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FTI Consulting Reports Fourth-Quarter and Full-Year 2014 Results
Last update: 19/02/2015 7:30:04 am
FTI Consulting Reports Fourth Quarter and Full Year 2014 Results
-- Fourth Quarter Revenues of $425.2 Million; Full Year Revenues of $1.76 Billion
-- Fourth Quarter Adjusted EPS of $0.04; Full Year Adjusted EPS of $1.64
-- Full Year 2015 Adjusted EPS Guidance Range Between $1.95 and $2.20
WASHINGTON, Feb. 18, 2015 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN) (the "Company"), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today released its financial results for the fourth quarter and full year ended December 31, 2014.
For the quarter, revenues increased 2.2 percent to $425.2 million compared to $416.0 million in the prior year quarter. Fully diluted earnings per share ("EPS") were $0.02 compared to fully diluted loss per share of ($0.18) in the prior year quarter. Fourth quarter EPS included a non-cash income tax reserve on a deferred tax asset of $4.6 million related to the deductibility of future net operating losses in the Company's Australian business and a special charge of $1.6 million related to the departure of an executive, which reduced EPS by $0.11 and $0.02, respectively. Fourth quarter 2013 EPS included $27.6 million of termination expenses related to the departure of former senior executives, which reduced EPS by $0.41. Adjusted fully diluted earnings per share ("Adjusted EPS") were $0.04 and Adjusted EBITDA was $36.1 million, or 8.5 percent of revenues, compared to Adjusted EPS of $0.39 and Adjusted EBITDA of $47.7 million, or 11.5 percent of revenues, in the prior year quarter.
For the full year, revenues increased 6.3 percent to $1.76 billion compared to $1.65 billion in the prior year. EPS were $1.44 and included $16.3 million of special charges compared to the prior year fully diluted loss per share of ($0.27), which included a goodwill impairment charge and special charges of $83.8 million and $38.4 million, respectively. Full year Adjusted EPS were $1.64 and Adjusted EBITDA was $210.6 million, or 12.0 percent of revenues, compared to Adjusted EPS of $2.09 and Adjusted EBITDA of $245.6 million, or 14.9 percent of revenues, in the prior year.
Adjusted EPS, Adjusted EBITDA and Adjusted Segment EBITDA are non-GAAP measures defined elsewhere in this press release and are reconciled to GAAP measures in the financial tables that accompany this press release.
Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, "Notwithstanding our disappointment in the fourth quarter, we are making solid progress towards getting to where we need to be to meet the 2015 and 2016 targets we have outlined. There is a lot of work ahead of us, both at the corporate level and in each of our businesses, but the progress we have made reinforces my enthusiasm about where we can take the business in 2015 and beyond."
Cash and Capital Allocation
Net cash provided by operating activities for the full year 2014 was $135.4 million compared to $193.3 million in the prior year. Cash and cash equivalents were $283.7 million at December 31, 2014. In 2014, the Company spent $23.5 million on acquisitions.
Fourth Quarter Segment Results
Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 0.3 percent to $93.1 million in the quarter compared to $92.8 million in the prior year quarter. Growth in non-distressed engagements in North America and transaction advisory and tax practices in the Europe, Middle East and Africa ("EMEA") region, was partially offset by declines in the Asia Pacific and North America bankruptcy and restructuring practices. Adjusted Segment EBITDA was $9.9 million, or 10.6 percent of segment revenues, compared to $10.9 million, or 11.7 percent of segment revenues, in the prior year quarter. Adjusted Segment EBITDA margin was impacted unfavorably by a decline in higher margin global bankruptcy and restructuring activity, lower bill rates in the segment's North America and EMEA regions and higher severance costs.
Economic Consulting
Revenues in the Economic Consulting segment declined 1.5 percent to $106.5 million in the quarter compared to $108.1 million in the prior year quarter. Revenues declined organically by 2.5 percent due to a negative impact of 1.0 percent from foreign currency translation ("FX") and lower demand for the segment's antitrust practice compared to strong performance in the prior year quarter. Adjusted Segment EBITDA was $9.8 million, or 9.2 percent of segment revenues, compared to $22.0 million, or 20.3 percent of segment revenues, in the prior year quarter. Adjusted Segment EBITDA margin was impacted unfavorably by increased compensation expense related to extensions of employment contracts entered into with certain key senior client-service professionals, a significant increase in state income tax equalization obligation and increased bad debt expense.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased 5.6 percent to $121.1 million in the quarter compared to $114.7 million in the prior year quarter. Revenues grew organically by 2.8 percent due to higher demand in the segment's North America and EMEA investigations and North America and Latin America construction solutions practices, which was partially offset by lower success fees and lower demand in the health solutions practice. Adjusted Segment EBITDA was $19.4 million, or 16.1 percent of segment revenues, compared to $17.6 million, or 15.3 percent of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to strong utilization in the global investigations practice and lower bonus expense compared to the prior year quarter, which was partially offset by lower utilization and success fees in the health solutions practice.
Technology
Revenues in the Technology segment increased 8.6 percent to $58.2 million in the quarter compared to $53.6 million in the prior year quarter. The increase in revenues was due to higher services revenue primarily related to complex global investigations. Adjusted Segment EBITDA was $13.3 million, or 22.8 percent of segment revenues, compared to $14.7 million, or 27.4 percent of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was due to an increase in the mix of lower margin services, higher research and development expenses and corporate allocations in support of operations.
Strategic Communications
Revenues in the Strategic Communications segment decreased 1.2 percent to $46.3 million in the quarter compared to $46.9 million in the prior year quarter, which included a 2.9 percent unfavorable impact from FX. Excluding FX, revenues increased 1.7 percent due to a project-related success fee. Adjusted Segment EBITDA was $7.4 million, or 16.0 percent of segment revenues, compared to $5.9 million, or 12.6 percent of segment revenues, in the prior year quarter. Adjusted Segment EBITDA margin was positively impacted by higher project income and reduced billable headcount resulting from cost savings activities initiated in 2014.
2015 Guidance
The Company estimates that revenues for 2015 will be between $1.80 billion and $1.90 billion and Adjusted EPS will be between $1.95 and $2.20. This guidance assumes no acquisitions.
Fourth Quarter and Full Year 2014 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss fourth quarter and full year financial results at 9:00 a.m. Eastern Time on February 19, 2014. 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 at www.fticonsulting.com.
The Company has posted updated Historical Financial and Operating Data reflecting fourth quarter 2014 and full year 2014 financial results on the investor relations section of its website at 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 4,400 employees located in 26 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management, strategic communications and restructuring. The company generated $1.76 billion in revenues during fiscal year 2014. More information can be found at www.fticonsulting.com.
Use of Non-GAAP Measures
Note: We define Segment Operating Income (loss) as a segment's share of consolidated operating income (loss). We define Total Segment Operating Income (loss) as the total of Segment Operating Income (loss) for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted EBITDA as consolidated net income (loss) 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 and loss on early extinguishment of debt. 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 define Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We define Adjusted Segment EBITDA margin as Adjusted Segment EBITDA as a percentage of a segment's share of revenue. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator
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FTI Consulting, Inc. is a global business advisory firm. The Company operates in five segments: Corporate Finance/Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology, and Strategic Communications. It assists the clients in addressing a range of business challenges, such as restructuring (including bankruptcy), financing and credit issues and indebtedness, interim business management, forensic accounting and litigation matters, mergers and acquisitions, antitrust and competition matters, electronic discovery, or e-discovery, management and retrieval of electronically stored information, reputation management and strategic communications. As of December 31, 2010, it had operations across 33 United Sates cities and 22 foreign countries. In April 2010, the Company acquired Baker Tilly Hong Kong Business Recovery Ltd. In August 2010, the Company acquired FS Asia Advisory Limited.
FTI Consulting, Inc. is a global business advisory firm. The Company operates in five segments: Corporate Finance/Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology, and Strategic Communications. It assists the clients in addressing a range of business challenges, such as restructuring (including bankruptcy), financing and credit issues and indebtedness, interim business management, forensic accounting and litigation matters, mergers and acquisitions, antitrust and competition matters, electronic discovery, or e-discovery, management and retrieval of electronically stored information, reputation management and strategic communications. As of December 31, 2010, it had operations across 33 United Sates cities and 22 foreign countries. In April 2010, the Company acquired Baker Tilly Hong Kong Business Recovery Ltd. In August 2010, the Company acquired FS Asia Advisory Limited.
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