ITEM 2.02. Results of Operations and Financial Condition
On July 28, 2022, FTI Consulting, Inc. ("FTI Consulting") announced financial
results for the three-months and six-months ended June 30, 2022. A copy of the
press release (including accompanying financial tables) (the "Press Release") is
attached as Exhibit 99.1 to this Current Report on Form 8-K and hereby is
incorporated by reference herein.
ITEM 7.01. Regulation FD Disclosure
In the Press Release, FTI Consulting uses information derived from consolidated
and segment financial information that may not be presented in its financial
statements or prepared in accordance with generally accepted accounting
principles in the United States ("GAAP"). Certain of these measures are
considered "non-GAAP financial measures" under rules promulgated by the
Securities and Exchange Commission. Specifically, FTI Consulting has 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
FTI Consulting has included the definitions of "Segment Operating Income" and
"Adjusted Segment EBITDA," which are financial measures presented in accordance
with GAAP, in order to more fully define the components of certain non-GAAP
financial measures. FTI Consulting evaluates the performance of its operating
segments based on Adjusted Segment EBITDA, and Segment Operating Income is a
component of the definition of Adjusted Segment EBITDA. FTI Consulting defines
"Segment Operating Income" as a segment's share of consolidated operating
income. FTI Consulting defines "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. FTI Consulting uses
Segment Operating Income for the purpose of calculating Adjusted Segment EBITDA.
FTI Consulting defines "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. FTI Consulting uses Adjusted Segment
EBITDA as a basis to internally evaluate the financial performance of its
segments because FTI Consulting believes it reflects current core operating
performance and provides an indicator of the segment's ability to generate cash.
FTI Consulting defines "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. FTI Consulting defines "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. FTI
Consulting defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of
total revenues. FTI Consulting believes that the non-GAAP financial measures,
which exclude the effects of remeasurement of acquisition-related contingent
consideration, special charges and goodwill impairment charges, when considered
together with its GAAP financial results and GAAP financial measures, provide
management and investors with a more complete understanding of FTI Consulting's
operating results, including underlying trends. In addition, EBITDA is a common
alternative measure of operating performance used by many of FTI Consulting's
competitors. It is used by investors, financial analysts, rating agencies and
others to value and compare the financial performance of companies in FTI
Consulting's industry. Therefore, FTI Consulting also believes that these
measures, considered along with corresponding GAAP financial measures, provide
management and investors with additional information for comparison of its
operating results with the operating results of other companies.
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FTI Consulting defines "Adjusted Net Income" and "Adjusted Earnings per Diluted
Share" ("Adjusted EPS"), which are non-GAAP financial measures, as net income
and earnings per diluted share, 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 gain or loss on sale of a business.
FTI Consulting uses Adjusted Net Income for the purpose of calculating Adjusted
EPS. Management of FTI Consulting uses Adjusted EPS to assess total company
operating performance on a consistent basis. FTI Consulting believes that these
non-GAAP financial measures, when considered together with its corresponding
GAAP financial results and GAAP financial measures, provides management and
investors with an additional understanding of its business operating results,
including underlying trends.
FTI Consulting defines "Free Cash Flow" as net cash provided by 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 FTI Consulting'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 FTI
Consulting's Consolidated Statements of Comprehensive Income. Reconciliations of
Non-GAAP financial measures to the most directly comparable GAAP financial
measures are included in the accompanying tables to the Press Release.
The information included herein, including Exhibit 99.1 furnished herewith,
shall not be deemed to be "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to
the liabilities of that section, nor shall it be incorporated by reference into
any filing pursuant to the Securities Act of 1933, as amended, or the Exchange
Act, regardless of any incorporation by reference language in any such filing,
except as expressly set forth by specific reference in such filing.
ITEM 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release dated July 28, 2022 of FTI Consulting, Inc.
104 The Cover Page from FTI Consulting's Current Report on Form 8-K dated
July 28, 2022, formatted in Inline XBRL
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