||||||||||
150,821 | 29,432 | 19.5 | % | 60 % | $ | 357 | 1,367 | ||||||||||||||
169,273 | 26,579 | 15.7 | % | 75 % | $ | 494 | 890 | ||||||||||||||
Technology (1) | 79,459 | 21,598 | 27.2 | % | N/M | N/M | 423 | ||||||||||||||
60,521 | 10,398 | 17.2 | % | N/M | N/M | 778 | |||||||||||||||
$ | 686,277 | $ | 125,446 | 18.3 | % | 5,142 | |||||||||||||||
Unallocated Corporate | (25,978 | ) | |||||||||||||||||||
Adjusted EBITDA | $ | 99,468 | 14.5 | % | |||||||||||||||||
Three Months Ended |
|||||||||||||||||||||
Corporate Finance & Restructuring | $ | 207,749 | $ | 48,946 | 23.6 | % | 69% | $ | 456 | 1,248 | |||||||||||
147,597 | 21,208 | 14.4 | % | 58% | $ | 342 | 1,393 | ||||||||||||||
132,138 | 12,710 | 9.6 | % | 68% | $ | 466 | 810 | ||||||||||||||
Technology (1) | 58,723 | 14,484 | 24.7 | % | N/M | N/M | 374 | ||||||||||||||
58,386 | 8,776 | 15.0 | % | N/M | N/M | 755 | |||||||||||||||
$ | 604,593 | $ | 106,124 | 17.6 | % | 4,580 | |||||||||||||||
Unallocated Corporate | (22,914 | ) | |||||||||||||||||||
Adjusted EBITDA | $ | 83,210 | 13.8 | % |
N/M - | Not meaningful | |
(1) | The majority of the |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended |
|||||||
2021 | 2020 | ||||||
(Unaudited) | |||||||
Operating activities | |||||||
Net income | $ | 64,496 | $ | 56,747 | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | 8,161 | 7,823 | |||||
Amortization and impairment of intangible assets | 2,801 | 2,331 | |||||
Acquisition-related contingent consideration | 1,289 | 506 | |||||
Provision for expected credit losses | 4,832 | 3,872 | |||||
Share-based compensation | 7,242 | 7,454 | |||||
Amortization of debt discount and issuance costs and other | 2,815 | 2,978 | |||||
Deferred income taxes | 3,612 | 545 | |||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||
Accounts receivable, billed and unbilled | (93,396 | ) | (60,963 | ) | |||
Notes receivable | 1,899 | 7,051 | |||||
Prepaid expenses and other assets | 1,900 | 9,442 | |||||
Accounts payable, accrued expenses and other | (7,803 | ) | 11,136 | ||||
Income taxes | 9,355 | (667 | ) | ||||
Accrued compensation | (172,042 | ) | (176,070 | ) | |||
Billings in excess of services provided | (1,745 | ) | 4,253 | ||||
Net cash used in operating activities | (166,584 | ) | (123,562 | ) | |||
Investing activities | |||||||
Purchases of property and equipment and other | (7,976 | ) | (8,228 | ) | |||
Net cash used in investing activities | (7,976 | ) | (8,228 | ) | |||
Financing activities | |||||||
Borrowings under revolving line of credit | 197,500 | 55,000 | |||||
Repayments under revolving line of credit | (27,500 | ) | (5,000 | ) | |||
Purchase and retirement of common stock | (46,133 | ) | (49,135 | ) | |||
Share-based compensation tax withholdings and other | (6,798 | ) | (5,583 | ) | |||
Payments for business acquisition liabilities | (3,374 | ) | — | ||||
Deposits and other | 2,721 | 3,870 | |||||
Net cash provided by (used in) financing activities | 116,416 | (848 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (3,388 | ) | (13,672 | ) | |||
Net decrease in cash and cash equivalents | (61,532 | ) | (146,310 | ) | |||
Cash and cash equivalents, beginning of period | 294,953 | 369,373 | |||||
Cash and cash equivalents, end of period | $ | 233,421 | $ | 223,063 |
RECONCILIATION OF
(in thousands)
Three Months Ended |
|||||||
2021 | 2020 | ||||||
Net cash used in operating activities | $ | (166,584 | ) | $ | (123,562 | ) | |
Purchases of property and equipment | (8,001 | ) | (8,236 | ) | |||
Free Cash Flow | $ | (174,585 | ) | $ | (131,798 | ) |
Source: FTI Consulting, Inc.
Media Contacts
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