UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20202021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from   to                    
Commission File Number: 001-14875
 
FTI CONSULTING, INC.
(Exact Name of Registrant as Specified in its Charter)
 
  
Maryland52-1261113
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
555 12th Street NW
Washington,
DC20004
(Address of Principal Executive Offices)(Zip Code)
(202) 312-9100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueFCNNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 
ClassOutstanding at October 22, 202021, 2021
Common Stock, $0.01 par value35,661,70934,288,467



FTI CONSULTING, INC. AND SUBSIDIARIES
INDEX
 
  
Page 
   
  
 
  
 
  
 
  
 
  
 
  
  
  
 
  
  
  
  
  
  
  
 
2


PART I—FINANCIAL INFORMATION
FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
Item 1.Financial Statements
 
September 30,December 31, September 30,December 31,
20202019 20212020
(Unaudited)(Unaudited)
AssetsAssets Assets 
Current assetsCurrent assets  Current assets  
Cash and cash equivalentsCash and cash equivalents$304,658 $369,373 Cash and cash equivalents$342,527 $294,953 
Accounts receivable:
Billed receivables603,832 540,584 
Unbilled receivables482,586 418,288 
Allowance for doubtful accounts and unbilled services(323,658)(265,500)
Accounts receivable, netAccounts receivable, net762,760 693,372  Accounts receivable, net809,878 711,357 
Current portion of notes receivableCurrent portion of notes receivable34,089 35,106 Current portion of notes receivable32,823 35,253 
Prepaid expenses and other current assetsPrepaid expenses and other current assets74,223 80,810 Prepaid expenses and other current assets83,266 88,144 
Total current assetsTotal current assets1,175,730 1,178,661 Total current assets1,268,494 1,129,707 
Property and equipment, netProperty and equipment, net95,544 93,672 Property and equipment, net132,857 101,642 
Operating lease assetsOperating lease assets153,818 159,777 Operating lease assets224,961 156,645 
GoodwillGoodwill1,223,764 1,202,767 Goodwill1,234,023 1,234,879 
Other intangible assets, net43,652 38,432 
Intangible assets, netIntangible assets, net34,504 41,550 
Notes receivable, netNotes receivable, net66,078 69,033 Notes receivable, net59,123 61,121 
Other assetsOther assets35,812 40,800 Other assets52,962 51,819 
Total assetsTotal assets$2,794,398 $2,783,142 Total assets$3,006,924 $2,777,363 
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityLiabilities and Stockholders' Equity
Current liabilitiesCurrent liabilitiesCurrent liabilities
Accounts payable, accrued expenses and otherAccounts payable, accrued expenses and other$164,493 $158,936 Accounts payable, accrued expenses and other$157,794 $170,066 
Accrued compensationAccrued compensation397,147 416,903 Accrued compensation451,549 455,933 
Billings in excess of services providedBillings in excess of services provided46,621 36,698 Billings in excess of services provided36,279 44,172 
Total current liabilitiesTotal current liabilities608,261 612,537 Total current liabilities645,622 670,171 
Long-term debt, netLong-term debt, net308,454 275,609 Long-term debt, net319,355 286,131 
Noncurrent operating lease liabilitiesNoncurrent operating lease liabilities161,976 176,378 Noncurrent operating lease liabilities232,390 161,677 
Deferred income taxesDeferred income taxes150,572 151,352 Deferred income taxes168,232 158,342 
Other liabilitiesOther liabilities90,638 78,124 Other liabilities97,022 100,861 
Total liabilitiesTotal liabilities1,319,901 1,294,000 Total liabilities1,462,621 1,377,182 
Commitments and contingent liabilities (Note 11)
Commitments and contingencies (Note 11)Commitments and contingencies (Note 11)00
Stockholders' equityStockholders' equityStockholders' equity
Preferred stock, $0.01 par value; shares authorized — 5,000; NaN
outstanding
Common stock, $0.01 par value; shares authorized — 75,000;
shares issued and outstanding — 36,028 (2020) and 37,390 (2019)
360 374 
Preferred stock, $0.01 par value; shares authorized — 5,000; none
outstanding
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 — 34,295 (2021) and 34,481 (2020)
Common stock, $0.01 par value; shares authorized — 75,000; shares
issued and outstanding — 34,295 (2021) and 34,481 (2020)
343 345 
Additional paid-in capitalAdditional paid-in capital46,642 216,162 Additional paid-in capital8,490 — 
Retained earningsRetained earnings1,568,546 1,413,453 Retained earnings1,659,947 1,506,271 
Accumulated other comprehensive lossAccumulated other comprehensive loss(141,051)(140,847)Accumulated other comprehensive loss(124,477)(106,435)
Total stockholders' equityTotal stockholders' equity1,474,497 1,489,142 Total stockholders' equity1,544,303 1,400,181 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$2,794,398 $2,783,142 Total liabilities and stockholders' equity$3,006,924 $2,777,363 
 
See accompanying notes to condensed consolidated financial statements
3


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share data)
(Unaudited)
 
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
RevenuesRevenues$622,249 $593,106 $1,834,694 $1,750,499 Revenues$702,228 $622,249 $2,099,991 $1,834,694 
Operating expensesOperating expensesOperating expenses
Direct cost of revenuesDirect cost of revenues417,179 380,892 1,232,437 1,116,224 Direct cost of revenues472,235 417,179 1,431,381 1,232,437 
Selling, general and administrative expensesSelling, general and administrative expenses122,102 127,951 375,989 371,042 Selling, general and administrative expenses138,600 122,102 399,076 375,989 
Special chargesSpecial charges7,103 7,103 Special charges— 7,103 — 7,103 
Amortization of other intangible assets2,795 2,125 7,440 5,838 
Amortization of intangible assetsAmortization of intangible assets2,860 2,795 8,515 7,440 
549,179 510,968 1,622,969 1,493,104  613,695 549,179 1,838,972 1,622,969 
Operating incomeOperating income73,070 82,138 211,725 257,395 Operating income88,533 73,070 261,019 211,725 
Other income (expense)Other income (expense)    Other income (expense)    
Interest income and otherInterest income and other(3,340)2,973 3,879 5,741 Interest income and other5,175 (3,340)5,297 3,879 
Interest expenseInterest expense(5,151)(4,832)(15,169)(14,371)Interest expense(5,073)(5,151)(15,164)(15,169)
(8,491)(1,859)(11,290)(8,630) 102 (8,491)(9,867)(11,290)
Income before income tax provisionIncome before income tax provision64,579 80,279 200,435 248,765 Income before income tax provision88,635 64,579 251,152 200,435 
Income tax provisionIncome tax provision14,407 19,857 45,342 61,100 Income tax provision19,155 14,407 54,394 45,342 
Net incomeNet income$50,172 $60,422 $155,093 $187,665 Net income$69,480 $50,172 $196,758 $155,093 
Earnings per common share — basicEarnings per common share — basic$1.41 $1.65 $4.30 $5.09 Earnings per common share — basic$2.07 $1.41 $5.88 $4.30 
Earnings per common share — dilutedEarnings per common share — diluted$1.35 $1.59 $4.11 $4.92 Earnings per common share — diluted$1.96 $1.35 $5.58 $4.11 
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax
expense of $0
Foreign currency translation adjustments, net of tax
expense of $0
$21,330 $(16,633)$(204)$(16,225)
Foreign currency translation adjustments, net of tax
expense of $0
$(18,607)$21,330 $(18,042)$(204)
Total other comprehensive income (loss), net of taxTotal other comprehensive income (loss), net of tax21,330 (16,633)(204)(16,225)Total other comprehensive income (loss), net of tax(18,607)21,330 (18,042)(204)
Comprehensive incomeComprehensive income$71,502 $43,789 $154,889 $171,440 Comprehensive income$50,873 $71,502 $178,716 $154,889 
 
See accompanying notes to condensed consolidated financial statements
4


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(Unaudited)
 
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
 Accumulated
Other
Comprehensive
Loss
SharesAmountTotal Common StockAdditional
Paid-in
Capital
Retained
Earnings
 
Balance at December 31, 201937,390 $374 $216,162 $1,413,453 $(140,847)$1,489,142 
SharesAmountAdditional
Paid-in
Capital
Retained
Earnings
TotalAccumulated
Other
Comprehensive
Loss
Balance at December 31, 2020Balance at December 31, 202034,481 $345 $(106,435)
Net incomeNet income— $— $— $56,747 $— $56,747 Net income— $— $— $64,496 $— 
Other comprehensive loss:Other comprehensive loss:Other comprehensive loss:
Cumulative translation adjustmentCumulative translation adjustment— — — — (31,102)(31,102)Cumulative translation adjustment— — — — (5,242)(5,242)
Issuance of common stock in
connection with:
Issuance of common stock in
connection with:
Issuance of common stock in connection with:
Exercise of optionsExercise of options34 1,206 — — 1,207 Exercise of options12 — 434 — — 434 
Restricted share grants, less net
settled shares of 58
136 (6,768)— — (6,767)
Restricted share grants, less net
settled shares of 63
Restricted share grants, less net
settled shares of 63
157 (7,232)— — (7,231)
Stock units issued under incentive
compensation plan
Stock units issued under incentive
compensation plan
— — 2,314 — — 2,314 
Stock units issued under incentive
compensation plan
— — 2,603 — — 2,603 
Purchase and retirement of common
stock
Purchase and retirement of common
stock
(450)(5)(50,306)— — (50,311)Purchase and retirement of common stock(422)(4)(3,047)(43,082)— (46,133)
Share-based compensationShare-based compensation— — 7,454 — — 7,454 Share-based compensation— — 7,242 — — 7,242 
Balance at March 31, 202037,110 $371 $170,062 $1,470,200 $(171,949)$1,468,684 
Balance at March 31, 2021Balance at March 31, 202134,228 $342 $— $1,527,685 $(111,677)$1,416,350 
Net incomeNet income— $— $— $48,174 $— $48,174 Net income— $— $— $62,782 $— $62,782 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Cumulative translation adjustmentCumulative translation adjustment— — — — 9,568 9,568 Cumulative translation adjustment— — — — 5,807 5,807 
Issuance of common stock in
connection with:
Issuance of common stock in
connection with:
Issuance of common stock in connection
with:
Exercise of optionsExercise of options33 — 1,191 — — 1,191 Exercise of options33 1,136 — — 1,137 
Restricted share grants, less net
settled shares of 18
38 (2,155)— — (2,154)
Restricted share grants, less net
settled shares of 13
Restricted share grants, less net
settled shares of 13
21 — (1,814)— — (1,814)
Purchase and retirement of common
stock
(471)(5)(51,048)— — (51,053)
Share-based compensationShare-based compensation— — 4,693 — — 4,693 Share-based compensation— — 4,948 — — 4,948 
Balance at June 30, 202036,710 $367 $122,743 $1,518,374 $(162,381)$1,479,103 
Balance at June 30, 2021Balance at June 30, 202134,282 $343 $4,270 $1,590,467 $(105,870)$1,489,210 
Net incomeNet income— $— $— $50,172 $— $50,172 Net income— $— $— $69,480 $— $69,480 
Other comprehensive income:
Other comprehensive loss:Other comprehensive loss:
Cumulative translation adjustmentCumulative translation adjustment— — — — 21,330 21,330 Cumulative translation adjustment— — — — (18,607)(18,607)
Issuance of common stock in
connection with:
Issuance of common stock in
connection with:
Issuance of common stock in connection
with:
Exercise of optionsExercise of options43 — 1,536 — — 1,536 Exercise of options— 126 — — 126 
Restricted share grants, less net
settled shares of 2
24 — (207)— — (207)
Restricted share grants, less net
settled shares of 6
Restricted share grants, less net
settled shares of 6
— (866)— — (866)
Purchase and retirement of common
stock
(749)(7)(82,859)— — (82,866)
Share-based compensationShare-based compensation— — 5,429 — — 5,429 Share-based compensation— — 4,960 — — 4,960 
Balance at September 30, 202036,028 $360 $46,642 $1,568,546 $(141,051)$1,474,497 
Balance at September 30, 2021Balance at September 30, 202134,295 $343 $8,490 $1,659,947 $(124,477)$1,544,303 
5


Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
 Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
SharesAmountTotal Common StockRetained
Earnings
 
Balance at December 31, 201838,147 $381 $299,534 $1,196,727 $(147,817)$1,348,825 
SharesAmountAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Balance at December 31, 2019Balance at December 31, 201937,390 $374 $(140,847)$1,489,142 
Net incomeNet income— $— $56,747 $— $56,747 
Other comprehensive loss:Other comprehensive loss:
Cumulative translation adjustmentCumulative translation adjustment— — — — (31,102)(31,102)
Issuance of common stock in connection with:Issuance of common stock in connection with:
Exercise of optionsExercise of options34 1,206 — — 1,207 
Restricted share grants, less net
settled shares of 58
Restricted share grants, less net
settled shares of 58
136 (6,768)— — (6,767)
Stock units issued under incentive
compensation plan
Stock units issued under incentive
compensation plan
— — 2,314 — — 2,314 
Purchase and retirement of common stockPurchase and retirement of common stock(450)(5)(50,306)— — (50,311)
Share-based compensationShare-based compensation— — 7,454 — — 7,454 
Balance at March 31, 2020Balance at March 31, 202037,110 $371 $170,062 $1,470,200 $(171,949)$1,468,684 
Net incomeNet income— $— $— $62,645 $— $62,645 Net income— $— $— $48,174 $— $48,174 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Cumulative translation adjustmentCumulative translation adjustment— — — — 5,223 5,223 Cumulative translation adjustment— — — — 9,568 9,568 
Issuance of common stock in
connection with:
Issuance of common stock in
connection with:
Issuance of common stock in connection
with:
Exercise of optionsExercise of options55 2,211 — — 2,212 Exercise of options33 — 1,191 — — 1,191 
Restricted share grants, less net
settled shares of 38
153 (2,740)— — (2,739)
Stock units issued under incentive
compensation plan
— — 1,346 — — 1,346 
Purchase and retirement of common stock(328)(3)(21,880)— — (21,883)
Share-based compensation— — 6,393 — — 6,393 
Balance at March 31, 201938,027 $380 $284,864 $1,259,372 $(142,594)$1,402,022 
Net income— $— $— $64,598 $— $64,598 
Other comprehensive loss:
Cumulative translation adjustment— — — — (4,815)(4,815)
Issuance of common stock in
connection with:
Exercise of options87 3,075 — — 3,076 
Restricted share grants, less net settled shares of 1778 (1,352)— — (1,351)
Restricted share grants, less net
settled shares of 18
Restricted share grants, less net
settled shares of 18
38 (2,155)— — (2,154)
Purchase and retirement of common stockPurchase and retirement of common stock(580)(6)(48,326)— — (48,332)Purchase and retirement of common stock(471)(5)(51,048)— — (51,053)
Share-based compensationShare-based compensation— — 3,814 — — 3,814 Share-based compensation— — 4,693 — — 4,693 
Balance at June 30, 201937,612 $376 $242,075 $1,323,970 $(147,409)$1,419,012 
Balance at June 30, 2020Balance at June 30, 202036,710 $367 $122,743 $1,518,374 $(162,381)$1,479,103 
Net incomeNet income— $— $— $60,422 $— $60,422 Net income— $— $— $50,172 $— $50,172 
Other comprehensive loss:
Other comprehensive income:Other comprehensive income:
Cumulative translation adjustmentCumulative translation adjustment— — — — (16,633)(16,633)Cumulative translation adjustment— — — — 21,330 21,330 
Issuance of common stock in
connection with:
Issuance of common stock in
connection with:
Issuance of common stock in connection with:
Exercise of optionsExercise of options94 3,568 — — 3,569 Exercise of options43 — 1,536 — — 1,536 
Restricted share grants, less net
settled shares of 13
14 (1,322)— — (1,322)
Stock units issued under incentive
compensation plan
— — 67 — — 67 
Restricted share grants, less net
settled shares of 2
Restricted share grants, less net
settled shares of 2
24 — (207)— — (207)
Purchase and retirement of common
stock
Purchase and retirement of common
stock
(91)(1)(7,733)— — (7,734)Purchase and retirement of common stock(749)(7)(82,859)— — (82,866)
Share-based compensationShare-based compensation— — 3,853 — — 3,853 Share-based compensation— — 5,429 — — 5,429 
Balance at September 30, 201937,629 $376 $240,508 $1,384,392 $(164,042)$1,461,234 
Balance at September 30, 2020Balance at September 30, 202036,028 $360 $46,642 $1,568,546 $(141,051)$1,474,497 

See accompanying notes to condensed consolidated financial statements
6


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
Nine Months Ended September 30, Nine Months Ended September 30,
2020201920212020
Operating activitiesOperating activitiesOperating activities
Net incomeNet income$155,093 $187,665 Net income$196,758 $155,093 
Adjustments to reconcile net income to net cash provided by operating
activities:
Adjustments to reconcile net income to net cash provided by operating
activities:
  Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortizationDepreciation and amortization23,655 22,384 Depreciation and amortization25,631 23,655 
Amortization and impairment of other intangible assets7,440 5,838 
Amortization and impairment of intangible assetsAmortization and impairment of intangible assets8,515 7,440 
Acquisition-related contingent considerationAcquisition-related contingent consideration4,652 717 Acquisition-related contingent consideration(1,014)4,652 
Provision for doubtful accounts15,608 13,552 
Provision for expected credit lossesProvision for expected credit losses14,816 15,608 
Share-based compensationShare-based compensation17,576 14,060 Share-based compensation17,150 17,576 
Amortization of debt discount and issuance costs9,028 8,666 
Amortization of debt discount and issuance costs and otherAmortization of debt discount and issuance costs and other8,551 9,073 
Deferred income taxesDeferred income taxes(1,658)4,084 Deferred income taxes5,128 (1,658)
Other45 248 
Changes in operating assets and liabilities, net of effects from
acquisitions:
Changes in operating assets and liabilities, net of effects from
acquisitions:
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilledAccounts receivable, billed and unbilled(86,491)(191,644)Accounts receivable, billed and unbilled(115,544)(86,491)
Notes receivableNotes receivable3,346 2,521 Notes receivable4,392 3,346 
Prepaid expenses and other assetsPrepaid expenses and other assets8,294 (5,817)Prepaid expenses and other assets1,145 8,294 
Accounts payable, accrued expenses and otherAccounts payable, accrued expenses and other7,713 (7,332)Accounts payable, accrued expenses and other(22,745)7,713 
Income taxesIncome taxes(14,635)26,693 Income taxes18,025 (14,635)
Accrued compensationAccrued compensation(18,985)5,156 Accrued compensation2,803 (18,985)
Billings in excess of services providedBillings in excess of services provided10,296 (9,925)Billings in excess of services provided(7,691)10,296 
Net cash provided by operating activitiesNet cash provided by operating activities140,977 76,866 Net cash provided by operating activities155,920 140,977 
Investing activitiesInvesting activities  Investing activities  
Payments for acquisition of businesses, net of cash receivedPayments for acquisition of businesses, net of cash received(25,271)(18,791)Payments for acquisition of businesses, net of cash received(9,833)(25,271)
Purchases of property and equipment(25,663)(27,026)
Purchases of property and equipment and otherPurchases of property and equipment and other(52,441)(25,105)
Other558 55 
Net cash used in investing activitiesNet cash used in investing activities(50,376)(45,762)Net cash used in investing activities(62,274)(50,376)
Financing activitiesFinancing activities  Financing activities  
Borrowings under revolving line of creditBorrowings under revolving line of credit149,500 45,000 Borrowings under revolving line of credit377,500 149,500 
Repayments under revolving line of creditRepayments under revolving line of credit(124,500)(45,000)Repayments under revolving line of credit(352,500)(124,500)
Purchase and retirement of common stockPurchase and retirement of common stock(175,832)(77,949)Purchase and retirement of common stock(46,133)(175,832)
Net issuance of common stock under equity compensation plans(5,195)3,176 
Share-based compensation tax withholdings and otherShare-based compensation tax withholdings and other(8,277)(5,195)
Payments for business acquisition liabilitiesPayments for business acquisition liabilities(3,948)(2,282)Payments for business acquisition liabilities(7,496)(3,948)
Deposits and other4,561 535 
DepositsDeposits1,928 4,561 
Net cash used in financing activitiesNet cash used in financing activities(155,414)(76,520)Net cash used in financing activities(34,978)(155,414)
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents98 (8,183)Effect of exchange rate changes on cash and cash equivalents(11,094)98 
Net decrease in cash and cash equivalents(64,715)(53,599)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents47,574 (64,715)
Cash and cash equivalents, beginning of periodCash and cash equivalents, beginning of period369,373 312,069 Cash and cash equivalents, beginning of period294,953 369,373 
Cash and cash equivalents, end of periodCash and cash equivalents, end of period$304,658 $258,470 Cash and cash equivalents, end of period$342,527 $304,658 
Supplemental cash flow disclosuresSupplemental cash flow disclosuresSupplemental cash flow disclosures
Cash paid for interestCash paid for interest$7,115 $7,264 Cash paid for interest$8,756 $7,115 
Cash paid for income taxes, net of refundsCash paid for income taxes, net of refunds$61,636 $29,885 Cash paid for income taxes, net of refunds$31,240 $61,636 
Non-cash investing and financing activities:Non-cash investing and financing activities:Non-cash investing and financing activities:
Issuance of stock units under incentive compensation plansIssuance of stock units under incentive compensation plans$2,314 $1,413 Issuance of stock units under incentive compensation plans$2,603 $2,314 
Purchase and retirement of common stock not yet paidPurchase and retirement of common stock not yet paid$8,540 $Purchase and retirement of common stock not yet paid$— $8,540 
Business acquisition liabilities not yet paidBusiness acquisition liabilities not yet paid$3,460 $14,004 Business acquisition liabilities not yet paid$— $3,460 
Non-cash additions to property and equipment Non-cash additions to property and equipment $4,435 $1,203 
See accompanying notes to condensed consolidated financial statements
7


FTI Consulting, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(dollar and share amounts in tables in thousands, except per share data)
(Unaudited)
 
1. Basis of Presentation and Significant Accounting Policies
The unaudited condensed consolidated financial statements of FTI Consulting, Inc., including its consolidated subsidiaries (collectively, the “Company,” “we,” “our” or “FTI Consulting”), presented herein, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and under the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Some of the information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. Certain prior period amounts have been reclassified to conform to the current period presentation. In management’s opinion, the interim financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods presented. All adjustments made were normal recurring accruals. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 20192020 filed with the SEC. 
2. New Accounting Standards
Recently Adopted Accounting Standards
In August 2018,2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15 ("ASU 2018-15"), Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires companies to capitalize implementation costs of a hosting arrangement that is a service contract and expense those costs over the term of the hosting arrangement. On January 1, 2020, we prospectively adopted ASU 2018-15 for eligible costs incurred on or after the adoption date. The adoption of this standard resulted in the recognition of additional internal use software costs, which are included in the “Property and equipment, net” financial statement line item on the Condensed Consolidated Balance Sheets. The impact was not material on the Condensed Consolidated Balance Sheets as of September 30, 2020 or on the Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Stockholders’ Equity or Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2020.
Accounting Standards Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to reduce the complexity in accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance. The amendments in this ASU are effective for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas.events. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2021, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.

In November 2020, the SEC issued Rule 33-10890, “Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information” to modernize, simplify, and enhance certain financial disclosure requirements in Regulation S-K. The amendment enhances and clarifies the disclosure requirements for liquidity and capital resources, eliminates the requirement to present five years of Selected Financial Data, amends the requirement to present two years of tabular selected quarterly financial data so that registrants only need to disclose when there are material retrospective changes and eliminates the tabular disclosure of contractual obligations. The final rules were effective on February 10, 2021 and registrants are required to apply the amended rules for the first fiscal year ending on or after August 9, 2021.
The Company is in the process of evaluating the impact of this amendment on its related disclosures.
3. Earnings Perper Common Share
Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share adjusts basic earnings per common share for the effects of potentially dilutive common shares. Potentially dilutive common shares include the dilutive effects of shares issuable under our equity compensation plans, including stock options and restricted shares (restricted share awards, restricted stock units and performance stock units), each using the treasury stock method.
8


Because we expect to settle the principal amount of the outstanding 2.0% convertible senior notes due 2023 ("2023 Convertible Notes") in cash, we use the treasury stock method for calculating the potential dilutive effect of the conversion feature on earnings per common share, if applicable. The conversion feature had a dilutive impact on earnings per common share for the three and nine months ended September 30, 20202021 and 2019,2020, as the average market price per share of our common stock for the periodperiods exceeded the conversion price of $101.38 per share. See Note 9, "Debt" for additional information about the 2023 Convertible Notes.
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Numerator — basic and diluted    
Net income$50,172 $60,422 $155,093 $187,665 
Denominator
Weighted average number of common shares outstanding — basic35,639 36,617 36,073 36,851 
Effect of dilutive convertible notes337 21 425 
Effect of dilutive stock options402 471 436 454 
Effect of dilutive restricted shares708 829 774 795 
Weighted average number of common shares outstanding — diluted37,086 37,938 37,708 38,107 
Earnings per common share — basic$1.41 $1.65 $4.30 $5.09 
Earnings per common share — diluted$1.35 $1.59 $4.11 $4.92 
Antidilutive stock options and restricted shares83 50 24 
8


 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Numerator — basic and diluted    
Net income$69,480 $50,172 $196,758 $155,093 
Denominator
Weighted average number of common shares outstanding — basic33,495 35,639 33,478 36,073 
Effect of dilutive restricted shares662 708 697 774 
Effect of dilutive stock options363 402 369 436 
Effect of dilutive convertible notes842 337 721 425 
Weighted average number of common shares outstanding — diluted35,362 37,086 35,265 37,708 
Earnings per common share — basic$2.07 $1.41 $5.88 $4.30 
Earnings per common share — diluted$1.96 $1.35 $5.58 $4.11 
Antidilutive stock options and restricted shares83 50 
4. Special Charges
There were no special charges recorded during the three and nine months ended September 30, 2021.
During the three and nine months ended September 30, 2020, we recorded a special charge of $7.1 million, which consists of the following components:
$4.7 million of lease abandonment and other relocation costs associated with the consolidation of office space in New York, New York. The lease abandonment costs include non-cash charges of $4.4 million related to accelerated amortization on operating lease assets and accelerated depreciation on lease-related property and equipment;York; and
$2.4 million of employee severance and other employee-related costs associated with performance-related actions in our Forensic and Litigation Consulting ("FLC") segment that impacted 16 employees. All of these amounts will be paid in cash within the next twelve months..
There were 0 special charges recorded during the three and nine months ended September 30, 2019.
The following table details the specialspecial charge by segment:
 Three Months Ended September 30,Nine Months Ended September 30,
 20202020
Corporate Finance & Restructuring$861 $861 
FLC3,484 3,484 
Economic Consulting35 35 
Technology276 276 
Strategic Communications2,074 2,074 
Segment special charge6,730 6,730 
Unallocated Corporate373 373 
Total$7,103 $7,103 

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Corporate Finance & Restructuring$— $861 $— $861 
FLC— 3,484 — 3,484 
Economic Consulting— 35 — 35 
Technology— 276 — 276 
Strategic Communication— 2,074 — 2,074 
Segment special charge— 6,730 — 6,730 
Unallocated Corporate— 373 — 373 
Total$— $7,103 $— $7,103 
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5. Revenues
We generate the majority of our revenues by providing consulting services to our clients. Most of our consulting service contracts are based on one of the following types of contract arrangements:
Time and expense arrangements require the client to pay us based on the number of hours worked at contractually agreed-upon rates. We recognize revenues for these contract arrangements based on hours incurred and contracted rates utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. When a time and expense arrangement has a not-to-exceed or "cap" amount and we expect to perform work in excess of the cap, we recognize revenues up to the cap amount specified by the client, based on the efforts or hours incurred as a percentage of total efforts or hours expected to be incurred (i.e., proportional performance method).
Fixed-fee arrangements require the client to pay a pre-establishedfixed fee in exchange for a predetermined set of professional services. We recognize revenues earned to date by applying the proportional performance method. Generally, these arrangements have one performance obligation.
Performance-based or contingent arrangements represent forms of variable consideration. In these arrangements, our fees are based on the attainment of contractually defined objectives with our client, such as completing a business transaction or assisting the client in achieving a specific business objective. We recognize revenues earned to date in an amount that is probable not to reverse and by applying the proportional performance method when the criteria for over time revenue recognition are met.
Revenues are recognized whenCertain fees in our time and materials arrangements may be subject to approval by a third-party, such as a bankruptcy court and other regulatory agency. In such cases, we satisfy a performance obligation by transferring services promised in a contractrecord revenues based on the amount we estimate we will be entitled to a customer and in an amount that reflects the consideration that we expect to receive in exchange for those services. Performance obligationsour services and only to the extent a significant reversal of revenue is not likely to occur when the uncertainty associated with the estimate is subsequently resolved. Potential fee reductions imposed by bankruptcy courts and other regulatory agencies or negotiated with specific clients are estimated on a specific identification basis. Our estimates may vary depending on the nature of the engagement, client economics, historical experience and other appropriate factors. When there are changes in our contracts represent distinct or separate services thatestimates of potential fee reductions, we providerecord such changes to revenues with a corresponding offset to our customers.billed and unbilled accounts receivable.
Revenues recognized during the current period may include revenues from performance obligations satisfied or partially satisfied in previous periods. This primarily occurs when the estimated transaction price has changed based on our current probability assessment over whether the agreed-upon outcome for our performance-based and contingent arrangements will be achieved. The aggregate amount of revenues recognized related to a change in the transaction price in the current period, which related to performance obligations satisfied or partially satisfied in a prior period, was $11.5 million and $23.0 million for the three and nine months ended September 30, 2021, respectively, and $2.6 million and $15.1 million for the three and nine months ended September 30, 2020, respectively, and $7.0 million and $23.5 million for the three and nine months ended September 30, 2019, respectively.
Unfulfilled performance obligations primarily consist of fees not yet recognized on certain fixed-fee arrangements and performance-based and contingent arrangements. As of September 30, 20202021 and December 31, 2019,2020, the aggregate amount of the remaining contract transaction price allocated to unfulfilled performance obligations was $3.1$4.1 million and $2.3$8.5 million, respectively. We expect to recognize the majority of the related revenues over the next 24 months. We elected to utilize the optional exemption to exclude from this disclosure fixed-fee and performance-based and contingent arrangements with an original expected duration of one year or less and to exclude our time and expense arrangements for which revenues are recognized using the right-to-invoice practical expedient.
Contract assets are defined as assets for which we have recorded revenuerevenues but are not yet entitled to receive our fees because certain events, such as completion of the measurement period or client approval, must occur. The contract asset balance was immaterial$1.3 million as of September 30, 20202021 and $1.3$2.6 million as of December 31, 2019.2020.
Contract liabilities are defined as liabilities incurred when we have received consideration but have not yet performed the agreed-upon services. This may occur when clients pay fees before work begins. The contract liability balance was $1.0 millionimmaterial as of September 30, 20202021 and immaterial as of December 31, 2019.2020, respectively.
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6. Accounts Receivable and Allowance for Doubtful AccountsExpected Credit Losses
TimingThe following table summarizes the components of revenue recognition often differs from"Accounts receivable, net" as presented on the timing of billing to our customers. Generally, we transfer goods or services to a customer before the customer pays consideration or payment is due. If we have an unconditional right to invoice and receive payment for goods or services already provided, we record billed and unbilled receivables on our Condensed Consolidated Balance Sheets. Our contract terms generally include a requirement of payment within 30 days when no contingencies exist. Payment terms and conditions vary depending on the jurisdiction, market and type of service, and whether regulatory or other third-party approvals are required. At times, we may execute contracts in a form provided by customers that might include different payment terms and contracts may be negotiated at the client’s request.Sheets:
September 30,
2021
December 31, 2020
Accounts receivable:
Billed receivables$560,046 $513,459 
Unbilled receivables290,352 236,285 
Allowance for expected credit losses(40,520)(38,387)
Accounts receivable, net$809,878 $711,357 
We maintain an allowance for expected credit losses, which represents the estimated aggregate amount of credit risk arising from the inability or unwillingness of specific clients to pay our fees or disputes that may affect our ability to fully collect our billed accounts receivable. We record adjustments toour estimate of lifetime expected credit losses concurrently with the initial recognition of the underlying receivable. Accounts receivable, net of the allowance for doubtful accounts and unbilled services as a reduction in revenues when there are changes in estimates of fee reductions, such as those fee reductions imposed by bankruptcy courts and other regulatory institutions for both billed and unbilled accounts receivable. Theexpected credit losses, represents the amount we expect to collect. At each reporting date, we adjust the allowance for doubtful accountsexpected credit losses to reflect our current estimate.
The following table summarizes the total provision for expected credit losses and unbilled services is also adjusted after the related work has been billed to the client and we determine that all or a portion of the accounts receivable is not expected to be collected.write-offs:
 Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Provision for expected credit losses (1)
$6,580 $3,984 $14,816 $15,608 
Write-offs$5,746 $6,182 $15,464 $19,707 
(1)Adjustments to the allowance for doubtful accounts and unbilled services related to expected credit losses are recorded to selling, general and& administrative ("SG&A") expenses on the Condensed Consolidated Statements of Comprehensive Income as bad debt expense. Judgment is required to assess collectability and to adjustIncome.
We estimate the allowancecurrent-period provision for doubtful accounts and unbilled services to the current estimate of expected credit losses.losses on a specific identification basis. Our judgments consider customerregarding a specific risksclient’s credit risk considers factors such as the counterparty’s creditworthiness, knowledge of the specific client’s circumstances and historical collection experience.experience for similar clients. Other factors include, but are not limited to, current economic conditions and forward-looking estimates.
Our billedactual experience may vary from our estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay our fees, we may need to record additional provisions for expected credit losses in future periods. The risk of credit losses may be mitigated to the extent that we received a retainer from some of our clients prior to performing services. Our provision for expected credit losses includes recoveries, direct write-offs and charges to other accounts. Billed accounts receivables are written off when the potential for recovery is considered remote. The following table summarizes total bad debt expense and write-offs for the three and nine months ended September 30, 2020:
 Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Bad debt expense$3,984 $7,292 $15,608 $13,552 
Write-offs6,182 2,951 19,707 8,869 
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7. Goodwill and Other Intangible Assets
Goodwill
The table below summarizes the changes in the carrying amount of goodwill by reportable segment:
Corporate
Finance &
Restructuring
FLCEconomic
Consulting
TechnologyStrategic
Communications
Total
Balance at December 31, 2019      
Goodwill$478,842 $232,120 $268,677 $96,770 $320,497 $1,396,906 
Accumulated goodwill impairment— — — — (194,139)(194,139)
Goodwill, net at December 31, 2019478,842 232,120 268,677 96,770 126,358 1,202,767 
Acquisitions20,532 — — — — 20,532 
Foreign currency translation
adjustment and other
2,300 (600)(7)(29)(1,199)465 
Balance at September 30, 2020
Goodwill501,674 231,520 268,670 96,741 319,298 1,417,903 
Accumulated goodwill impairment— — — — (194,139)(194,139)
Goodwill, net at September 30, 2020$501,674 $231,520 $268,670 $96,741 $125,159 $1,223,764 
Corporate
Finance &
  Restructuring (1)
FLC (1)
Economic
Consulting (1)
Technology (1)
Strategic
Communications (2)
Total
Balance at December 31, 2020$506,072 $233,374 $269,087 $96,821 $129,525 $1,234,879 
Acquisitions— 5,493 — — — 5,493 
Foreign currency translation
adjustment and other
(4,149)(680)(168)(11)(1,341)(6,349)
Balance at September 30, 2021$501,923 $238,187 $268,919 $96,810 $128,184 $1,234,023 
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During the three months ended September 30, 2020, we acquired a strategy consulting and investment banking business that was assigned to(1)    There were 0 accumulated impairment losses for the Corporate Finance & Restructuring ("Corporate Finance"), FLC, Economic Consulting or Technology segments as of September 30, 2021 and December 31, 2020, respectively.
(2)    Amounts for our Strategic Communications segment include gross carrying values of $322.3 million and $323.7 million as of September 30, 2021 and December 31, 2020, respectively, and accumulated impairment losses of $194.1 million as of September 30, 2021 and December 31, 2020.
During the nine months ended September 30, 2021, we acquired certain assets of a business that were assigned to the FLC segment. We recorded $20.5$5.5 million in goodwill based on a preliminary purchase price allocation as a result of the acquisition. Weacquisition and we have included the results of the acquired business’s operations in the Corporate FinanceFLC segment since its acquisition date.date.
Other Intangible Assets
Other intangibleIntangible assets were as follows:
September 30, 2020December 31, 2019 September 30, 2021December 31, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortizing intangible assetsAmortizing intangible assets      Amortizing intangible assets      
Customer relationships (1)
Customer relationships (1)
$110,502 $82,343 $28,159 $99,613 $76,808 $22,805 
Customer relationships (1)
$112,818 $91,069 $21,749 $111,556 $85,180 $26,376 
Trademarks (1)
11,401 2,108 9,293 9,855 653 9,202 
TrademarksTrademarks11,245 4,292 6,953 11,809 2,768 9,041 
Acquired software and otherAcquired software and other3,537 2,437 1,100 3,386 2,061 1,325 Acquired software and other3,461 2,759 702 3,618 2,585 1,033 
125,440 86,888 38,552 112,854 79,522 33,332 127,524 98,120 29,404 126,983 90,533 36,450 
Non-amortizing intangible assetsNon-amortizing intangible assetsNon-amortizing intangible assets
TrademarksTrademarks5,100 — 5,100 5,100 — 5,100 Trademarks5,100 — 5,100 5,100 — 5,100 
TotalTotal$130,540 $86,888 $43,652 $117,954 $79,522 $38,432 Total$132,624 $98,120 $34,504 $132,083 $90,533 $41,550 
(1)     During the threenine months ended September 30, 2020,2021, we acquired certain assets of a strategy consulting and investment banking business, and its related intangible assets were assigned to the Corporate FinanceFLC segment.

Other intangibleIntangible assets with finite lives are amortized over their estimated useful lives. We recorded amortization expense of $2.9 million and $8.5 million for the three and nine months ended September 30, 2021, respectively, and $2.8 million and $7.4 million for the three and nine months ended September 30, 2020, respectively, and $2.1 million and $5.8 million for the three and nine months ended September 30, 2019, respectively.
12


We estimate our future amortization expense for our intangible assets with finite lives to be as follows:
YearYear
As of
September 30, 2020 (1)
Year
As of
September 30, 2021 (1)
2020 (remaining)$2,792 
202110,642 
2021 (remaining)2021 (remaining)$2,325 
202220228,519 20228,824 
202320234,821 20235,122 
202420243,388 20243,693 
202520253,014 
ThereafterThereafter8,390 Thereafter6,426 
$38,552  $29,404 
(1)Actual amortization expense to be reported in future periods could differ from these estimates because of new intangible asset acquisitions, impairments, changes in useful lives, or other relevant factors or changes.
12


8. Financial Instruments
The following table below presents the carrying amounts and estimated fair values of our financial instruments by hierarchy level as of September 30, 20202021 and December 31, 2019:2020:
September 30, 2020September 30, 2021
Hierarchy Level
(Fair Value)
Hierarchy Level
(Fair Value)
Carrying
Amount
Level 1Level 2Level 3Carrying
Amount
Level 1Level 2Level 3
LiabilitiesLiabilitiesLiabilities
Acquisition-related contingent consideration, including
current portion (1)(2)
Acquisition-related contingent consideration, including
current portion (1)(2)
$18,545 $$$18,545 
Acquisition-related contingent consideration, including
current portion (1)(2)
$14,568 $— $— $14,568 
2023 Convertible Notes (3)
2023 Convertible Notes (3)
283,454 394,079 
2023 Convertible Notes (3)
294,355 — 444,957 — 
TotalTotal$301,999 $$394,079 $18,545 Total$308,923 $— $444,957 $14,568 
December 31, 2019December 31, 2020
Hierarchy Level
(Fair Value)
Hierarchy Level
(Fair Value)
Carrying
Amount
Level 1Level 2Level 3Carrying
Amount
Level 1Level 2Level 3
LiabilitiesLiabilities   Liabilities   
Acquisition-related contingent consideration, including
current portion (1)
$14,826 $$$14,826 
Acquisition-related contingent consideration, including
current portion (1)(2)
Acquisition-related contingent consideration, including
current portion (1)(2)
$20,118 $— $— $20,118 
2023 Convertible Notes (3)
2023 Convertible Notes (3)
275,609 398,016 
2023 Convertible Notes (3)
286,131 — 396,982 — 
TotalTotal$290,435 $$398,016 $14,826 Total$306,249 $— $396,982 $20,118 
(1)The short-term portion is included in “Accounts payable, accrued expenses and other” and the long-term portion is included in “Other liabilities” on the Condensed Consolidated Balance Sheets.
(2)During the threenine months ended September 30, 2020,2021, we acquired certain assets of a strategy consulting and investment banking business that was assigned to the Corporate Finance segment and recorded an acquisition-related contingent consideration liability.
(3)The carrying values include unamortized deferred debt issue costs and debt discount.
The fair values of financial instruments not included in the tables above are estimated to be equivalentequal to their carrying values as of September 30, 20202021 and December 31, 2019.2020.
We estimate the fair value of our 2023 Convertible Notes based on their last actively traded prices. The fair value of our 2023 Convertible Notes is classified within Level 2 of the fair value hierarchy because it is traded in less active markets.
13


We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted discounted cash flow model or a Monte Carlo simulation. These fair value estimates represent Level 3 measurements as they are based on significant inputs not observed in the market and reflect our own assumptions. We have multiple valuation models that use different inputs and assumptions based on the timing of the acquisitions. As a result, the significant unobservable inputs used in these models vary. The acquisition-related contingent consideration subject to the probability-weighted discounted cash flow model was valued using significant unobservable inputs including a discount rate of 13.5% and future cash flows. The acquisition-related contingent consideration liabilities subject to the Monte Carlo simulation were valued using significant unobservable inputs including volatility rates between 31.5% and 35.0% and discount rates between 14.0% and 13.0%, which reflect the weighted average of our cost of debt and adjusted cost of equity of the acquired companies, and future cash flows. Significant increases (or decreases) in these unobservable inputs in isolation would result in significantly lower (or higher) fair values. We reassess the fair value of our acquisition-related contingent consideration at each reporting period based on additional information as it becomes available.
13


The table below presents the change in our liability for acquisition-related contingent consideration for our Level 3 financial instruments is as follows:instruments:
Liability for Acquisition-Related Contingent Consideration
Balance at December 31, 2020$20,118 
Accretion expense (1)
1,289 
Payments(1,000)
Foreign currency translation adjustment (2)
(612)
Balance at March 31, 2021$19,795 
Additions1,093 
Accretion expense (1)
676 
Payments(4,122)
Foreign currency translation adjustment (2)
264 
Remeasurement gain (3)
(3,095)
Balance at June 30, 2021$14,611 
Accretion expense (1)
116 
Foreign currency translation adjustment (2)
(159)
Balance at September 30, 2021$14,568 
Contingent Consideration
Balance at December 31, 2019$14,826 
Accretion expense (1)
506 
Foreign currency translation adjustment (2)
(148)
Balance at March 31, 2020$15,184 
Accretion expense (1)
614 
Payments(4,692)
Foreign currency translation adjustment (2)
88 
Balance at June 30, 2020$11,194 
Additions(3)
3,460 
Accretion expense (1)
3,532 
Foreign currency translation adjustment (2)
359 
Balance at September 30, 2020$18,545 
Liability for Acquisition-Related Contingent Consideration
Balance at December 31, 2018$3,698 
Accretion expense (1)
93 
Balance at March 31, 2019$3,791 
Accretion expense (1)
93 
Payments(1,000)
Balance at June 30, 2019$2,884 
Additions (3)
14,004 
Accretion expense (1)
531 
Foreign currency translation adjustment (2)
(333)
Balance at September 30, 2019$17,086 
(1)Accretion expense is included in "Selling, general and administrative expenses"SG&A expenses on the Condensed Consolidated Statements of Comprehensive Income.
(2)Foreign currency translation adjustments are included in "Other comprehensive income (loss), net of tax" on the Condensed Consolidated Statements of Comprehensive Income.
(3)DuringRemeasurement gain or loss resulting from a change in the three months ended September 30, 2020 and 2019, we acquired businesses that were assigned tofair value of an acquisition's contingent consideration liability is recorded in SG&A expenses on the Corporate Finance segment.Condensed Consolidated Statements of Comprehensive Income.
14


9. Debt
The table below summarizespresents the components of the Company’s debt: 
September 30, 2020December 31, 2019September 30,
2021
December 31, 2020
2023 Convertible Notes2023 Convertible Notes$316,250 $316,250 2023 Convertible Notes$316,250 $316,250 
Credit FacilityCredit Facility25,000 Credit Facility25,000 — 
Total debtTotal debt341,250 316,250 Total debt341,250 316,250 
Less: deferred debt discountLess: deferred debt discount(28,626)(35,393)Less: deferred debt discount(19,169)(26,310)
Less: deferred debt issue costsLess: deferred debt issue costs(4,170)(5,248)Less: deferred debt issue costs(2,726)(3,809)
Long-term debt, net (1)
Long-term debt, net (1)
$308,454 $275,609 
Long-term debt, net (1)
$319,355 $286,131 
Additional paid-in capitalAdditional paid-in capital$35,306 $35,306 Additional paid-in capital$35,306 $35,306 
Discount attribution to equityDiscount attribution to equity(1,175)(1,175)Discount attribution to equity(1,175)(1,175)
Equity component, netEquity component, net$34,131 $34,131 Equity component, net$34,131 $34,131 
(1)There were 0no current portions of long-term debt as of September 30, 20202021 and December 31, 2019.

2020.
2023 Convertible Notes
On August 20, 2018, we issued the 2023 Convertible Notes in an aggregate principal amount of $316.3 million. The 2023 Convertible Notes bear interest at a fixed rate of 2.0% per year, payable semiannually in arrears on February 15th and August 15th of each year and will mature on August 15, 2023, unless earlier converted or repurchased. The 2023 Convertible Notes are senior unsecured obligations of the Company.
The 2023 Convertible Notes are convertible at maturity at a conversion rate of 9.8643 shares of our common stock per $1,000 principal amount of the 2023 Convertible Notes (equivalent to a conversion price of approximately $101.38 per share of common stock). Subject to the conditions set forth in the indenture governing the 2023 Convertible Notes, holders may convert their 2023 Convertible Notes at any time prior to the close of business on the business day immediately preceding May 15, 2023. The 2023 Convertible Notes were convertible during the three months ended September 30, 2021 and the number of notes submitted for conversion was immaterial. The circumstances required to allow the holders to convert their 2023 Convertible Notes prior to maturity were not met as of September 30, 2020.2021, therefore, holders may convert their notes at any time beginning on October 1, 2021 and ending on December 31, 2021. We continue to classify the net carrying amount of the 2023 Convertible Notes as long-term debt based on our intent and ability to refinance the principal portion of our debt on a long-term basis.
The excess of the principal amount of the liability over its carrying amount ("debt discount") is amortized to interest expense over the term of the 2023 Convertible Notes using the effective interest rate method.
We incurred debt issue costs and allocated the total amount to the liability and equity components of the 2023 Convertible Notes based on their relative values. The debt issue costs attributable to the liability component are amortized to interest expense over the term of the 2023 Convertible Notes using the effective interest rate method. Issuance costs attributable to the equity component were netted with the equity component in stockholders' equity.
The table below summarizes the amount of interest cost recognized by us for both the contractual interest expense and amortization of the debt discount for the 2023 Convertible Notes:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
Contractual interest expenseContractual interest expense$1,581 $1,581 $4,744 $4,743 Contractual interest expense$1,581 $1,581 $4,744 $4,744 
Amortization of debt discount (1)
Amortization of debt discount (1)
2,286 2,166 6,766 6,411 
Amortization of debt discount (1)
2,412 2,286 7,141 6,766 
TotalTotal$3,867 $3,747 $11,510 $11,154 Total$3,993 $3,867 $11,885 $11,510 
(1)The effective interest rate of the liability component is 5.45%.
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Credit Facility
On June 26, 2015, we entered into a credit agreement, (the "Original Credit Agreement"), which provides for a $550.0 million senior secured bank revolving credit facility (the “Credit(“Original Credit Facility”) maturing on June 26, 2020. In November 2018, we amended and restated the credit agreement to the Original Credit Agreement,Facility, to, among other things, extend the maturity of the revolving loans under
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the Credit Facility to November 30, 2023 and incurred an additional $1.7 million of debt issuance costs (the Original Credit AgreementFacility as amended and restated, the “Credit Agreement”Facility”).
The Company classified the borrowings under the Company’s Credit Facility as long-term debt in the accompanying Condensed Consolidated Balance Sheets, as amounts due under the Credit Facility are not contractually required or expected to be liquidated for more than one year from the applicable balance sheet date. Additionally,As of September 30, 2021, $1.1 million of the borrowing limit under the Credit Facility was utilized (and, therefore, unavailable) as of September 30, 2020 for letters of credit.
There were $0.8$1.0 million and $2.0$1.3 million of unamortized debt issue costs related to the Credit Facility as of September 30, 20202021 and December 31, 2019,2020, respectively. These amounts wereare included in “Other assets” on our Condensed Consolidated Balance Sheets.
10. Leases
We lease office space and equipment under non-cancelable operating leases. We recognize operating lease expense on a straight-line basis over the lease term, which may include renewal or termination options that are reasonably certain of exercise. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are expensed on a straight-line basis. Most leases include 1 or more options to renew, with renewal terms that can extend the lease term from six monthsone month to seven years. The exercise of lease renewal options is at our sole discretion. Certain of our lease agreements include rental payments that are adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The current period disclosures below include our new principal office space in New York, New York, as we accepted possession of the premises on April 1, 2021.
The table below summarizes the carrying amount of our operating lease assets and liabilities:
LeasesClassificationAs of
September 30, 2020
As of
December 31, 2019
Assets
  Operating lease assetsOperating lease assets$153,818 $159,777 
Total lease assets$153,818 $159,777 
Liabilities
Current
  Operating lease liabilitiesAccounts payable, accrued expenses and other$41,875 $35,727 
Noncurrent
  Operating lease liabilitiesNoncurrent operating lease liabilities161,976 176,378 
Total lease liabilities$203,851 $212,105 

LeasesClassificationSeptember 30, 2021December 31, 2020
Assets
  Operating lease assetsOperating lease assets$224,961 $156,645 
Total lease assets$224,961 $156,645 
Liabilities
Current
  Operating lease liabilitiesAccounts payable, accrued expenses and other$32,924 $42,716 
Noncurrent
  Operating lease liabilitiesNoncurrent operating lease liabilities232,390 161,677 
Total lease liabilities$265,314 $204,393 
The table below summarizes total lease costs:
Three Months Ended September 30,Nine Months Ended September 30,
Lease Cost2020201920202019
Operating lease costs$15,769 $11,332 $39,368 $33,241 
Short-term lease costs768 926 1,778 2,355 
Variable lease costs3,730 3,030 9,563 8,728 
Sublease income(1,048)(1,259)(3,178)(3,702)
Total lease cost, net$19,219 $14,029 $47,531 $40,622 

Three Months Ended September 30,Nine Months Ended September 30,
Lease Cost2021202020212020
Operating lease costs$14,476 $15,769 $40,965 $39,368 
Short-term lease costs398 768 1,361 1,778 
Variable lease costs3,368 3,730 9,579 9,563 
Sublease income(1,048)(1,048)(3,143)(3,178)
Total lease cost, net$17,194 $19,219 $48,762 $47,531 
We sublease certain of our leased office spaces to third parties. Our sublease portfolio consists of leases of office space that we have vacated before the lease term expiration. Operating lease expense on vacated office space is reduced by sublease rental income, which is recorded to SG&A expenses on the Condensed Consolidated Statements of Comprehensive Income. Our sublease arrangements do not contain renewal options or restrictive covenants. We estimate future sublease rental income to be $1.2$0.8 million forin the remainder of 2020, $4.6 million in 2021, $0.8 million in 2022, $0.6 million in 2023, $0.6 million in 2024 and $0.3 million in 2025. There is no future sublease rental income estimated for the years beyond 2024.

2025.
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The maturity analysis below summarizes the remaining future undiscounted cash flows for our operating leases and includes a reconciliation to operating lease liabilities reported on the Condensed Consolidated Balance Sheet:Sheets:
As of
September 30, 2020
As of
September 30, 2021
2020 (remaining)$4,428 
202157,940 
2021 (remaining)2021 (remaining)$(969)
2022202237,736 202251,093 
2023202331,546 202348,335 
2024202427,760 202443,196 
2025202536,176 
ThereafterThereafter84,838 Thereafter167,613 
Total future lease payments Total future lease payments244,248  Total future lease payments345,444 
Less: imputed interest Less: imputed interest(40,397) Less: imputed interest(80,130)
TotalTotal$203,851 Total$265,314 

The table below includes cash paid for our operating lease liabilities, other non-cash information, our weighted average remaining lease term and weighted average discount rate:
Nine Months Ended September 30,
 20202019
Cash paid for amounts included in the measurement of operating lease liabilities$41,078$33,031
Operating lease assets obtained in exchange for lease liabilities$23,653$21,880
Weighted average remaining lease term (years)
   Operating leases6.86.5
Weighted average discount rate
   Operating leases
5.5 %5.6 %
On October 26, 2020, the Company entered into a material lease agreement, amending and restating the lease agreement entered into as of August 19, 2020 (the "Lease") for its new principal office space in New York, New York. The Company expects to accept possession of the premises on or about April 1, 2021, subject to the satisfaction of certain conditions, and shall continue for an initial fixed term of 15 years, subject to 2 renewal options of five years each. Fixed rental payments under the Lease are scheduled to commence in April 2022, payable in monthly installments and will aggregate approximately $145 million, excluding lease-related incentives over the term of the Lease. The Lease is not included in operating lease assets and operating lease liabilities on the Condensed Consolidated Balance Sheets as of September 30, 2020 as the Company does not yet have the right to use the premises.
Nine Months Ended September 30,
 20212020
Cash paid for amounts included in the measurement of operating lease liabilities$45,754$41,078
Operating lease assets obtained in exchange for lease liabilities$98,472$23,653
Weighted average remaining lease term (years)
   Operating leases8.76.8
Weighted average discount rate
   Operating leases
5.4 %5.5 %
11. Commitments and Contingencies
The Company entered into a material lease agreement for its new principal office space in New York, New York during thethree months ended September 30, 2020. See Note 10, "Leases" for additional information about the terms of the Lease.
We are subject to legal actions arising in the ordinary course of business. In management’s opinion, we believe we have adequate legal defenses and/or insurance coverage with respect to the eventuality of such actions. We do not believe any settlement or judgment relating to any pending legal action would materially affect our financial position or results of operations.
12. Share-Based Compensation
During the nine months ended September 30, 2020,2021, we granted 158,996106,560 restricted share awards, 50,81738,169 restricted stock units and 108,718103,220 performance stock units under the FTI Consulting, Inc. 2017 Omnibus Incentive Compensation Plan, our employee equity compensation plan. Our performance stock units are presented at the maximum potential payout percentage of 150% of target shares granted. These awards are recorded as equity on the Condensed Consolidated Balance Sheets. During the
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nine months ended September 30, 2020, 6,8052021, 11,242 shares of restricted stock and 0no stock options were forfeited prior to the completion of the applicable vesting requirements. Additionally, 27,221 performance stock units were forfeited during the nine months ended September 30, 2021.
Total share-based compensation expense, net of forfeitures for the three and nine months ended September 30, 2020 and 2019 is detailed in the following table:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
Income Statement ClassificationIncome Statement Classification2020201920202019Income Statement Classification2021202020212020
Direct cost of revenuesDirect cost of revenues$2,404 $2,327 $10,268 $10,129 Direct cost of revenues$2,441 $2,404 $10,172 $10,268 
Selling, general and administrative expensesSelling, general and administrative expenses2,837 3,478 8,773 8,608 Selling, general and administrative expenses2,830 2,837 9,762 8,773 
Total share-based compensation expenseTotal share-based compensation expense$5,241 $5,805 $19,041 $18,737 Total share-based compensation expense$5,271 $5,241 $19,934 $19,041 
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13. Stockholders’ Equity
On June 2, 2016, our Board of Directors authorized a stock repurchase program of up to $100.0 million (the “Repurchase Program”). On each of May 18, 2017, December 1, 2017, February 21, 2019 and February 20, 2020, our Board of Directors authorized an additional $100.0 million, respectively. On each of July 28, 2020 and December 3, 2020, our Board of Directors authorized an additional $200.0 million, respectively, increasing the Repurchase Program to an aggregate authorization of $700.0$900.0 million. No time limit has been established for the completion of the Repurchase Program, and the Repurchase Program may be suspended, discontinued or replaced by the Board of Directors at any time without prior notice. As of September 30, 2020,2021, we have $182.4$167.1 million available under the Repurchase Program to repurchase additional shares.
The following table details our stock repurchases under the Repurchase Program:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
Shares of common stock repurchased and retiredShares of common stock repurchased and retired749 91 1,670 999 Shares of common stock repurchased and retired— 749 422 1,670 
Average price paid per shareAverage price paid per share$110.57 $85.11 $110.27 $78.04 Average price paid per share$— $110.57 $109.37 $110.27 
Total costTotal cost$82,852 $7,732 $184,196 $77,929 Total cost$— $82,852 $46,124 $184,196 
As we repurchase our common shares, we reduce stated capital on our Condensed Consolidated Balance Sheets for the $0.01 of par value of the shares repurchased, with the excess purchase price over par value recorded as a reduction to additional paid-in capital. If additional paid-in capital is reduced to zero, we record the remainder of the excess purchase price over par value as a reduction of retained earnings. During the nine months ended September 30, 2021, due to the volume of repurchases, we recorded a reduction to stated capital for the par value of the shares repurchased, with a portion of the excess purchase price over par value recorded as a reduction to additional paid-in capital of $3.0 million and the remainder of the excess purchase price over par value of $43.1 million recorded as a reduction of retained earnings.
Common stock outstanding was 36.034.3 million shares and 37.434.5 million shares as of September 30, 20202021 and December 31, 2019,2020, respectively. Common stock outstanding includes unvested restricted stock awards, which are considered issued and outstanding under the terms of the restricted stock award agreements.
14. Segment Reporting
We manage our business in 5 reportable segments: Corporate Finance, FLC, Economic Consulting, Technology and Strategic Communications.
Our Corporate Finance segment focuses on the strategic, operational, financial, transactional and capital needs of our clients around the worldworld. Our clients include companies, boards of directors, investors, private equity sponsors, banks, lenders, and deliversother financing sources and creditor groups, as well as other parties-in-interest. We deliver a wide range of service offerings related to restructuring,services centered around 3 core offerings: business transformation, transactions and transactions. Ourturnaround, restructuring practice includes corporate restructuring, including bankruptcy and interim management services. Our business transformation and transactions practices include financial, operational and performance improvement services, as well as due diligence, financing advisory, mergers and acquisitions ("M&A") advisory, M&A integration, carveout support and valuations.bankruptcy.
Our FLC segment provides law firms, companies, government clients and other interested parties with multidisciplinary and independent services related to risk advisory, investigations and disputes. We have expertise in anti-corruption/anti-money laundering investigations and compliance, cybersecurity, data analytics, export controls and sanctions, and monitorship. We offer specialized industry expertise in the areas of insurance, construction, healthcare, environmental and trial services.    
Our Economic Consulting segment provides law firms, companies, government entities and other interested parties with analysisa multidisciplinary and independent range of services in risk and investigations and disputes, including a focus on highly regulated industries such as our construction & environmental solutions and health solutions services. These services are supported by our data & analytics services which help our clients analyze large, disparate sets of data related to their business operations and support our clients during regulatory inquiries and commercial disputes. We deliver a wide range of services centered around 5 core offerings: construction & environmental solutions, data & analytics, disputes, health solutions and risk and investigations.
Our Economic Consulting segment, including subsidiary Compass Lexecon LLC, provides law firms, companies, government entities and other interested parties with analyses of complex economic issues for use in legal, regulatory and international arbitration, legal and regulatory proceedings, and strategic decision making and public policy debates in the United States and around the world. We deliver a wide range of services centered around 3 core offerings: antitrust & competition economics, financial economics and international arbitration.
Our Technology segment provides companies, and law firms and government entities with a comprehensive and global portfolio of consulting and services fore-discovery, information governance, privacy and security electronic discovery and insight analytics. Ourcorporate legal operations solutions. We deliver a full spectrum of services including data collection, data processing, document review, hosting, advanced analytics and consulting expertise enablesto help clients to more confidentlysecure, govern, secure, find, analyze and rapidly understand their data in the context of compliance and risk.
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Our Strategic Communications segment designsdevelops and executes communications strategies for CEOs,to help management teams, and boards of directors, that help them seize opportunities,law firms, governments and regulators manage change and mitigate risk surrounding transformational and disruptive events, including transactions, investigations, disputes, crises, regulation and legislation. We deliver a wide range of services centered around 3 core offerings: corporate reputation, financial regulatorycommunications and reputational challenges, navigate market disruptions, articulate their corporate brand, stake a competitive position and preserve their freedom to operate.public affairs.
We evaluate the performance of our operating segments based on Adjusted Segment EBITDA, a GAAP financial measure. 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 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 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.
The table below presents revenues and Adjusted Segment EBITDA for our reportable segments:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
RevenuesRevenues    Revenues    
Corporate FinanceCorporate Finance$236,615 $191,698 $690,375 $542,667 Corporate Finance$250,321 $236,615 $707,495 $690,375 
FLCFLC119,104 142,651 373,082 427,518 FLC145,264 119,104 446,831 373,082 
Economic ConsultingEconomic Consulting154,978 141,715 438,609 439,488 Economic Consulting172,543 154,978 525,122 438,609 
TechnologyTechnology58,585 57,083 164,392 164,051 Technology64,657 58,585 222,762 164,392 
Strategic CommunicationsStrategic Communications52,967 59,959 168,236 176,775 Strategic Communications69,443 52,967 197,781 168,236 
Total revenuesTotal revenues$622,249 $593,106 $1,834,694 $1,750,499 Total revenues$702,228 $622,249 $2,099,991 $1,834,694 
Adjusted Segment EBITDAAdjusted Segment EBITDA    Adjusted Segment EBITDA    
Corporate FinanceCorporate Finance$56,215 $48,084 $181,425 $135,937 Corporate Finance$55,635 $56,215 $133,248 $181,425 
FLCFLC13,591 27,008 25,752 87,066 FLC16,620 13,591 64,054 25,752 
Economic ConsultingEconomic Consulting25,720 19,413 60,124 66,766 Economic Consulting29,917 25,720 87,195 60,124 
TechnologyTechnology11,939 12,286 32,858 37,884 Technology7,835 11,939 47,951 32,858 
Strategic CommunicationsStrategic Communications8,427 12,644 27,237 34,667 Strategic Communications15,489 8,427 39,388 27,237 
Total Adjusted Segment EBITDATotal Adjusted Segment EBITDA$115,892 $119,435 $327,396 $362,320 Total Adjusted Segment EBITDA$125,496 $115,892 $371,836 $327,396 
The table below reconciles net income to Total Adjusted Segment EBITDA:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Net income$50,172 $60,422 $155,093 $187,665 
Add back:  
Income tax provision14,407 19,857 45,342 61,100 
Interest income and other3,340 (2,973)(3,879)(5,741)
Interest expense5,151 4,832 15,169 14,371 
Unallocated corporate expenses (1)
26,061 27,783 79,928 78,778 
Segment depreciation expense7,236 7,389 21,573 20,309 
Amortization of intangible assets2,795 2,125 7,440 5,838 
Segment special charges6,730 6,730 
Total Adjusted Segment EBITDA$115,892 $119,435 $327,396 $362,320 
(1) Includes $0.4 million of special charges.
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net income$69,480 $50,172 $196,758 $155,093 
Add back:  
Income tax provision19,155 14,407 54,394 45,342 
Interest income and other(5,175)3,340 (5,297)(3,879)
Interest expense5,073 5,151 15,164 15,169 
Unallocated corporate expenses25,974 26,061 82,041 79,928 
Segment depreciation expense8,130 7,236 23,394 21,573 
Amortization of intangible assets2,859 2,795 8,512 7,440 
Segment special charges— 6,730 — 6,730 
Remeasurement of acquisition-related contingent consideration— — (3,130)— 
Total Adjusted Segment EBITDA$125,496 $115,892 $371,836 $327,396 
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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion and analysis of our consolidated financial condition, results of operations and liquidity and capital resources for the three and nine months ended September 30, 20202021 and 20192020 and significant factors that could affect our prospective financial condition and results of operations. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes and with our Annual Report on Form 10-K for the year ended December 31, 20192020 filed with the United States ("U.S.") Securities and Exchange Commission (“SEC”). In addition to historical information, the following discussion includes forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements.
BUSINESS OVERVIEW
FTI Consulting, Inc. ("FTI Consulting," "we," "us" or the "Company") is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political and& regulatory, reputational and transactional. Individually, each of our segments and practices is staffed with experts recognized for the depth of their knowledge and a track record of making an impact. Collectively, FTI Consulting offers a comprehensive suite of services designed to assist clients across the business cycle, from proactive risk management to rapid response to unexpected events and dynamic environments.
We report financial results for the following five reportable segments:
Our Corporate Finance & Restructuring (“Corporate Finance”) segment focuses on the strategic, operational, financial, transactional and capital needs of our clients around the worldworld. Our clients include companies, boards of directors, investors, private equity sponsors, banks, lenders, and deliversother financing sources and creditor groups, as well as other parties-in-interest. We deliver a wide range of service offerings related to restructuring,services centered around three core offerings: business transformation, transactions and transactions. Ourturnaround, restructuring practice includes corporate restructuring, including bankruptcy and interim management services. Our business transformation and transactions practices include financial, operational and performance improvement services, as well as due diligence, financing advisory, mergers and acquisitions ("M&A") advisory, M&A integration, carveout support and valuations.bankruptcy.
Our Forensic and Litigation Consulting (“FLC”) segment provides law firms, companies, government clientsentities and other interested parties with a multidisciplinary and independent range of services in risk and investigations and disputes, including a focus on highly regulated industries such as our construction & environmental solutions and health solutions services. These services are supported by our data & analytics services which help our clients analyze large, disparate sets of data related to risk advisory, investigationstheir business operations and support our clients during regulatory inquiries and commercial disputes. We have expertise in anti-corruption/anti-money laundering investigationsdeliver a wide range of services centered around five core offerings: construction & environmental solutions, data & analytics, disputes, health solutions and compliance, cybersecurity, data analytics, export controlsrisk and sanctions, and monitorship. We offer specialized industry expertise in the areas of insurance, construction, healthcare, environmental and trial services.investigations.
Our Economic Consulting segment, including subsidiary Compass Lexecon LLC, provides law firms, companies, government entities and other interested parties with analysisanalyses of complex economic issues for use in legal, regulatory and international arbitration, legal and regulatory proceedings, and strategic decision making and public policy debates in the U.S. and around the world. We deliver a wide range of services centered around three core offerings: antitrust & competition economics, financial economics and international arbitration.
Our Technology segment provides companies, and law firms and government entities with a comprehensive and global portfolio of consulting and services fore-discovery, information governance, privacy and security electronic discovery ("e-discovery") and insight analytics. Ourcorporate legal operations solutions. We deliver a full spectrum of services including data collection, data processing, document review, hosting, advanced analytics and consulting expertise enablesto help clients to more confidentlysecure, govern, secure, find, analyze and rapidly understand their data in the context of compliance and risk.
Our Strategic Communications segment designsdevelops and executes communications strategies for CEOs,to help management teams, and boards of directors, that help them seize opportunities,law firms, governments and regulators manage change and mitigate risk surrounding transformational and disruptive events, including transactions, investigations, disputes, crises, regulation and legislation. We deliver a wide range of services centered around three core offerings: corporate reputation, financial regulatorycommunications and reputational challenges, navigate market disruptions, articulate their corporate brand, stake a competitive position and preserve their freedom to operate.public affairs.
We derive substantially all of our revenues from providing professional services to both U.S. and global clients. Most of our services are rendered under time and expense arrangements that obligate the client to pay us a fee for the hours that we incur at agreed-upon rates. Under this arrangement, we typically bill our clients for reimbursable expenses, which may include the cost of producing our work product and other direct expenses that we incur on behalf of the client, such as travel costs. We also render services for which certain clients may be required to pay us a fixed-fee or recurring retainer. These arrangements are generally cancelable at any time. Some of our engagements contain performance-based arrangements in which we earn a contingent or success fee when and if certain predefined outcomes occur. This type of success fee may supplement a time and
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expense or fixed-fee arrangement. Success fee revenues may cause variations in our revenues and operating results due to the timing of when achieving the performance-based criteria becomes probable. Seasonal factors, such as the timing of our employees’ and clients’ vacations and holidays, may impact the timing of our revenues across our segments.
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In our Technology segment, certain clients are billed based on the amount of data storage used or the volume of information processed. Unit-based revenues are defined as revenues billed on a per item, per page or some otheranother unit-based method and include revenues from data processing and hosting. Unit-based revenues include revenues associated with the software products that are made available to customers via a web browser (“on-demand”). On-demand revenues are charged on a unit or monthly basis and include, but are not limited to, processing and review related functions.

Our financial results are primarily driven by:
the number, size and type of engagements we secure;
the rate per hour or fixed charges we charge our clients for services;
the utilization rates of the revenue-generating professionals we employ;
the timing of revenue recognition related to revenues subject to certain performance-based contingencies;
the number of revenue-generating professionals;
the types of assignments we are working on at different times;
the length of the billing and collection cycles; and
the geographic locations of our clients or locations in which services are rendered.
We define acquisition growth as revenues of acquired companies in the first 12 months following the effective date of an acquisition. Our definition of organic growth is the change in revenues, excluding the impact of all such acquisitions.
When significant, we identify the estimated impact of foreign currency (“FX”) driven by our businesses with functional currencies other than the U.S. dollar (“USD”). The estimated impact of FX on the period-to-period performance results is calculated as the difference between the prior period results multiplied by the average FX exchange rates to USD in the current period and the prior period results, multiplied by the average FX exchange rates to USD in the prior period.
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 U.S. ("GAAP"). Certain of these financial measures are considered not in conformity with GAAP ("non-GAAP financial measures”) under the 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 in the accompanying analysis of financial information. As described in Note 14, “Segment Reporting” in Part I, Item 1, of this Quarterly Report on Form 10-Q, we evaluate the performance of our operating segments based on Adjusted Segment EBITDA, and Segment Operating Income is a component of the definition of Adjusted Segment EBITDA.
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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,
21


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 Adjusted EBITDA Margin, which is a non-GAAP financial measure, as Adjusted EBITDA as a percentage of total revenues.
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 earnings per diluted share ("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 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 elsewhere in this report.
22


EXECUTIVE HIGHLIGHTS
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
(dollar amounts in thousands,
except per share data)
(dollar amounts in thousands,
except per share data)
(dollar amounts in thousands,
except per share data)
(dollar amounts in thousands, except per share data)
RevenuesRevenues$622,249 $593,106 $1,834,694 $1,750,499 Revenues$702,228 $622,249 $2,099,991 $1,834,694 
Special charges (1)
Special charges (1)
$7,103 $— $7,103 $— 
Special charges (1)
$— $7,103 $— $7,103 
Net incomeNet income$50,172 $60,422 $155,093 $187,665 Net income$69,480 $50,172 $196,758 $155,093 
Adjusted EBITDAAdjusted EBITDA$90,917 $92,343 $249,924 $285,616 Adjusted EBITDA$100,260 $90,917 $292,035 $249,924 
Earnings per common share — dilutedEarnings per common share — diluted$1.35 $1.59 $4.11 $4.92 Earnings per common share — diluted$1.96 $1.35 $5.58 $4.11 
Adjusted earnings per common share — dilutedAdjusted earnings per common share — diluted$1.54 $1.63 $4.39 $4.99 Adjusted earnings per common share — diluted$2.02 $1.54 $5.64 $4.39 
Net cash provided by operating activitiesNet cash provided by operating activities$111,563 $131,304 $140,977 $76,866 Net cash provided by operating activities$196,946 $111,563 $155,920 $140,977 
Total number of employeesTotal number of employees6,264 5,456 6,264 5,456 Total number of employees6,690 6,264 6,690 6,264 
(1)    Excluded from non-GAAP financial measures.

22


Third Quarter 20202021 Executive Highlights
Revenues
Revenues for the three months ended September 30, 20202021 increased $29.1$80.0 million, or 4.9%12.9%, to $622.2$702.2 million, as compared to the three months ended September 30, 2019,2020, which included a 1.0%1.6% estimated positive impact from FX. Acquisition-related revenues contributed $8.5$3.7 million compared to the same quarter in the prior year. Excluding the estimated impact from FX and the acquisition-related revenues, revenues increased $14.8$66.4 million, or 2.5%10.7%, primarily due to increased demand for all of our Corporate Finance and Economic Consulting segments which was partially offset by lower demand for our FLC and Strategic Communications segments, as well as a $13.6 million decrease in pass-through revenues, which includes billable travel and entertainment expenses and media buys, compared to the same quarter in the prior year.

Special Charges
There were no special charges recorded during the three months ended September 30, 2021.
During the three months ended September 30, 2020, we recorded a special charge of $7.1 million, which consists of the following components:
$4.7 million of lease abandonment and other relocation costs associated with the consolidation of office space in New York, New York. The lease abandonment costs include non-cash charges of $4.4 million related to accelerated amortization on operating lease assets and accelerated depreciation on lease-related property and equipment;York; and
$2.4 million of employee severance and other employee-related costs associated with performance-related actions in our FLC segment that impacted 16 employees. All of these amounts will be paid in cash within the next twelve months.
There were no special charges recorded during the three months ended September 30, 2019..
The following table details the special charge by segment:
Three Months Ended September 30, 2020
(in thousands)
Corporate Finance$861 
FLC3,484 
Economic Consulting35 
Technology276 
Strategic Communications2,074 
Segment special charge6,730 
Unallocated Corporate373 
Total$7,103 
Three Months Ended September 30,
20212020
Corporate Finance$— $861 
FLC— 3,484 
Economic Consulting— 35 
Technology— 276 
Strategic Communication— 2,074 
Segment special charge— 6,730 
Unallocated Corporate— 373 
Total$— $7,103 
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Net income
Net income for the three months ended September 30, 2020 decreased $10.32021 increased $19.3 million, or 38.5%, to $50.2$69.5 million, as compared to the three months ended September 30, 2019.2020. The decreaseincrease in net income was primarily due to higheran increase in revenues and FX remeasurement gains, which was partially offset by an increase in compensation expenses, primarily related toincluding the impact of a 15.8%6.9% increase in billable headcount and higher variable compensation, as well as a special charge of $7.1 million and FX remeasurement losses, which were partially offset by an increase in revenues, a decline inhigher selling, general and administrative ("SG&A") expenses, and a lower effective tax rate.compared to the same quarter in the prior year.
Adjusted EBITDA
Adjusted EBITDA for the three months ended September 30, 2020 decreased $1.42021 increased $9.3 million, or 1.5%10.3%, to $90.9$100.3 million, as compared to the three months ended September 30, 2019.2020. Adjusted EBITDA Margin of 14.3% for the three months ended September 30, 2021 compared with 14.6% for the three months ended September 30, 2020 compared with 15.6% for the three months ended September 30, 2019.. The decreaseincrease in Adjusted EBITDA which excludes the special charge, was due to higheran increase in revenues, which was partially offset by an increase in compensation expenses, primarily related toincluding the impact of a 15.8%6.9% increase in billable headcount and higher variable compensation, which were partially offset by an increaseas well as higher SG&A expenses compared to the same quarter in revenues and a decline in SG&A expenses.
23


the prior year.
EPS and Adjusted EPS
EPS for the three months ended September 30, 2020 decreased $0.242021 increased $0.61 to $1.35$1.96 compared to $1.59$1.35 for the three months ended September 30, 2019.2020. The special charge recorded in the third quarter of 2020 reduced EPS by $0.14. The decreaseincrease in EPS was primarily due to the lower operating resultshigher net income described above coupled with FX remeasurement losses, which were partially offset byand a lower effective tax rate.decline in diluted weighted average shares outstanding.
Adjusted EPS decreased $0.09increased $0.48 to $2.02 for the three months ended September 30, 2021 compared to $1.54 for the three months ended September 30, 2020 compared to $1.63. Adjusted EPS for the three months ended September 30, 2019. 2020 Adjusted EPS 2021 excludes $7.1$2.4 million of special charges and $2.3 million of non-cash interest expense related to the 2.0% convertible senior notes due 2023 (the "2023 Convertible Notes"), which increased Adjusted EPS by $0.14 and $0.05, respectively. 2019$0.06. Adjusted EPS for the three months ended September 30, 2020 excluded $2.2$7.1 million of special charges and $2.3 million of non-cash interest expense related to the 2023 Convertible Notes, which increased Adjusted EPS by $0.04.$0.14 and $0.05, respectively.
Liquidity and Capital Allocation
Net cash provided by operating activities for the three months ended September 30, 2020 decreased $19.72021 increased $85.4 million to $111.6$196.9 million compared with $131.3$111.6 million for the three months ended September 30, 2019.2020. The decreaseincrease in net cash provided by operating activities was primarily due to increased cash collections, which was partially offset by an increase in compensation expenses largelysalaries primarily related to headcount growth combined with an increase in income tax payments, which were partially offset by lower non-compensation-relatedand other operating costs and slightly higher cash collections.expenses. Days sales outstanding (“DSO”) of 100 days at September 30, 2021 compared to 104 days at September 30, 2020 compared to 108 days at September 30, 2019.2020.
Free Cash Flow was an inflow of $99.8$172.2 million and $124.9$99.8 million for the three months ended September 30, 20202021 and 2019,2020, respectively. The decreaseincrease for the three months ended September 30, 20202021 was primarily due to lowerhigher net cash provided by operating activities, as described above.
Other strategic activities
During the three months ended September 30, 2020, we acquired certain assetsabove, partially offset by an increase in net cash used for purchases of Delta Partners Group Limited, a leading telecom, mediaproperty and technology focused strategy consulting and investment banking firm with offices in Dubai, New York, Singapore, Barcelona, Johannesburg, San Francisco and Sydney.
Also, during the three months ended September 30, 2020, we entered into a material lease agreement for our new principal office space in New York, New York to consolidate existing office space into fewer locations and in anticipation of future office space needs in view of our current leases, which are scheduled to expire in November 2021.equipment.
Coronavirus Disease 2019 ("COVID-19") Pandemic
The COVID-19 pandemic has created global volatility, economic uncertainty and general market disruption. The extent to which COVID-19 will ultimately impact our business is difficult to predict. During the three months ended September 30, 2020, the COVID-19 pandemicdisruption, and it has impacted each of our segments, practices and regions differently. In general, limitations inDuring the three months ended September 30, 2021, the COVID-19 pandemic continued to impact our ability to service our clients due to social distancing, travel restrictions and remote work have negatively impacted our financial results. In addition, we experienced a reduction in demand and delays in our ability to providedeliver certain services due to regulatorytravel restrictions, court closures, backlogs at courts and government moratoriums on restructuring, which is varied in each region. Although we have not been materially adversely impacted by illness in our employee population, the COVID-19 pandemic could negatively impact employee retention or headcount growth, which differs by segment, position and postponements of legal proceedingsgeography and investigations. These events arising from COVID-19is difficult to quantify. Evolving business practices as well as fiscal and monetary policies have negatively impacted our segment results to a varied extent this quarter, but they particularly impacted our FLC segment. While restructuring and bankruptcy services provided by our Corporate Finance segment have experienced increased demand as compared tomitigated the same period in the prior year as a result of the adversenegative economic impact of the pandemic in certain key geographies, such as in North America. The COVID-19 pandemic during the third quarter of 2020 we experienced a decline in activity as compared to the second quarter of 2020 primarily resulting from government monetary stimulus and the availability of other financing sources. Thus, the increased demand for our restructuring and bankruptcy services may not adequately offset the potential negative impacts of the COVID-19 pandemicits impact on our business in future quarters.and the health and welfare of our employees continues to be difficult to predict, especially due to uncertainty arising from COVID-19 variants, the efficacy of vaccinations, and the roll-out of vaccination programs around the world, including vaccine mandates imposed by governments that could apply to us and our employees and requirements imposed by our clients relating to the vaccination status of our employees who serve such clients.
24


Headcount
Our total headcount increased 12.5%5.8% from 5,567 at6,321 as of December 31, 20192020 to 6,264 at6,690 as of September 30, 2020.2021. The following table includes the net billable headcount additions (reductions) for the nine months ended September 30, 2020:2021:
Billable Headcount
Corporate
Finance (1)
FLCEconomic ConsultingTechnologyStrategic
Communications
Total
December 31, 20191,194 1,351 790 361 728 4,424 
Additions, net54 42 20 13 27 156 
March 31, 20201,248 1,393 810 374 755 4,580 
Additions (reductions), net114 (67)— 12 65 
June 30, 20201,362 1,326 810 386 761 4,645 
Additions, net246 45 70 374 
September 30, 20201,608 1,371 880 394 766 5,019 
Percentage change in headcount from
December 31, 2019
34.7 %1.5 %11.4 %9.1 %5.2 %13.4 %
Billable HeadcountCorporate
Finance
FLCEconomic ConsultingTechnologyStrategic
Communications
Total
December 31, 20201,655 1,343 891 408 770 5,067 
Additions (reductions), net29 24 (1)15 75 
March 31, 20211,684 1,367 890 423 778 5,142 
Additions (reductions), net(52)32 (6)(7)(27)
June 30, 20211,632 1,399 884 429 771 5,115 
Additions, net72 77 41 14 46 250 
September 30, 20211,704 1,476 925 443 817 5,365 
Percentage change in headcount from
December 31, 2020
3.0 %9.9 %3.8 %8.6 %6.1 %5.9 %
(1)    There were 131 revenue-generating professionals added during the three months ended September 30, 2020 related to the acquisition of a strategy consulting and investment banking business within the Corporate Finance segment.
CONSOLIDATED RESULTS OF OPERATIONS
Segment and Consolidated Operating Results: 
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (in thousands, except per share data)(in thousands, except per share data)
Revenues    
Corporate Finance$236,615 $191,698 $690,375 $542,667 
FLC119,104 142,651 373,082 427,518 
Economic Consulting154,978 141,715 438,609 439,488 
Technology58,585 57,083 164,392 164,051 
Strategic Communications52,967 59,959 168,236 176,775 
Total revenues$622,249 $593,106 $1,834,694 $1,750,499 
Segment operating income    
Corporate Finance$52,372 $46,007 $172,847 $130,470 
FLC8,729 25,534 17,853 82,753 
Economic Consulting24,304 17,943 55,916 62,179 
Technology8,621 9,094 23,642 30,080 
Strategic Communications5,105 11,343 21,395 30,691 
Total segment operating income99,131 109,921 291,653 336,173 
Unallocated corporate expenses(26,061)(27,783)(79,928)(78,778)
Operating income73,070 82,138 211,725 257,395 
Other income (expense)   
Interest income and other(3,340)2,973 3,879 5,741 
Interest expense(5,151)(4,832)(15,169)(14,371)
 (8,491)(1,859)(11,290)(8,630)
Income before income tax provision64,579 80,279 200,435 248,765 
Income tax provision14,407 19,857 45,342 61,100 
Net income$50,172 $60,422 $155,093 $187,665 
Earnings per common share — basic$1.41 $1.65 $4.30 $5.09 
Earnings per common share — diluted$1.35 $1.59 $4.11 $4.92 

 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (in thousands, except per share data)(in thousands, except per share data)
Revenues    
Corporate Finance$250,321 $236,615 $707,495 $690,375 
FLC145,264 119,104 446,831 373,082 
Economic Consulting172,543 154,978 525,122 438,609 
Technology64,657 58,585 222,762 164,392 
Strategic Communications69,443 52,967 197,781 168,236 
Total revenues$702,228 $622,249 $2,099,991 $1,834,694 
Segment operating income    
Corporate Finance$52,316 $52,372 $126,718 $172,847 
FLC15,101 8,729 59,599 17,853 
Economic Consulting28,455 24,304 82,891 55,916 
Technology4,416 8,621 38,315 23,642 
Strategic Communications14,219 5,105 35,537 21,395 
Total segment operating income114,507 99,131 343,060 291,653 
Unallocated corporate expenses(25,974)(26,061)(82,041)(79,928)
Operating income88,533 73,070 261,019 211,725 
Other income (expense)   
Interest income and other5,175 (3,340)5,297 3,879 
Interest expense(5,073)(5,151)(15,164)(15,169)
 102 (8,491)(9,867)(11,290)
Income before income tax provision88,635 64,579 251,152 200,435 
Income tax provision19,155 14,407 54,394 45,342 
Net income$69,480 $50,172 $196,758 $155,093 
Earnings per common share — basic$2.07 $1.41 $5.88 $4.30 
Earnings per common share — diluted$1.96 $1.35 $5.58 $4.11 
25


Reconciliation of Net Income to Adjusted EBITDA: 
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
(in thousands)(in thousands) (in thousands)(in thousands)
Net incomeNet income$50,172 $60,422 $155,093 $187,665 Net income$69,480 $50,172 $196,758 $155,093 
Add back:Add back:Add back:
Income tax provisionIncome tax provision14,407 19,857 45,342 61,100 Income tax provision19,155 14,407 54,394 45,342 
Interest income and otherInterest income and other3,340 (2,973)(3,879)(5,741)Interest income and other(5,175)3,340 (5,297)(3,879)
Interest expenseInterest expense5,151 4,832 15,169 14,371 Interest expense5,073 5,151 15,164 15,169 
Depreciation and amortizationDepreciation and amortization7,949 8,080 23,656 22,383 Depreciation and amortization8,867 7,949 25,631 23,656 
Amortization of other intangible assets2,795 2,125 7,440 5,838 
Amortization of intangible assetsAmortization of intangible assets2,860 2,795 8,515 7,440 
Special chargesSpecial charges7,103 — 7,103 — Special charges— 7,103 — 7,103 
Remeasurement of acquisition-related contingent considerationRemeasurement of acquisition-related contingent consideration— — (3,130)— 
Adjusted EBITDAAdjusted EBITDA$90,917 $92,343 $249,924 $285,616 Adjusted EBITDA$100,260 $90,917 $292,035 $249,924 
 
Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS: 
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (in thousands, except per share data)(in thousands, except per share data)
Net income$50,172 $60,422 $155,093 $187,665 
Add back:
Special charges7,103 — 7,103 — 
Tax impact of special charges(1,847)— (1,847)— 
Non-cash interest expense on convertible notes2,286 2,166 6,766 6,411 
Tax impact of non-cash interest expense on convertible
    notes
(595)(563)(1,760)(1,666)
Tax impact of gain on sale of business (1)
— — — (2,097)
Adjusted Net Income$57,119 $62,025 $165,355 $190,313 
Earnings per common share — diluted$1.35 $1.59 $4.11 $4.92 
Add back:    
Special charges0.19 — 0.19 — 
Tax impact of special charges(0.05)— (0.05)— 
Non-cash interest expense on convertible notes0.06 0.06 0.18 0.17 
Tax impact of non-cash interest expense on convertible
    notes
(0.01)(0.02)(0.04)(0.04)
Tax impact of gain on sale of business (1)
— — — (0.06)
Adjusted earnings per common share — diluted$1.54 $1.63 $4.39 $4.99 
Weighted average number of common shares
outstanding — diluted
37,086 37,938 37,708 38,107 
(1)For the nine months ended September 30, 2019, represents a discrete tax adjustment resulting from a change in estimate related to the accounting for the Ringtail e-discovery software and related business (collectively, "Ringtail") divestiture in 2018.
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (in thousands, except per share data)(in thousands, except per share data)
Net income$69,480 $50,172 $196,758 $155,093 
Add back:
Remeasurement of acquisition-related contingent consideration— — (3,130)— 
Special charges— 7,103 — 7,103 
Tax impact of special charges— (1,847)— (1,847)
Non-cash interest expense on convertible notes2,412 2,286 7,141 6,766 
Tax impact of non-cash interest expense on convertible
notes
(627)(595)(1,857)(1,760)
Adjusted Net Income$71,265 $57,119 $198,912 $165,355 
Earnings per common share — diluted$1.96 $1.35 $5.58 $4.11 
Add back:    
Remeasurement of acquisition-related contingent consideration— — (0.09)— 
Special charges— 0.19 — 0.19 
Tax impact of special charges— (0.05)— (0.05)
Non-cash interest expense on convertible notes0.08 0.06 0.20 0.18 
Tax impact of non-cash interest expense on convertible
notes
(0.02)(0.01)(0.05)(0.04)
Adjusted earnings per common share — diluted$2.02 $1.54 $5.64 $4.39 
Weighted average number of common shares
outstanding — diluted
35,362 37,086 35,265 37,708 
26


Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
(in thousands)(in thousands) (in thousands)(in thousands)
Net cash provided by operating activitiesNet cash provided by operating activities$111,563 $131,304 $140,977 $76,866 Net cash provided by operating activities$196,946 $111,563 $155,920 $140,977 
Purchases of property and equipmentPurchases of property and equipment(11,764)(6,365)(25,663)(27,026)Purchases of property and equipment(24,745)(11,764)(52,470)(25,663)
Free Cash FlowFree Cash Flow$99,799 $124,939 $115,314 $49,840 Free Cash Flow$172,201 $99,799 $103,450 $115,314 
Three Months Ended September 30, 20202021 Compared with Three Months Ended September 30, 2019

2020
Revenues and operating income
See “Segment Results”Results” for an expanded discussion of revenues, gross profit and SG&A expenses.
Unallocated corporate expenses
Unallocated corporate expenses for the three months ended September 30, 20202021 decreased $1.7$0.1 million, or 6.2%0.3%, to $26.1$26.0 million compared with $27.8$26.1 million for the three months ended September 30, 20192020.Excluding the impact of special charges recorded in 2020, unallocated corporate expenses increased by $0.3 million, or 1.1%. The decreaseincrease was primarily due to lower variable executive compensation and travel expenses, partially offset by higher corporate staffcompensation costs due to headcount growth.

Interest income and other
Interest income and other, which includes FX gains and losses, decreased $6.3increased $8.5 million to $5.2 million for the three months ended September 30, 2021 compared with a $3.3 million loss for the three months ended September 30, 2020 compared with $3.0 million of income for the three months ended September 30, 2019.2020. The decreaseincrease was primarily due to a $5.5$7.6 million increase in net FX loss, which was $3.5 million for the three months ended September 30, 2020 compared with a $2.0 million net FX gain for the three months ended September 30, 2019.gains.
FX gains and losses, both realized and unrealized, relate to the remeasurement or settlement of monetary assets and liabilities that are denominated in a currency other than an entity’s functional currency. These monetary assets and liabilities include cash, as well as third-party and intercompany receivables and payables.
Interest expense
Interest expense for the three months ended September 30, 2020 increased by $0.32021 decreased $0.1 million to $5.2$5.1 million compared with $4.8$5.2 million for the three months ended September 30, 2019.2020.
Income tax provision
The effectiveOur income tax rate for the three months ended September 30, 2020 of 22.3% compared with 24.7%provision increased $4.7 million, or 33.0%, to $19.2 million for the three months ended September 30, 2019.2021 from $14.4 million for the three months ended September 30, 2020. Our effective tax rate of 21.6% for the three months ended September 30, 2021 compared with 22.3% for the three months ended September 30, 2020. The 2020 tax rate for the three months ended September 30, 2021 was favorably impacted by a discrete tax adjustment related to the release of the valuation allowance on our deferred tax assets in Australia because of sustained profitability. Additionally, the tax rate for the three months ended September 30, 2021 and 2020 was favorably impacted by a discrete tax adjustment related to share-based compensation and lower reserves for uncertain tax positions, as well as lower non-deductible U.S. expenses. The tax rate for the three months ended September 30, 2019 was favorably impacted by a discrete tax adjustment related to share-based compensation.
Nine Months Ended September 30, 20202021 Compared with Nine Months Ended September 30, 20192020
Revenues and operating income
See “Segment Results” for an expanded discussion of revenues, gross profit and SG&A expenses.
Unallocated corporate expenses
Unallocated corporate expenses for the nine months ended September 30, 20202021 increased $1.2$2.1 million, or 1.5%2.6%, to $79.9$82.0 million compared with $78.8$79.9 million for the nine months ended September 30, 20192020. Excluding the impact of special charges recorded in 2020, unallocated corporate expenses increased by $2.5 million, or 3.1%. The increase was primarily due to higher corporate staffcompensation costs due to headcount growth, partially offset by a decreaseas well as higher infrastructure support costs to support growth in variable compensation expense for our executive and regional leadership.the business.
27


Interest income and other
Interest income and other, which includes FX gains and losses, decreased $1.9increased $1.4 million to $5.3 million for the nine months ended September 30, 2021 compared with $3.9 million for the nine months ended September 30, 2020 compared with $5.72020. The increase was primarily due to a $1.9 million increase in net FX gains.
Interest expense
Interest expense was $15.2 million for the nine months ended September 30, 2019. The decrease in interest2021 and 2020.
Income tax provision
Our income and other for the nine months ended September 30, 2020 as comparedtax provision increased $9.1 million, or 20.0%, to the prior year was primarily due to a $0.9 million decrease in net FX gains and a $0.4 million decrease in interest income from investments of excess cash.
FX gains and losses, both realized and unrealized, relate to the remeasurement or settlement of monetary assets and liabilities that are denominated in a currency other than an entity’s functional currency. These monetary assets and liabilities include cash, as well as third-party and intercompany receivables and payables.
Interest expense
Interest expense for the nine months ended September 30, 2020 increased $0.8 million to $15.2 million compared with $14.4$54.4 million for the nine months ended September 30, 2019.
Income2021 from $45.3 million for the nine months ended September 30, 2020. Our effective tax provision
rate of 21.7% for the nine months ended September 30, 2021 compared with 22.6% for the nine months ended September 30, 2020. The effective income tax rate for the nine months ended September 30, 20202021 was 22.6% compared with 24.6%favorably impacted by a discrete tax adjustment related to the future change in the U.K. tax rate and the release of the valuation allowance on our deferred tax assets in Australia because of sustained profitability. In June 2021, the U.K. government approved the U.K. tax rate increase from 19.0% to 25.0% effective in April 2023, which required us to remeasure our deferred tax asset related to an intellectual property license between our U.S. and U.K. subsidiaries. Additionally, the tax rate for the nine months ended September 30, 2019. The2021 and 2020 tax rate was favorably impacted by a discrete tax adjustment related to share-based compensation, lower non-deductible U.S. expenses and the release of certain valuation allowances on our deferred tax assets. The tax rate for the nine months ended September 30, 2019 was favorably impacted by discrete tax adjustments including a change in estimate related to the accounting for the sale of Ringtail and share-bcompensation.
28

ased compensation. 
SEGMENT RESULTS
Total Adjusted Segment EBITDA
We evaluate the performance of each of our operating segments based on Adjusted Segment EBITDA, which is a GAAP financial measure. The following table reconciles net income to Total Adjusted Segment EBITDA, a non-GAAP financial measure, for the three and nine months ended September 30, 20202021 and 2019:2020:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (in thousands)(in thousands)
Net income$50,172 $60,422 $155,093 $187,665 
Add back:
Income tax provision14,407 19,857 45,342 61,100 
Interest income and other3,340 (2,973)(3,879)(5,741)
Interest expense5,151 4,832 15,169 14,371 
Unallocated corporate expenses (1)
26,061 27,783 79,928 78,778 
Total segment operating income99,131 109,921 291,653 336,173 
Add back:
Segment depreciation expense7,236 7,389 21,573 20,309 
Amortization of other intangible assets2,795 2,125 7,440 5,838 
Segment special charges6,730 — 6,730 — 
Total Adjusted Segment EBITDA$115,892 $119,435 $327,396 $362,320 
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (in thousands)(in thousands)
Net income$69,480 $50,172 $196,758 $155,093 
Add back:
Income tax provision19,155 14,407 54,394 45,342 
Interest income and other(5,175)3,340 (5,297)(3,879)
Interest expense5,073 5,151 15,164 15,169 
Unallocated corporate expenses25,974 26,061 82,041 79,928 
Total segment operating income114,507 99,131 343,060 291,653 
Add back:
Segment depreciation expense8,130 7,236 23,394 21,573 
Amortization of intangible assets2,859 2,795 8,512 7,440 
Segment special charges— 6,730 — 6,730 
Remeasurement of acquisition-related contingent consideration— — (3,130)— 
Total Adjusted Segment EBITDA$125,496 $115,892 $371,836 $327,396 
(1)
Includes a $0.4 million special charge.



2829


Other Segment Operating Data
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
Number of revenue-generating professionals:
(at period end)
    
Number of revenue-generating professionals (at period
end):
Number of revenue-generating professionals (at period
end):
    
Corporate FinanceCorporate Finance1,608 1,177 1,608 1,177 Corporate Finance1,704 1,608 1,704 1,608 
FLCFLC1,371 1,326 1,371 1,326 FLC1,476 1,371 1,476 1,371 
Economic ConsultingEconomic Consulting880 764 880 764 Economic Consulting925 880 925 880 
Technology (1)
Technology (1)
394 348 394 348 
Technology (1)
443 394 443 394 
Strategic CommunicationsStrategic Communications766 719 766 719 Strategic Communications817 766 817 766 
Total revenue-generating professionalsTotal revenue-generating professionals5,019 4,334 5,019 4,334 Total revenue-generating professionals5,365 5,019 5,365 5,019 
Utilization rates of billable professionals: (2)
Utilization rates of billable professionals: (2)
    
Utilization rates of billable professionals: (2)
    
Corporate FinanceCorporate Finance64 %70 %68 %70 %Corporate Finance62 %64 %60 %68 %
FLCFLC48 %61 %50 %64 %FLC54 %48 %58 %50 %
Economic ConsultingEconomic Consulting66 %70 %68 %76 %Economic Consulting68 %66 %73 %68 %
Average billable rate per hour: (3)
Average billable rate per hour: (3)
    
Average billable rate per hour: (3)
    
Corporate FinanceCorporate Finance$460 $449 $468 $451 Corporate Finance$465 $460 $457 $468 
FLCFLC$337 $336 $333 $336 FLC$355 $337 $350 $333 
Economic ConsultingEconomic Consulting$502 $512 $482 $500 Economic Consulting$539 $502 $510 $482 
(1)The number of revenue-generating professionals for the Technology segment excludes as-needed professionals, who we employ based on demand for the segment’s services. We employed an average of 440 as-needed employees during the three months ended September 30, 2021 compared with 380 as-needed employees during the three months ended September 30, 2020 compared with 343 as-needed employees during the three months ended September 30, 2019.2020.
(2)We calculate the utilization rate for our billable professionals by dividing the number of hours that all of our billable professionals worked on client assignments during a period by the total available working hours for all of our billable professionals during the same period. Available hours are determined by the standard hours worked by each employee, adjusted for part-time hours, U.S. standard work weeks and local country holidays. Available working hours include vacation and professional training days, but exclude holidays. Utilization rates are presented for our segments that primarily bill clients on an hourly basis. We have not presented utilization rates for our Technology and Strategic Communications segments as most of the revenues of these segments are not generated on an hourly basis.
(3)For engagements where revenues are based on number of hours worked by our billable professionals, averageAverage billable rate per hour is calculated by dividing revenues (excluding revenues from success fees, pass-through revenues and outside consultants) for a period by the number of hours worked on client assignments during the same period. We have not presented average billable rates per hour for our Technology and Strategic Communications segments as most of the revenues of these segments are not based on billable hours.
2930


CORPORATE FINANCE & RESTRUCTURING
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (dollars in thousands,
except rate per hour)
(dollars in thousands,
except rate per hour)
Revenues$236,615 $191,698 $690,375 $542,667 
Percentage change in revenues from prior year23.4 %41.6 %27.2 %29.3 %
Operating expenses
Direct cost of revenues150,219 115,410 422,088 327,524 
Selling, general and administrative expenses31,290 29,168 89,988 82,027 
Special charges861 — 861 — 
Amortization of other intangible assets1,873 1,113 4,591 2,646 
 184,243 145,691 517,528 412,197 
Segment operating income52,372 46,007 172,847 130,470 
Percentage change in segment operating income
   from prior year
13.8 %82.2 %32.5 %41.0 %
Add back:
Depreciation and amortization of intangible assets2,982 2,077 7,717 5,467 
Special charges861 — 861 — 
Adjusted Segment EBITDA$56,215 $48,084 $181,425 $135,937 
Gross profit (1)
$86,396 $76,288 $268,287 $215,143 
Percentage change in gross profit from prior year13.2 %59.2 %24.7 %33.5 %
Gross profit margin (2)
36.5 %39.8 %38.9 %39.6 %
Adjusted Segment EBITDA as a percent of revenues23.8 %25.1 %26.3 %25.0 %
   Number of revenue-generating professionals
      (at period end) (3)
1,608 1,177 1,608 1,177 
Percentage change in number of revenue-generating
   professionals from prior year
36.6 %27.1 %36.6 %27.1 %
Utilization rates of billable professionals64 %70 %68 %70 %
Average billable rate per hour$460 $449 $468 $451 
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues
(3)There were 131 revenue-generating professionals added during the three months ended September 30, 2020 related to the acquisition of a strategy consulting and investment banking business assigned to the Corporate Finance segment.
Three Months Ended September 30, 2020 Compared with Three Months Ended September 30, 2019
Revenues increased $44.9 million, or 23.4%, to $236.6 million for the three months ended September 30, 2020. Acquisition-related revenues contributed $8.5 million, or 4.4% of the increase, compared to the same quarter in the prior year. Excluding the acquisition-related revenues, revenues increased $36.4 million, or 19.0%, primarily due to increased demand and higher realized bill rates related to the mix of client engagements and staffing across restructuring services, largely in North America and Europe, the Middle East and Africa (“EMEA”).
Gross profit increased $10.1 million, or 13.2%, to $86.4 million for the three months ended September 30, 2020. Gross profit margin decreased 3.3 percentage points for the three months ended September 30, 2020. The decrease in gross profit margin was primarily due to a 6 percentage point decline in utilization, combined with higher variable compensation as a percentage of revenues.
SG&A expenses increased $2.1 million, or 7.3%, to $31.3 million for the three months ended September 30, 2020, which included a 1.5% estimated negative impact from FX. SG&A expenses of 13.2% of revenues for the three months ended September 30, 2020 compared with 15.2% of revenues for the three months ended September 30, 2019. The increase in SG&A expenses was primarily due to higher acquisition-related expenses and infrastructure support costs, largely related to an increase in headcount, which was partially offset by lower bad debt and travel and entertainment expenses.
30


Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019
Revenues increased $147.7 million, or 27.2%, to $690.4 million for the nine months ended September 30, 2020. Acquisition-related revenues contributed $34.4 million, or 6.3% of the increase, compared to the same period in the prior year. Excluding the acquisition-related revenues, revenues increased $113.3 million, or 20.9%, primarily due to higher demand for our restructuring services in North America and EMEA, as well as higher demand for our business transformation and transactions services in EMEA, which were partially offset by a $12.4 million decrease in success fees compared to the same period in the prior year.
Gross profit increased $53.1 million, or 24.7%, to $268.3 million for the nine months ended September 30, 2020. Gross profit margin decreased 0.8 percentage points for the nine months ended September 30, 2020. The decrease in gross profit margin was primarily due to lower success fees, as well as lower utilization, primarily driven by our business transformation and transactions services.
SG&A expenses increased $8.0 million, or 9.7%, to $90.0 million for the nine months ended September 30, 2020. SG&A expenses of 13.0% of revenues for the nine months ended September 30, 2020 compared with 15.1% of revenues for the nine months ended September 30, 2019. The increase in SG&A expenses was primarily due to acquisition-related expenses and higher infrastructure support costs, largely related to an increase in headcount, which was partially offset by a decrease in travel and entertainment expenses and lower bad debt expenses.
FORENSIC AND LITIGATION CONSULTING
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (dollars in thousands,
except rate per hour)
(dollars in thousands,
except rate per hour)
Revenues$119,104 $142,651 $373,082 $427,518 
Percentage change in revenues from prior year-16.5 %12.6 %-12.7 %10.1 %
Operating expenses
Direct cost of revenues86,335 91,233 280,167 265,227 
Selling, general and administrative expenses20,385 25,598 70,951 78,673 
Special charges3,484 — 3,484 — 
Amortization of other intangible assets171 286 627 865 
 110,375 117,117 355,229 344,765 
Segment operating income8,729 25,534 17,853 82,753 
             Percentage change in segment operating income
    from prior year
-65.8 %23.8 %-78.4 %16.3 %
Add back:
Depreciation and amortization of intangible assets1,378 1,474 4,415 4,313 
Special charges3,484 — 3,484 — 
Adjusted Segment EBITDA$13,591 $27,008 $25,752 $87,066 
Gross profit (1)
$32,769 $51,418 $92,915 $162,291 
Percentage change in gross profit from prior year-36.3 %13.3 %-42.7 %13.9 %
Gross profit margin (2)
27.5 %36.0 %24.9 %38.0 %
Adjusted Segment EBITDA as a percent of revenues11.4 %18.9 %6.9 %20.4 %
Number of revenue-generating professionals (at period end)1,371 1,326 1,371 1,326 
Percentage change in number of revenue-generating
   professionals from prior year
3.4 %17.4 %3.4 %17.4 %
Utilization rates of billable professionals48 %61 %50 %64 %
Average billable rate per hour$337 $336 $333 $336 
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues

31


Three Months Ended September 30, 2020 Compared with Three Months Ended September 30, 2019
Revenues decreased $23.5 million, or 16.5%, to $119.1 million for the three months ended September 30, 2020. The decrease was primarily due to lower demand for most of our services, particularly for our disputes and investigations services.
Gross profit decreased $18.6 million, or 36.3%, to $32.8 million for the three months ended September 30, 2020. Gross profit margin decreased 8.5 percentage points for the three months ended September 30, 2020. The decrease in gross profit margin was largely related to a 13 percentage point decline in utilization and higher salaries due to a 3.4% increase in headcount, which were partially offset by lower variable compensation as a percentage of revenues.
SG&A expenses decreased $5.2 million, or 20.4%, to $20.4 million for the three months ended September 30, 2020. SG&A expenses of 17.1% of revenues for the three months ended September 30, 2020 compared with 17.9% of revenues for the three months ended September 30, 2019. The decrease in SG&A expenses was primarily driven by lower travel and entertainment and bad debt expenses, as well as a decline in other general and administrative expenses.
Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019
Revenues decreased $54.4 million, or 12.7%, to $373.1 million for the nine months ended September 30, 2020. The decrease was primarily due to lower demand for all of our services, particularly for our disputes, investigations and health solutions services.
Gross profit decreased $69.4 million, or 42.7%, to $92.9 million for the nine months ended September 30, 2020. Gross profit margin decreased 13.1 percentage points for the nine months ended September 30, 2020. The decrease in gross profit margin was largely related to a 14 percentage point decline in utilization and higher salaries due to increased headcount, which were partially offset by lower variable compensation as a percentage of revenues.
SG&A expenses decreased $7.7 million, or 9.8%, to $71.0 million for the nine months ended September 30, 2020. SG&A expenses of 19.0% of revenues for the nine months ended September 30, 2020 compared with 18.4% of revenues for the nine months ended September 30, 2019. The decrease in SG&A expenses was primarily driven by lower travel and entertainment, hiring, bad debt and other general and administrative expenses.
32


ECONOMIC CONSULTING
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
(dollars in thousands,
except rate per hour)
(dollars in thousands,
except rate per hour)
(dollars in thousands,
except rate per hour)
(dollars in thousands,
except rate per hour)
RevenuesRevenues$154,978 $141,715 $438,609 $439,488 Revenues$250,321 $236,615 $707,495 $690,375 
Percentage change in revenues from prior yearPercentage change in revenues from prior year9.4 %1.8 %-0.2 %8.4 %Percentage change in revenues from prior year5.8 %23.4 %2.5 %27.2 %
Operating expensesOperating expensesOperating expenses
Direct cost of revenuesDirect cost of revenues110,716 104,920 322,002 322,541 Direct cost of revenues161,638 150,219 479,311 422,088 
Selling, general and administrative expensesSelling, general and administrative expenses19,879 18,808 60,523 54,635 Selling, general and administrative expenses34,494 31,290 95,822 89,988 
Special chargesSpecial charges35 — 35 — Special charges— 861 — 861 
Amortization of other intangible assets44 44 133 133 
Amortization of intangible assetsAmortization of intangible assets1,873 1,873 5,644 4,591 
130,674 123,772 382,693 377,309  198,005 184,243 580,777 517,528 
Segment operating incomeSegment operating income24,304 17,943 55,916 62,179 Segment operating income52,316 52,372 126,718 172,847 
Percentage change in segment operating income
from prior year
Percentage change in segment operating income
from prior year
35.5 %-17.4 %-10.1 %16.5 %
Percentage change in segment operating income
from prior year
-0.1 %13.8 %-26.7 %32.5 %
Add back:Add back:Add back:
Depreciation and amortization of intangible assetsDepreciation and amortization of intangible assets1,381 1,470 4,173 4,587 Depreciation and amortization of intangible assets3,319 2,982 9,660 7,717 
Special chargesSpecial charges35 — 35 — Special charges— 861 — 861 
Fair value remeasurement of contingent considerationFair value remeasurement of contingent consideration— — (3,130)— 
Adjusted Segment EBITDAAdjusted Segment EBITDA$25,720 $19,413 $60,124 $66,766 Adjusted Segment EBITDA$55,635 $56,215 $133,248 $181,425 
Gross profit (1)
Gross profit (1)
$44,262 $36,795 $116,607 $116,947 
Gross profit (1)
$88,683 $86,396 $228,184 $268,287 
Percentage change in gross profit from prior yearPercentage change in gross profit from prior year20.3 %-4.8 %-0.3 %9.0 %Percentage change in gross profit from prior year2.6 %13.2 %-14.9 %24.7 %
Gross profit margin (2)
Gross profit margin (2)
28.6 %26.0 %26.6 %26.6 %
Gross profit margin (2)
35.4 %36.5 %32.3 %38.9 %
Adjusted Segment EBITDA as a percent of revenues16.6 %13.7 %13.7 %15.2 %
Adjusted Segment EBITDA as a percentage of revenuesAdjusted Segment EBITDA as a percentage of revenues22.2 %23.8 %18.8 %26.3 %
Number of revenue-generating professionals (at period end)Number of revenue-generating professionals (at period end)880 764 880 764 Number of revenue-generating professionals (at period end)1,704 1,608 1,704 1,608 
Percentage change in number of revenue-generating
professionals from prior year
Percentage change in number of revenue-generating
professionals from prior year
15.2 %8.4 %15.2 %8.4 %
Percentage change in number of revenue-generating
professionals from prior year
6.0 %36.6 %6.0 %36.6 %
Utilization rates of billable professionals66 %70 %68 %76 %
Utilization rate of billable professionalsUtilization rate of billable professionals62 %64 %60 %68 %
Average billable rate per hourAverage billable rate per hour$502 $512 $482 $500 Average billable rate per hour$465 $460 $457 $468 
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues
Three Months Ended September 30, 20202021 Compared with Three Months Ended September 30, 20192020
Revenues increased $13.3$13.7 million, or 9.4%5.8%, to $155.0$250.3 million for the three months ended September 30, 2020,2021, which included a 1.3%1.5% estimated positive impact from FX. Excluding the estimated impact from FX, revenues increased $10.1 million, or 4.3%, primarily due to increased demand and higher realization across our transactions and business transformation services, as well as recognition of deferred revenues, which was partially offset by lower demand for our restructuring services.
Gross profit increased $2.3 million, or 2.6%, to $88.7 million for the three months ended September 30, 2021. Gross profit margin decreased 1.1 percentage points for the three months ended September 30, 2021. The decrease in gross profit margin was primarily due to a 2 percentage point decline in utilization.
SG&A expenses increased $3.2 million, or 10.2%, to $34.5 million for the three months ended September 30, 2021, which included a 1.1% estimated negative impact from FX. SG&A expenses of 13.8% of revenues for the three months ended September 30, 2021 compared with 13.2% of revenues for the three months ended September 30, 2020. The increase in SG&A expenses was primarily due to higher bad debt, infrastructure support, rent and occupancy and other general and administrative costs, which was partially offset by a decline in acquisition-related expenses.
31


Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020
Revenues increased $17.1 million, or 2.5%, to $707.5 million for the nine months ended September 30, 2021, which included a 2.5% estimated positive impact from FX. Acquisition-related revenues contributed $22.0 million, or 3.2% of the increase for the nine months ended September 30, 2021. Excluding the estimated impact from FX and acquisition-related revenues, revenues decreased $22.4 million, or 3.2%, primarily due to lower demand for restructuring services, as well as a $6.8 million decline in pass-through revenues, which was partially offset by increased demand across our transactions and business transformation services in North America and Europe, the Middle East and Africa.
Gross profit decreased $40.1 million, or 14.9%, to $228.2 million for the nine months ended September 30, 2021. Gross profit margin decreased 6.6 percentage points for the nine months ended September 30, 2021. The decrease in gross profit margin was largely due to an 8 percentage point decline in utilization, primarily for our restructuring services.
SG&A expenses increased $5.8 million, or 6.5%, to $95.8 million for the nine months ended September 30, 2021, which included a 2.6% estimated negative impact from FX. SG&A expenses of 13.5% of revenues for the nine months ended September 30, 2021 compared with 13.0% of revenues for the nine months ended September 30, 2020. The increase in SG&A expenses was primarily due to higher rent and occupancy, infrastructure support and compensation expenses, which was partially offset by lower acquisition-related expenses.

FORENSIC AND LITIGATION CONSULTING
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (dollars in thousands,
except rate per hour)
(dollars in thousands,
except rate per hour)
Revenues$145,264 $119,104 $446,831 $373,082 
Percentage change in revenues from prior year22.0 %-16.5 %19.8 %-12.7 %
Operating expenses
Direct cost of revenues103,870 86,335 311,772 280,167 
Selling, general and administrative expenses26,044 20,385 74,813 70,951 
Special charges— 3,484 — 3,484 
Amortization of intangible assets249 171 647 627 
 130,163 110,375 387,232 355,229 
Segment operating income15,101 8,729 59,599 17,853 
Percentage change in segment operating income
from prior year
73.0 %-65.8 %233.8 %-78.4 %
Add back:
Depreciation and amortization of intangible assets1,519 1,378 4,455 4,415 
Special charges— 3,484 — 3,484 
Adjusted Segment EBITDA$16,620 $13,591 $64,054 $25,752 
Gross profit (1)
$41,394 $32,769 $135,059 $92,915 
Percentage change in gross profit from prior year26.3 %-36.3 %45.4 %-42.7 %
Gross profit margin (2)
28.5 %27.5 %30.2 %24.9 %
Adjusted Segment EBITDA as a percentage of revenues11.4 %11.4 %14.3 %6.9 %
Number of revenue-generating professionals (at period end)1,476 1,371 1,476 1,371 
Percentage change in number of revenue-generating
professionals from prior year
7.7 %3.4 %7.7 %3.4 %
Utilization rate of billable professionals54 %48 %58 %50 %
Average billable rate per hour$355 $337 $350 $333 
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues
32


Three Months Ended September 30, 2021 Compared with Three Months Ended September 30, 2020
Revenues increased $26.2 million, or 22.0%, to $145.3 million for the three months ended September 30, 2021, which included a 1.1% estimated positive impact from FX. Acquisition-related revenues contributed $3.7 million, or 3.1% of the increase, compared to the same quarter in the prior year. Excluding the estimated impact from FX and acquisition-related revenues, revenues increased $21.3 million, or 17.8%, primarily due to higher demand for our investigations, disputes and health solutions services.
Gross profit increased $8.6 million, or 26.3%, to $41.4 million for the three months ended September 30, 2021. Gross profit margin increased 1.0 percentage point for the three months ended September 30, 2021. The increase in gross profit margin was largely related to a 6 percentage point increase in utilization, primarily in our investigations and disputes services, which was partially offset by higher variable compensation as a percentage of revenues.
SG&A expenses increased $5.7 million, or 27.8%, to $26.0 million for the three months ended September 30, 2021, which included a 1.2% estimated negative impact from FX. SG&A expenses of 17.9% of revenues for the three months ended September 30, 2021 compared with 17.1% of revenues for the three months ended September 30, 2020. The increase in SG&A expenses was primarily driven by higher rent and occupancy, bad debt, travel and entertainment and outside services expenses.
Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020
Revenues increased $73.7 million, or 19.8%, to $446.8 million for the nine months ended September 30, 2021, which included a 1.9% estimated positive impact from FX. Acquisition-related revenues contributed $5.7 million, or 1.5% of the increase, compared to the same period in the prior year. Excluding the estimated impact from FX and acquisition-related revenues, revenues increased $60.9 million, or 16.3%, primarily due to higher demand for our investigations, disputes and health solutions services.
Gross profit increased $42.1 million, or 45.4%, to $135.1 million for the nine months ended September 30, 2021. Gross profit margin increased 5.3 percentage points for the nine months ended September 30, 2021. The increase in gross profit margin was largely related to an 8 percentage point increase in utilization, primarily in our disputes, investigations and health solutions services, which was partially offset by higher variable compensation as a percentage of revenues.
SG&A expenses increased $3.9 million, or 5.4%, to $74.8 million for the nine months ended September 30, 2021, which included a 1.9% estimated negative impact from FX. SG&A expenses of 16.7% of revenues for the nine months ended September 30, 2021 compared with 19.0% of revenues for the nine months ended September 30, 2020. The increase in SG&A expenses was primarily driven by higher infrastructure support, rent and occupancy, and other general and administrative expenses, which was partially offset by lower bad debt and travel and entertainment expenses.
33


ECONOMIC CONSULTING
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (dollars in thousands,
except rate per hour)
(dollars in thousands,
except rate per hour)
Revenues$172,543 $154,978 $525,122 $438,609 
Percentage change in revenues from prior year11.3 %9.4 %19.7 %-0.2 %
Operating expenses
Direct cost of revenues123,079 110,716 383,799 322,002 
Selling, general and administrative expenses21,009 19,879 58,432 60,523 
Special charges— 35 — 35 
Amortization of intangible assets— 44 — 133 
 144,088 130,674 442,231 382,693 
Segment operating income28,455 24,304 82,891 55,916 
Percentage change in segment operating income
from prior year
17.1 %35.5 %48.2 %-10.1 %
Add back:
Depreciation and amortization of intangible assets1,462 1,381 4,304 4,173 
Special charges— 35 — 35 
Adjusted Segment EBITDA$29,917 $25,720 $87,195 $60,124 
Gross profit (1)
$49,464 $44,262 $141,323 $116,607 
Percentage change in gross profit from prior year11.8 %20.3 %21.2 %-0.3 %
Gross profit margin (2)
28.7 %28.6 %26.9 %26.6 %
Adjusted Segment EBITDA as a percentage of revenues17.3 %16.6 %16.6 %13.7 %
Number of revenue-generating professionals (at period end)925 880 925 880 
Percentage change in number of revenue-generating
professionals from prior year
5.1 %15.2 %5.1 %15.2 %
Utilization rate of billable professionals68 %66 %73 %68 %
Average billable rate per hour$539 $502 $510 $482 
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues
Three Months Ended September 30, 2021 Compared with Three Months Ended September 30, 2020
Revenues increased $17.6 million, or 11.3%, to $172.5 million for the three months ended September 30, 2021, which included a 1.7% estimated positive impact from FX. Excluding the estimated impact of FX, revenues increased $11.4$14.9 million, or 8.1%9.6%, primarily due to higher demand for our non-M&A-related antitrust and financial economics services, which was partially offset by lower demand for M&A-related antitrust services.
Gross profit increased $5.2 million, or 11.8%, to $49.5 million for the three months ended September 30, 2021. Gross profit margin increased 0.1 percentage points for the three months ended September 30, 2021. The increase in gross profit margin was primarily due to a 2 percentage point increase in utilization, which was partially offset by higher variable compensation as a percentage of revenues.
SG&A expenses increased $1.1 million, or 5.7%, to $21.0 million for the three months ended September 30, 2021, which included a 1.1% estimated negative impact from FX. SG&A expenses of 12.2% of revenues for the three months ended September 30, 2021 compared with 12.8% of revenues for the three months ended September 30, 2020. The increase in SG&A expenses was primarily driven by higher infrastructure support and other general and administrative expenses.
34


Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020
Revenues increased $86.5 million, or 19.7%, to $525.1 million for the nine months ended September 30, 2021, which included a 2.9% estimated positive impact from FX. Excluding the estimated impact of FX, revenues increased $73.7 million, or 16.8%, primarily due to higher demand for our non-M&A-related antitrust services, along with higher demand and realized bill rates for M&A-related antitrustfinancial economics and international arbitration services, which was partially offset by lower realized bill rates for non-MM&A-related antitrust services.
Gross profit increased $7.5$24.7 million, or 20.3%21.2%, to $44.3$141.3 million for the threenine months ended September 30, 2020.2021. Gross profit margin increased 2.60.3 percentage points for the threenine months ended September 30, 2020. 2021. The increase in gross profit margin was primarily due to lower compensation expense as a percentage of revenues due to a higher proportion of junior professional staff,5 percentage point improvement in utilization, which was partially offset by lower utilization.higher variable compensation and contractor expenses as a percentage of revenues.
SG&A expenses increased $1.1decreased $2.1 million, or 5.7%3.5%, to $19.9$58.4 million for the threenine months ended September 30, 2020,2021, which included a 1.3%3.3% estimated negative impact from FX. SG&A expenses of 12.8%11.1% of revenues for the threenine months ended September 30, 20202021 compared with 13.3%13.8% of revenues for the three months ended September 30, 2019. The increase in SG&A expenses was primarily driven by higher bad debt expenses, which was partially offset by lower legal and travel and entertainment expenses.
33


Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019
Revenues decreased $0.9 million, or 0.2%, to $438.6 million for the nine months ended September 30, 2020. The decrease was primarily due to lower demand for financial economics and non-M&A-related antitrust services, along with lower realized bill rates for our non-M&A-related antitrust services, which was partially offset by higher demand and realized bill rates for our M&A-related antitrust services.
Gross profit decreased $0.3 million, or 0.3%, to $116.6 million for the nine months ended September 30, 2020. Gross profit margin is in line with the nine months ended September 30, 2019. Gross profit margin was adversely impacted by an 8 percentage point decline in utilization, which was offset by a higher proportion of junior professional staff and a lower proportion of lower margin contractor revenues.
SG&A expenses increased $5.9 million, or 10.8%, to $60.5 million for the nine months ended September 30, 2020. SG&A expenses of 13.8% of revenues for the nine months ended September 30, 2020 compared with 12.4% of revenues for the nine months ended September 30, 2019. The increase in SG&A expenses was primarily driven by higherlower bad debt and renttravel and occupancyentertainment expenses, which was partially offset by lower travel and entertainment expenses.higher infrastructure support costs.

TECHNOLOGY
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
(dollars in thousands)(dollars in thousands) (dollars in thousands)(dollars in thousands)
RevenuesRevenues$58,585 $57,083 $164,392 $164,051 Revenues$64,657 $58,585 $222,762 $164,392 
Percentage change in revenues from prior yearPercentage change in revenues from prior year2.6 %0.7 %0.2 %13.9 %Percentage change in revenues from prior year10.4 %2.6 %35.5 %0.2 %
Operating expensesOperating expensesOperating expenses
Direct cost of revenuesDirect cost of revenues35,369 33,293 99,077 93,319 Direct cost of revenues42,637 35,369 133,860 99,077 
Selling, general and administrative expensesSelling, general and administrative expenses14,319 14,696 41,397 40,652 Selling, general and administrative expenses17,604 14,319 50,587 41,397 
Special chargesSpecial charges276 — 276 — Special charges— 276 — 276 
49,964 47,989 140,750 133,971  60,241 49,964 184,447 140,750 
Segment operating incomeSegment operating income8,621 9,094 23,642 30,080 Segment operating income4,416 8,621 38,315 23,642 
Percentage change in segment operating income
from prior year
Percentage change in segment operating income
from prior year
-5.2 %14.7 %-21.4 %107.6 %
Percentage change in segment operating income
from prior year
-48.8 %-5.2 %62.1 %-21.4 %
Add back:Add back:Add back:
Depreciation and amortization of intangible assetsDepreciation and amortization of intangible assets3,042 3,192 8,940 7,804 Depreciation and amortization of intangible assets3,419 3,042 9,636 8,940 
Special chargesSpecial charges276 — 276 — Special charges— 276 — 276 
Adjusted Segment EBITDAAdjusted Segment EBITDA$11,939 $12,286 $32,858 $37,884 Adjusted Segment EBITDA$7,835 $11,939 $47,951 $32,858 
Gross profit (1)
Gross profit (1)
$23,216 $23,790 $65,315 $70,732 
Gross profit (1)
$22,020 $23,216 $88,902 $65,315 
Percentage change in gross profit from prior yearPercentage change in gross profit from prior year-2.4 %1.2 %-7.7 %19.2 %Percentage change in gross profit from prior year-5.2 %-2.4 %36.1 %-7.7 %
Gross profit margin (2)
Gross profit margin (2)
39.6 %41.7 %39.7 %43.1 %
Gross profit margin (2)
34.1 %39.6 %39.9 %39.7 %
Adjusted Segment EBITDA as a percent of revenues20.4 %21.5 %20.0 %23.1 %
Number of revenue-generating professionals (at period
end) (3)
394 348 394 348 
Adjusted Segment EBITDA as a percentage of revenuesAdjusted Segment EBITDA as a percentage of revenues12.1 %20.4 %21.5 %20.0 %
Number of revenue-generating professionals (at period end) (3)
Number of revenue-generating professionals (at period end) (3)
443 394 443 394 
Percentage change in number of revenue-generating
professionals from prior year
Percentage change in number of revenue-generating
professionals from prior year
13.2 %14.9 %13.2 %14.9 %
Percentage change in number of revenue-generating
professionals from prior year
12.4 %13.2 %12.4 %13.2 %
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues
(3)Includes personnel involved in direct client assistance and revenue-generating consultants and excludes professionals employed on an as-needed basis.

3435


Three Months Ended September 30, 20202021 Compared with Three Months Ended September 30, 20192020
Revenues increased $1.5$6.1 million, or 2.6%10.4%, to $58.6$64.7 million for the three months ended September 30, 2021, which included a 1.7% estimated positive impact from FX. Excluding the estimated impact from FX, revenues increased $5.1 million, or 8.6%, primarily due to increased demand for our hosting, consulting and managed review services, largely related to litigation, cross-border investigations and information governance engagements, which was partially offset by a decline in M&A-related “second request” engagements.
Gross profit decreased $1.2 million, or 5.2%, to $22.0 million for the three months ended September 30, 2021. Gross profit margin decreased 5.6 percentage points for the three months ended September 30, 2021. The decrease in gross profit margin was primarily due to an increase in compensation as a percentage of revenues, including the impact of a 12.4% increase in billable headcount, which was partially offset by a favorable mix of higher margin hosting services.
SG&A expenses increased $3.3 million, or 22.9%, to $17.6 million for the three months ended September 30, 2021, which included a 1.3% estimated negative impact from FX. SG&A expenses of 27.2% of revenues for the three months ended September 30, 2021 compared with 24.4% of revenues for the three months ended September 30, 2020. The increase in SG&A expenses was primarily driven by higher demand for our consultingcompensation and hosting services, which was partially offset by the completion of a transitional services agreement associated with the Ringtail divestitureother general and lower realized rates for our managed review services. The aforementioned increase in revenues was primarily due to higher demand for cross-border investigations and litigation services.administrative expenses.
Gross profit decreased $0.6 million, or 2.4%, to $23.2 million for the three months ended September 30, 2020. Gross profit margin decreased by 2.0 percentage points for the three months ended September 30, 2020. The decrease in gross profit margin was largely due to the completion of a transitional services agreement, which was partially offset by the favorable mix and higher profitability for our hosting and consulting services.
SG&A expenses decreased $0.4 million, or 2.6%, to $14.3 million for the three months ended September 30, 2020. SG&A expenses of 24.4% of revenues for the three months ended September 30, 2020 compared with 25.7% of revenues for the three months ended September 30, 2019.
Nine Months Ended September 30, 20202021 Compared with Nine Months Ended September 30, 20192020
Revenues increased $0.3$58.4 million, or 0.2%35.5%, to $164.4$222.8 million for the nine months ended September 30, 2021, which included a 2.7% estimated positive impact from FX. Excluding the estimated impact from FX, revenues increased $54.0 million, or 32.8%, primarily due to increased demand for our managed review and hosting services, largely related to litigation, M&A-related “second request” and cross-border investigation engagements.
Gross profit increased $23.6 million, or 36.1%, to $88.9 million for the nine months ended September 30, 2021. Gross profit margin increased 0.2 percentage points for the nine months ended September 30, 2021. The increase in gross profit margin was primarily due to a favorable mix of higher margin managed review services, which was partially offset by higher compensation as a percentage of revenues, including the impact of a 12.4% increase in billable headcount.
SG&A expenses increased $9.2 million, or 22.2%, to $50.6 million for the nine months ended September 30, 2021, which included a 2.1% estimated negative impact from FX. SG&A expenses of 22.7% of revenues for the nine months ended September 30, 2021 compared with 25.2% of revenues for the nine months ended September 30, 2020. The increase in SG&A expenses was primarily driven by higher demandcompensation, bad debt and realized bill rates for our consulting services, which was partially offset by lower demandother general and realized rates for our managed review services, as well as lower revenues related to the completion of a transitional services agreement associated with the Ringtail divestiture. The aforementioned increase in revenues was due to higher demand for M&A-related and information governance services, which was partially offset by lower demand for our litigation services.
Gross profit decreased $5.4 million, or 7.7%, to $65.3 million for the nine months ended September 30, 2020. Gross profit margin decreased by 3.4 percentage points for the nine months ended September 30, 2020. The decrease in gross profit margin was largely due to the completion of a transitional services agreement, coupled with an unfavorable mix and lower profitability for our managed review and processing services, which was partially offset by the favorable mix and higher profitability for our consulting services.
SG&A expenses increased $0.7 million, or 1.8%, to $41.4 million for the nine months ended September 30, 2020. SG&A expenses of 25.2% of revenues for the nine months ended September 30, 2020 compared with 24.8% of revenues for the nine months ended September 30, 2019.administrative expenses.
3536


STRATEGIC COMMUNICATIONS
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
(dollars in thousands)(dollars in thousands) (dollars in thousands)(dollars in thousands)
RevenuesRevenues$52,967 $59,959 $168,236 $176,775 Revenues$69,443 $52,967 $197,781 $168,236 
Percentage change in revenues from prior yearPercentage change in revenues from prior year-11.7 %8.9 %-4.8 %6.9 %Percentage change in revenues from prior year31.1 %-11.7 %17.6 %-4.8 %
Operating expensesOperating expensesOperating expenses
Direct cost of revenuesDirect cost of revenues34,540 36,036 109,103 107,613 Direct cost of revenues41,010 34,540 122,638 109,103 
Selling, general and administrative expensesSelling, general and administrative expenses10,542 11,898 33,576 36,277 Selling, general and administrative expenses13,477 10,542 37,385 33,576 
Special chargesSpecial charges2,074 — 2,074 — Special charges— 2,074 — 2,074 
Amortization of other intangible assets706 682 2,088 2,194 
Amortization of intangible assetsAmortization of intangible assets737 706 2,221 2,088 
47,862 48,616 146,841 146,084  55,224 47,862 162,244 146,841 
Segment operating incomeSegment operating income5,105 11,343 21,395 30,691 Segment operating income14,219 5,105 35,537 21,395 
Percentage change in segment operating income
from prior year
Percentage change in segment operating income
from prior year
-55.0 %20.6 %-30.3 %12.5 %
Percentage change in segment operating income
from prior year
178.5 %-55.0 %66.1 %-30.3 %
Add back:Add back:Add back:
Depreciation and amortization of intangible assetsDepreciation and amortization of intangible assets1,248 1,301 3,768 3,976 Depreciation and amortization of intangible assets1,270 1,248 3,851 3,768 
Special chargesSpecial charges2,074 — 2,074 — Special charges— 2,074 — 2,074 
Adjusted Segment EBITDAAdjusted Segment EBITDA$8,427 $12,644 $27,237 $34,667 Adjusted Segment EBITDA$15,489 $8,427 $39,388 $27,237 
Gross profit (1)
Gross profit (1)
$18,427 $23,923 $59,133 $69,162 
Gross profit (1)
$28,433 $18,427 $75,143 $59,133 
Percentage change in gross profit from prior yearPercentage change in gross profit from prior year-23.0 %13.4 %-14.5 %6.9 %Percentage change in gross profit from prior year54.3 %-23.0 %27.1 %-14.5 %
Gross profit margin (2)
Gross profit margin (2)
34.8 %39.9 %35.1 %39.1 %
Gross profit margin (2)
40.9 %34.8 %38.0 %35.1 %
Adjusted Segment EBITDA as a percent of revenues15.9 %21.1 %16.2 %19.6 %
Adjusted Segment EBITDA as a percentage of revenuesAdjusted Segment EBITDA as a percentage of revenues22.3 %15.9 %19.9 %16.2 %
Number of revenue-generating professionals (at period end)Number of revenue-generating professionals (at period end)766 719 766 719 Number of revenue-generating professionals (at period end)817 766 817 766 
Percentage change in number of revenue-generating
professionals from prior year
Percentage change in number of revenue-generating
professionals from prior year
6.5 %10.3 %6.5 %10.3 %
Percentage change in number of revenue-generating
professionals from prior year
6.7 %6.5 %6.7 %6.5 %
(1)Revenues less direct cost of revenues
(2)Gross profit as a percentage of revenues

Three Months Ended September 30, 20202021 Compared with Three Months Ended September 30, 20192020
Revenues decreased $7.0increased $16.5 million, or 11.7%31.1%, to $53.0$69.4 million for the three months ended September 30, 2020,2021, which included a 2.1%2.6% estimated positive impact from FX. Excluding the estimated positive impact of FX, revenues decreased $8.2increased $15.1 million, or 13.7%28.5%, primarily due to lowergrowth in project- and retainer-based revenues, primarilymainly driven by lowerhigher demand for our corporate reputation and financial communication services, as well as a $2.4 million decline in pass-through revenues.

public affairs services.
Gross profit decreased $5.5increased $10.0 million, or 23.0%54.3%, to $18.4$28.4 million for the three months ended September 30, 2020.2021. Gross profit margin decreased 5.1increased 6.2 percentage points for the three months ended September 30, 2020.2021. The decreaseincrease in gross profit margin was driven by higher employee-related costs due tolower compensation as a 6.5% increase in headcount, which was partially offset by a lower proportionpercentage of lower margin pass-through revenues.

SG&A expenses decreased $1.4increased $2.9 million, or 11.4%27.8%, to $10.5$13.5 million for the three months ended September 30, 2020,2021, which included a 1.8%2.2% estimated negative impact from FX. SG&A expenses of 19.4% of revenues for the three months ended September 30, 2021 compared with 19.9% of revenues for the three months ended September 30, 2020 compared with 19.8% of revenues for the three months ended September 30, 2019.2020. The decreaseincrease in SG&A expenses was primarily due to lower travel and entertainmenthigher outside services, infrastructure support and other general and administrative expenses.
Nine Months Ended September 30, 20202021 Compared with Nine Months Ended September 30, 20192020
Revenues decreased $8.5increased $29.5 million, or 4.8%17.6%, to $168.2$197.8 million for the nine months ended September 30, 2020. The decrease in2021, which included a 4.4% estimated positive impact from FX. Excluding the estimated impact of FX, revenues wasincreased $22.1 million, or 13.1%, primarily due to a $3.9 million declinegrowth in pass-through revenues, and lower project- and retainer-based revenues, primarily driven by lowerhigher demand for our corporate reputation and public affairs services.
37


Gross profit decreased $10.0increased $16.0 million, or 14.5%27.1%, to $59.1$75.1 million for the nine months ended September 30, 2020.2021. Gross profit margin decreased 4.0increased 2.8 percentage points for the nine months ended September 30, 2020.2021. The decreaseincrease in gross profit
36


margin was primarily driven by higher employee-related costs due to increased headcount, which was partially offset bylower compensation as a lowerpercentage of revenues as well as a smaller proportion of lower margin pass-through revenues.
SG&A expenses decreased $2.7increased $3.8 million, or 7.4%11.3%, to $33.6$37.4 million for the nine months ended September 30, 2020.2021, which included a 4.1% estimated negative impact from FX. SG&A expenses of 18.9% of revenues for the nine months ended September 30, 2021 compared with 20.0% of revenues for the nine months ended September 30, 2020 compared with 20.5% of revenues for the nine months ended September 30, 2019.2020. The decreaseincrease in SG&A expenses was primarily due to lower traveldriven by higher outside services and entertainment expenses.infrastructure support costs.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Note 1 to the Consolidated Financial Statements included in Part II, Item 8, of our Annual Report on Form 10-K for the year ended December 31, 20192020 describes the significant accounting policies and methods used in preparation of the Condensed Consolidated Financial Statements. We evaluate our estimates, including those related to allowance for doubtful accountsrevenues, goodwill and unbilled services, goodwill,intangible assets, income taxes and contingencies, on an ongoing basis. Our estimates are based on current facts and circumstances, historical experience and various other assumptions that we believe are reasonable, andwhich form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies that reflect our more significant estimates, judgments and assumptions, and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results, include the following:
Revenue recognition
Allowance for doubtful accounts and unbilled servicesRecognition
Goodwill and other intangible assets  Intangible Assets
There were no material changes to our critical accounting policies and estimates from the information provided in “Critical Accounting Policies” in the Management's Discussion and Analysis, in Part II, Item 7, of our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS
See Note 2, “New Accounting Standards” in Part I, Item 1, of this Quarterly Report on Form 10-Q.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Nine Months Ended September 30, Nine Months Ended September 30,
2020201920212020
Cash FlowsCash Flows(dollars in thousands)Cash Flows(dollars in thousands)
Net cash provided by operating activitiesNet cash provided by operating activities$140,977 $76,866 Net cash provided by operating activities$155,920 $140,977 
Net cash used in investing activitiesNet cash used in investing activities$(50,376)$(45,762)Net cash used in investing activities$(62,274)$(50,376)
Net cash used in financing activitiesNet cash used in financing activities$(155,414)$(76,520)Net cash used in financing activities$(34,978)$(155,414)
DSODSO104 108 DSO100 104 
We generally finance our day-to-day operations, capital expenditures, acquisitions and share repurchases through cash flows from operations. During the first quarter of our fiscal year, our cash needs generally exceed our cash flows from operations due to the payment of annual incentive compensation. Our operating cash flows generally exceed our cash needs subsequent to the second quarter of each year.
Our operating assets and liabilities consist primarily of billed and unbilled accounts receivable, notes receivable from employees, accounts payable, accrued expenses and accrued compensation expenses. The timing of billings and collections of receivables, as well as compensation and vendor payments, affect the changes in these balances.
38


DSO is a performance measure used to assess how quickly revenues are collected by the Company.Company collects accounts receivable. We calculate DSO at the end of each reporting period by dividing net accounts receivable reduced by billings in excess of services provided, by
37


revenues for the quarter, adjusted for changes in foreign exchange rates. We multiply the result by the number of days in the quarter.
Nine Months Ended September 30, 20202021 Compared with Nine Months Ended September 30, 20192020
Net cash provided by operating activities for the nine months ended September 30, 2020 was $141.0 million compared with $76.9$155.9 million for the nine months ended September 30, 2019.2021 compared with $141.0 million for the nine months ended September 30, 2020. The increase in net cash provided by operating activities was primarily due to higher cash collections, combined with lower non-compensation-related operating costs, which werewas partially offset by higheran increase in salaries, primarily related to headcount growth and higher annual bonus payments, and an increase in income tax payments.as well as other operating expenses. DSO was 100 days as of September 30, 2021 and 104 days as of September 30, 2020 and 108 days as of September 30, 2019.2020.
Net cash used in investing activities for the nine months ended September 30, 2020 was $50.4 million compared with $45.8$62.3 million for the nine months ended September 30, 2019. The increase in net cash used in investing activities for the nine months ended September 30, 2020 as compared to the same period in the prior year was primarily due to an increase of $6.5 million in payments for the acquisition of businesses, net of cash received, partially offset by a decrease of $1.4 million in capital expenditures.
Net cash used in financing activities for the nine months ended September 30, 2020 was $155.4 million2021 compared with $76.5$50.4 million for the nine months ended September 30, 2019.2020. The increase of $11.9 million, or 23.6% in net cash used in investing activities was primarily due to an increase of $26.8 million in capital expenditures, mainly related to leasehold improvement costs for our new principal office space in New York, New York. Additionally, we paid $9.8 million for the acquisition of a business compared with $25.3 million spent on the acquisition of a business in the prior year.
Net cash used in financing activities was $35.0 million for the nine months ended September 30, 2021 compared with $155.4 million for the nine months ended September 30, 2020. The decrease in net cash used in financing activities for the nine months ended September 30, 2020 as compared to the same period in the prior year2021 was primarily due to an increasea decrease of $97.9$129.7 million in payments for common stock repurchases under the Repurchase Program partially offset by an increase in net borrowings of $25.0 million under our senior secured bank revolving credit facility (the “Credit Facility”)as compared with the same period in the currentprior year.

Capital Resources
As of September 30, 2020,2021, our capital resources included $304.7$342.5 million of cash and cash equivalents and available borrowing capacity of $523.9 million under the $550.0 million revolving line of credit under our Credit Facility. As of September 30, 2020,2021, we had $25.0 million of outstanding borrowings under our Credit Facility and $1.1 million of outstanding letters of credit, which reduced the availability of borrowings under the Credit Facility. We use letters of credit primarily in lieu of security deposits for our leased office facilities. The $550.0 million revolving line of credit under theour Credit Facility includes a $75.0 million sublimit for borrowings in currencies other than USD, including the euro, British pound, Australian dollar and Canadian dollar.
The availability of borrowings, as well as issuances and extensions of letters of credit, under our Credit Facility is subject to specified conditions. We may choose to repay outstanding borrowings under the Credit Facility at any time before maturity without premium or penalty. Borrowings under the Credit Facility in USD, euro and British pound bear interest at an annual rate equal to the London Interbank Offered Rate ("LIBOR"), plus an applicable margin or an alternative base rate plus an applicable margin. The alternative base rate means a fluctuating rate per annum equal to the highest of (1) the rate of interest in effect for such day as the prime rate announced by Bank of America, (2) the federal funds rate plus the sum of 50 basis points, and (3) the one-month LIBOR plus 100 basis points. Borrowings under the Credit Facility in Canadian dollars bear interest at an annual rate equal to the Canadian Dealer Offered Rate plus an applicable margin. Borrowings under the Credit Facility in Australian dollars bear interest at an annual rate equal to the Bank Bill Swap Reference Bid Rate plus an applicable margin. The Credit Facility is guaranteed by substantially all of our domestic subsidiaries and is secured by a first priority security interest in substantially all of the assets of FTI Consulting and such domestic subsidiaries. Subject to certain conditions, at any time prior to maturity, we will be able to invite existing and new lenders to increase the size of the facility up to a maximum of $700.0 million.
In July 2017, the Financial Conduct Authority of the United Kingdom (“FCA”), which regulates LIBOR, announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. On March 5, 2021, however, the ICE Benchmark Administration Limited (“IBA”), which is the administrator that publishes LIBOR, and the FCA made public statements regarding the future cessation of LIBOR and that IBA will permanently cease publication of all settings of non-U.S. dollar LIBOR and only the one-week and two-month settings of U.S. dollar LIBOR on December 31, 2021, with the publication of the remaining U.S. dollar LIBOR settings ceasing on June 30, 2023. Our Credit Facility is indexed to LIBOR and provides for multiple LIBOR currency and tenor options. Our Credit Facility also provides for alternative reference rates, although such alternative reference rates and the consequences of the phase out of LIBOR cannot be entirely predicted at this time.
Our Credit Agreement and other indebtedness outstanding from time to time contains or may contain covenants that, among other things, may limit our ability to: incur additional indebtedness; create liens; pay dividends on our capital stock,stock; make distributions or repurchases of our capital stock or make specified other restricted payments; consolidate, merge or sell all
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or substantially all of our assets; guarantee obligations of other entities or our foreign subsidiaries; enter into hedging agreements; enter into transactions with affiliates or related persons; or engage in any business other than consulting-related businesses. In addition, the Credit Agreement includes a financial covenant that requires us not to exceed a maximum consolidated total net leverage ratio (the ratio of funded debt (less unrestricted cash up to $150.0 million) to Consolidated EBITDA, as defined in the Credit Agreement). As of September 30, 2020,2021, we were in compliance with the covenants contained in the Credit Agreement and the indenture, dated as of August 20, 2018, between us and U.S. Bank National Association, as trustee (the "Indenture"), governing the 2023 Convertible Notes.
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Future Capital Needs
We anticipate that our future capital needs will principally consist of funds required for:
operating and general corporate expenses relating to the operation of our businesses;
capital expenditures, primarily for information technology equipment, office furniture and leasehold improvements;
debt service requirements, including interest payments on our long-term debt;
compensation to designated executive management and senior managing directors under our various long-term incentive compensation programs;
discretionary funding of the Repurchase Program;
contingent obligations related to our acquisitions;
potential acquisitions of businesses; and
other known future contractual obligations.
During the nine months ended September 30, 2020,2021, we spent $25.7$52.5 million in capital expenditures to support our organization, including direct support for specific client engagements. We currently expect to make additional capital expenditures to support our organization in an aggregate amount between $10between $20.0 million and $18$25.0 million, which includes costs related to supportleasehold improvements for our organizationnew principal office space in New York, New York, for the remainder of 2020.2021. Our estimate takes into consideration the needs of our existing businesses but does not include the impact of any purchases that we may be required to make as a result of future acquisitions or specific client engagements that are not completed or not currently contemplated. Our capital expenditure requirements may change if our staffing levels or technology needs change significantly from what we currently anticipate, if we are required to purchase additional equipment specifically to support new client engagements or if we pursue and complete additional acquisitions.
2023 Convertible Notes
Our 2023 Convertible Notes were issued pursuant to the Indenture. The 2023 Convertible Notes bear interest at a fixed rate of 2.0% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2019. The 2023 Convertible Notes will mature on August 15, 2023, unless earlier converted or repurchased. Upon conversion, the 2023 Convertible Notes may be settled, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock.
Each $1,000 principal amount of the 2023 Convertible Notes will be convertible into 9.8643 shares of our common stock, which is equivalent to a conversion price of approximately $101.38 per share of common stock, at maturity, subject to adjustment upon the occurrence of specified events. Prior to the close of business on the business day immediately preceding May 15, 2023, the 2023 Convertible Notes may be converted only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter endingended on September 30, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “Measurement Period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the 2023 Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate in effect on each such trading day; or (3) upon the occurrence of specified corporate events. On or after May 15, 2023, until the close of business on the business day immediately preceding the maturity date of August 15, 2023, holders may convert their 2023 Convertible Notes at any time, regardless of the foregoing circumstances. During the quarter ended September 30, 2021, the closing price of our common stock exceeded 130% of the conversion price of our 2023 Convertible Notes for at least 20 trading days (whether or not
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consecutive) during a period of 30 consecutive trading days ending on and including, the last trading day of the immediately preceding quarter. As a result, holders may convert their 2023 Convertible Notes at any time beginning on October 1, 2021 and ending on December 31, 2021.
We may not redeem the 2023 Convertible Notes prior to the maturity date.
If we undergo a fundamental change (as defined in the Indenture), subject to certain conditions, holders may require us to repurchase for cash all or part of their 2023 Convertible Notes in principal amounts of $1,000 or a multiple thereof. The fundamental change repurchase price will be equal to 100% of the principal amount of the 2023 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, in certain circumstances, we may be required to increase the conversion rate for any 2023 Convertible Notes converted in connection with a make-whole fundamental change (as defined in the Indenture). See Note 9, "Debt" in Part I, Item 1 of this Quarterly Report on Form 10-Q for a further discussion of the 2023 Convertible Notes.
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Cash Flows
For the last several years, our cash flows from operations have exceeded our cash needs for capital expenditures and debt service requirements. We believe that our cash flows from operations, supplemented by short-term borrowings under our Credit Facility, as necessary, will provide adequate cash to fund our long-term cash needs for the next 12 months or longer.
Our conclusion that we will be able to fund our cash requirements for the next 12 months by using existing capital resources and cash generated from operations does not take into account exacerbation of, or additional or prolonged disruptions caused by or arising out of, the COVID-19 pandemic or general economic and other events that could result in a material adverse impact on our business, which are events beyond our control, or the impact of any future acquisitions, unexpected significant changes in number of employees or other unanticipated uses of cash. The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if events, including economic disruptions, arising from the COVID-19 pandemic worsen, or if other economic conditions change from those currently prevailing or from those now anticipated or if other unexpected circumstances arise that may have a material adverse effect on the cash flow or profitability of our business, including material negative changes in the health and welfare of our employees or those of our clients, turnover or attrition of employees and the operating performance or financial results of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding needs in excess of the identified currently available sources and could require us to increase borrowings or raise additional debt or equity funding to meet those needs. Our ability to raise additional capital, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:
our future profitability;
the quality of our accounts receivable;
our relative levels of debt and equity;
the volatility and overall condition of the capital markets;
general economic factors; and
the market prices of our securities.
Any new debt funding, if available, may be on terms less favorable to us than our Credit Facility or the 2023 Convertible Notes. See “Forward-Looking Statements” in Part I, Item 2 of this Quarterly Report on Form 10-Q, and the information contained under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2019and under the heading “Risk Factors” in Part II, Item 1A, of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. 
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements and we have not entered into any transactions involving unconsolidated subsidiaries or special purpose entities that would be expected to have a material impact on our financial condition or results of operations.
Future Contractual Obligations
On October 26, 2020, the Company entered into a material lease agreement, amending and restating the lease agreement entered into as of August 19, 2020 (the "Lease") for its new principal office space in New York, New York to consolidate existing office space into fewer locations and in anticipation of future office space needs in view of its current leases, which are scheduled to expire in November 2021. The Company expects to accept possession of the premises on or about April 1, 2021, subject to the satisfaction of certain conditions, and shall continue for an initial fixed term of 15 years, subject to two renewal options of five years each. Fixed rental payments under the Lease are scheduled to commence in April 2022, payable in monthly installments and will aggregate approximately $145 million, excluding lease-related incentives over the term of the Lease. During the lease term, the Company will be responsible for its percentage share of the leased square footage of the premises of increases in taxes over a base tax year of July 1, 2021 - June 30, 2022 and operating expenses over a base operating year of calendar year 2021.
There have been no other material changes in our future contractual obligations, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
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Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended
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(the (the “Exchange Act”), that involve uncertainties and risks. Forward-looking statements include statements concerning our plans, policies and practices, objectives, goals, strategies, future events, future revenues, future results and performance, future capital allocations and expenditures, 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, scientific or technological developments and other information that is not historical. Forward-looking statements often contain words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “aspires,” “forecasts” and variations of such words or similar expressions. All forward-looking statements, including, without limitation, management’s financial guidance and examination of operating trends, are based upon our historical performance and our current plans, estimates, intentions and expectations at the time we make them, and various assumptions. There can be no assurance that management’s expectations, intentions, aspirations, beliefs, forecasts and projections will result or be achieved. Our actual financial results, performance or achievements could differ materially from those expressed in, or implied by, any forward-looking statements. The inclusion of any forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, forecasts, intentions, aspirations, beliefs or expectations contemplated by us will be achieved. Given these risks, uncertainties and other factors, you should not place undue reliance on any forward-looking statements.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in, or implied by, this Quarterly Report on Form 10-Q. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q include those set forth under the heading “Risk Factors” in Part II, Item 1A, of ourthis Quarterly Report on Form 10-Q for the quarter ended March 31, 2020September 30, 2021 and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019,2020, as well as in other information that we file with the SEC from time to time. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q include, but are not limited to, the following:
impact of the COVID-19 pandemic and related events that are beyond our control, including possible effects on our business, financial condition and results of operations, clients and vendors, and employees and contractors, and employee attrition and headcount growth, which could affect our segments and practices, the type of services they provide and the geographic regions in which we conduct business, differently and adversely;adversely, as well as heighten risks related to or otherwise negatively impact the effectiveness of cybersecurity, information technology, financial reporting and our other corporate functions;
changes in demand for our services;
our ability to attractrecruit and retain qualified professionals and senior management;management, including segment, industry and regional leaders;
conflicts resulting in our inability to represent certain clients;
our former employees joining or forming competing businesses;
our ability to manage our headcount needs and our professionals’ utilization and billing rates and maintain or increase the pricing of our services and products;
our ability to identify suitable acquisition candidates, negotiate favorable terms, take advantage of opportunistic acquisition situations and integrate the operations of acquisitions, as well as the costs of integration;
our ability to adapt to and manage the risks associated with operating in non-U.S. markets;
our ability to replace key personnel, including former executives, officers, senior managers and practice and regional leaders who have highly specialized skills and experience;
our ability to protect the confidentiality of internal and client data and proprietary and confidential information, including from cyberattacks, systems failures or other similar events;events, or the use or misuse of social media;
legislation or judicial rulings, including legislation or rulings regarding data privacy and the discovery process;
periodic fluctuations in revenues, operating income and cash flows;
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damage to our reputation as a result of claims involving the quality of our services;services, failures of our internal information technology systems controls or adverse publicity relating to certain clients or engagements;
fee discounting or renegotiation, lower pricing, less advantageous contract terms and unexpected termination of client engagements;
competition for clients and key personnel;
general economic factors, industry trends, restructuring and bankruptcy rates, legal or regulatory requirements, capital market conditions, merger and acquisition activity, major litigation activity and other events outside of our control;
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our ability to manage growth;
risk of non-payment of receivables;
the amount and terms of our outstanding indebtedness;
uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark;
headcount and cost reductions during periods of reduced demand;
risks relating to the obsolescence of or the protection of our proprietary software products, intellectual property rights and trade secrets;
foreign currency disruptions and currency fluctuations between the U.S. dollar and foreign currencies;
U.S. and foreign tax law changes, including the enactment of proposed U.S. tax legislation into law, which could increase our effective tax rate and cash tax expenditures;
physical risks related to climate change, including rising temperatures, severe storms, energy disruptions and rising sea levels, among others, which could adversely impact our ability to conduct business or maintain business continuity, including by affecting our access to our leased office space in affected geographies and the integrity of our information technology systems;
our ESG-related initiatives and goals, including our policies and practices relating to the environment and climate change, sustainability, and diversity and inclusion, if they do not meet or keep pace with evolving governmental, investor or other stakeholder expectations and standards or rules and regulations enacted by regulators; and
fluctuations in the mix of our services and the geographic locations in which our clients are located or our services are rendered.
There may be other factors that may cause our actual results to differ materially from our forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included herein. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances and do not intend to do so.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2019.2020. There have been no material changes in our market risk exposure during the period covered by this Quarterly Report on Form 10-Q.
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Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures. An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q, was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (a) were effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) included, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting that occurred during the three months ended September 30, 20202021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1.Legal Proceedings
From time to time in the ordinary course of business, we are subject to claims, asserted or unasserted, or named as a party to lawsuits or investigations. Litigation, in general, and intellectual property and securities litigation in particular, can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings cannot be predicted with any certainty and in the case of more complex legal proceedings such as intellectual property and securities litigation, the results are difficult to predict at all. We are not aware of any asserted or unasserted legal proceedings or claims that we believe would have a material adverse effect on our financial condition or results of our operations.
Item 1A.Risk Factors
There have been no material changes in anyThe following risk factors previously disclosedare in Part II, Item 1A, of our Quarterly Report on Form 10-Q foraddition to the quarter ended March 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on April 30, 2020 and Part I, Item 1A, ofrisk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 20192020, filed with the SECUnited States Securities and Exchange Commission (the "SEC") on February 25, 2020.2021. We may disclose changes to risk factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Risks Related to Our Operations
Changes to corporate income tax rates, tax legislation, tax rules and regulations and tax treaties in the jurisdictions in which we conduct business may substantially negatively impact our effective tax rate and financial results of operations and increase our tax cash payment obligations.
Changes to corporate income tax laws and rules and regulations and tax treaties in jurisdictions where we pay taxes that increase rates, eliminate or reduce deductions or affect the utility or value of deferred tax assets or liabilities could negatively affect our reported financial results and increase our cash tax payment obligations. The U.S. Congress is currently considering broad tax legislation that includes higher corporate income tax rates on both domestic and foreign earnings, the application of global intangible low-taxed income on a country-by-country basis and limits on various deductions, including the deductibility of compensation paid to certain highly-compensated employees. Limits on the deductibility of employee compensation could have a significant impact on professional services firms such as FTI and other companies that require the services of in-demand professionals who are often highly compensated for their substantive expertise and their ability to attract business. The content and timing of income tax legislation in the U.S., including whether any such legislation becomes law, remains uncertain. In addition, if any legislation is adopted, implementing regulations could significantly affect the impact of any tax legislation, both in terms of substance and timing.
We are exposed to certain physical and regulatory risks related to climate change, which could adversely affect our business, financial condition and results of operations.
Due to the global nature of our business, we are exposed to a variety of physical risks related to climate change, including rising temperatures, severe storms, energy disruptions and rising sea levels, among others.These risks could impact our ability to maintain business continuity, including by affecting our access to our leased office space in affected geographies and the integrity of our information technology systems.In addition, existing or future legislation and regulations applicable to our business and operations related to greenhouse gas emissions and climate change by federal, state, local and foreign legislatures and governmental agencies could cause us to incur additional compliance and operational costs or actions if we fail to comply.
Increasing scrutiny and changing expectations from investors, clients and our colleagues with respect to our environmental, social and governance (“ESG”) practices and those of our clients may impose additional costs on us or expose us to new or additional risks.
There is increased focus, including from governmental organizations, investors, clients and employees on ESG issues such as environmental stewardship, climate change, diversity and inclusion, racial justice and workplace culture conduct.We have expended and may further expend resources to monitor, report and adopt policies and practices that we believe will improve compliance with our evolving ESG goals and plans, as well as third party imposed ESG related standards and expectations. If our ESG practices, including our goals for sustainability and diversity and inclusion, do not meet evolving rules and regulations or investor or other stakeholder expectations and standards (or if we are viewed in a negative light based on positions we do or do not take or work we do or do not perform for certain clients or industries), then our reputation, our ability to attract or retain leading experts, employees and other professionals, and our ability to attract new engagements and clients could be negatively impacted, as could our attractiveness as an investment, service provider, business partner or acquiror.
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Similarly, our failure or perceived failure to pursue or fulfill our current or future goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters, and unfavorable ratings of our Company may lead to negative investor sentiment, stock price fluctuations and the diversion of investment to other companies.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered sales of equity securities.
None.
Repurchases of our common stock.
The following table provides information with respect to purchases we made of our common stock during the three months ended September 30, 2020:2021: 
 Total
Number of
Shares
Purchased
 Average
Price
Paid per
Share
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Program (1)
 Approximate
Dollar Value
That May Yet Be
Purchased
Under the
Program
 (in thousands, except per share data)
July 1 through July 31, 2020148 (2)$111.66 147 (4)$248,817 
August 1 through August 31, 202098 $117.59 98 (5)$237,304 
September 1 through September 30, 2020505 (3)$108.90 504 (6)$182,412 
751   749   
 Total
Number of
Shares
Purchased
 Average
Price
Paid per
Share
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Program (1)
 Approximate
Dollar Value
That May Yet Be
Purchased
Under the
Program
 (in thousands, except per share data)
July 1 through July 31, 2021(2)$137.22 — $167,058 
August 1 through August 31, 2021— $— — $167,058 
September 1 through September 30, 2021(3)$134.67 — $167,058 
  —   
(1)On June 2, 2016, our Board of Directors authorized a stock repurchase program of up to $100.0 million (the “Repurchase Program”). On each of May 18, 2017, December 1, 2017, February 21, 2019 and February 20, 2020, our Board of Directors authorized an additional $100.0 million, respectively. On each of July 28, 2020 and December 3, 2020, our Board of Directors authorized an additional $200.0 million, respectively, increasing the Repurchase Program to an aggregate authorization of $700.0$900.0 million. DuringNo time limit has been established for the completion of the Repurchase Program, and the Repurchase Program may be suspended, discontinued or replaced by the Board of Directors at any time without prior notice. There were no repurchases of shares of our common stock pursuant to the Repurchase Program during the quarter ended September 30, 2020, we repurchased an aggregate of 749,315 shares of our outstanding common stock under the Repurchase Program at an average price of $110.57 per share for a total cost of approximately $82.9 million.2021.
(2)Includes 2355,607 shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.
(3)Includes 1,605712 shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.
(4)During the month ended July 31, 2020, we repurchased and retired 147,409 shares of common stock, at an average price per share of $111.66, for an aggregate cost of $16.5 million.
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(5)During the month ended August 31, 2020, we repurchased and retired 97,890 shares of common stock, at an average price per share of $117.59, for an aggregate cost of $11.5 million.
(6)During the month ended September 30, 2020, we repurchased and retired 504,016 shares of common stock, at an average price per share of $108.89, for an aggregate cost of $54.9 million.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
None.
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Item 6.Exhibits
Exhibit
Number
Description
  
3.1
  
3.2
  
3.3
  
3.4
  
3.5
10.1±
31.1†
31.2†
  
32.1†**
32.2†**
101The following financial information from the Quarterly Report on Form 10-Q of FTI Consulting, Inc., included herewith, and formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 20202021 and December 31, 2019;2020; (ii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 20202021 and 2019;2020; (iii) Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, 20202021 and 2019;2020; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 20202021 and 2019;2020; and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.
104The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020,2021, formatted in Inline XBRL (included as Exhibit 101).
Filed herewith.
**This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
±Exhibits and Schedules (or similar attachments) to the Amended and Restated Lease are not filed. FTI Consulting, Inc. will supplementally furnish a copy of any omitted Exhibit or Schedule (or similar attachment) to the Securities and Exchange Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: October 29, 202028, 2021
 
FTI CONSULTING, INC.
   
By: /s/ Brendan Keating
  Brendan Keating
  Chief Accounting Officer and
Controller
  (principal accounting officer)
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