Exhibit 99.1
FTI Consulting, Inc.
777 South Flagler Drive, Suite 1500
West Palm Beach, FL 33401
+1.561.515.6078
Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com
FTI Consulting Reports Fourth Quarter and Full Year 2012 Results
• Record Fourth Quarter Revenues of $399.3 Million
• Fourth Quarter Adjusted EPS of $0.67 (excluding goodwill impairment charge)
• Full Year Adjusted EPS of $2.30 (excluding goodwill impairment charge)
• 2013 Guidance for Revenues of $1.63 to $1.70 Billion and Diluted EPS of $2.40 to $2.60
West Palm Beach, FL – February 28, 2013 – FTI Consulting, Inc. (NYSE: FCN), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value (the “Company”), today released its financial results for the fourth quarter and full year ended December 31, 2012.
For the quarter, revenues increased 2.2 percent to a fourth quarter record of $399.3 million. On a GAAP basis, fully diluted loss per share was ($2.15) for the quarter, including a non-cash goodwill impairment charge of $110.4 million which reduced fully diluted EPS by $2.75 per share. The impairment charge has no impact on the Company’s liquidity, cash flow, borrowing capability or operations. Adjusted earnings per share (“EPS”) were $0.67, and Adjusted EBITDA was $68.1 million, or 17.1 percent of revenues. 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 President and Chief Executive Officer said, “Our fourth quarter results provide a promising foundation for the launch of our 31st year. We saw quarterly growth in three of our businesses and enjoyed solid operating performance and strong cash flow. December was the strongest cash collection month in our history and, coupled with the successful refinancing of our long term debt, provides us with a powerful balance sheet and financial position going forward.”
“For 2013, we will continue our focus on organic growth and cash flow. We will use our cash to continue our stock repurchase program and pursue tuck-in acquisitions where we can enhance our industry expertise, service capability or geographic scale. We see excellent prospects for our industry initiatives, particularly in Telecommunications, Media and Technology; Energy; Healthcare; Insurance; and Global Risk and Investigations. In Economic Consulting our roster of potential merger and acquisition matters is approaching the highest levels in firm history. If this is truly the harbinger of a revitalized M&A market in 2013, nothing could be better across our entire firm.”
Cash and Capital Management
Cash collections during the quarter were $461.0 million, including a record $180.5 million in December, compared to revenues in the quarter of $399.3 million. Cash and cash equivalents were $156.8 million at December 31, 2012.
In the fourth quarter, the Company repurchased 923,379 shares of its common stock for an aggregate amount of approximately $30 million or an average price of $32.51 per share. This brought total stock repurchases under the Company’s June 2012 $250 million stock repurchase program to 1,681,029 shares for approximately $50 million or an average price of $29.76 per share.
In the quarter, the Company completed a series of debt refinancing transactions which increased access to capital and extended debt maturities at lower interest rates. In July the Company also retired its 3 3/4% convertible senior subordinated notes using $73.9 million of internally generated funds reducing total outstanding debt by that amount as of December 31, 2012. At December 31, 2012 the Company had no borrowings outstanding under its $350 million senior secured bank credit facility.
Fourth Quarter Segment Results
Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 13.7 percent to $123.2 million from $108.4 million last year. Revenues were driven by strong results in North America including improved realization on certain client matters, higher success fees and revenue increases from the Asia Pacific region, largely resulting from the acquisition of an Australian restructuring business. Adjusted Segment EBITDA was $28.0 million, or 22.7 percent of segment revenues, compared with $38.5 million, or 35.5 percent of segment revenues, in the prior year quarter. Adjusted Segment EBITDA for the quarter was reduced by a one-time transfer tax payment of $2.4 million related to the acquisition of the Australian restructuring business in 2012. Adjusted Segment EBITDA in the prior year quarter included a revaluation gain of $9.0 million as compared to $1.4 million in the current year quarter. Excluding revaluation gains and the $2.4 million transfer tax, Adjusted Segment EBITDA was $29.0 million compared to $29.4 million in the prior year quarter.
Economic Consulting
Revenues in the Economic Consulting segment increased 6.9 percent to $95.7 million from $89.6 million in the prior year quarter. Revenues were driven by strong activity in merger/acquisition reviews, antitrust litigation, financial economics, international arbitration and regulatory consulting engagements particularly in the energy, telecommunications and transportation industries. Adjusted Segment EBITDA was $21.5 million, or 22.4 percent of segment revenues, compared to $16.4 million, or 18.3 percent of segment revenues, in the prior year quarter reflecting operating leverage from higher demand and better realization coupled with lower variable compensation costs.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased 8.2 percent to $82.6 million from $90.0 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 continued to face challenging markets. Adjusted Segment EBITDA was $9.8 million in the quarter, or 11.9 percent of segment revenues, compared to $16.1 million, or 17.9 percent of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was primarily due to reduced revenues coupled with a ramp up in hiring in the back half of the year for our Governance, Risk and Compliance; Construction Solutions; and Global Risk and Investigations initiatives.
Technology
Revenues in the Technology segment decreased 11.3 percent to $47.6 million from $53.6 million in the prior year quarter due to the winding down of certain large investigation and litigation related matters and lower pricing due to competitive factors and business mix. Adjusted Segment EBITDA was $15.5 million or 32.5 percent of segment revenues, compared to $18.6 million, or 34.8 percent of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA margin reflected the impact of lower revenues, partially offset by lower research and development costs.
Strategic Communications
Revenues in the Strategic Communications segment increased 2.2 percent to $50.3 million from $49.2 million in the prior year quarter. Adjusted Segment EBITDA was $8.7 million, or 17.4 percent of segment revenues, compared to $7.5 million, or 15.3 percent of segment revenues in the prior year quarter. Among areas of growth were matters involving shareholder activism and the beginnings of capital markets activity. In addition, the segment’s expertise has proved a catalyst for our industry initiatives in energy, life sciences and government affairs. The goodwill impairment charge of $110.4 million noted above is related to prior investments made in this segment.
2013 Guidance
Based on current market conditions and the factors described above, the Company estimates that revenues for 2013 will be between $1.63 billion and $1.70 billion and diluted Adjusted EPS will be between $2.40 and $2.60. This guidance assumes no acquisitions.
Fourth Quarter Conference Call
FTI Consulting will hold a conference call for analysts and investors to discuss fourth quarter financial results at 9:00 AM Eastern Time on February 28, 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 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 3,915 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. 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, 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 (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.
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 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.
FINANCIAL TABLES FOLLOW
# # #
FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2012 AND 2011
(in thousands, except per share data)
(unaudited)
| Year Ended | ||||||||
| December 31, | ||||||||
| 2012 | 2011 | |||||||
| Revenues |
$ | 1,576,871 | $ | 1,566,768 | ||||
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| Operating expenses |
||||||||
| Direct cost of revenues |
980,532 | 956,908 | ||||||
| Selling, general and administrative expense |
378,016 | 373,295 | ||||||
| Special charges |
29,557 | 15,212 | ||||||
| Acquisition-related contingent consideration |
(3,064 | ) | (6,465 | ) | ||||
| Amortization of other intangible assets |
22,407 | 22,371 | ||||||
| Goodwill impairment charge |
110,387 | — | ||||||
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| 1,517,835 | 1,361,321 | |||||||
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| Operating income |
59,036 | 205,447 | ||||||
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| Other income (expense) |
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| Interest income and other |
5,659 | 6,304 | ||||||
| Interest expense |
(56,731 | ) | (58,624 | ) | ||||
| Loss on early extinguishment of debt |
(4,850 | ) | — | |||||
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| (55,922 | ) | (52,320 | ) | |||||
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| Income before income tax provision |
3,114 | 153,127 | ||||||
| Income tax provision |
40,100 | 49,224 | ||||||
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| Net income (loss) |
$ | (36,986 | ) | $ | 103,903 | |||
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| Earnings (loss) per common share - basic |
$ | (0.92 | ) | $ | 2.53 | |||
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| Weighted average common shares outstanding - basic |
40,316 | 41,131 | ||||||
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| Earnings (loss) per common share - diluted |
$ | (0.92 | ) | $ | 2.39 | |||
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| Weighted average common shares outstanding - diluted |
40,316 | 43,473 | ||||||
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| Other comprehensive income (loss), net of tax: |
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| Foreign currency translation adjustments, including tax expense (benefit) of $654 and ($1,568) in 2012 and 2011, respectively |
$ | 15,023 | $ | (2,902 | ) | |||
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| Other comprehensive income (loss), net of tax |
15,023 | (2,902 | ) | |||||
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| Comprehensive income (loss) |
$ | (21,963 | ) | $ | 101,001 | |||
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FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011
(in thousands, except per share data)
(unaudited)
| Three Months Ended | ||||||||
| December 31, | ||||||||
| 2012 | 2011 | |||||||
| Revenues |
$ | 399,345 | $ | 390,713 | ||||
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| Operating expenses |
||||||||
| Direct cost of revenues |
245,080 | 233,005 | ||||||
| Selling, general and administrative expense |
94,058 | 92,932 | ||||||
| Special charges |
— | — | ||||||
| Acquisition-related contingent consideration |
(483 | ) | (9,004 | ) | ||||
| Amortization of other intangible assets |
5,634 | 5,576 | ||||||
| Goodwill impairment charge |
110,387 | — | ||||||
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| 454,676 | 322,509 | |||||||
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| Operating income (loss) |
(55,331 | ) | 68,204 | |||||
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| Other income (expense) |
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| Interest income and other |
1,156 | 895 | ||||||
| Interest expense |
(13,124 | ) | (14,495 | ) | ||||
| Loss on early extinguishment of debt |
(4,850 | ) | — | |||||
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| (16,818 | ) | (13,600 | ) | |||||
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| Income (loss) before income tax provision |
(72,149 | ) | 54,604 | |||||
| Income tax provision |
13,728 | 14,723 | ||||||
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| Net income (loss) |
$ | (85,877 | ) | $ | 39,881 | |||
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| Earnings (loss) per common share - basic |
$ | (2.15 | ) | $ | 1.00 | |||
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| Weighted average common shares outstanding - basic |
39,913 | 39,932 | ||||||
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| Earnings (loss) per common share - diluted |
$ | (2.15 | ) | $ | 0.93 | |||
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| Weighted average common shares outstanding - diluted |
39,913 | 42,857 | ||||||
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| Other comprehensive income (loss), net of tax: |
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| Foreign currency translation adjustments, including tax expense of $654 and $0 in 2012 and 2011, respectively |
$ | 403 | $ | (3,684 | ) | |||
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| Other comprehensive income (loss), net of tax |
403 | (3,684 | ) | |||||
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| Comprehensive income (loss) |
$ | (85,474 | ) | $ | 36,197 | |||
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FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
| Average | Revenue- | |||||||||||||||||||||||
| Adjusted | Billable | Generating | ||||||||||||||||||||||
| Revenues | EBITDA (1) | Margin | Utilization | Rate | Headcount | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Three Months Ended December 31, 2012 |
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| Corporate Finance/Restructuring |
$ | 123,200 | $ | 27,963 | 22.7 | % | 64 | % | $ | 465 | 836 | |||||||||||||
| Forensic and Litigation Consulting |
82,570 | 9,827 | 11.9 | % | 67 | % | $ | 402 | 813 | |||||||||||||||
| Economic Consulting |
95,740 | 21,459 | 22.4 | % | 80 | % | $ | 489 | 474 | |||||||||||||||
| Technology (2) |
47,551 | 15,464 | 32.5 | % | N/M | N/M | 277 | |||||||||||||||||
| Strategic Communications (2) |
50,284 | 8,742 | 17.4 | % | N/M | N/M | 593 | |||||||||||||||||
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| $ | 399,345 | 83,455 | 20.9 | % | 2,993 | |||||||||||||||||||
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| Corporate |
(15,321 | ) | ||||||||||||||||||||||
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| Adjusted EBITDA (1) |
$ | 68,134 | 17.1 | % | ||||||||||||||||||||
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| Year Ended December 31, 2012 |
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| Corporate Finance/Restructuring |
$ | 459,231 | $ | 108,966 | 23.7 | % | 71 | % | $ | 416 | 836 | |||||||||||||
| Forensic and Litigation Consulting |
343,074 | 52,743 | 15.4 | % | 68 | % | $ | 370 | 813 | |||||||||||||||
| Economic Consulting |
391,622 | 77,461 | 19.8 | % | 81 | % | $ | 493 | 474 | |||||||||||||||
| Technology (2) |
195,194 | 57,203 | 29.3 | % | N/M | N/M | 277 | |||||||||||||||||
| Strategic Communications (2) |
187,750 | 25,019 | 13.3 | % | N/M | N/M | 593 | |||||||||||||||||
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| $ | 1,576,871 | 321,392 | 20.4 | % | 2,993 | |||||||||||||||||||
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| Corporate |
(70,401 | ) | ||||||||||||||||||||||
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| Adjusted EBITDA (1) |
$ | 250,991 | 15.9 | % | ||||||||||||||||||||
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| Three Months Ended December 31, 2011 |
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| Corporate Finance/Restructuring |
$ | 108,352 | $ | 38,466 | 35.5 | % | 72 | % | $ | 438 | 692 | |||||||||||||
| Forensic and Litigation Consulting |
89,981 | 16,134 | 17.9 | % | 68 | % | $ | 325 | 852 | |||||||||||||||
| Economic Consulting |
89,580 | 16,394 | 18.3 | % | 83 | % | $ | 472 | 433 | |||||||||||||||
| Technology (2) |
53,601 | 18,649 | 34.8 | % | N/M | N/M | 290 | |||||||||||||||||
| Strategic Communications (2) |
49,199 | 7,532 | 15.3 | % | N/M | N/M | 582 | |||||||||||||||||
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| $ | 390,713 | 97,175 | 24.9 | % | 2,849 | |||||||||||||||||||
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| Corporate |
(16,320 | ) | ||||||||||||||||||||||
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| Adjusted EBITDA (1) |
$ | 80,855 | 20.7 | % | ||||||||||||||||||||
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| Year Ended December 31, 2011 |
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| Corporate Finance/Restructuring |
$ | 427,813 | $ | 97,638 | 22.8 | % | 70 | % | $ | 427 | 692 | |||||||||||||
| Forensic and Litigation Consulting |
365,326 | 69,180 | 18.9 | % | 69 | % | $ | 330 | 852 | |||||||||||||||
| Economic Consulting |
353,981 | 67,028 | 18.9 | % | 85 | % | $ | 482 | 433 | |||||||||||||||
| Technology (2) |
218,738 | 77,011 | 35.2 | % | N/M | N/M | 290 | |||||||||||||||||
| Strategic Communications (2) |
200,910 | 26,801 | 13.3 | % | N/M | N/M | 582 | |||||||||||||||||
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| $ | 1,566,768 | 337,658 | 21.6 | % | 2,849 | |||||||||||||||||||
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| Corporate |
(66,046 | ) | ||||||||||||||||||||||
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| Adjusted EBITDA (1) |
$ | 271,612 | 17.3 | % | ||||||||||||||||||||
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| (1) | We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets, special charges and goodwill impairment charge. Amounts presented in the Adjusted EBITDA column for each segment reflect the segments’ respective Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as the segments’ share of consolidated operating income before depreciation, amortization of intangible assets, special charges and goodwill impairment charge. Although Adjusted EBITDA and Adjusted Segment EBITDA are not measures of financial condition or performance determined in accordance with generally accepted accounting principles (“GAAP”), we believe that these measures can be a useful operating performance measure for evaluating our results of operations as compared from period to period and as compared to our competitors. |
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 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 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 MONTHS AND YEAR ENDED DECEMBER 31, 2012 AND 2011
(unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net income (loss) |
$ | (85,877 | ) | $ | 39,881 | $ | (36,986 | ) | $ | 103,903 | ||||||
| Add back: |
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| Special charges, net of tax effect (1) |
— | 19,115 | 9,285 | |||||||||||||
| Goodwill impairment charge(2) |
110,387 | 110,387 | — | |||||||||||||
| Loss on early extinguishment of debt, net of tax(3) |
2,910 | — | 2,910 | — | ||||||||||||
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| Adjusted Net Income |
$ | 27,420 | $ | 39,881 | $ | 95,426 | $ | 113,188 | ||||||||
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| Earnings (loss) per common share - diluted |
$ | (2.15 | ) | $ | 0.93 | $ | (0.92 | ) | $ | 2.39 | ||||||
| Add back: |
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| Special charges, net of tax effect (1) |
— | — | 0.47 | 0.21 | ||||||||||||
| Goodwill impairment charge(2) |
2.77 | — | 2.74 | — | ||||||||||||
| Loss on early extinguishment of debt, net of tax(3) |
0.07 | — | 0.07 | — | ||||||||||||
| Impact of denominator for diluted adjusted earnings per common share(4) |
(0.02 | ) | — | (0.06 | ) | — | ||||||||||
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| Adjusted earnings per common share - diluted |
$ | 0.67 | $ | 0.93 | $ | 2.30 | $ | 2.60 | ||||||||
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| Weighted average number of common shares outstanding - diluted(4) |
40,990 | 42,857 | 41,578 | 43,473 | ||||||||||||
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| (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 rates for the adjustments for the years ended December 31, 2012 and 2011 were 35.3% and 39.0%, respectively. The tax expense related to the adjustments for the years ended December 31, 2012 and 2011 were $10.4 million or $0.26 impact on adjusted earnings per diluted share and $5.9 million or $0.14 impact on diluted earnings per share, respectively. |
| (2) | The goodwill impairment charge is non-deductible for income tax purposes and resulted in no tax benefit for the year ended December 31, 2012. |
| (3) | 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 for the three months and year ended December 31, 2012 were 40.0%. The tax expense related to the adjustments for the three months and year ended December 31, 2012 was $1.9 million or $0.05 impact on adjusted earnings per diluted share. |
| (4) | For the three months and year ended December 31, 2012, the Company reported a net loss. For such periods, the basic weighted average common shares outstanding equals the diluted weighted average common shares outstanding for purposes of calculating U.S. GAAP earnings per share because potentially dilutive securities would be antidilutive. For non-GAAP purposes, the per share and share amounts presented herein reflect the impact of the inclusion of share-based awards and convertible notes that are considered dilutive based on the impact of the add backs included in Adjusted Net Income above. |
RECONCILIATION OF NET INCOME (LOSS) AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
| Corporate Finance / Restructuring |
Forensic
and Litigation Consulting |
Economic Consulting |
Technology | Strategic Communications |
Corp HQ | Total | ||||||||||||||||||||||
| Three Months Ended December 31, 2012 |
||||||||||||||||||||||||||||
| Net income (loss) |
$ | (85,877 | ) | |||||||||||||||||||||||||
| Interest income and other |
(1,156 | ) | ||||||||||||||||||||||||||
| Interest expense |
13,124 | |||||||||||||||||||||||||||
| Income tax provision |
13,728 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt |
4,850 | |||||||||||||||||||||||||||
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|
|
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| Operating income (loss) |
$ | 25,482 | $ | 8,449 | $ | 20,311 | $ | 10,239 | $ | (103,459 | ) | $ | (16,353 | ) | $ | (55,331 | ) | |||||||||||
| Depreciation and amortization |
896 | 903 | 732 | 3,239 | 642 | 1,032 | 7,444 | |||||||||||||||||||||
| Amortization of other intangible assets |
1,585 | 475 | 416 | 1,986 | 1,172 | — | 5,634 | |||||||||||||||||||||
| Special charges |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Goodwill impairment charge |
— | — | — | — | 110,387 | — | 110,387 | |||||||||||||||||||||
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| Adjusted EBITDA (1) |
$ | 27,963 | $ | 9,827 | $ | 21,459 | $ | 15,464 | $ | 8,742 | $ | (15,321 | ) | $ | 68,134 | |||||||||||||
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| Year Ended December 31, 2012 |
||||||||||||||||||||||||||||
| Net income (loss) |
$ | (36,986 | ) | |||||||||||||||||||||||||
| Interest income and other |
(5,659 | ) | ||||||||||||||||||||||||||
| Interest expense |
56,731 | |||||||||||||||||||||||||||
| Income tax provision |
40,100 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt |
4,850 | |||||||||||||||||||||||||||
|
|
|
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| Operating income (loss) |
$ | 87,367 | $ | 39,412 | $ | 71,992 | $ | 33,642 | $ | (97,298 | ) | $ | (76,079 | ) | 59,036 | |||||||||||||
| Depreciation and amortization |
3,424 | 3,715 | 2,863 | 12,501 | 2,555 | 4,546 | 29,604 | |||||||||||||||||||||
| Amortization of other intangible assets |
6,239 | 1,944 | 1,615 | 7,946 | 4,663 | — | 22,407 | |||||||||||||||||||||
| Special charges |
11,936 | 7,672 | 991 | 3,114 | 4,712 | 1,132 | 29,557 | |||||||||||||||||||||
| Goodwill impairment charge |
— | 110,387 | 110,387 | |||||||||||||||||||||||||
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| Adjusted EBITDA (1) |
108,966 | 52,743 | 77,461 | 57,203 | 25,019 | (70,401 | ) | 250,991 | ||||||||||||||||||||
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| Three Months Ended December 31, 2011 |
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| Net income |
$ | 39,881 | ||||||||||||||||||||||||||
| Interest income and other |
(895 | ) | ||||||||||||||||||||||||||
| Interest expense |
14,495 | |||||||||||||||||||||||||||
| Income tax provision |
14,723 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt |
— | |||||||||||||||||||||||||||
|
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|
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| Operating income |
$ | 36,153 | $ | 14,723 | $ | 15,326 | $ | 13,891 | $ | 5,615 | $ | (17,504 | ) | 68,204 | ||||||||||||||
| Depreciation and amortization |
863 | 844 | 669 | 2,761 | 754 | 1,184 | 7,075 | |||||||||||||||||||||
| Amortization of other intangible assets |
1,450 | 567 | 399 | 1,997 | 1,163 | — | 5,576 | |||||||||||||||||||||
| Special charges |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Goodwill impairment charge |
— | — | — | — | — | — | — | |||||||||||||||||||||
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| Adjusted EBITDA (1) |
38,466 | 16,134 | 16,394 | 18,649 | 7,532 | (16,320 | ) | 80,855 | ||||||||||||||||||||
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| Year Ended December 31, 2011 |
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| Net income |
$ | 103,903 | ||||||||||||||||||||||||||
| Interest income and other |
(6,304 | ) | ||||||||||||||||||||||||||
| Interest expense |
58,624 | |||||||||||||||||||||||||||
| Income tax provision |
49,224 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt |
— | |||||||||||||||||||||||||||
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| Operating income |
$ | 78,923 | $ | 62,499 | $ | 60,890 | $ | 57,917 | $ | 19,066 | $ | (73,848 | ) | 205,447 | ||||||||||||||
| Depreciation and amortization |
3,480 | 3,423 | 2,552 | 11,168 | 2,997 | 4,962 | 28,582 | |||||||||||||||||||||
| Amortization of other intangible assets |
5,795 | 2,419 | 1,493 | 7,926 | 4,738 | — | 22,371 | |||||||||||||||||||||
| Special charges |
9,440 | 839 | 2,093 | — | — | 2,840 | 15,212 | |||||||||||||||||||||
| Goodwill impairment charge |
— | — | — | — | — | — | — | |||||||||||||||||||||
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| Adjusted EBITDA (1) |
97,638 | 69,180 | 67,028 | 77,011 | 26,801 | (66,046 | ) | 271,612 | ||||||||||||||||||||
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| (1) | We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible asset, special charge, loss on extinguishment of debt and goodwill impairment charge. Amounts presented in the Adjusted EBITDA column for each segment reflect the segments’ respective Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as the segments’ share of consolidated operating income before depreciation, amortization of intangible assets, special charge and goodwill impairment charge. Although Adjusted EBITDA and Adjusted Segment EBITDA are not measures of financial condition or performance determined in accordance with generally accepted accounting principles (“GAAP”), we believe that these measures can be a useful operating performance measure for evaluating our results of operations as compared from period to period and as compared to our competitors. |
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 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.
FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2012 AND 2011
(in thousands)
(unaudited)
| Year Ended | ||||||||
| December 31, | ||||||||
| 2012 | 2011 | |||||||
| Operating activities |
||||||||
| Net income (loss) |
$ | (36,986 | ) | $ | 103,903 | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
33,919 | 28,582 | ||||||
| Amortization and impairment of other intangible assets |
22,586 | 22,371 | ||||||
| Goodwill impairment charge |
110,387 | — | ||||||
| Acquisition-related contingent consideration |
(3,064 | ) | (6,465 | ) | ||||
| Provision for doubtful accounts |
14,179 | 12,586 | ||||||
| Non-cash share-based compensation |
29,361 | 37,352 | ||||||
| Excess tax benefits from share-based compensation |
(515 | ) | (1,597 | ) | ||||
| Non-cash interest expense and loss on extinguishment of debt |
9,824 | 8,439 | ||||||
| Other |
27 | (471 | ) | |||||
| Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
| Accounts receivable, billed and unbilled |
(3,691 | ) | (94,178 | ) | ||||
| Notes receivable |
(25,730 | ) | (3,781 | ) | ||||
| Prepaid expenses and other assets |
(1,895 | ) | 3,933 | |||||
| Accounts payable, accrued expenses and other |
(12,458 | ) | 11,472 | |||||
| Income taxes |
(6,816 | ) | 22,227 | |||||
| Accrued compensation |
(21,074 | ) | 38,073 | |||||
| Billings in excess of services provided |
12,134 | (8,618 | ) | |||||
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|
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| Net cash provided by operating activities |
120,188 | 173,828 | ||||||
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|
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| Investing activities |
||||||||
| Payments for acquisition of businesses, net of cash received |
(62,893 | ) | (62,346 | ) | ||||
| Purchases of property and equipment |
(27,759 | ) | (31,091 | ) | ||||
| Other |
246 | (211 | ) | |||||
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|
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| Net cash used in investing activities |
(90,406 | ) | (93,648 | ) | ||||
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| Financing activities |
||||||||
| Borrowings under revolving line of credit |
75,000 | 25,000 | ||||||
| Payments of revolving line of credit |
(75,000 | ) | (25,000 | ) | ||||
| Payments of long-term debt and capital lease obligations |
(377,859 | ) | (6,994 | ) | ||||
| Issuance of debt securities, net |
292,608 | — | ||||||
| Payments of debt financing fees |
(2,848 | ) | — | |||||
| Cash received for settlement of interest rate swaps |
— | 5,596 | ||||||
| Purchase and retirement of common stock |
(50,032 | ) | (209,400 | ) | ||||
| Net issuance of common stock under equity compensation plans |
1,598 | 11,109 | ||||||
| Excess tax benefit from share-based compensation |
515 | 1,597 | ||||||
| Other |
(2,228 | ) | (637 | ) | ||||
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|
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| Net cash used in financing activities |
(138,246 | ) | (198,729 | ) | ||||
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|
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| Effect of exchange rate changes on cash and cash equivalents |
826 | (1,598 | ) | |||||
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|
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| Net decrease in cash and cash equivalents |
(107,638 | ) | (120,147 | ) | ||||
| Cash and cash equivalents, beginning of period |
264,423 | 384,570 | ||||||
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|
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| Cash and cash equivalents, end of period |
$ | 156,785 | $ | 264,423 | ||||
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FTI CONSULTING, INC.
CONSOLIDATED BALANCE SHEETS
AT DECEMBER 31, 2012 AND DECEMBER 31, 2011
(in thousands, except per share amounts)
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Assets | ||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 156,785 | $ | 264,423 | ||||
| Restricted cash |
1,190 | 10,213 | ||||||
| Accounts receivable: |
||||||||
| Billed receivables |
314,491 | 335,758 | ||||||
| Unbilled receivables |
208,797 | 173,440 | ||||||
| Allowance for doubtful accounts and unbilled services |
(94,048 | ) | (80,096 | ) | ||||
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|
|||||
| Accounts receivable, net |
429,240 | 429,102 | ||||||
| Current portion of notes receivable |
33,194 | 26,687 | ||||||
| Prepaid expenses and other current assets |
50,351 | 40,529 | ||||||
| Current portion of deferred tax assets |
3,615 | — | ||||||
|
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|
|
|||||
| Total current assets |
674,375 | 770,954 | ||||||
| Property and equipment, net of accumulated depreciation |
68,192 | 74,448 | ||||||
| Goodwill |
1,260,035 | 1,309,358 | ||||||
| Other intangible assets, net of amortization |
104,181 | 118,889 | ||||||
| Notes receivable, net of current portion |
101,623 | 81,748 | ||||||
| Other assets |
67,046 | 55,687 | ||||||
|
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|
|
|||||
| Total assets |
$ | 2,275,452 | $ | 2,411,084 | ||||
|
|
|
|
|
|||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities |
||||||||
| Accounts payable, accrued expenses and other |
$ | 98,109 | $ | 132,773 | ||||
| Accrued compensation |
168,392 | 180,366 | ||||||
| Current portion of long-term debt and capital lease obligations |
6,021 | 153,381 | ||||||
| Billings in excess of services provided |
31,675 | 19,063 | ||||||
| Deferred income taxes |
— | 12,254 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
304,197 | 497,837 | ||||||
| Long-term debt and capital lease obligations, net of current portion |
717,024 | 643,579 | ||||||
| Deferred income taxes |
105,751 | 88,071 | ||||||
| Other liabilities |
80,248 | 75,395 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,207,220 | 1,304,882 | ||||||
|
|
|
|
|
|||||
| 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 outstanding - 40,775 (2012) and 41,484 (2011) |
408 | 415 | ||||||
| Additional paid-in capital |
367,978 | 383,978 | ||||||
| Retained earnings |
741,215 | 778,201 | ||||||
| Accumulated other comprehensive loss |
(41,369 | ) | (56,392 | ) | ||||
|
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|
|
|
|||||
| Total stockholders’ equity |
1,068,232 | 1,106,202 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 2,275,452 | $ | 2,411,084 | ||||
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