WASHINGTON, July 30, 2020 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended June 30, 2020.
Second quarter 2020 revenues of $607.9 million increased $1.7 million, or 0.3%, compared to revenues of $606.1 million in the prior year quarter. Excluding the estimated negative impact from foreign currency translation ("FX"), revenues increased $9.3 million, or 1.6%, compared to the prior year quarter. The increase in revenues was driven by higher demand in the Corporate Finance & Restructuring business segment, which was nearly offset by lower demand in the Forensic and Litigation Consulting and Technology business segments compared to the prior year quarter. Net income of $48.2 million compared to $64.6 million in the prior year quarter. The decrease in net income was due to higher compensation, primarily related to an 18.2% increase in billable headcount and higher variable compensation, which was partially offset by a decline in selling, general and administrative ("SG&A") expenses and a lower tax rate compared to the prior year quarter. Adjusted EBITDA of $75.8 million, or 12.5% of revenues, compared to $97.2 million, or 16.0% of revenues, in the prior year quarter.
Second quarter 2020 fully diluted earnings per share ("EPS") of $1.27 compared to $1.69 in the prior year quarter. Second quarter 2020 EPS included $2.3 million of non-cash interest expense related to the Company's 2.0% convertible senior notes due 2023 ("2023 Convertible Notes"), which decreased EPS by $0.05. Second quarter 2019 EPS included $2.1 million of non-cash interest expense related to the Company's 2023 Convertible Notes, which decreased EPS by $0.04. Second quarter 2020 Adjusted EPS of $1.32, which excludes the non-cash interest expense, compared to Adjusted EPS of $1.73 in the prior year quarter.
Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our strong results this quarter reflect the powerful sets of initiatives we have undertaken over the last few years to strengthen our core positions, extend into new adjacencies and anticipate our clients’ needs, together with the extraordinary efforts of our teams to collaborate with our clients as they face their greatest challenges and opportunities.”
Cash Position and Capital Allocation
Net cash provided by operating activities of $153.0 million for the quarter ended June 30, 2020 compared to $47.6 million for the quarter ended June 30, 2019. The year-over-year increase in net cash provided by operating activities was largely due to an increase in cash collected and lower non-compensation-related operating expenses compared to the prior year quarter, which was partially offset by an increase in salaries, primarily related to the increase in headcount.
Cash and cash equivalents of $304.2 million at June 30, 2020 compared to $189.1 million at June 30, 2019 and $223.1 million at March 31, 2020. Total debt, net of cash, of $47.0 million at June 30, 2020 compared to $147.1 million at June 30, 2019 and $143.2 million at March 31, 2020. The sequential decrease in total debt, net of cash, was primarily due to net cash provided by operating activities, which was partially offset by cash used for share repurchases.
During the quarter, the Company repurchased 470,853 shares of its common stock at an average price per share of $108.41 for a total cost of $51.0 million. As of June 30, 2020, approximately $65.3 million remained available for stock repurchases under the Company’s $500.0 million stock repurchase authorization. On July 28, 2020, the Company's Board of Directors authorized an additional $200.0 million to repurchase shares of FTI Consulting’s outstanding common stock pursuant to its stock repurchase program. After giving effect to share repurchases through such date and the increased authorization, FTI Consulting has approximately $249.5 million remaining available for common stock repurchases under the program. No time limit was established for the completion of the program, and the program may be suspended, discontinued or replaced by the Board at any time without prior notice.
Under the program, FTI Consulting may repurchase shares in open-market purchases or any other method in accordance with applicable securities laws and regulations. The specific timing and amount of repurchases will be determined by FTI Consulting’s management, in its discretion, and will vary based on market conditions, securities law limitations and other factors. The repurchases may be funded using available cash on hand or a combination of cash and available borrowings under FTI Consulting’s senior secured revolving bank credit facility.
Second Quarter 2020 Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $56.0 million, or 29.5%, to $246.0 million in the quarter compared to $190.0 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $58.3 million, or 30.7%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand and realization for restructuring services, which was partially offset by a decline in success fees and lower revenues related to business transformation and transaction services compared to the prior year quarter. Acquisition-related revenues contributed $12.4 million compared to the prior year quarter. Adjusted Segment EBITDA of $76.3 million, or 31.0% of segment revenues, compared to $50.5 million, or 26.6% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by higher compensation, primarily related to a 34.7% increase in billable headcount and higher variable compensation.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased $39.5 million, or 27.1%, to $106.4 million in the quarter compared to $145.9 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $37.5 million, or 25.7%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for investigations and disputes services. Adjusted Segment EBITDA of a loss of $9.0 million compared to $28.2 million, or 19.4% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to lower revenues and higher compensation, primarily related to a 9.4% increase in billable headcount, which was partially offset by a decline in SG&A expenses.
Economic Consulting
Revenues in the Economic Consulting segment decreased $4.0 million, or 2.6%, to $151.5 million in the quarter compared to $155.5 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $2.5 million, or 1.6%, compared to the prior year quarter. The decrease in revenues was largely due to lower demand for financial economics and non-merger and acquisition ("M&A")-related antitrust services, as well as lower realization for non-M&A-related antitrust and international arbitration services, which was partially offset by higher demand for M&A-related antitrust services. Adjusted Segment EBITDA of $21.7 million, or 14.3% of segment revenues, compared to $23.3 million, or 15.0% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to lower revenues and an increase in bad debt expenses, which was partially offset by lower variable compensation.
Technology
Revenues in the Technology segment decreased $8.5 million, or 15.4%, to $47.1 million in the quarter compared to $55.6 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $8.0 million, or 14.4%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for litigation and global cross-border investigation services, as well as lower revenues related to the completion of transition services associated with the September 2018 sale of the Company’s Ringtail e-discovery software and related business. Adjusted Segment EBITDA of $6.4 million, or 13.7% of segment revenues, compared to $12.9 million, or 23.1% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to lower revenues and higher compensation, primarily related to a 19.5% increase in billable headcount.
Strategic Communications
Revenues in the Strategic Communications segment decreased $2.2 million, or 3.8%, to $56.9 million in the quarter compared to $59.1 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $1.0 million, or 1.7%, compared to the prior year quarter. This decrease in revenues was primarily due to a $1.9 million decline in pass-through revenues. Adjusted Segment EBITDA of $10.0 million, or 17.6% of segment revenues, compared to $10.5 million, or 17.7% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to higher compensation, primarily related to a 13.2% increase in billable headcount, which was partially offset by a decline in SG&A expenses.
2020 Guidance
The Company is reaffirming its full year 2020 revenue guidance of between $2.450 billion and $2.550 billion. The Company is also reaffirming its full year 2020 EPS guidance of between $5.32 and $5.82 and full year 2020 Adjusted EPS guidance of between $5.50 and $6.00. The variance between EPS and Adjusted EPS guidance for full year 2020 includes an estimated non-cash interest expense of $0.18 per share related to the Company's 2023 Convertible Notes.
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 5,800 employees located in 27 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 $2.35 billion in revenues during fiscal year 2019. More information can be found at www.fticonsulting.com.
