Also Announces Pending Acquisition of U.S. Business Recovery Services Division
of PricewaterhouseCoopers and Exploration of Sale of FTI's Applied Sciences
Division
ANNAPOLIS, Md., July 24 /PRNewswire-FirstCall/ -- FTI Consulting, Inc.
(NYSE: FCN), the premier national provider of turnaround, bankruptcy and
litigation-related consulting services, today reported record results for the
second quarter ended June 30, 2002. Continued strong performance by the
Financial Consulting Division led the company to its thirteenth straight
quarter of record results.
In a separate release, FTI also today announced that it has agreed to
acquire the domestic Business Recovery Division ("BRS") of
PricewaterhouseCoopers, headquartered in New York City. Further, FTI is also
exploring the sale of its Applied Sciences Division and is presently in
negotiations with a group led by its divisional president.
Second-quarter results
Revenues for the second quarter of 2002 increased 21.1 percent to
$51.1 million from $42.2 million in the second quarter of last year. Income
from operations grew 42.2 percent to $11.8 million from $8.3 million in the
comparable quarter last year. Net income was 59.5 percent higher than last
year, growing to $6.7 million from $4.2 million, and earnings per share grew
40.9 percent to $0.31 on a fully diluted basis compared with $0.22 last year;
the increase in earnings per share would have been 19.2 percent if FAS 142,
Goodwill and Other Intangible Assets, had been in effect in the second quarter
of 2001. Earnings before interest, taxes, depreciation and amortization
(EBITDA) grew 24.8 percent to $13.1 million from $10.5 million in the 2001
period.
Financial Consulting achieved record results during the period as revenues
grew 39.3 percent to $33.3 million from $23.9 million in the first quarter of
last year and EBITDA increased 45.3 percent to $13.8 million compared with
$9.5 million in the prior-year period. These results included the start up of
several new practice areas during the quarter, including economic litigation
and structured settlement services, as well as the results of the new practice
areas initiated during the first quarter.
Applied Sciences posted revenues for the quarter of $11.3 million, an
increase of 4.6 percent from $10.8 million in the first quarter of last year.
EBITDA for the division declined 21.1 percent, to $1.5 million from $1.9
million in the prior-year period. The corresponding reduction in margins
arose primarily from an increased cost structure incurred to support the level
of business earlier in the year that did not continue into the second quarter.
Efforts to improve short-term profitability are expected to be successful and
a return to normal margins appears possible by the end of this year.
Litigation Consulting revenues declined 13.3 percent to $6.5 million from
$7.5 million in last year's comparable quarter. EBITDA declined 40.0 percent
to $0.9 million from $1.5 million on a comparable basis, however, results for
the second quarter of 2002 were nearly identical to the first quarter and
continue to reflect the impact of steps taken to maintain the profitability of
that business.
Stewart Kahn, president and chief operating officer of FTI, commented, "It
is particularly important to note that some of our new practice areas have
contributed significantly to the growth in Financial Consulting compared to
the prior year. The financial consulting practices other than 'turnaround and
bankruptcy' grew their revenues and EBITDA by more than 50 percent."
Commenting on the company's record performance, Jack Dunn, FTI's chairman
and chief executive officer, stated, "This quarter's results reaffirm our
decision four years ago to become a first class consulting company. Combined
with the success of our new initiatives and our news on the acquisition front,
I think the signs are that we are well on the way to achieving that goal."
Six-Month Results
For the six months, revenues increased 21.8 percent to $101.8 million,
compared with $83.6 million in the prior year. Net income was $13.3 million,
an increase of 66.3 percent over the $8.0 million in the prior year. Earnings
per diluted share were $0.62 compared with earnings per diluted share of $0.43
for the 2001 period, or a 44.2 percent increase.
Earnings before interest, taxes and depreciation and amortization
("EBITDA") increased by 25 percent to $26.0 million for the first six months
of 2002, compared with $20.8 million in the first six months of 2001. Cash
flow provided by operations for the six months was $13.0 million compared with
a $10.0 million provision by operations in the prior year.
Financial Consulting's revenues for the first six months of 2002 were
$64.7 million compared with $48.1 million last year, an increase of 34.5
percent. Segment profit was $26.3 million compared with $19.2 million last
year, an increase of 37.0 percent. For Applied Sciences, revenues were
$24.1 million compared with $21.0 million last year, a 14.8 percent increase,
while segment profit was $4.1 million compared with $3.6 million last year.
For Litigation Consulting, revenues were $13.0 million compared with
$14.5 million in the prior year, and segment profit was $1.8 million compared
with $2.5 million in the prior year.
Third-Quarter, Full-Year Outlook
The company firmly believes that its stated goals of generating 15 percent
to 20 percent or greater organic growth in revenues and 20 percent or greater
organic growth in earnings per share for the full year 2002 are achievable,
and that the general level of business activity experienced in the first half
of 2002 appears to be continuing into the second half. The net effect of the
acquisition of BRS and the possible sale of the Applied Sciences division is
expected to be immediately and significantly accretive to earnings per share
in 2002 and 2003 on the assumption that the acquisition will be completed late
in the third quarter of 2002, and any disposition of Applied Sciences
completed during the fourth quarter of 2002.
Second-Quarter Conference Call
FTI will hold a conference call to discuss second-quarter results,
management's outlook for the rest of 2002 and the pending acquisition at 11:00
a.m. EDT on Thursday, July 25, 2002. The call can be accessed live and will
be available for replay over the Internet via http://www.vcall.com.
About FTI Consulting
FTI Consulting is a multi-disciplined consulting firm with leading
practices in the areas of bankruptcy and financial restructuring, litigation
consulting and engineering/scientific investigation. Modern corporations, as
well as those who advise and invest in them, face growing challenges on every
front. From a proliferation of "bet-the-company" litigation to increasingly
complicated relationships with lenders and investors in an ever-changing
global economy, U.S. companies are turning more and more to outside experts
and consultants to meet these complex issues. FTI is dedicated to helping
corporations, their advisors, lawyers, lenders and investors meet these
challenges by providing a broad array of the highest quality professional
practices from a single source.
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. 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, and
other risks described in the company's filings with the Securities and
Exchange Commission.
FTI is on the Internet at http://www.fticonsulting.com .
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(in thousands of dollars, except share and per-share data)
Three Months Ended
06/30/2002 06/30/2001
(unaudited)
Revenues $51,075 $42,154
Direct cost of revenues 25,928 21,674
Selling, general and administrative
expenses 13,304 10,935
Amortization of goodwill - 1,255
Total costs and expenses 39,232 33,864
Income from operations 11,843 8,290
Interest expense, net 602 1,147
Income before income taxes 11,241 7,143
Income taxes 4,553 2,967
Net income $6,688 $4,176
Earnings per common share, basic $0.33 $0.24
Weighted average shares for basic(A) 20,176 17,228
Earnings per common share, diluted $0.31 $0.22
Weighted average shares for
diluted(A) 21,647 19,202
EBITDA $13,059 $10,484
(A) Weighted average shares have been adjusted for all periods to reflect
the three-for-two stock split effected as a stock dividend paid to
shareholders of record on January 2, 2002.
FTI CONSULTING, INC.
REVENUES AND EBITDA BY DIVISION
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(in thousands of dollars)
Three Months Ended
06/30/2002 06/30/2001
(unaudited)
Revenues
Financial Consulting $33,293 $23,873
Applied Sciences 11,285 10,790
Litigation Consulting 6,497 7,491
Total Revenues $51,075 $42,154
EBITDA, before corporate charges
Financial Consulting $13,797 $9,518
Applied Sciences 1,490 1,855
Litigation Consulting 940 1,502
Total EBITDA, before corporate
charges $16,227 $12,875
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(in thousands of dollars, except share and per-share data)
Six Months Ended
06/30/2002 06/30/2001
(unaudited)
Revenues $101,755 $83,629
Direct cost of revenues 51,386 43,483
Selling, general and administrative
expenses 26,690 21,240
Amortization of goodwill - 2,507
Total costs and expenses 78,076 67,230
Income from operations 23,679 16,399
Interest expense, net 1,340 2,588
Income before income taxes 22,339 13,811
Income taxes 9,047 5,801
Net income $13,292 $8,010
Earnings per common share, basic $0.67 $0.48
Weighted average shares for basic(A) 19,981 16,584
Earnings per common share, diluted $0.62 $0.43
Weighted average shares for
diluted(A) 21,501 18,584
EBITDA $25,980 $20,761
(A) Weighted average shares have been adjusted for all periods to reflect
the three-for-two stock split effected as a stock dividend paid to
shareholders of record on January 2, 2002.
FTI CONSULTING, INC.
REVENUES AND EBITDA BY DIVISION
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(in thousands of dollars)
Six Months Ended
06/30/2002 06/30/2001
(unaudited)
Revenues
Financial Consulting $64,673 $48,086
Applied Sciences 24,058 21,000
Litigation Consulting 13,024 14,543
Total Revenues $101,755 $83,629
EBITDA, before corporate charges
Financial Consulting $26,259 $19,209
Applied Sciences 4,078 3,597
Litigation Consulting 1,796 2,460
Total EBITDA, before corporate
charges $32,133 $25,266
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(in thousands of dollars)
June 30, June 30,
2002 2001
(unaudited) (unaudited)
Operating activities
Net income $13,292 $8,010
Adjustment to reconcile net income to
net cash provided by operating
activities:
Depreciation and other amortization 2,301 1,854
Amortization of goodwill - 2,507
Income tax benefit from stock option
exercises 7,027 2,392
Other 1,476 25
Changes in operating assets and
liabilities:
Accounts receivable, billed and
unbilled (9,149) (3,705)
Income taxes, current and deferred 896 1,043
Accrued compensation expense (1,389) (1,132)
Other current assets and liabilities (1,472) (997)
Net cash provided by operating
activities 12,982 9,997
Investing activities
Purchase of property and equipment (4,154) (1,629)
Acquisition of subsidiaries and
contingent payments (3,362) (713)
Change in other assets (383) 202
Net cash used in investing activities (7,899) (2,140)
Financing activities
Issuance of common shares and
exercise of stock options 5,462 6,564
Repayments on long-term debt (2,166) (15,167)
Payment of financing fees 1 (16)
Net cash provided by (used in)
financing activities 3,297 (8,619)
Net increase (decrease) in cash and
cash equivalents 8,380 (762)
Cash and cash equivalents at
beginning of period 12,856 3,235
Cash and cash equivalents at end of
period $21,236 $2,473
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND JUNE 30, 2002
(in thousands of dollars, except share data)
December 31, June 30,
2001 2002
(audited) (unaudited)
Assets
Current assets
Cash and cash equivalents $12,856 $21,236
Accounts receivable, less
allowances 20,435 25,213
Unbilled receivable, less
allowances 12,154 15,875
Other current assets 5,476 4,649
Total current assets 50,921 66,973
Property and equipment, net 12,253 14,423
Goodwill, net 90,156 93,969
Other assets 1,023 1,298
Total Assets $154,353 $176,663
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and other accrued
expenses $17,692 $15,008
Deferred income taxes 130 130
Current portion of long-term debt 4,333 4,333
Total current liabilities 22,155 19,471
Long-term debt, less current portion 23,833 21,667
Deferred income taxes and other
liabilities 3,229 3,375
Stockholders' equity
Preferred stock, $.01 par value;
5,000,000 shares
authorized, none outstanding - -
Common stock, $.01 par value;
45,000,000 shares
authorized; 19,590,938 and
20,540,102 shares issued
and outstanding in 2001 and 2002,
respectively 196 205
Additional paid-in capital 75,416 88,907
Unearned Compensation (568) (465)
Retained earnings 31,036 44,328
Accumulated other comprehensive
income (loss) (944) (825)
Total stockholders' equity 105,136 132,150
Total Liabilities and Stockholders'
Equity $154,353 $176,663
SOURCE FTI Consulting, Inc.
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Related links:
http://www.fticonsulting.com
CONTACT:
Jack Dunn, Chairman & CEO of FTI Consulting,
+1-410-224-1483, or General Inquiries, Marilyn Windsor,
+1-702-515-1260, Analyst Inquiries, Lisa Fortuna,
+1-312-640-6779, Media Inquiries, Tim Grace, +1-312-640-6667, all
of FRB Weber Shandwick
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