FTI Consulting, Inc. (FCN)

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FTI Consulting (FCN)

Q4 2012 Earnings Call

February 28, 2013 9:00 am ET


Mollie Hawkes - Assistant Vice President of Strategic Communications

Jack B. Dunn - Chief Executive Officer, President and Director

Roger D. Carlile - Chief Financial Officer and Executive Vice President

Dennis J. Shaughnessy - Executive Chairman

David G. Bannister - Executive Vice President and Chairman of the North American Region


Timothy McHugh - William Blair & Company L.L.C., Research Division

Frank Atkins - SunTrust Robinson Humphrey, Inc., Research Division

Daniel R. Leben - Robert W. Baird & Co. Incorporated, Research Division

William Sutherland - Northland Capital Markets, Research Division

Ato Garrett - Deutsche Bank AG, Research Division

David Gold - Sidoti & Company, LLC

Randle G. Reece - Avondale Partners, LLC, Research Division



Good day, and welcome to the FTI Consulting Fourth Quarter and Full Year 2012 Earnings Conference Call. As a reminder, today's call is being recorded. Now for opening remarks and introductions, I would like to turn the conference over to Ms. Mollie Hawkes of FTI Consulting. Please go ahead, ma'am.

Mollie Hawkes

Good morning. Welcome to the FTI Consulting conference call to discuss the company's fourth quarter and full year 2012 results as reported this morning. Management will begin with formal remarks, after which we'll 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 involve risks and uncertainties. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, future revenues, future results and performance expectations, plans or intentions related to financial performance, acquisitions, business trends and other information or other matters that are 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 the earnings press release issued this morning, a copy of which is available on our website at www.fticonsulting.com, as well as other disclosures under the heading of Risk Factors and Forward-looking Information in our most recent Form 10-K and in our other 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 and will not be updated.

During the call, we will discuss certain non-GAAP financial measures such as adjusted EBITDA, adjusted segment EBITDA and adjusted earnings per share. For a discussion of these non-GAAP financial measures, as well as our reconciliation of these non-GAAP financial measures to the most recently comparable gap measures, investors should review the press release we issued this morning.

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

Jack B. Dunn

Thank you, Mollie, and thank you and welcome to everyone for joining us today. With me on the call from FTI are Daniel Shaughnessy, our Chairman; Roger Carlile, our Chief Financial Officer; and David Bannister, our chairman of North America.

This morning we announced our fourth quarter and year-end 2012 results. By now, I hope all of you have had a chance to review them. If not, as Mollie said, they can be found at www.fticonsulting.com for your convenient reference.

For the quarter, revenues increased 2% to a fourth quarter record of $399.3 million. Adjusted earnings per share were $0.67 and adjusted EBITDA was $68.1 million or 17% of revenues. Cash collections were at record levels, even significantly exceeding our record revenues for the quarter.

For the year, revenues increased 1% to $1.58 billion compared to $1.57 billion in the prior-year period. Adjusted earnings per share were $230 million and adjusted EBITDA was $251 million or 16% of revenues.

Most importantly, I think, the quarterly results set the stage for the launch of our 31st year and it has become our custom rather than regurgitate the press release. We'll briefly give a few thoughts on what we believe are the key takeaways from the quarter and the year, turn it over to Roger to discuss some of the financial events that we had in the fourth quarter, and then most importantly, turn it over to you for your questions.

Increasingly, as we grow from a collection of great professionals and gold standard practices into one firm, the keys to that growth will be our ability to operate globally and respond with industry expertise. In short, we need to be able to respond to hot markets with solutions wherever they occur. There is no greater demonstration of this than in our fourth quarter.

From a geographic perspective, we realized revenue increases in each of our geographic regions. In Latin America, revenues grew 8% year-over-year. Revenues were driven by another strong quarter from the Forensic and Litigation Consulting team in South America, particularly in Brazil, where our construction industry practice saw a strong growth, as Brazil's government recognized the urgent need to improve the country's infrastructure.

The 2016 Olympics and 2014 World Cup will happen in a country where only 14% of roads are paved and the, World Economic Forum ranks Brazil's quality of infrastructure 104 out of 142 countries surveyed. Looking ahead, Brazil's urgent infrastructure need should provide ample opportunities for FTI Consulting.

Over the next 2 years, the Brazilian government will spend $80 billion or 1% of GDP a year on infrastructure as part of its growth acceleration program. We also saw nearly a 150% year-over-year improvement in Mexico that was largely driven by contributions from our Forensic and Litigation segment.

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