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FTI Consulting, Inc. Q2 2010 Earnings Call Transcript

FTI Consulting, Inc. Q2 2010 Earnings Call Transcript

FTI Consulting, Inc. (FCN)

Q2 2010 Earnings Conference Call

August 5, 2010 9:00 AM ET


Eric Boyriven – IR

Jack Dunn – President and CEO

Dominic DiNapoli – EVP and COO

Dennis Shaughnessy – Executive Chairman

David Bannister – EVP, CFO and Chief Development Officer

Roger Carlile – EVP and Chief Administrative Officer


Timothy McHugh – William Blair & Company L.L.C.

Tobey Sommer – SunTrust Robinson Humphrey Capital Markets

David Gold – Sidoti & Co

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Good day, and welcome to the FTI Consulting Second Quarter 2010 Conference Call. (Operator Instructions) For opening remarks and introductions, I’d like to turn the call over to Eric Boyriven of FD. Please go ahead, sir.

Eric Boyriven

Good morning, and welcome to the FTI Consulting Conference Call to discuss the company’s 2010 second quarter results, which were reported earlier this morning. Management will begin with formal remarks, after which we will take your questions.

Before we begin, I would like to remind everyone that this conference call may include forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934 that involves uncertainties and risks. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues, future results and performance expectations, plans or intentions, business trends and other information that is not historical, including statements regarding estimates of our future financial results.

For a discussion of risks and other factors that may cause actual results or events to differ from those contemplated by forward-looking statements, investors should review the Safe Harbor statement in this earnings press release we issued this morning, a copy of which is available on our website at, as well as the disclosures under the heading Risk Factors and Forward-Looking Information in our most recent Form 10-K and in our filings with the Securities and Exchange Commission.

Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this earnings call.

During the call, we will discuss certain non-GAAP financial measures such as EBITDA. For a discussion of these non-GAAP financial measures, as well as reconciliations of these non-GAAP financial measures to the most nearly comparable GAAP measures, investors should review the press release we issued this morning.

With these formalities out of the way, I’d like to turn the call over to Jack Dunn, President and Chief Executive Officer. Jack, please go ahead.

Jack Dunn

Thank you. Good morning and thank you for joining us.

With me on the call are Dennis Shaughnessy, our Chairman; David Bannister, our Chief Financial Officer; Dom DiNapoli, our Chief Operating Officer; and Roger Carlile, our Chief Administrative Officer.

Our results were released first thing this morning and I hope you have had a chance to review them. If not, they are available on our website at

Since we last spoke, the business climate and our view have not changed. It is our goal on this call to briefly recap our second quarter performance talk about the new acquisitions we announced last evening with a separate press release and then open it up for your questions.

As discussed on our previous calls, as a general matter pro-cyclical businesses continued to follow the trajectory of the improving economy, while a hungry high-yield market and at least temporarily sympathetic creditors continue to impact the restructuring side of our business.

In short our pro-cyclical businesses have not improved as fast as we thought in our restructuring business has declined faster.

Ironically, if we had anticipated that the same factors that would drive one, would drive the other and they have, just closer to the fulcrum of balances opposed to the wider and more volatile ends of the spectrum that usually mean good markets for us.

A good example affecting all our business is the tepid pace of recovery in the M&A markets. Despite corporate financial positions that have materially strengthened over the past few years’ strong corporate liquidity and the debt markets I spoke of, the capital remains on the sidelines waiting to be invested. The uncertainty about regulation, taxation and where valuation might be headed, have quite correctly caused decision-makers to exercise caution and delay pulling the trigger.

As I said, this dynamic has cut across virtually all our segments in the quarter impeding the antitrust work done by our competition economist, the volume antitrust second request processed by our technology segment, the number of transactions handled by our strategic communications segment in the amount of due diligence work performed by our transaction advisory group within corporate finance.

With this backdrop, let’s look at our results which are consistent with our pre-release.

Revenues were $349 million. Earnings per share were $0.52 and adjusted EBITDA $65 million or 18.8% of revenue.

We generated 49 million in operating cash for the quarter with continued strong cash collections of stronger DSO’s than during the same period last year, and we exited the quarter with approximately $123 million in cash.

Cash generation has continued strong and currently we have about 130 million on the balance sheet after buying back 336,000 of our shares during July.

With respect the segments, revenues in corporate finance restructuring were $111 million down from $134 million in the corresponding quarter a year ago. This reflects a lower overall demand for restructuring and bankruptcy services due to the factors that I mentioned.

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