FTI Consulting Reports Second Quarter 2022 Financial Results

Rhea-AI Summary

FTI Consulting reported second quarter 2022 revenues of $755.0 million, a 6.1% increase from $711.5 million in the prior year. However, net income fell to $51.4 million, down from $62.8 million, reflecting higher expenses and a 19% drop in EPS to $1.43. Adjusted EBITDA also decreased, showing a margin contraction. The company reaffirmed its 2022 revenue guidance between $2.920 billion and $3.045 billion, along with EPS guidance between $6.40 and $7.20.

Positive

• Revenues increased by 6.1% year-over-year, signaling growth.
• Corporate Finance & Restructuring segment saw a revenue increase of 20.0%.

Negative

• Net income declined to $51.4 million, down from $62.8 million.
• EPS decreased by 19% year-over-year to $1.43.
• Adjusted EBITDA fell to $76.2 million, down from $92.3 million, indicating margin pressure.

• Second Quarter 2022 Revenues of $755.0 Million, Up 6% Compared to $711.5 Million in Prior Year Quarter
• Second Quarter 2022 EPS of $1.43, Down 19% Compared to $1.77 in Prior Year Quarter; Second Quarter 2022 Adjusted EPS of $1.43, Down 18% Compared to $1.74 in Prior Year Quarter
• Reaffirms 2022 Guidance

WASHINGTON, July 28, 2022 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended June 30, 2022.

Second quarter 2022 revenues of $755.0 million increased $43.5 million, or 6.1%, compared to revenues of $711.5 million in the prior year quarter. Excluding the estimated negative impact from foreign currency translation ("FX"), revenues increased $65.5 million, or 9.2%, compared to the prior year quarter. Acquisition-related revenues contributed $4.7 million during the quarter. The increase in revenues was primarily due to higher demand and realized rates in Corporate Finance & Restructuring and higher realized rates in Forensic and Litigation Consulting, which was partially offset by lower realization and demand in Economic Consulting. Net income of $51.4 million compared to $62.8 million in the prior year quarter. Net income declined compared to the prior year quarter, as the increase in revenues was more than offset by higher selling, general and administrative ("SG&A") and compensation expenses, which included the impact of a 9.4% increase in billable headcount. Adjusted EBITDA of $76.2 million, or 10.1% of revenues, compared to $92.3 million, or 13.0% of revenues, in the prior year quarter.

Second quarter 2022 earnings per diluted share ("EPS") of $1.43 compared to $1.77 in the prior year quarter. Second quarter 2021 EPS included a $3.1 million fair value remeasurement of acquisition-related contingent consideration, which increased EPS by $0.09 and $2.4 million of non-cash interest expense related to the Company's 2.0% convertible senior notes due 2023, which decreased EPS by $0.06. Second quarter 2022 Adjusted EPS of $1.43 compared to Adjusted EPS of $1.74 in the prior year quarter. Second quarter 2021 Adjusted EPS excluded the fair value remeasurement and non-cash interest expense.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, “Our solid results this quarter reflect the strength of our underlying business, together with our commitment to invest heavily to attract and support talented professionals to extend our global footprint and ensure we are able to continuously deliver on our clients' ever-evolving needs.”

Cash Position and Capital Allocation

Net cash provided by operating activities of $35.0 million for the quarter ended June 30, 2022 compared to $125.6 million for the quarter ended June 30, 2021. The year-over-year decrease in net cash provided by operating activities was largely due to an increase in compensation, primarily related to headcount growth, higher operating expenses and income tax payments, as well as a decrease in cash collections compared to the same period in the prior year.

Cash and cash equivalents of $255.7 million at June 30, 2022 compared to $256.9 million at June 30, 2021 and $271.1 million at March 31, 2022. Total debt, net of cash, of $60.5 million at June 30, 2022 compared to $159.4 million at June 30, 2021 and $60.1 million at March 31, 2022.

There were no share repurchases during the quarter ended June 30, 2022. As of June 30, 2022, approximately $164.0 million remained available for common stock repurchases under the Company’s stock repurchase authorization.

Second Quarter 2022 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $46.1 million, or 20.0%, to $277.1 million in the quarter compared to $231.0 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $52.3 million, or 22.7%, compared to the prior year quarter. Acquisition-related revenues contributed $3.6 million in the quarter. The increase in revenues was primarily due to higher demand and realized rates for transactions, business transformation and restructuring services compared to the prior year quarter. Adjusted Segment EBITDA of $55.0 million, or 19.8% of segment revenues, compared to $40.2 million, or 17.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation, which includes the impact of an 8.4% 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 $13.5 million, or 9.0%, to $164.2 million in the quarter compared to $150.7 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $16.3 million, or 10.8%, compared to the prior year quarter. Acquisition-related revenues contributed $1.1 million in the quarter. The increase in revenues was primarily due to higher demand for health solutions services and higher realized rates for investigations services compared to the prior year quarter. Adjusted Segment EBITDA of $16.7 million, or 10.2% of segment revenues, compared to $18.0 million, or 11.9% 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 7.9% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Economic Consulting
Revenues in the Economic Consulting segment decreased $19.3 million, or 10.5%, to $164.0 million in the quarter compared to $183.3 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues decreased $12.2 million, or 6.6%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for merger and acquisition ("M&A")-related antitrust services and lower realization for non-M&A-related antitrust services, primarily related to revenue deferrals, which was partially offset by higher demand for non-M&A-related antitrust services compared to the prior year quarter. Adjusted Segment EBITDA of $21.6 million, or 13.2% of segment revenues, compared to $30.7 million, or 16.7% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to lower revenues and higher SG&A expenses, which was partially offset by lower variable compensation expenses compared to the prior year quarter.

Technology
Revenues in the Technology segment decreased $0.9 million, or 1.1%, to $77.8 million in the quarter compared to $78.6 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $1.1 million, or 1.4%, compared to the prior year quarter. The increase in revenues was primarily due to increased demand for information governance, privacy and security and investigations services, which was partially offset by lower demand for litigation and M&A-related "second request" services compared to the prior year quarter. Adjusted Segment EBITDA of $8.4 million, or 10.8% of segment revenues, compared to $18.5 million, or 23.5% 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 an 18.2% increase in billable headcount and an increase in as-needed contractors, as well as higher SG&A expenses compared to the prior year quarter.

Strategic Communications
Revenues in the Strategic Communications segment increased $4.0 million, or 6.0%, to $71.9 million in the quarter compared to $67.8 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $7.9 million, or 11.7%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for corporate reputation services compared to the prior year quarter. Adjusted Segment EBITDA of $11.5 million, or 16.0% of segment revenues, compared to $13.5 million, or 19.9% 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 13.7% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

2022 Guidance
The Company is reaffirming its full year 2022 revenue guidance of between $2.920 billion and $3.045 billion. The Company is also reaffirming its full year 2022 EPS guidance of between $6.40 and $7.20. The Company does not currently expect Adjusted EPS to differ from EPS.

Second Quarter 2022 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss second quarter 2022 financial results at 9:00 a.m. Eastern Time on Thursday, July 28, 2022. 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 7,000 employees located in 30 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 $2.78 billion in revenues during fiscal year 2021. 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 (used in) 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, initiatives, projections, prospects, policies and practices, objectives, goals, commitments, 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, climate change-related matters, 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," "commits," "aspires," "forecasts," "future," "goal," "seeks" 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 plans, expectations, intentions, aspirations, beliefs, goals, estimates, forecasts and projections will result or be achieved. Our actual financial results, performance or achievements and outcomes could differ materially from those expressed in, or implied by, any forward-looking statements. Further, unaudited quarterly results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flows in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer; the mix of the geographic locations where our clients are located or where services are performed; fluctuations in the price per share of our common stock; adverse financial, real estate or other market and general economic conditions; the impact of the COVID-19 pandemic and related events that are beyond our control, which could affect our segments, practices and the geographic regions in which we conduct business differently and adversely; and other future events, which could impact each of our segments, practices and the geographic regions in which we conduct business differently and could be outside of our control; the pace and timing of the consummation and integration of future acquisitions; the Company’s ability to realize cost savings and efficiencies; competitive and general economic conditions; retention of staff and clients; new laws and regulations or changes thereto; and other risks described under the heading "Item 1A, Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022 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.

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

FINANCIAL TABLES FOLLOW

FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)

	June 30,				December 31,
		2022				2021
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	255,730			$	494,485
Accounts receivable, net		905,548				754,120
Current portion of notes receivable		29,773				30,256
Prepaid expenses and other current assets		100,668				91,166
Total current assets		1,291,719				1,370,027
Property and equipment, net		144,053				142,163
Operating lease assets		198,893				215,995
Goodwill		1,227,837				1,232,791
Intangible assets, net		28,613				31,990
Notes receivable, net		55,230				53,539
Other assets		56,823				54,404
Total assets	$	3,003,168			$	3,100,909
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other	$	165,455			$	165,025
Accrued compensation		357,222				507,556
Billings in excess of services provided		48,217				45,535
Total current liabilities		570,894				718,116
Long-term debt, net		314,337				297,158
Noncurrent operating lease liabilities		218,001				236,026
Deferred income taxes		167,797				170,612
Other liabilities		101,520				95,676
Total liabilities		1,372,549				1,517,588
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 34,540 (2022) and 34,333 (2021)		345				343
Additional paid-in capital		499				13,662
Retained earnings		1,805,485				1,698,156
Accumulated other comprehensive loss		(175,710	)			(128,840	)
Total stockholders' equity		1,630,619				1,583,321
Total liabilities and stockholders' equity	$	3,003,168			$	3,100,909

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

	Three Months Ended June 30,
		2022				2021
	(Unaudited)
Revenues	$	754,992			$	711,486
Operating expenses
Direct cost of revenues		520,080				490,722
Selling, general and administrative expenses		167,940				133,930
Amortization of intangible assets		2,737				2,854
		690,757				627,506
Operating income		64,235				83,980
Other income (expense)
Interest income and other		2,994				(912	)
Interest expense		(2,448	)			(5,294	)
		546				(6,206	)
Income before income tax provision		64,781				77,774
Income tax provision		13,353				14,992
Net income	$	51,428			$	62,782
Earnings per common share ― basic	$	1.52			$	1.88
Weighted average common shares outstanding ― basic		33,790				33,458
Earnings per common share ― diluted	$	1.43			$	1.77
Weighted average common shares outstanding ― diluted		35,909				35,374
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax expense of $0	$	(40,679	)		$	5,807
Total other comprehensive income (loss), net of tax		(40,679	)			5,807
Comprehensive income	$	10,749			$	68,589

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

	Six Months Ended June 30,
		2022				2021
	(Unaudited)
Revenues	$	1,478,612			$	1,397,763
Operating expenses
Direct cost of revenues		1,013,184				959,146
Selling, general and administrative expenses		316,911				260,476
Amortization of intangible assets		5,005				5,655
		1,335,100				1,225,277
Operating income		143,512				172,486
Other income (expense)
Interest income and other		2,647				122
Interest expense		(5,090	)			(10,091	)
		(2,443	)			(9,969	)
Income before income tax provision		141,069				162,517
Income tax provision		30,320				35,239
Net income	$	110,749			$	127,278
Earnings per common share ― basic	$	3.29			$	3.80
Weighted average common shares outstanding ― basic		33,705				33,470
Earnings per common share ― diluted	$	3.10			$	3.61
Weighted average common shares outstanding ― diluted		35,778				35,218
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax expense of $0	$	(46,870	)		$	565
Total other comprehensive income (loss), net of tax		(46,870	)			565
Comprehensive income	$	63,879			$	127,843

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

		Three Months Ended June 30,							Six Months Ended June 30,
			2022			2021				2022			2021
		(Unaudited)							(Unaudited)
Net income		$	51,428		$	62,782			$	110,749		$	127,278
Add back:
Remeasurement of acquisition-related contingent consideration			—			(3,130	)			—			(3,130	)
Non-cash interest expense on convertible notes			—			2,380				—			4,728
Tax impact of non-cash interest expense on convertible notes			—			(619	)			—			(1,229	)
Adjusted Net Income		$	51,428		$	61,413			$	110,749		$	127,647
Earnings per common share — diluted		$	1.43		$	1.77			$	3.10		$	3.61
Add back:
Remeasurement of acquisition-related contingent consideration			—			(0.09	)			—			(0.09	)
Non-cash interest expense on convertible notes			—			0.07				—			0.13
Tax impact of non-cash interest expense on convertible notes			—			(0.01	)			—			(0.03	)
Adjusted earnings per common share — diluted		$	1.43		$	1.74			$	3.10		$	3.62
Weighted average number of common shares outstanding ― diluted			35,909			35,374				35,778			35,218

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

Three Months Ended June 30, 2022 (Unaudited)		Corporate Finance & Restructuring			Forensic and Litigation Consulting			Economic Consulting			Technology			Strategic Communications			Unallocated Corporate				Total
Net income																					$	51,428
Interest income and other																						(2,994	)
Interest expense																						2,448
Income tax provision																						13,353
Operating income		$	50,935		$	15,014		$	20,439		$	4,930		$	10,633		$	(37,716	)		$	64,235
Depreciation and amortization			1,708			1,448			1,207			3,435			654			736				9,188
Amortization of intangible assets			2,307			245			—			—			185			—				2,737
Adjusted EBITDA		$	54,950		$	16,707		$	21,646		$	8,365		$	11,472		$	(36,980	)		$	76,160

Six Months Ended June 30, 2022 (Unaudited)		Corporate Finance & Restructuring			Forensic and Litigation Consulting			Economic Consulting			Technology			Strategic Communications			Unallocated Corporate				Total
Net income																					$	110,749
Interest income and other																						(2,647	)
Interest expense																						5,090
Income tax provision																						30,320
Operating income		$	100,989		$	30,556		$	40,382		$	15,173		$	25,467		$	(69,055	)		$	143,512
Depreciation and amortization			3,374			2,915			2,459			6,555			1,333			1,459				18,095
Amortization of intangible assets			4,127			493			—			—			385			—				5,005
Adjusted EBITDA		$	108,490		$	33,964		$	42,841		$	21,728		$	27,185		$	(67,596	)		$	166,612

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

Three Months Ended June 30, 2021 (Unaudited)		Corporate Finance & Restructuring				Forensic and Litigation Consulting			Economic Consulting			Technology			Strategic Communications			Unallocated Corporate				Total
Net income																						$	62,782
Interest income and other																							912
Interest expense																							5,294
Income tax provision																							14,992
Operating income		$	40,103			$	16,492		$	29,204		$	15,340		$	12,198		$	(29,357	)		$	83,980
Depreciation and amortization			1,317				1,286			1,495			3,178			558			770				8,604
Amortization of intangible assets			1,884				224			—			—			745			1				2,854
Remeasurement of acquisition-related contingent consideration			(3,130	)			—			—			—			—			—				(3,130	)
Adjusted EBITDA		$	40,174			$	18,002		$	30,699		$	18,518		$	13,501		$	(28,586	)		$	92,308
Six Months Ended June 30, 2021 (Unaudited)		Corporate Finance & Restructuring				Forensic and Litigation Consulting			Economic Consulting			Technology			Strategic Communications			Unallocated Corporate				Total
Net income																						$	127,278
Interest income and other																							(122	)
Interest expense																							10,091
Income tax provision																							35,239
Operating income		$	74,402			$	44,498		$	54,436		$	33,899		$	21,318		$	(56,067	)		$	172,486
Depreciation and amortization			2,570				2,538			2,842			6,217			1,097			1,501				16,765
Amortization of intangible assets			3,771				398			—			—			1,484			2				5,655
Remeasurement of acquisition-related contingent consideration			(3,130	)			—			—			—			—			—				(3,130	)
Adjusted EBITDA		$	77,613			$	47,434		$	57,278		$	40,116		$	23,899		$	(54,564	)		$	191,776

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 June 30, 2022 (Unaudited)
Corporate Finance & Restructuring	$	277,067		$	54,950			19.8	%		62	%		$	471		1,769
Forensic and Litigation Consulting		164,248			16,707			10.2	%		56	%		$	360		1,509
Economic Consulting		164,041			21,646			13.2	%		70	%		$	477		935
Technology (1)		77,782			8,365			10.8	%		N/M			N/M			507
Strategic Communications (1)		71,854			11,472			16.0	%		N/M			N/M			877
	$	754,992		$	113,140			15.0	%								5,597
Unallocated Corporate					(36,980	)
Adjusted EBITDA				$	76,160			10.1	%
Six Months Ended June 30, 2022 (Unaudited)
Corporate Finance & Restructuring	$	530,396		$	108,490			20.5	%		62	%		$	458		1,769
Forensic and Litigation Consulting		318,144			33,964			10.7	%		56	%		$	357		1,509
Economic Consulting		330,018			42,841			13.0	%		71	%		$	476		935
Technology (1)		158,266			21,728			13.7	%		N/M			N/M			507
Strategic Communications (1)		141,788			27,185			19.2	%		N/M			N/M			877
	$	1,478,612		$	234,208			15.8	%								5,597
Unallocated Corporate					(67,596	)
Adjusted EBITDA				$	166,612			11.3	%
Three Months Ended June 30, 2021 (Unaudited)
Corporate Finance & Restructuring	$	230,971		$	40,174			17.4	%		59	%		$	456		1,632
Forensic and Litigation Consulting		150,746			18,002			11.9	%		60	%		$	344		1,399
Economic Consulting		183,306			30,699			16.7	%		75	%		$	524		884
Technology (1)		78,646			18,518			23.5	%		N/M			N/M			429
Strategic Communications (1)		67,817			13,501			19.9	%		N/M			N/M			771
	$	711,486		$	120,894			17.0	%								5,115
Unallocated Corporate					(28,586	)
Adjusted EBITDA				$	92,308			13.0	%
Six Months Ended June 30, 2021 (Unaudited)
Corporate Finance & Restructuring	$	457,174		$	77,613			17.0	%		59	%		$	456		1,632
Forensic and Litigation Consulting		301,567			47,434			15.7	%		60	%		$	350		1,399
Economic Consulting		352,579			57,278			16.2	%		75	%		$	504		884
Technology (1)		158,105			40,116			25.4	%		N/M			N/M			429
Strategic Communications (1)		128,338			23,899			18.6	%		N/M			N/M			771
	$	1,397,763		$	246,340			17.6	%								5,115
Unallocated Corporate					(54,564	)
Adjusted EBITDA				$	191,776			13.7	%

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)

	Six Months Ended June 30,
		2022				2021
	(Unaudited)
Operating activities
Net income	$	110,749			$	127,278
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		18,095				16,765
Amortization and impairment of intangible assets		5,005				5,655
Acquisition-related contingent consideration		133				(1,130	)
Provision for expected credit losses		8,752				8,236
Share-based compensation		12,050				12,190
Amortization of debt discount and issuance costs and other		1,068				5,685
Deferred income taxes		2,713				9,802
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled		(180,737	)			(138,838	)
Notes receivable		(1,985	)			8,921
Prepaid expenses and other assets		(810	)			6,728
Accounts payable, accrued expenses and other		13,854				(13,518	)
Income taxes		(14,834	)			6,695
Accrued compensation		(147,209	)			(88,024	)
Billings in excess of services provided		4,425				(7,471	)
Net cash used in operating activities		(168,731	)			(41,026	)
Investing activities
Payments for acquisition of businesses, net of cash received		(6,698	)			(9,833	)
Purchases of property and equipment and other		(25,637	)			(27,696	)
Net cash used in investing activities		(32,335	)			(37,529	)
Financing activities
Borrowings under revolving line of credit		165,000				292,500
Repayments under revolving line of credit		(165,000	)			(192,500	)
Purchase and retirement of common stock		(3,098	)			(46,133	)
Share-based compensation tax withholdings and other		(14,827	)			(7,475	)
Payments for business acquisition liabilities		(4,161	)			(7,496	)
Deposits and other		4,887				602
Net cash provided by (used in) financing activities		(17,199	)			39,498
Effect of exchange rate changes on cash and cash equivalents		(20,490	)			979
Net decrease in cash and cash equivalents		(238,755	)			(38,078	)
Cash and cash equivalents, beginning of period		494,485				294,953
Cash and cash equivalents, end of period	$	255,730			$	256,875

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

	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Net cash provided by (used in) operating activities	$	35,047			$	125,558			$	(168,731	)		$	(41,026	)
Purchases of property and equipment		(13,028	)			(19,724	)			(25,635	)			(27,725	)
Free Cash Flow	$	22,019			$	105,834			$	(194,366	)		$	(68,751	)

 

FAQ

What were FTI Consulting's second quarter 2022 revenues?

FTI Consulting reported second quarter 2022 revenues of $755.0 million.

How did FTI Consulting's EPS perform in the second quarter of 2022?

The EPS for the second quarter of 2022 was $1.43, down 19% from the prior year.

What is FTI Consulting's guidance for 2022 revenue?

FTI Consulting reaffirmed its 2022 revenue guidance to be between $2.920 billion and $3.045 billion.

What were the main factors impacting FTI Consulting's net income in Q2 2022?

Net income decreased due to higher selling, general and administrative expenses and increased compensation costs.