• Record First Quarter Revenues of $407.2 Million;
• First Quarter Adjusted EPS of $0.59, up 37.2 Percent from Prior Year Period.
For the quarter, revenues increased 3.0 percent to a first quarter record of $407.2 million. Fully diluted earnings per share (“EPS”) were $0.58 for the quarter. Adjusted earnings per share (“Adjusted EPS”) increased 37.2 percent to $0.59 for the quarter compared to $0.43 for the prior year quarter. Adjusted EBITDA was $59.3 million in the quarter compared to $54.0 million for the prior year quarter, representing an increase of 9.9 percent. 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, Jack Dunn, FTI Consulting President and Chief Executive Officer said,"Once again our results for the first quarter were led by the excellent performance of our market-leading Economic Consulting group. We also enjoyed the contributions from two small Corporate Finance/Restructuring acquisitions in Asia Pacific and in telecommunications, media and technology respectively, and began to see results from our efforts to cut costs in SG&A.”
Cash and Capital Allocation
Cash and cash equivalents were $100.7 million at March 31, 2013. During the quarter, the Company used $28.8 million to repurchase and retire 826,800 shares of the Company’s common stock. In addition, the Company used $14.7 million in payments for acquisitions.
First Quarter Segment Results
The following current and prior year segment-level financial information, commentary and results reflect the combination as of January 1, 2013 of approximately 200 healthcare and life sciences focused personnel that were formerly included in the Corporate Finance/Restructuring and Forensic and Litigation Consulting segments into a single practice reported in the results for Forensic and Litigation Consulting. Absent this change, revenues for the first quarter would have been $17.6 million higher in Corporate Finance/Restructuring and lower in Forensic and Litigation Consulting and Adjusted Segment EBITDA margin would have been 70 basis points higher in Forensic and Litigation Consulting and 148 basis points lower in Corporate Finance/Restructuring.
Revenues in the Corporate Finance/Restructuring segment increased 2.3 percent to $99.1 million from $96.9 million in the prior year quarter. Results reflect growth from the acquisition of an Australian based restructuring business in the fourth quarter of 2012 and increased demand for the telecommunications, media and technology practice and the U.K., while demand for North America bankruptcy and restructuring services declined. Adjusted Segment EBITDA decreased to $19.1 million, or 19.3 percent of segment revenues from $24.2 million, or 25.0 percent of segment revenues, in the prior year quarter due to lower utilization in the North America bankruptcy and restructuring practice.
Revenues in the Economic Consulting segment increased 15.1 percent to $115.2 million from $100.1 million in the prior year quarter. Revenues were driven by strong demand and higher average bill rates across the board including the financial economics, antitrust, European international arbitration, regulatory and valuation practices. Adjusted Segment EBITDA was $26.2 million, or 22.7 percent of segment revenues, compared to $18.4 million, or 18.4 percent of segment revenues, in the prior year quarter reflecting enhanced operating leverage from higher staff utilization and bill rates.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased 2.8 percent to $100.7 million from $103.6 million in the prior year quarter reflecting growth in its global construction and global risk and investigations practices versus lower demand for global financial and enterprise data analytics and core North America services. Adjusted Segment EBITDA was $12.8 million in the quarter, or 12.7 percent of segment revenues, compared to $14.7 million, or 14.2 percent of segment revenues, in the prior year quarter.
Revenues in the Technology segment decreased 6.0 percent to $46.7 million from $49.7 million in the prior year quarter. The decrease in revenues was due to declines in certain large litigation and investigation related matters, fewer mergers and acquisitions second request matters and lower pricing for consulting and services. Adjusted Segment EBITDA was $13.7 million or 29.4 percent of segment revenues, compared to $13.2 million, or 26.6 percent of segment revenues, in the prior year quarter primarily due to lower overhead, research and development, travel and entertainment and facilities expenses.
Revenues in the Strategic Communications segment increased 1.0 percent to $45.5 million from $45.0 million in the prior year quarter reflecting higher project income in North America and the Europe, Middle East and Africa as well as higher pass-through revenue in North America versus fewer merger and acquisitions projects in Asia Pacific and reduced project income in Latin America. Adjusted Segment EBITDA was $3.6 million, or 7.8 percent of segment revenues, compared to $4.5 million, or 10.1 percent of segment revenues in the prior year quarter. This decrease reflects the higher proportion of low-margin pass-through revenue, lower margins in Asia Pacific and Latin America and the impact of acquisition costs related to the North America based public policy group acquired in March, 2013.
First Quarter Conference Call
FTI Consulting will hold a conference call for analysts and investors to discuss first quarter financial results at 9:00 AM Eastern Time on May 9, 2013. 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.
About FTI Consulting
FTI Consulting, Inc. (fticonsulting.com) 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 over 3,900 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 $1.58 billion in revenues during fiscal year 2012.
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, goodwill impairment charge and special charges. We define Adjusted Segment EBITDA as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, goodwill impairment charge 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 goodwill impairment charge, 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. 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.
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 and in the Company's other filings with the Securities and Exchange Commission, including the risks set forth under "Risks Related to Our Operating 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.