Second Quarter Revenue of $337.7 Million, Operating Income of $67.3 Million, EBITDA of $77.6 Million and Diluted EPS of $0.66 All Set New Highs
Reaffirms Guidance
WEST PALM BEACH, Fla., Aug. 6 /PRNewswire-FirstCall/ -- FTI Consulting
(NYSE: FCN), the global business advisory firm dedicated to helping
organizations protect and enhance their enterprise value, today reported its
financial results for the second quarter and six months ended June 30, 2008.
Second Quarter Results
For the second quarter of 2008 revenue increased 40.9 percent to a record
$337.7 million compared to $239.7 million in the prior year period. Operating
income increased 54.0 percent to $67.3 million compared to $43.7 million in
the prior year period. Diluted earnings per common share increased 24.0
percent to $0.66 compared to $0.53 in the prior year period, despite a 23.7
percent increase in weighted average shares outstanding and the benefit from a
one-time tax benefit in the prior year period that increased diluted earnings
per common share by $0.03. Operating income before depreciation and
amortization of intangible assets, plus litigation settlements ('EBITDA')
increased 53.0 percent to $77.6 million compared to $50.7 million in the prior
year period, and the EBITDA margin improved 190 basis points to 23.0 percent
of revenue compared to 21.1 percent of revenue in the prior year period.
Commenting on the quarter, Jack Dunn, FTI's president and chief executive
officer, said, 'The second quarter was another outstanding period for FTI
across the key dimensions of our business. We generated record revenue and
profits and higher margins compared to last year. As importantly, we made
significant strides in the execution of our strategy, bringing an expanding
range of capabilities to our clients on a global basis.'
Mr. Dunn continued, 'Our outstanding growth and profitability in the
quarter reflect a volatile economic environment that continues to be a driver
of demand for our services. The impact of global credit constraints continues
to spread, driving increased demand from clients to preserve their
organizations' business results, wealth and reputations and enhance their
competitive positions during these challenging times. This demand, combined
with the leadership positions enjoyed by our business segments, fostered
organic revenue growth of 25 percent, with strong momentum in our
restructuring, economic and strategic communication segments. Technology once
again had outstanding results, and grew over 50% in the quarter.'
Mr. Dunn added, 'We are continuing to see the fruits of our investments in
global markets. Approximately 20 percent of our revenue in the quarter came
from outside the United States, up from approximately 15 percent a year ago as
a function of continued growth in existing international operations plus
contributions from the acquisitions we made this year in Europe, Asia and
Latin America.'
For the first half of the year, the Company generated operating cash flow
of $57.0 million, up over $75 million from the same period last year. The
Company's tax rate for the second quarter of 2008 was 39.6 percent compared to
33.3 percent a year ago when the Company recorded a benefit due to
implementation of its international tax strategy. At the end of the quarter,
total debt outstanding was $567.9 million and no amounts were outstanding
under the Company's line of credit.
As of June 30, 2008, total headcount was 3,144, of which 2,434 represented
revenue-generating professionals. Utilization of revenue-generating personnel
and average rate per hour metrics are presented in the accompanying tables for
those business segments for which the metrics continue to be relevant.
Second Quarter Business Segment Results
Technology
Revenue in the Technology segment in the second quarter increased 50.3
percent to $56.3 million from $37.4 million in the prior year period. Segment
EBITDA increased 49.6 percent to $21.2 million, or 37.7 percent of segment
revenue, from $14.2 million, or 37.9 percent of segment revenue, in the prior
year period. The strong performance in the quarter was driven by continued
success of the segment's software-as-a-service model, especially its ability
to manage extremely high processing volumes. Demand continued to be strong
from large matters in the pharmaceutical industry, Antitrust Second Requests
and from financial services companies for interpretation of complex financial
and transactional data and financial systems investigations. After the end of
the quarter, the Company also completed the acquisition of Attenex
Corporation, a leading eDiscovery software provider and entered into a
strategic partnership with Endeca Technologies, Inc., an information access
software company.
Corporate Finance/Restructuring
Revenue in the Corporate Finance/Restructuring segment increased 52.6
percent to $96.1 million from $63.0 million in the prior year period. Segment
EBITDA increased 77.8 percent to $29.6 million, or 30.8 percent of segment
revenue, compared to $16.7 million, or 26.4 percent of segment revenue, in the
prior year period. The segment continued to experience a high level of
restructuring activity in industries impacted by the global credit crisis such
as the automotive, sub-prime mortgage, monoline insurer, financial institution
and real estate/homebuilding/construction markets. As credit issues continue
to spread, and the global economy appears to be weakening, the segment is
seeing growing demand, and additional industries are being affected included
consumer products and retail. The healthcare practice was also strong,
especially for turnaround, consulting and restructuring services. Momentum in
the segment's UK operation continued to build. Profitability improved due to
leverage from higher revenues and an increase in success fees.
Economic Consulting
Revenue in the Economic Consulting segment increased 22.2 percent to $53.8
million from $44.0 million in the prior year period. Segment EBITDA increased
7.1 percent to $14.0 million, or 26.0 percent of segment revenue, from $13.1
million, or 29.7 percent of segment revenue, in the prior year period. The
market for strategic M&A was strong across financial services, hospitals,
airlines and industrial companies. In addition, the segment began to see an
increasing number of engagements related to the sub-prime and credit crisis,
and the Network Industries Strategies practice experienced an increase in
railroad commercial litigation and regulatory work as a result of a more
predictable regulatory environment.
Strategic Communications
Revenue in the Strategic Communications segment increased 48.0 percent to
$62.2 million from $42.0 million in the prior year period. Segment EBITDA
increased 50.0 percent to $16.4 million, or 26.4 percent of segment revenue,
from $11.0 million, or 26.1 percent of revenue, in the prior year period. The
revenue increase was due to businesses acquired over the past year and strong
organic growth. While equity capital market activity was slow, solid growth
in the core U.K. and U.S. businesses was driven by M&A and crisis and issues
management projects with both retained and new clients. This growth was
augmented by excellent performances in Asia, Australia and the Middle East as
well as rising momentum in acquired businesses and significant M&A completion
fees.
Forensic and Litigation Consulting
Revenue in the Forensic and Litigation Consulting segment increased 30.1
percent to $69.3 million from $53.3 million in the prior year period. Segment
EBITDA increased 18.5 percent to $15.7 million, or 22.7 percent of segment
revenue, from $13.3 million, or 24.9 percent of segment revenue, in the prior
year period. Revenue increased in the quarter due to contributions from
acquisitions, sustained activity in Foreign Corrupt Practices Act
investigations, strong activity in regulated industries such as insurance,
healthcare and pharmaceuticals, and an accelerating number of cases in the
segment's intellectual property practice. Margins in the quarter were affected
by somewhat lower utilization as well as integration costs from the two U.K.
acquisitions.
2008 Guidance Update
Based on current market conditions, the Company is maintaining its
previously announced revenue guidance of $1.30 billion to $1.375 billion.
Diluted earnings per share are also expected to be in the range previously
provided of $2.50 to $2.63. Third quarter earnings are expected to be reduced
by $0.02 to $0.04 due to certain acquisition and amortization expenses. In
addition, the costs, time and effort resulting from a contemplated transaction
separately announced today relating to the Company's technology practice may
have some effect on second half earnings.
Second Quarter Conference Call
FTI will hold a conference call for analysts and investors to discuss
second quarter financial results at 9:00 a.m. Eastern time on Wednesday,
August 6, 2008. 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,
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 more than 3,000
employees located in most major business centers in the world, we work closely
with clients every day to anticipate, illuminate, and overcome complex
business challenges in areas such as investigations, litigation, mergers and
acquisitions, regulatory issues, reputation management and restructuring.
More information can be found at www.fticonsulting.com.
Note: We define EBITDA as operating income before depreciation and
amortization of intangible assets plus litigation settlements. We use EBITDA
in evaluating financial performance. Although EBITDA is not a measure of
financial condition or performance determined in accordance with GAAP we
believe that it can be a useful operating performance measure for evaluating
our results of operation 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
EBITDA to evaluate and compare the operating performance of our segments and
it is one of the primary measures used to determine employee bonuses.
