FTI Consulting Reports Record Third Quarter 2021 Financial Results

Rhea-AI Summary

FTI Consulting reported Q3 2021 revenues of $702.2 million, a 13% increase from $622.2 million year-over-year. EPS rose 45% to $1.96, with adjusted EPS at $2.02, up 31%. The company raised its full-year revenue guidance to between $2.750 billion and $2.800 billion, and EPS guidance to $6.39 to $6.64. Net income reached $69.5 million vs $50.2 million, driven by increased revenues and FX gains, despite higher expenses. Cash and equivalents improved to $342.5 million. The company experienced higher demand across all business segments.

Positive

• Q3 2021 revenues increased by 13% to $702.2 million.
• EPS rose 45% to $1.96; Adjusted EPS rose 31% to $2.02.
• Full-year revenue guidance raised to $2.750 billion - $2.800 billion.
• Full-year EPS guidance increased to $6.39 - $6.64.
• Net cash from operating activities increased to $196.9 million.

Negative

• Higher compensation expenses due to a 6.9% rise in billable headcount.
• Increase in selling, general, and administrative expenses compared to prior year quarter.

• Third Quarter 2021 Revenues of $702.2 Million, Up 13% Compared to $622.2 Million in Prior Year Quarter
  
• Third Quarter 2021 EPS of $1.96, Up 45% Compared to $1.35 in Prior Year Quarter; Third Quarter 2021 Adjusted EPS of $2.02, Up 31% Compared to $1.54 in Prior Year Quarter
• Company Raises Lower End of Full Year 2021 Guidance Range for Revenues and Raises Full Year 2021 Guidance Ranges for EPS and Adjusted EPS
  

WASHINGTON, Oct. 28, 2021 (GLOBE NEWSWIRE) --  FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended September 30, 2021.

Third quarter 2021 revenues of $702.2 million increased $80.0 million, or 12.9%, compared to revenues of $622.2 million in the prior year quarter. Excluding the estimated positive impact from foreign currency translation ("FX"), revenues increased $70.1 million, or 11.3%, compared to the prior year quarter. Acquisition-related revenues contributed $3.7 million in the quarter. Excluding the estimated positive impact of FX and acquisition-related revenues, revenues increased $66.4 million, or 10.7%, compared to the prior year quarter. The increase in revenues was due to higher demand across all business segments. Net income of $69.5 million compared to $50.2 million in the prior year quarter. The increase in net income was primarily due to higher revenues and FX remeasurement gains, which was partially offset by higher compensation expenses, which includes the impact of a 6.9% increase in billable headcount, and higher selling, general and administrative ("SG&A") expenses compared to the prior year quarter. Adjusted EBITDA of $100.3 million, or 14.3% of revenues, compared to $90.9 million, or 14.6% of revenues, in the prior year quarter.

Third quarter 2021 diluted earnings per share ("EPS") of $1.96 compared to $1.35 in the prior year quarter. Third quarter 2021 EPS included $2.4 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 $0.06. Third quarter 2020 EPS included a $7.1 million special charge, which reduced EPS by $0.14, and $2.3 million of non-cash interest expense, which reduced EPS by $0.05. Third quarter 2021 Adjusted EPS of $2.02, which excludes the non-cash interest expense, compared to Adjusted EPS of $1.54 in the prior year quarter.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, "These powerful results reflect our multi-year commitment to invest behind our leading positions and expand into new adjacencies by developing, attracting and supporting the best professionals. That commitment, in turn, has allowed us to grow our capacity and capabilities and increasingly deliver for our clients when they are facing their most significant challenges and opportunities."

Cash Position and Capital Allocation
Net cash provided by operating activities of $196.9 million for the quarter ended September 30, 2021 compared to $111.6 million for the quarter ended September 30, 2020. The year-over-year increase in net cash provided by operating activities was largely due to an increase in cash collected resulting from higher revenues, which was partially offset by an increase in compensation-related costs and other operating expenses compared to the prior year quarter.

Cash and cash equivalents of $342.5 million at September 30, 2021 compared to $304.7 million at September 30, 2020 and $256.9 million at June 30, 2021. Total debt, net of cash, of ($1.3) million at September 30, 2021 improved compared to $36.6 million at September 30, 2020 and $159.4 million at June 30, 2021. The sequential decrease in total debt, net of cash, was primarily due to an increase in cash and cash equivalents and repayment of borrowings under the Company’s senior secured bank revolving credit facility.

There were no share repurchases during the quarter ended September 30, 2021. As of September 30, 2021, approximately $167.1 million remained available for common stock repurchases under the Company’s stock repurchase authorization.

Third Quarter 2021 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $13.7 million, or 5.8%, to $250.3 million in the quarter, compared to $236.6 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $10.1 million, or 4.3%, due to higher demand for transactions and business transformation services, which was partially offset by lower demand for restructuring services compared to the prior year quarter. Adjusted Segment EBITDA of $55.6 million, or 22.2% of segment revenues, compared to $56.2 million, or 23.8% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was primarily due to higher compensation, which includes the impact of a 6.0% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $26.2 million, or 22.0%, to $145.3 million in the quarter, compared to $119.1 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $24.9 million, or 20.9%. Acquisition-related revenues contributed $3.7 million in the quarter. Excluding the estimated positive impact from FX and acquisition-related revenues, revenues increased $21.3 million, or 17.8%, primarily due to higher demand for investigations, disputes and health solutions services. Adjusted Segment EBITDA of $16.6 million, or 11.4% of segment revenues, compared to $13.6 million, or 11.4% 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, which includes the impact of a 7.7% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Economic Consulting
Revenues in the Economic Consulting segment increased $17.6 million, or 11.3%, to $172.5 million in the quarter, compared to $155.0 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $14.9 million, or 9.6%, primarily due to higher demand for non-merger and acquisition ("M&A")-related antitrust and financial economics services, which was partially offset by lower demand for M&A-related antitrust services compared to the prior year quarter. Adjusted Segment EBITDA of $29.9 million, or 17.3% of segment revenues, compared to $25.7 million, or 16.6% 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, which includes the impact of a 5.1% increase in billable headcount compared to the prior year quarter.

Technology
Revenues in the Technology segment increased $6.1 million, or 10.4%, to $64.7 million in the quarter, compared to $58.6 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $5.1 million, or 8.6%, primarily due to higher demand for litigation, investigations and information governance services, which was partially offset by a decline in M&A-related "second request" services compared to the prior year quarter. Adjusted Segment EBITDA of $7.8 million, or 12.1% of segment revenues, compared to $11.9 million, or 20.4% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to higher compensation, which includes the impact of a 12.4% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Strategic Communications
Revenues in the Strategic Communications segment increased $16.5 million, or 31.1%, to $69.4 million in the quarter, compared to $53.0 million in the prior year quarter. Excluding the estimated positive impact from FX, revenues increased $15.1 million, or 28.5%, primarily due to higher demand for corporate reputation and public affairs services compared to the prior year quarter. Adjusted Segment EBITDA of $15.5 million, or 22.3% of segment revenues, compared to $8.4 million, or 15.9% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues compared to the prior year quarter.

2021 Guidance
In light of record financial performance during the first nine months of 2021, the Company is raising the lower end of its previous full year 2021 guidance range for revenues of between $2.700 billion and $2.800 billion. The Company now expects revenues of between $2.750 billion and $2.800 billion. The Company is raising its previous full year 2021 guidance ranges for EPS of between $5.89 and $6.39 and Adjusted EPS of between $6.00 and $6.50 to EPS of between $6.39 and $6.64 and Adjusted EPS of between $6.50 and $6.75. The $0.11 per share variance between EPS and Adjusted EPS guidance for full year 2021 includes estimated non-cash interest expense of approximately $0.20 per share related to the Company’s 2023 Convertible Notes and the second quarter 2021 $0.09 per share gain related to the fair value remeasurement of acquisition-related contingent consideration.

Third Quarter 2021 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2021 financial results at 9:00 a.m. Eastern Time on Thursday, October 28, 2021. 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 6,600 employees located in 29 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 $2.46 billion in revenues during fiscal year 2020. More information can be found at www.fticonsulting.com.

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 financial measures are considered not in conformity with GAAP ("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 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 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 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, policies and practices, 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, new or changes to laws and regulations, including U.S. and foreign tax laws, environmental, social and governance ("ESG")-related issues, scientific and technological developments, 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," "aspires," "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, intentions, aspirations, 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the SEC on October 28, 2021 and Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 25. 2021, 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,
		2021					2020
		(Unaudited)
Assets
Current assets
Cash and cash equivalents		$	342,527				$	294,953
Accounts receivable, net		809,878					711,357
Current portion of notes receivable		32,823					35,253
Prepaid expenses and other current assets		83,266					88,144
Total current assets		1,268,494					1,129,707
Property and equipment, net		132,857					101,642
Operating lease assets		224,961					156,645
Goodwill		1,234,023					1,234,879
Intangible assets, net		34,504					41,550
Notes receivable, net		59,123					61,121
Other assets		52,962					51,819
Total assets		$	3,006,924				$	2,777,363
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other		$	157,794				$	170,066
Accrued compensation		451,549					455,933
Billings in excess of services provided		36,279					44,172
Total current liabilities		645,622					670,171
Long-term debt, net		319,355					286,131
Noncurrent operating lease liabilities		232,390					161,677
Deferred income taxes		168,232					158,342
Other liabilities		97,022					100,861
Total liabilities		1,462,621					1,377,182
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 — 34,295 (2021) and 34,481 (2020)		343					345
Additional paid-in capital		8,490					—
Retained earnings		1,659,947					1,506,271
Accumulated other comprehensive loss		(124,477		)			(106,435		)
Total stockholders' equity		1,544,303					1,400,181
Total liabilities and stockholders' equity		$	3,006,924				$	2,777,363

FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)

	Three Months Ended September 30,
	2021					2020
	(Unaudited)
Revenues	$	702,228				$	622,249
Operating expenses
Direct cost of revenues	472,235					417,179
Selling, general and administrative expenses	138,600					122,102
Special charges	—					7,103
Amortization of intangible assets	2,860					2,795
	613,695					549,179
Operating income	88,533					73,070
Other income (expense)
Interest income and other	5,175					(3,340		)
Interest expense	(5,073		)			(5,151		)
	102					(8,491		)
Income before income tax provision	88,635					64,579
Income tax provision	19,155					14,407
Net income	$	69,480				$	50,172
Earnings per common share ― basic	$	2.07				$	1.41
Weighted average common shares outstanding ― basic	33,495					35,639
Earnings per common share ― diluted	$	1.96				$	1.35
Weighted average common shares outstanding ― diluted	35,362					37,086
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax expense of $0	$	(18,607	)			$	21,330
Total other comprehensive income (loss), net of tax	(18,607		)			21,330
Comprehensive income	$	50,873				$	71,502

FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)

	Nine Months Ended September 30,
	2021					2020
	(Unaudited)
Revenues	$	2,099,991				$	1,834,694
Operating expenses
Direct cost of revenues	1,431,381					1,232,437
Selling, general and administrative expenses	399,076					375,989
Special charges	—					7,103
Amortization of intangible assets	8,515					7,440
	1,838,972					1,622,969
Operating income	261,019					211,725
Other income (expense)
Interest income and other	5,297					3,879
Interest expense	(15,164		)			(15,169		)
	(9,867		)			(11,290		)
Income before income tax provision	251,152					200,435
Income tax provision	54,394					45,342
Net income	$	196,758				$	155,093
Earnings per common share ― basic	$	5.88				$	4.30
Weighted average common shares outstanding ― basic	33,478					36,073
Earnings per common share ― diluted	$	5.58				$	4.11
Weighted average common shares outstanding ― diluted	35,265					37,708
Other comprehensive loss, net of tax
Foreign currency translation adjustments, net of tax expense of $0	$	(18,042	)			$	(204	)
Total other comprehensive loss, net of tax	(18,042		)			(204		)
Comprehensive income	$	178,716				$	154,889

FTI CONSULTING, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)

		Three Months Ended September 30,										Nine Months Ended September 30,
		2021					2020					2021					2020
		(Unaudited)										(Unaudited)
Net income		$	69,480				$	50,172				$	196,758				$	155,093
Add back:
Special charges		—					7,103					—					7,103
Tax impact of special charges		—					(1,847		)			—					(1,847		)
Remeasurement of acquisition-related contingent consideration		—					—					(3,130		)			—
Non-cash interest expense on convertible notes		2,412					2,286					7,141					6,766
Tax impact of non-cash interest expense on convertible notes		(627		)			(595		)			(1,857		)			(1,760		)
Adjusted Net Income		$	71,265				$	57,119				$	198,912				$	165,355
Earnings per common share — diluted		$	1.96				$	1.35				$	5.58				$	4.11
Add back:
Special charges		—					0.19					—					0.19
Tax impact of special charges		—					(0.05		)			—					(0.05		)
Remeasurement of acquisition-related contingent consideration		—					—					(0.09		)			—
Non-cash interest expense on convertible notes		0.08					0.06					0.20					0.18
Tax impact of non-cash interest expense on convertible notes		(0.02		)			(0.01		)			(0.05		)			(0.04		)
Adjusted earnings per common share — diluted		$	2.02				$	1.54				$	5.64				$	4.39
Weighted average number of common shares outstanding ― diluted		35,362					37,086					35,265					37,708

FTI CONSULTING, INC.
RECONCILIATION OF EPS GUIDANCE TO ADJUSTED EPS GUIDANCE

		Year Ended December 31, 2021
		Low					High
Guidance on estimated earnings per common share — diluted (GAAP) (1)		$	6.39				$	6.64
Remeasurement of acquisition-related contingent consideration		(0.09		)			(0.09		)
Non-cash interest expense on convertible notes, net of tax		0.20					0.20
Guidance on estimated adjusted earnings per common share (non-GAAP) (1)		$	6.50				$	6.75

⁽¹⁾      The forward-looking guidance on estimated 2021 EPS and Adjusted EPS does not reflect other gains and losses (all of which would be excluded from Adjusted EPS) related to the future impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, losses on early extinguishment of debt, or gain or loss on sale of a business as these items are dependent on future events that are uncertain and difficult to predict. The forward-looking guidance excludes any shares of common stock potentially issuable upon conversion of the 2023 Convertible Notes from the calculation of EPS.

FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)

Three Months Ended September 30, 2021 (Unaudited)		CorporateFinance & Restructuring					Forensic and Litigation Consulting				Economic Consulting				Technology				Strategic Communications				Unallocated Corporate					Total
Net income																												$	69,480
Interest income and other																												(5,175		)
Interest expense																												5,073
Income tax provision																												19,155
Operating income		$	52,316				$	15,101			$	28,455			$	4,416			$	14,219			$	(25,974	)			$	88,533
Depreciation and amortization		1,446					1,270				1,462				3,419				533				737					8,867
Amortization of intangible assets		1,873					249				—				—				737				1					2,860
Adjusted EBITDA		$	55,635				$	16,620			$	29,917			$	7,835			$	15,489			$	(25,236	)			$	100,260
Nine Months Ended September 30, 2021 (Unaudited)		Corporate Finance & Restructuring					Forensic and Litigation Consulting				Economic Consulting				Technology				Strategic Communications				Unallocated Corporate					Total
Net income																												$	196,758
Interest income and other																												(5,297		)
Interest expense																												15,164
Income tax provision																												54,394
Operating income		$	126,718				$	59,599			$	82,891			$	38,315			$	35,537			$	(82,041	)			$	261,019
Depreciation and amortization		4,016					3,808				4,304				9,636				1,630				2,237					25,631
Amortization of intangible assets		5,644					647				—				—				2,221				3					8,515
Remeasurement of acquisition-related contingent consideration		(3,130		)			—				—				—				—				—					(3,130		)
Adjusted EBITDA		$	133,248				$	64,054			$	87,195			$	47,951			$	39,388			$	(79,801	)			$	292,035

FTI CONSULTING, INC.
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)

Three Months Ended September 30, 2020 (Unaudited)		Corporate Finance & Restructuring				Forensic and Litigation Consulting				Economic Consulting				Technology				Strategic Communications				Unallocated Corporate					Total
Net income																											$	50,172
Interest income and other																											3,340
Interest expense																											5,151
Income tax provision																											14,407
Operating income (loss)		$	52,372			$	8,729			$	24,304			$	8,621			$	5,105			$	(26,061	)			$	73,070
Depreciation and amortization		1,109				1,207				1,337				3,041				542				713					7,949
Amortization of intangible assets		1,873				171				44				1				706				—					2,795
Special charges		861				3,484				35				276				2,074				373					7,103
Adjusted EBITDA		$	56,215			$	13,591			$	25,720			$	11,939			$	8,427			$	(24,975	)			$	90,917
Nine Months Ended September 30, 2020 (Unaudited)		Corporate Finance& Restructuring				Forensic and Litigation Consulting				Economic Consulting				Technology				Strategic Communications				Unallocated Corporate					Total
Net income																											$	155,093
Interest income and other																											(3,879		)
Interest expense																											15,169
Income tax provision																											45,342
Operating income		$	172,847			$	17,853			$	55,916			$	23,642			$	21,395			$	(79,928	)			$	211,725
Depreciation and amortization		3,126				3,788				4,040				8,939				1,680				2,083					23,656
Amortization of intangible assets		4,591				627				133				1				2,088				—					7,440
Special charges		861				3,484				35				276				2,074				373					7,103
Adjusted EBITDA		$	181,425			$	25,752			$	60,124			$	32,858			$	27,237			$	(77,472	)			$	249,924

FTI CONSULTING, INC.
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 September 30, 2021 (Unaudited)
Corporate Finance & Restructuring	$	250,321			$	55,635				22.2	%		62	%		$	465			1,704
Forensic and Litigation Consulting	145,264				16,620					11.4	%		54	%		$	355			1,476
Economic Consulting	172,543				29,917					17.3	%		68	%		$	539			925
Technology (1)	64,657				7,835					12.1	%		N/M			N/M				443
Strategic Communications (1)	69,443				15,489					22.3	%		N/M			N/M				817
	$	702,228			$	125,496				17.9	%									5,365
Unallocated Corporate					(25,236		)
Adjusted EBITDA					$	100,260				14.3	%
Nine Months Ended September 30, 2021 (Unaudited)
Corporate Finance & Restructuring	$	707,495			$	133,248				18.8	%		60	%		$	457			1,704
Forensic and Litigation Consulting	446,831				64,054					14.3	%		58	%		$	350			1,476
Economic Consulting	525,122				87,195					16.6	%		73	%		$	510			925
Technology (1)	222,762				47,951					21.5	%		N/M			N/M				443
Strategic Communications (1)	197,781				39,388					19.9	%		N/M			N/M				817
	$	2,099,991			$	371,836				17.7	%									5,365
Unallocated Corporate					(79,801		)
Adjusted EBITDA					$	292,035				13.9	%
Three Months Ended September 30, 2020 (Unaudited)
Corporate Finance & Restructuring	$	236,615			$	56,215				23.8	%		64	%		$	460			1,608
Forensic and Litigation Consulting	119,104				13,591					11.4	%		48	%		$	337			1,371
Economic Consulting	154,978				25,720					16.6	%		66	%		$	502			880
Technology (1)	58,585				11,939					20.4	%		N/M			N/M				394
Strategic Communications (1)	52,967				8,427					15.9	%		N/M			N/M				766
	$	622,249			$	115,892				18.6	%									5,019
Unallocated Corporate					(24,975		)
Adjusted EBITDA					$	90,917				14.6	%
Nine Months Ended September 30, 2020 (Unaudited)
Corporate Finance & Restructuring	$	690,375			$	181,425				26.3	%		68	%		$	468			1,608
Forensic and Litigation Consulting	373,082				25,752					6.9	%		50	%		$	333			1,371
Economic Consulting	438,609				60,124					13.7	%		68	%		$	482			880
Technology (1)	164,392				32,858					20.0	%		N/M			N/M				394
Strategic Communications (1)	168,236				27,237					16.2	%		N/M			N/M				766
	$	1,834,694			$	327,396				17.8	%									5,019
Unallocated Corporate					(77,472		)
Adjusted EBITDA					$	249,924				13.6	%

N/M -      Not meaningful
⁽¹⁾         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.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Nine Months Ended September 30,
	2021					2020
	(Unaudited)
Operating activities
Net income	$	196,758				$	155,093
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	25,631					23,655
Amortization and impairment of intangible assets	8,515					7,440
Acquisition-related contingent consideration	(1,014		)			4,652
Provision for expected credit losses	14,816					15,608
Share-based compensation	17,150					17,576
Amortization of debt discount and issuance costs and other	8,551					9,073
Deferred income taxes	5,128					(1,658		)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled	(115,544		)			(86,491		)
Notes receivable	4,392					3,346
Prepaid expenses and other assets	1,145					8,294
Accounts payable, accrued expenses and other	(22,745		)			7,713
Income taxes	18,025					(14,635		)
Accrued compensation	2,803					(18,985		)
Billings in excess of services provided	(7,691		)			10,296
Net cash provided by operating activities	155,920					140,977
Investing activities
Payments for acquisition of businesses, net of cash received	(9,833		)			(25,271		)
Purchases of property and equipment and other	(52,441		)			(25,105		)
Net cash used in investing activities	(62,274		)			(50,376		)
Financing activities
Borrowings under revolving line of credit	377,500					149,500
Repayments under revolving line of credit	(352,500		)			(124,500		)
Purchase and retirement of common stock	(46,133		)			(175,832		)
Share-based compensation tax withholdings and other	(8,277		)			(5,195		)
Payments for business acquisition liabilities	(7,496		)			(3,948		)
Deposits	1,928					4,561
Net cash used in financing activities	(34,978		)			(155,414		)
Effect of exchange rate changes on cash and cash equivalents	(11,094		)			98
Net increase (decrease) in cash and cash equivalents	47,574					(64,715		)
Cash and cash equivalents, beginning of period	294,953					369,373
Cash and cash equivalents, end of period	$	342,527				$	304,658

FTI CONSULTING, INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(in thousands)

	Three Months Ended September 30,										Nine Months Ended September 30,
	2021					2020					2021					2020
Net cash provided by operating activities	$	196,946				$	111,563				$	155,920				$	140,977
Purchases of property and equipment	(24,745		)			(11,764		)			(52,470		)			(25,663		)
Free Cash Flow	$	172,201				$	99,799				$	103,450				$	115,314

FTI Consulting, Inc.
555 12th Street NW
Washington, DC 20004
+1.202.312.9100

Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com

FAQ

What were the earnings results for FTI Consulting in Q3 2021?

FTI Consulting reported Q3 2021 revenues of $702.2 million and EPS of $1.96.

How did FTI Consulting adjust its guidance for 2021?

FTI Consulting raised its revenue guidance to $2.750 - $2.800 billion and EPS guidance to $6.39 - $6.64.

What were the key drivers of revenue growth for FTI Consulting in Q3 2021?

The increase in revenues was driven by higher demand across all business segments.

What is the stock symbol for FTI Consulting?

The stock symbol for FTI Consulting is FCN.