WASHINGTON, July 27, 2017 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN) today released its financial results for the quarter ended June 30, 2017.
For the quarter, revenues of $444.7 million declined $15.4 million, or 3.4%, compared to revenues of $460.1 million in the prior year quarter. Excluding the estimated negative impact of foreign currency translation (“FX”), revenues decreased $7.4 million, or 1.6%, compared to the prior year quarter. The decrease in revenues was primarily driven by lower demand for services within the Corporate Finance & Restructuring segment.
Second quarter 2017 net loss of $5.2 million compared to net income of $26.5 million in the prior year quarter. Net loss included a special charge of $30.1 million, which included $16.1 million of severance costs related to the termination of approximately 4% of the Company’s more than 4,700 employees, $12.4 million of lease curtailment charges related to the Company’s Washington, D.C., office relocation and $1.6 million of costs related to the disposal or closing of several small international offices. The Company expects that these actions will result in cost savings of approximately $23.0 million over the remainder of 2017. Adjusted EBITDA, which excludes the special charge, was $40.8 million, or 9.2% of revenues, compared to $56.6 million, or 12.3% of revenues in the prior year quarter. The decline in Adjusted EBITDA was due to lower revenues.
On a GAAP basis, second quarter 2017 fully diluted loss per share was ($0.13) compared to fully diluted earnings per share (“EPS”) of $0.64 in the prior year quarter. In total, the second quarter 2017 special charge reduced EPS by $0.52. EPS in the prior year quarter included a $1.7 million special charge, which reduced EPS by $0.02. Adjusted EPS, which excludes special charges, was $0.40 compared to $0.66 in the prior year quarter.
Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, said, “We had a slow start to 2017. Despite this, we continue to expect a stronger second half of the year. This expectation is supported by the strong sequential improvement compared to the first quarter and significant new wins in our Corporate Finance & Restructuring segment; continued investment where we have confidence we can grow; and the disciplined actions we have taken to align costs with demand and reduce overhead. We believe this combination of sustained investment, disciplined cost control and the strength of our franchise will translate into second half financials that more closely reflect the underlying strength of our businesses.”
Cash Position and Capital Allocation
Net cash provided by operating activities of $10.9 million for the three months ended June 30, 2017, compared to $73.7 million for the three months ended June 30, 2016. The year-over-year difference in operating cash flows is due to lower cash receipts resulting from lower revenues and slower collections and increased compensation payments due to annual increases in salaries, increased headcount and an additional US payroll.
During the quarter, the Company repurchased 1,887,033 shares of its common stock at an average price of $34.74 for a total of $65.6 million. As of June 30, 2017, $78.9 million remained available under the Company’s $200.0 million share repurchase authorization.
Total debt of $485.0 million at June 30, 2017, compared to $500.0 million at June 30, 2016. Cash and cash equivalents were $138.5 million at June 30, 2017, compared to $182.7 million at June 30, 2016. Total debt, net of cash, of $346.5 million at June 30, 2017, compared to $317.3 million at June 30, 2016.
Second Quarter 2017 Segment Results
Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment decreased $14.7 million, or 11.1%, to $117.5 million in the quarter compared to $132.1 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues decreased $12.5 million, or 9.4%, compared to the prior year quarter. The decrease in revenues was primarily due to lower demand for restructuring services globally, which was partially offset by higher success fees. Adjusted Segment EBITDA was $20.0 million, or 17.1% of segment revenues, compared to $32.0 million, or 24.2% of segment revenues, in the prior year quarter. The decline in Adjusted Segment EBITDA was primarily due to lower revenues.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased $6.8 million, or 5.7%, to $111.4 million in the quarter compared to $118.2 million in the prior year quarter. The decrease in revenues was primarily due to lower demand for global investigations and health solutions services, which was partially offset by higher demand for construction solutions services. Adjusted Segment EBITDA was $13.0 million, or 11.7% of segment revenues, compared to $15.2 million, or 12.9% of segment revenues, in the prior year quarter. The decline in Adjusted Segment EBITDA was primarily due to lower revenues, which was partially offset by lower compensation resulting from headcount reductions taken in the health solutions practice in 2016.
Economic Consulting
Revenues in the Economic Consulting segment increased $6.0 million, or 5.1%, to $124.0 million in the quarter compared to $118.0 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $8.6 million, or 7.2%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for antitrust services in North America. Adjusted Segment EBITDA was $15.5 million, or 12.5% of segment revenues, compared to $15.4 million, or 13.0% of segment revenues, in the prior year quarter. Adjusted Segment EBITDA was consistent with the prior year quarter, as the increase in revenues was offset by increased compensation costs related to an increase in billable headcount.
Technology
Revenues in the Technology segment increased $3.7 million, or 8.8%, to $45.6 million in the quarter compared to $41.9 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues increased $4.2 million, or 10.1%, compared to the prior year quarter. The increase in revenues was primarily driven by higher consulting demand related to merger and acquisition related “second request” services, which was partially offset by reduced hosting revenue. Adjusted Segment EBITDA was $5.4 million, or 11.9% of segment revenues, compared to $5.0 million, or 12.0% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was a result of higher revenues, which was largely offset by higher cost of service and investment in future revenue generating initiatives.
Strategic Communications
Revenues in the Strategic Communications segment decreased $3.7 million, or 7.4%, to $46.2 million in the quarter compared to $49.9 million in the prior year quarter. Excluding the estimated negative impact of FX, revenues decreased $2.0 million, or 4.0%, compared to the prior year quarter. The decrease in revenues was primarily due to a decline in project-based revenues in North America, particularly for financial communications and corporate reputation services. Adjusted Segment EBITDA was $4.9 million, or 10.5% of segment revenues, compared to $8.4 million, or 16.9% of segment revenues, in the prior year quarter. The decrease in Adjusted Segment EBITDA was due to lower revenues.
2017 Guidance
The Company reaffirms its full year 2017 revenue guidance of between $1.775 billion and $1.875 billion. Given the special charge in the second quarter of 2017, the Company is revising its full year 2017 GAAP EPS guidance. The Company now estimates that full year 2017 GAAP EPS will range between $1.37 and $1.67. This compares to the previous GAAP EPS guidance range of between $1.75 and $2.10. The Company is maintaining its full year 2017 Adjusted EPS guidance of between $1.90 and $2.20. The variance between GAAP EPS and Adjusted EPS guidance for full year 2017 is related to the second quarter 2017 special charge of $30.1 million, or $0.52 per share, resulting from headcount reductions, the Company’s Washington, D.C., office relocation and other costs related to the disposal or closure of several small international offices.
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 4,600 employees located in 28 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 $1.81 billion in revenues during fiscal year 2016. More information can be found at www.fticonsulting.com.
