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FTI Consulting Reports Record Third Quarter 2022 Financial Results

  • Third Quarter 2022 Revenues of $775.9 Million, Up 10.5% Compared to $702.2 Million in Prior Year Quarter; Excluding Estimated Negative Impact of FX, Third Quarter 2022 Revenues Up 14.8% Compared to Prior Year Quarter
  • Third Quarter 2022 EPS of $2.15, Up 9.7% Compared to $1.96 in Prior Year Quarter; Third Quarter 2022 Adjusted EPS of $2.15, Up 6.4% Compared to $2.02 in Prior Year Quarter
  • Company Narrows 2022 Guidance Ranges for Revenues and EPS

WASHINGTON, Oct. 27, 2022 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) today released financial results for the quarter ended September 30, 2022.

Third quarter 2022 revenues of $775.9 million increased $73.6 million, or 10.5%, compared to revenues of $702.2 million in the prior year quarter. Excluding the estimated negative impact from foreign currency translation ("FX"), revenues increased $103.7 million, or 14.8%, compared to the prior year quarter. Acquisition-related revenues contributed $3.1 million during the quarter. The increase in revenues was due to higher realization, which includes the recognition of revenues previously deferred, and higher demand across all business segments. Net income of $77.3 million compared to $69.5 million in the prior year quarter. The increase in net income was primarily due to higher revenues, a lower effective tax rate, an increase in FX remeasurement gains and lower interest expense, which was partially offset by an increase in compensation, including the impact of a 12.4% increase in total headcount, and higher selling, general and administrative ("SG&A") expenses compared to the prior year quarter. The lower effective tax rate was primarily related to a combined $8.3 million benefit from the use of foreign tax credits and a deferred tax benefit arising from an intracompany intellectual property license agreement. Adjusted EBITDA of $99.0 million, or 12.8% of revenues, compared to $100.3 million, or 14.3% of revenues, in the prior year quarter.

Third quarter 2022 earnings per diluted share ("EPS") of $2.15 compared to $1.96 in the prior year quarter. Third quarter 2021 EPS included $2.4 million of non-cash interest expense related to the Company's 2.0% convertible senior notes due 2023 ("2023 Convertible Notes"), which decreased EPS by $0.06. Third quarter 2022 Adjusted EPS of $2.15 compared to Adjusted EPS of $2.02 in the prior year quarter. Third quarter 2021 Adjusted EPS excluded the non-cash interest expense related to the 2023 Convertible Notes. The aforementioned $8.3 million tax benefit increased third quarter 2022 EPS and Adjusted EPS by $0.23.

Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, commented, "Our record results this quarter reflect the combination of solid underlying business performance in aggregate, together with some one-time benefits. As always, our focus remains on driving the powerful multi-year trajectory our firm has been on by continuing to invest behind our strong positions and the ambitions of our people."

Cash Position and Capital Allocation

Net cash provided by operating activities of $128.3 million for the quarter ended September 30, 2022 compared to $196.9 million for the quarter ended September 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, as well as a decrease in cash collections compared to the same period in the prior year.

Cash and cash equivalents of $327.0 million at September 30, 2022 compared to $342.5 million at September 30, 2021 and $255.7 million at June 30, 2022. FX translation unfavorably impacted cash and cash equivalents at September 30, 2022 compared to September 30, 2021 and June 30, 2022. Total debt, net of cash, of ($10.8) million at September 30, 2022 compared to ($1.3) million at September 30, 2021 and $60.5 million at June 30, 2022. The sequential decrease in total debt, net of cash, was due to an increase in cash and cash equivalents.

During the quarter, the Company repurchased 127,791 shares of its common stock at an average price per share of $159.87 for a total cost of $20.4 million. As of September 30, 2022, approximately $143.5 million remained available for common stock repurchases under the Company’s stock repurchase authorization.

Third Quarter 2022 Segment Results

Corporate Finance & Restructuring
Revenues in the Corporate Finance & Restructuring segment increased $15.0 million, or 6.0%, to $265.4 million in the quarter compared to $250.3 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $24.1 million, or 9.6%, compared to the prior year quarter. Acquisition-related revenues contributed $3.1 million in the quarter. The increase in revenues was primarily due to higher demand for restructuring and business transformation services, which was partially offset by lower demand for transactions services and a decline in success fees compared to the prior year quarter. Adjusted Segment EBITDA of $51.5 million, or 19.4% of segment revenues, compared to $55.6 million, or 22.2% of segment revenues, in the prior year quarter. Adjusted Segment EBITDA declined compared to the prior year quarter, as the increase in revenues was more than offset by higher compensation, which includes the impact of an 11.5% increase in billable headcount, and higher SG&A expenses.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased $14.7 million, or 10.1%, to $159.9 million in the quarter compared to $145.3 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $18.4 million, or 12.7%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for health solutions and investigations services and higher realization, which was partially offset by lower demand for disputes services compared to the prior year quarter. Adjusted Segment EBITDA of $18.2 million, or 11.4% of segment revenues, compared to $16.6 million, or 11.4% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues, which was partially offset by an increase in compensation, which includes the impact of a 9.3% increase in billable headcount, and higher SG&A expenses compared to the prior year quarter.

Economic Consulting
Revenues in the Economic Consulting segment increased $20.6 million, or 12.0%, to $193.2 million in the quarter compared to $172.5 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $30.1 million, or 17.4%, compared to the prior year quarter. The increase in revenues was due to higher realization, primarily from the recognition of revenues previously deferred and higher demand for non-merger and acquisition ("M&A")-related antitrust services, which was partially offset by lower demand for M&A-related antitrust services compared to the prior year quarter. Adjusted Segment EBITDA of $32.9 million, or 17.0% of segment revenues, compared to $29.9 million, or 17.3% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues, which was partially offset by higher compensation expenses, primarily related to an increase in variable compensation, and the impact of a 7.9% increase in billable headcount compared to the prior year quarter.

Technology
Revenues in the Technology segment increased $20.3 million, or 31.3%, to $84.9 million in the quarter compared to $64.7 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $22.6 million, or 34.9%, compared to the prior year quarter. The increase in revenues was primarily due to higher demand for M&A-related "second request" and investigations services compared to the prior year quarter. Adjusted Segment EBITDA of $13.2 million, or 15.6% of segment revenues, compared to $7.8 million, or 12.1% of segment revenues, in the prior year quarter. The increase in Adjusted Segment EBITDA was primarily due to higher revenues, which was partially offset by an increase in compensation, which includes the impact of a 23.7% increase in billable headcount and an increase in contractors, as well as higher SG&A expenses compared to the prior year quarter.

Strategic Communications
Revenues in the Strategic Communications segment increased $3.0 million, or 4.3%, to $72.4 million in the quarter compared to $69.4 million in the prior year quarter. Excluding the estimated negative impact from FX, revenues increased $8.5 million, or 12.2%, compared to the prior year quarter. The increase in revenues was primarily due to increased demand for corporate reputation services compared to the prior year quarter. Adjusted Segment EBITDA of $12.9 million, or 17.9% of segment revenues, compared to $15.5 million, or 22.3% of segment revenues, in the prior year quarter. Adjusted Segment EBITDA declined compared to the prior year quarter, as the increase in revenues was more than offset by higher compensation, which includes the impact of a 16.4% increase in billable headcount, and higher SG&A expenses.

2022 Guidance
The Company is narrowing its full year 2022 guidance ranges for revenues and EPS. The Company now expects revenues to range between $2.965 billion and $3.025 billion, which compares to the previous range of between $2.920 billion and $3.045 billion. The Company now expects EPS to range between $6.40 and $6.80, which compares to the previous range of between $6.40 and $7.20. The Company does not currently expect Adjusted EPS to differ from EPS.

Third Quarter 2022 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss third quarter 2022 financial results at 9:00 a.m. Eastern Time on Thursday, October 27, 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 7,500 employees located in 31 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.

FINANCIAL TABLES FOLLOW


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

  September 30, December 31,
   2022   2021 
  (Unaudited)  
Assets    
Current assets    
Cash and cash equivalents $327,047  $494,485 
Accounts receivable, net  947,993   754,120 
Current portion of notes receivable  27,198   30,256 
Prepaid expenses and other current assets  91,187   91,166 
Total current assets  1,393,425   1,370,027 
Property and equipment, net  144,713   142,163 
Operating lease assets  195,339   215,995 
Goodwill  1,212,541   1,232,791 
Intangible assets, net  25,673   31,990 
Notes receivable, net  54,144   53,539 
Other assets  56,259   54,404 
Total assets $3,082,094  $3,100,909 
Liabilities and Stockholders' Equity    
Current liabilities    
Accounts payable, accrued expenses and other $175,491  $165,025 
Accrued compensation  422,985   507,556 
Billings in excess of services provided  50,523   45,535 
Total current liabilities  648,999   718,116 
Long-term debt, net  314,756   297,158 
Noncurrent operating lease liabilities  213,449   236,026 
Deferred income taxes  161,486   170,612 
Other liabilities  98,821   95,676 
Total liabilities  1,437,511   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 34,422 (2022) and 34,333 (2021)
  344   343 
Additional paid-in capital     13,662 
Retained earnings  1,868,424   1,698,156 
Accumulated other comprehensive loss  (224,185)  (128,840)
Total stockholders' equity  1,644,583   1,583,321 
Total liabilities and stockholders' equity $3,082,094  $3,100,909 


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

 Three Months Ended
September 30,
  2022   2021 
 (Unaudited)
Revenues$775,865  $702,228 
Operating expenses   
Direct cost of revenues 526,654   472,235 
Selling, general and administrative expenses 159,186   138,600 
Amortization of intangible assets 2,315   2,860 
  688,155   613,695 
Operating income 87,710   88,533 
Other income (expense)   
Interest income and other 7,771   5,175 
Interest expense (2,378)  (5,073)
  5,393   102 
Income before income tax provision 93,103   88,635 
Income tax provision 15,836   19,155 
Net income$77,267  $69,480 
Earnings per common share ― basic$2.29  $2.07 
Weighted average common shares outstanding ― basic 33,812   33,495 
Earnings per common share ― diluted$2.15  $1.96 
Weighted average common shares outstanding ― diluted 35,918   35,362 
Other comprehensive loss, net of tax   
Foreign currency translation adjustments, net of tax expense of $0$(48,475) $(18,607)
Total other comprehensive loss, net of tax (48,475)  (18,607)
Comprehensive income$28,792  $50,873 


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

 Nine Months Ended
September 30,
  2022   2021 
 (Unaudited)
Revenues$2,254,477  $2,099,991 
Operating expenses   
Direct cost of revenues 1,539,838   1,431,381 
Selling, general and administrative expenses 476,097   399,076 
Amortization of intangible assets 7,320   8,515 
  2,023,255   1,838,972 
Operating income 231,222   261,019 
Other income (expense)   
Interest income and other 10,418   5,297 
Interest expense (7,468)  (15,164)
  2,950   (9,867)
Income before income tax provision 234,172   251,152 
Income tax provision 46,156   54,394 
Net income$188,016  $196,758 
Earnings per common share ― basic$5.57  $5.88 
Weighted average common shares outstanding ― basic 33,741   33,478 
Earnings per common share ― diluted$5.25  $5.58 
Weighted average common shares outstanding ― diluted 35,825   35,265 
Other comprehensive loss, net of tax   
Foreign currency translation adjustments, net of tax expense of $0$(95,345) $(18,042)
Total other comprehensive loss, net of tax (95,345)  (18,042)
Comprehensive income$92,671  $178,716 


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

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
   2022  2021   2022  2021 
  (Unaudited) (Unaudited)
Net income $77,267 $69,480  $188,016 $196,758 
Add back:        
Remeasurement of acquisition-related contingent
  consideration
         (3,130)
Non-cash interest expense on convertible notes    2,412     7,141 
Tax impact of non-cash interest expense on
  convertible notes
    (627)    (1,857)
Adjusted Net Income $77,267 $71,265  $188,016 $198,912 
Earnings per common share — diluted $2.15 $1.96  $5.25 $5.58 
Add back:        
Remeasurement of acquisition-related contingent
  consideration
         (0.09)
Non-cash interest expense on convertible notes    0.08     0.20 
Tax impact of non-cash interest expense on
  convertible notes
    (0.02)    (0.05)
Adjusted earnings per common share — diluted $2.15 $2.02  $5.25 $5.64 
Weighted average number of common shares
  outstanding ― diluted
  35,918  35,362   35,825  35,265 


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

Three Months Ended September 30, 2022
(Unaudited)
 Corporate
Finance &
Restructuring
 Forensic and
Litigation
Consulting
 Economic
Consulting
 Technology  Strategic
Communications
 Unallocated
Corporate
 Total
Net income             $77,267 
Interest income and other              (7,771)
Interest expense              2,378 
Income tax provision              15,836 
Operating income  $47,948 $16,570 $31,674 $9,833 $12,155 $(30,470) $87,710 
Depreciation and amortization  1,675  1,350  1,239  3,380  629  676   8,949 
Amortization of intangible assets  1,909  242      163  1   2,315 
Adjusted EBITDA $51,532 $18,162 $32,913 $13,213 $12,947 $(29,793) $98,974 


Nine Months Ended September 30, 2022
(Unaudited)
 Corporate
Finance &
Restructuring
 Forensic and
Litigation
Consulting
 Economic
Consulting
 Technology Strategic
Communications
 Unallocated
Corporate
 Total
Net income             $188,016 
Interest income and other              (10,418)
Interest expense              7,468 
Income tax provision              46,156 
Operating income $148,936 $47,126 $72,056 $25,005 $37,623 $(99,524) $231,222 
Depreciation and amortization  5,049  4,265  3,698  9,935  1,962  2,136   27,045 
Amortization of intangible assets  6,036  735      548  1   7,320 
Adjusted EBITDA $160,021 $52,126 $75,754 $34,940 $40,133 $(97,387) $265,587 


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

Three Months Ended September 30, 2021
(Unaudited)
 Corporate
Finance &
Restructuring
 Forensic and
Litigation
Consulting
 Economic
Consulting
 Technology Strategic
Communications
 Unallocated
Corporate
 Total
Net income             $69,480 
Interest income and other              (5,175)
Interest expense              5,073 
Income tax provision              19,155 
Operating income $52,316  $15,101 $28,455 $4,416 $14,219 $(25,974) $88,533 
Depreciation and amortization  1,446   1,270  1,462  3,419  533  737   8,867 
Amortization of intangible assets  1,873   249      737  1   2,860 
Adjusted EBITDA $55,635  $16,620 $29,917 $7,835 $15,489 $(25,236) $100,260 
               
Nine Months Ended September 30, 2021
(Unaudited)
 Corporate
Finance &
Restructuring
 Forensic and
Litigation
Consulting
 Economic
Consulting
 Technology Strategic
Communications
 Unallocated
Corporate
 Total
Net income             $196,758 
Interest income and other              (5,297)
Interest expense              15,164 
Income tax provision              54,394 
Operating income $126,718  $59,599 $82,891 $38,315 $35,537 $(82,041) $261,019 
Depreciation and amortization  4,016   3,808  4,304  9,636  1,630  2,237   25,631 
Amortization of intangible assets  5,644   647      2,221  3   8,515 
Remeasurement of acquisition-related
  contingent consideration
  (3,130)             (3,130)
Adjusted EBITDA $133,248  $64,054 $87,195 $47,951 $39,388 $(79,801) $292,035 


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 September 30, 2022 (Unaudited)           
Corporate Finance & Restructuring$265,370 $51,532  19.4% 61%  $455 1,900
Forensic and Litigation Consulting 159,948  18,162  11.4% 53%  $368 1,614
Economic Consulting 193,183  32,913  17.0% 67%  $579 998
Technology (1) 84,915  13,213  15.6% N/M  N/M 548
Strategic Communications (1) 72,449  12,947  17.9% N/M  N/M 951
 $775,865 $128,767  16.6%     6,011
Unallocated Corporate   (29,793)        
Adjusted EBITDA   $98,974  12.8%      
            
Nine Months Ended September 30, 2022
(Unaudited)
           
Corporate Finance & Restructuring$795,766 $160,021  20.1% 62%  $455 1,900
Forensic and Litigation Consulting 478,092  52,126  10.9% 55%  $360 1,614
Economic Consulting 523,201  75,754  14.5% 70%  $506 998
Technology (1) 243,181  34,940  14.4% N/M  N/M 548
Strategic Communications (1) 214,237  40,133  18.7% N/M  N/M 951
 $2,254,477 $362,974  16.1%     6,011
Unallocated Corporate   (97,387)        
Adjusted EBITDA   $265,587  11.8%      
            
Three Months Ended September 30, 2021 (Unaudited)           
Corporate Finance & Restructuring$250,321 $55,635  22.2% 62%  $465 1,704
Forensic and Litigation Consulting 145,264  16,620  11.4% 54%  $355 1,476
Economic Consulting 172,543  29,917  17.3% 68%  $539 925
Technology (1) 64,657  7,835  12.1% N/M  N/M 443
Strategic Communications (1) 69,443  15,489  22.3% N/M  N/M 817
 $702,228 $125,496  17.9%     5,365
Unallocated Corporate   (25,236)        
Adjusted EBITDA   $100,260  14.3%      
            
Nine Months Ended September 30, 2021
(Unaudited)
           
Corporate Finance & Restructuring$707,495 $133,248  18.8% 60%  $457 1,704
Forensic and Litigation Consulting 446,831  64,054  14.3% 58%  $350 1,476
Economic Consulting 525,122  87,195  16.6% 73%  $510 925
Technology (1) 222,762  47,951  21.5% N/M  N/M 443
Strategic Communications (1) 197,781  39,388  19.9% N/M  N/M 817
 $2,099,991 $371,836  17.7%     5,365
Unallocated Corporate   (79,801)        
Adjusted EBITDA   $292,035  13.9%      
            

___________________________

N/MNot 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)

 Nine Months Ended
September 30,
  2022   2021 
 (Unaudited)
Operating activities   
Net income$188,016  $196,758 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:   
Depreciation and amortization 27,045   25,631 
Amortization and impairment of intangible assets 7,320   8,515 
Acquisition-related contingent consideration 863   (1,014)
Provision for expected credit losses 13,101   14,816 
Share-based compensation 18,491   17,150 
Amortization of debt discount and issuance costs and other 1,588   8,551 
Deferred income taxes (9,140)  5,128 
Changes in operating assets and liabilities, net of effects from acquisitions:   
Accounts receivable, billed and unbilled (251,280)  (115,544)
Notes receivable 838   4,392 
Prepaid expenses and other assets (3,066)  1,145 
Accounts payable, accrued expenses and other 21,936   (22,745)
Income taxes 3,940   18,025 
Accrued compensation (67,763)  2,803 
Billings in excess of services provided 7,672   (7,691)
Net cash provided by (used in) operating activities (40,439)  155,920 
Investing activities   
Payments for acquisition of businesses, net of cash received (6,742)  (9,833)
Purchases of property and equipment and other (38,935)  (52,441)
Net cash used in investing activities (45,677)  (62,274)
Financing activities   
Borrowings under revolving line of credit 165,000   377,500 
Repayments under revolving line of credit (165,000)  (352,500)
Purchase and retirement of common stock (23,530)  (46,133)
Share-based compensation tax withholdings and other (15,663)  (8,277)
Payments for business acquisition liabilities (4,848)  (7,496)
Deposits and other 7,092   1,928 
Net cash used in financing activities (36,949)  (34,978)
Effect of exchange rate changes on cash and cash equivalents (44,373)  (11,094)
Net increase (decrease) in cash and cash equivalents (167,438)  47,574 
Cash and cash equivalents, beginning of period 494,485   294,953 
Cash and cash equivalents, end of period$327,047  $342,527 


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

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2022   2021   2022   2021 
Net cash provided by (used in) operating activities$128,292  $196,946  $(40,439) $155,920 
Purchases of property and equipment (13,316)  (24,745)  (38,951)  (52,470)
Free Cash Flow$114,976  $172,201  $(79,390) $103,450 


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


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