FTI Consulting Reports Third Quarter 2020 Financial Results
- Third Quarter 2020 Revenues of
$622.2 Million , Up4.9% Compared to$593.1 Million in Prior Year Quarter - Third Quarter 2020 EPS of
$1.35 , Down15.1% Compared to$1.59 in Prior Year Quarter; Third Quarter 2020 Adjusted EPS of$1.54 , Down5.5% Compared to$1.63 in Prior Year Quarter - Company Revises 2020 Guidance
WASHINGTON, Oct. 29, 2020 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended September 30, 2020.
Third quarter 2020 revenues of
Third quarter 2020 fully diluted earnings per share ("EPS") of
Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our growth in the face of COVID-19, in the face of all the challenges it has created for our clients and for our teams working to deliver for them, is a powerful testament to the strength of this company, its relevance to clients facing major issues, and the dedication and resilience of our more than 6,200 employees across the globe.”
Cash Position and Capital Allocation
Net cash provided by operating activities of
Cash and cash equivalents of
During the quarter, the Company repurchased 749,315 shares of its common stock at an average price per share of
Third Quarter 2020 Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased
Economic Consulting
Revenues in the Economic Consulting segment increased
Technology
Revenues in the Technology segment increased
Strategic Communications
Revenues in the Strategic Communications segment decreased
2020 Guidance
The Company is revising its full year 2020 guidance. The Company now estimates that 2020 revenues will range between
Third Quarter 2020 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2020 financial results at 9:00 a.m. Eastern Time on Thursday, October 29, 2020. 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 6,200 employees located in 28 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
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 measures are considered "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 definition 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 Adjusted EBITDA Margin, which is a non-GAAP financial measure, as Adjusted EBITDA as a percentage of total revenues.
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 Net Income and Adjusted Earnings per Diluted Share ("Adjusted EPS"), which are non-GAAP financial measures, as net income and earnings per diluted share ("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 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 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 December 31, 2019, filed with the SEC on February 25, 2020 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on April 30, 2020, including the risks set forth under "Risks Related to Our Reportable Segments" and "Risks Related to Our Operations," 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.
FINANCIAL TABLES FOLLOW
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| September 30, | December 31, | |||||||||
| 2020 | 2019 | |||||||||
| (Unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 304,658 | $ | 369,373 | ||||||
| Accounts receivable: | ||||||||||
| Billed receivables | 603,832 | 540,584 | ||||||||
| Unbilled receivables | 482,586 | 418,288 | ||||||||
| Allowances for doubtful accounts and unbilled services | (323,658 | ) | (265,500 | ) | ||||||
| Accounts receivable, net | 762,760 | 693,372 | ||||||||
| Current portion of notes receivable | 34,089 | 35,106 | ||||||||
| Prepaid expenses and other current assets | 74,223 | 80,810 | ||||||||
| Total current assets | 1,175,730 | 1,178,661 | ||||||||
| Property and equipment, net | 95,544 | 93,672 | ||||||||
| Operating lease assets | 153,818 | 159,777 | ||||||||
| Goodwill | 1,223,764 | 1,202,767 | ||||||||
| Other intangible assets, net | 43,652 | 38,432 | ||||||||
| Notes receivable, net | 66,078 | 69,033 | ||||||||
| Other assets | 35,812 | 40,800 | ||||||||
| Total assets | $ | 2,794,398 | $ | 2,783,142 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable, accrued expenses and other | $ | 164,493 | $ | 158,936 | ||||||
| Accrued compensation | 397,147 | 416,903 | ||||||||
| Billings in excess of services provided | 46,621 | 36,698 | ||||||||
| Total current liabilities | 608,261 | 612,537 | ||||||||
| Long-term debt, net | 308,454 | 275,609 | ||||||||
| Noncurrent operating lease liabilities | 161,976 | 176,378 | ||||||||
| Deferred income taxes | 150,572 | 151,352 | ||||||||
| Other liabilities | 90,638 | 78,124 | ||||||||
| Total liabilities | 1,319,901 | 1,294,000 | ||||||||
| Stockholders' equity | ||||||||||
| Preferred stock, | — | — | ||||||||
| Common stock, | 360 | 374 | ||||||||
| Additional paid-in capital | 46,642 | 216,162 | ||||||||
| Retained earnings | 1,568,546 | 1,413,453 | ||||||||
| Accumulated other comprehensive loss | (141,051 | ) | (140,847 | ) | ||||||
| Total stockholders' equity | 1,474,497 | 1,489,142 | ||||||||
| Total liabilities and stockholders' equity | $ | 2,794,398 | $ | 2,783,142 | ||||||
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
| Three Months Ended September 30, | |||||||||
| 2020 | 2019 | ||||||||
| (Unaudited) | |||||||||
| Revenues | $ | 622,249 | $ | 593,106 | |||||
| Operating expenses | |||||||||
| Direct cost of revenues | 417,179 | 380,892 | |||||||
| Selling, general and administrative expenses | 122,102 | 127,951 | |||||||
| Special charges | 7,103 | — | |||||||
| Amortization of other intangible assets | 2,795 | 2,125 | |||||||
| 549,179 | 510,968 | ||||||||
| Operating income | 73,070 | 82,138 | |||||||
| Other income (expense) | |||||||||
| Interest income and other | (3,340 | ) | 2,973 | ||||||
| Interest expense | (5,151 | ) | (4,832 | ) | |||||
| (8,491 | ) | (1,859 | ) | ||||||
| Income before income tax provision | 64,579 | 80,279 | |||||||
| Income tax provision | 14,407 | 19,857 | |||||||
| Net income | $ | 50,172 | $ | 60,422 | |||||
| Earnings per common share ― basic | $ | 1.41 | $ | 1.65 | |||||
| Weighted average common shares outstanding ― basic | 35,639 | 36,617 | |||||||
| Earnings per common share ― diluted | $ | 1.35 | $ | 1.59 | |||||
| Weighted average common shares outstanding ― diluted | 37,086 | 37,938 | |||||||
| Other comprehensive income (loss), net of tax | |||||||||
| Foreign currency translation adjustments, net of tax expense of | $ | 21,330 | $ | (16,633 | ) | ||||
| Total other comprehensive income (loss), net of tax | 21,330 | (16,633 | ) | ||||||
| Comprehensive income | $ | 71,502 | $ | 43,789 | |||||
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
| Nine Months Ended September 30, | |||||||||
| 2020 | 2019 | ||||||||
| (Unaudited) | |||||||||
| Revenues | $ | 1,834,694 | $ | 1,750,499 | |||||
| Operating expenses | |||||||||
| Direct cost of revenues | 1,232,437 | 1,116,224 | |||||||
| Selling, general and administrative expenses | 375,989 | 371,042 | |||||||
| Special charges | 7,103 | — | |||||||
| Amortization of other intangible assets | 7,440 | 5,838 | |||||||
| 1,622,969 | 1,493,104 | ||||||||
| Operating income | 211,725 | 257,395 | |||||||
| Other income (expense) | |||||||||
| Interest income and other | 3,879 | 5,741 | |||||||
| Interest expense | (15,169 | ) | (14,371 | ) | |||||
| (11,290 | ) | (8,630 | ) | ||||||
| Income before income tax provision | 200,435 | 248,765 | |||||||
| Income tax provision | 45,342 | 61,100 | |||||||
| Net income | $ | 155,093 | $ | 187,665 | |||||
| Earnings per common share ― basic | $ | 4.30 | $ | 5.09 | |||||
| Weighted average common shares outstanding ― basic | 36,073 | 36,851 | |||||||
| Earnings per common share ― diluted | $ | 4.11 | $ | 4.92 | |||||
| Weighted average common shares outstanding ― diluted | 37,708 | 38,107 | |||||||
| Other comprehensive loss, net of tax | |||||||||
| Foreign currency translation adjustments, net of tax expense of | $ | (204 | ) | $ | (16,225 | ) | |||
| Total other comprehensive loss, net of tax | (204 |
FTI Consulting, Inc.
NYSE:FCNFCN RankingsFCN Latest NewsFCN Stock Data
7.68B
34.26M
1.73%
101.74%
1.36%
Payroll Services
Professional, Scientific, and Technical Services
United States of America
WASHINGTON
About FCNfti consulting, inc. is an independent global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. fti consulting professionals, located in all major business centers throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges and opportunities.
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