Annapolis, MD
-
October 31, 2005
FTI CONSULTING, INC. ANNOUNCES RECORD QUARTERLY REVENUES OF $133.2 MILLION
Third Quarter Revenues up 27.6 Percent;
Income from Operations up 27.2 Percent and EPS up 19.2 Percent before One-Time Charges
Updates Outlook for Remainder of 2005
ANNAPOLIS, MD, October 31, 2005—FTI Consulting, Inc. (NYSE: FCN), a premier provider of problem-solving consulting and technology services to major corporations, financial institutions and law firms, today reported its results for the third quarter of 2005. FTI has also filed today its Form 10-Q with the SEC for the third quarter of 2005.
VIEW FINANCIAL TABLES
Third-Quarter 2005 Results
For the quarter, revenues were a quarterly record of $133.2 million, an increase of 27.6 percent from $104.4 million for the third quarter of 2004. Income from operations before one-time charges rose 27.2 percent to $26.2 million from $20.6 million in the comparable quarter last year. Earnings per share increased 19.2 percent to $0.31 on a diluted basis before one-time charges compared with $0.26 last year.
Commenting on the quarter, Jack Dunn, FTI’s President and Chief Executive Officer said: “We are pleased to report that our third quarter this year produced all-time record quarterly revenues and strong growth in earnings before one time charges. Traditionally our slowest quarter, this year we saw strong performance in our forensic accounting and financial investigations practice related, among other things, to insurance and hedge fund investigations, as well as increased economic consulting in the telecom and energy areas related to merger and acquisition activity on the one hand and litigation and strategy on the other.
“In anticipation of these efforts continuing, during the quarter we invested almost $1.0 million in compensation and recruiting fees to grow our headcount at the short-term expense of earnings per share. During the quarter we added 78 revenue producing professionals, including 11 Senior Managing Directors, and affiliated with three new high-profile PhD economists. We would expect the return from these people to increase over the next several quarters.
“Looking forward we expect forensic accounting and financial investigations activity to remain strong, telecom activity to shift into a strategic and litigation phase as companies adjust to new realities in the post mega-merger environment, and the energy business to continue to be vibrant as large energy sensitive companies such as producers, utilities and consumers face the challenges of a higher price environment. In addition, our forensic/litigation/technology segment should see impact from Hurricane Katrina related work and our announced roles in such high profile restructuring matters as Asarco and Northwest Airlines, as well as continuing work in Delphi should have a positive impact on results for the corporate finance/restructuring practice in the fourth quarter.”
As previously reported, earnings for the third quarter of 2005 were impacted by several one-time charges totaling approximately $0.04 per share. These charges included a non-cash charge of approximately $1.7 million, or approximately $0.03 per diluted share, for the write-off of deferred financing costs associated with the early extinguishment of the company’s $142.5 million term loan in connections with its $350.0 million debt offering in August 2005, and approximately $900,000, or approximately $0.01 per diluted share in connection with its sub-lease for 30 months of a portion of its New York City facility.
Earnings from operations before interest, taxes, depreciation and amortization before one-time charges (Adjusted EBITDA, see note below) increased 28.9 percent to $31.2 million, 23.4 percent of revenues, compared with EBITDA of $24.2 million, or 23.2 percent of revenues, in the third quarter of the prior year.
Cash flow provided by operations for the third quarter of 2005 was $27.5 million compared with $29.7 million provided in the third quarter of 2004, a decrease of 7.4 percent. Total long-term debt at September 30, 2005 was $350.0 million. No amounts were outstanding under the company’s revolving credit agreement. The company repurchased 5.2 million shares of common stock during the third quarter in connection with its $350.0 million debt offerings. At September 30, 2005, the remaining amount authorized under the company’s current share repurchase program was approximately $40 million.
Total headcount at September 30, 2005 was 1,291, and revenue-generating headcount was 966. Utilization of revenue-generating personnel measurable by billable hours was approximately 76 percent for the third quarter, and average rate per hour for the quarter was approximately $331. Utilization was relatively strong in the third quarter at all staff levels, the mix of which contributed to the modest decline in the average rate per hour.
Third-Quarter 2005 Business Segment Results
Forensic/Litigation/Technology
Revenues increased 25.5 percent to $55.2 million in the third quarter from $44.0 million last year. Approximately $19.6 million in revenues were generated by the company’s combined technology operations as compared to $11.3 million in the prior year. Segment EBITDA was $16.8 million, or 30.4 percent of revenues, an increase of 43.6 percent from $11.7 million in the prior year, or 26.6 percent of revenues.
Corporate Finance/Restructuring
Revenues were $49.6 million for the third quarter, a 22.8 percent increase from $40.4 million recorded in the third quarter of 2004. Segment EBITDA was $14.1 million, or 28.4 percent of revenues, an increase of 4.4 percent from $13.5 million in the prior year, or 33.4 percent of revenues.
Economic Consulting
Revenues in the economic consulting segment were $28.4 million in the third quarter of 2005, increasing 42.0 percent from $20.0 million last year. Segment EBITDA was $7.2 million, or 25.4 percent of revenues, an increase of 111.8 percent from $3.4 million, or 16.8 percent of revenues, in the prior year.
Nine-Month Results
For the nine months of 2005, revenues were $373.7 million, an increase of 16.0 percent compared with $322.1 million for the first nine months of 2004. Income from operations before one-time charges rose 19.8 percent to $77.4 million from $64.6 million last year. Earnings per share before one-time charges increased 15.7 percent to $0.93 on a diluted basis compared with $0.83 for the same period last year.
Earnings from operations before interest, taxes, depreciation and amortization before one-time charges (Adjusted EBITDA, see note below) increased 18.0 percent to $89.0 million, or 23.8 percent of revenues, compared with EBITDA of $75.4 million, or 23.4 percent of revenues, in the first nine months of the prior year. Cash flow provided by operations for the first nine months of 2005 increased to $43.5 million, compared with $30.2 million in the first nine months of 2004.
Forensic/Litigation/Technology revenues increased 17.2 percent to $156.9 million in the first nine months of 2005 from $133.9 million in the first nine months of 2004. Approximately $50.9 million in revenues were generated by our combined technology operations as compared to $32.3 million in the prior year. Segment EBITDA was $50.6 million, or 32.2 percent of revenues, an increase of 30.7 percent from $38.7 million, or 28.9 percent of revenues, in the prior year.
Corporate Finance/Restructuring revenues were $135.4 million for the first nine months of 2005, an increase of 9.8 percent from $123.3 million recorded in the first nine months of 2004. Segment EBITDA was $41.3 million, or 30.5 percent of revenues, an increase of 6.4 percent from $38.8 million, or 31.5 percent of revenues, in the prior year.
Economic Consulting revenues were $81.4 million in the first nine months of 2005, increasing 25.2 percent from $65.0 million in the first nine months of 2004. Segment EBITDA was $19.9 million, or 24.4 percent of revenues, an increase of 41.1 percent from $14.1 million, or 21.7 percent of revenues, in the prior year.
Outlook for Remainder of 2005
Based on results for the first nine months of the year, FTI’s outlook for the remainder of 2005 is as follows: revenues are anticipated to range from $503.0 million to $512.0 million for the full year; earnings per diluted share are expected to range from $1.28 to $1.35 before one-time charges; EBITDA is expected to range from $121.0 million to $126.0 million and cash flow from operations is expected to range between $75.0 million and $85.0 million. To achieve the high-ends of these ranges will require the company to earn certain success fees in the fourth quarter, the timing of which is often difficult to predict.
The company believes its average bill rate per hour will range from $337 to $340 and utilization will range from approximately 80 to 81 percent (on a 2,032 hours base), respectively. The updated outlook by segment for 2005 reflects, among other things, some shift in segment results due to the continued success of FTI’s cross-selling and cross-utilization programs. While such programs may impact individual segment results, they have no effect on total enterprise revenues and profitability. A table reflecting the outlook for each of FTI’s three business segments is attached.
Third-Quarter Conference Call
FTI will hold a conference call to discuss third-quarter results and management’s outlook for the remainder of 2005 at 11:00 a.m. Eastern time on Tuesday, November 1, 2005. The call can be accessed live and will be available for replay over the Internet by logging onto the company’s website, www.fticonsulting.com, for 90 days.
About FTI Consulting
FTI is a premier provider of problem-solving consulting and technology services to major corporations, financial institutions and law firms when confronting critical issues that shape their future and the future of their clients, such as financial and operational improvement, major litigation, mergers and acquisitions and regulatory issues. Strategically located in 24 of the major US cities, London and Melbourne, FTI's total workforce of approximately 1,300 employees includes numerous PhDs, MBAs, CPAs, CIRAs and CFEs, who are committed to delivering the highest level of service to clients. Additional information is available at: www.fticonsulting.com.
Note: Although EBITDA and Adjusted EBITDA (excluding one-time charges) are not measures of financial condition or performance determined in accordance with GAAP, FTI believes that it is a useful operating performance measure for evaluating its results of operations from period to period and as compared to its 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 its industry. FTI uses EBITDA to evaluate and compare the operating performance of its segments and it is one of the primary measures used to determine employee bonuses. FTI also uses EBITDA to value businesses it acquires or anticipates acquiring. A reconciliation of Adjusted EBITDA to net earnings and EBITDA is included in the accompanying tables to this press release. Adjusted EBITDA and EBITDA are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same. In addition, because the calculation of EBITDA in the maintenance covenants contained in FTI’s credit facilities is based on accounting policies in use, consistently applied from the time the indebtedness was incurred, Adjusted EBITDA and EBITDA as supplemental financial measures are also indicative of the company’s capacity to service debt and thereby provides additional useful information to investors regarding the company’s financial condition and results of operations. Adjusted EBITDA and EBITDA for purposes of those covenants are not calculated in the same manner as they are calculated in the accompanying table.
This press release includes "forward-looking" statements that involve uncertainties and risks. There can be no assurance that actual results will not differ from the company's expectations. The company has experienced fluctuating revenues, operating income and cash flow in some prior periods and expects this may occur from time to time in the future. As a result of these possible fluctuations, the company’s actual results may differ from our projections. Further, preliminary results are subject to normal year-end adjustments. Other factors that could cause such differences include pace and timing of additional 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 in the company's filings with the Securities and Exchange Commission. 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.
|