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~~June 30, ~~2021~~2022


☐			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)


Maryland									52-1261113
(State or Other Jurisdiction of Incorporation or Organization)									(I.R.S. Employer Identification No.)

555 12th Street NW
Washington,
DC									20004
(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 class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

FCN

New 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 filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller 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.


Class			Outstanding at ~~October~~July 21, ~~2021~~2022
Common Stock, $0.01 par value			~~34,288,467~~34,539,548

FTI CONSULTING, INC. AND SUBSIDIARIES

INDEX


		Page
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets—~~September~~June ~~30, 2021~~3 0 , 2022 and December 31, ~~2020~~2021	3

	Condensed Consolidated Statements of Comprehensive Income—Three and ~~Nine~~Six Months Ended ~~September~~June ~~30,~~3 0 , 2022 and 2021 ~~and 2020~~	4

	Condensed Consolidated Statements of Stockholders’ Equity—Three and Six ~~Nine~~Months Ended ~~Months Ended~~ ~~September~~June ~~30,~~3 0 , 2022 and 2021 ~~and 2020~~	5

	Condensed Consolidated Statements of Cash ~~Flows—~~Flows ~~Nine~~—Six Months Ended ~~September~~June ~~30,~~3 0 , 2022 and 2021 ~~and 2020~~	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2021

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	4443

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	4544

Item 1A.	Risk Factors	4544

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4644

Item 3.	Defaults Upon Senior Securities	4645

Item 4.	Mine Safety Disclosures	4645

Item 5.	Other Information	4645

Item 6.	Exhibits	4746

SIGNATURES		4847

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,			June 30,		December 31,
		2021		2020			2022		2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	342,527	$	294,953	Cash and cash equivalents	$	255,730	$	494,485

Accounts receivable, net	Accounts receivable, net	809,878		711,357		Accounts receivable, net	905,548		754,120
Current portion of notes receivable	Current portion of notes receivable	32,823		35,253		Current portion of notes receivable	29,773		30,256
Prepaid expenses and other current assets	Prepaid expenses and other current assets	83,266		88,144		Prepaid expenses and other current assets	100,668		91,166
Total current assets	Total current assets	1,268,494		1,129,707		Total current assets	1,291,719		1,370,027
Property and equipment, net	Property and equipment, net	132,857		101,642		Property and equipment, net	144,053		142,163
Operating lease assets	Operating lease assets	224,961		156,645		Operating lease assets	198,893		215,995
Goodwill	Goodwill	1,234,023		1,234,879		Goodwill	1,227,837		1,232,791
Intangible assets, net	Intangible assets, net	34,504		41,550		Intangible assets, net	28,613		31,990
Notes receivable, net	Notes receivable, net	59,123		61,121		Notes receivable, net	55,230		53,539
Other assets	Other assets	52,962		51,819		Other assets	56,823		54,404
Total assets	Total assets	$	3,006,924	$	2,777,363	Total assets	$	3,003,168	$	3,100,909
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	$	157,794	$	170,066	Accounts payable, accrued expenses and other	$	165,455	$	165,025
Accrued compensation	Accrued compensation	451,549		455,933		Accrued compensation	357,222		507,556
Billings in excess of services provided	Billings in excess of services provided	36,279		44,172		Billings in excess of services provided	48,217		45,535

Total current liabilities	Total current liabilities	645,622		670,171		Total current liabilities	570,894		718,116
Long-term debt, net	Long-term debt, net	319,355		286,131		Long-term debt, net	314,337		297,158
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	232,390		161,677		Noncurrent operating lease liabilities	218,001		236,026
Deferred income taxes	Deferred income taxes	168,232		158,342		Deferred income taxes	167,797		170,612
Other liabilities	Other liabilities	97,022		100,861		Other liabilities	101,520		95,676
Total liabilities	Total liabilities	1,462,621		1,377,182		Total liabilities	1,372,549		1,517,588
Commitments and contingencies (Note 11)		0		0
Commitments and contingencies (Note 10)						Commitments and contingencies (Note 10)	0		0
Stockholders' equity	Stockholders' equity					Stockholders' equity
Preferred stock, $0.01 par value; shares authorized — 5,000; none outstanding	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)		343		345
Common stock, $0.01 par value; shares authorized — 75,000; shares issued and outstanding 34,540 (2022) and 34,333 (2021)						Common stock, $0.01 par value; shares authorized — 75,000; shares issued and outstanding 34,540 (2022) and 34,333 (2021)	345		343
Additional paid-in capital	Additional paid-in capital	8,490		—		Additional paid-in capital	499		13,662
Retained earnings	Retained earnings	1,659,947		1,506,271		Retained earnings	1,805,485		1,698,156
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(124,477)		(106,435)		Accumulated other comprehensive loss	(175,710)		(128,840)
Total stockholders' equity	Total stockholders' equity	1,544,303		1,400,181		Total stockholders' equity	1,630,619		1,583,321
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,006,924	$	2,777,363	Total liabilities and stockholders' equity	$	3,003,168	$	3,100,909

See accompanying notes to condensed consolidated financial statements

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 June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues	Revenues	$	702,228	$	622,249	$	2,099,991	$	1,834,694	Revenues	$	754,992	$	711,486	$	1,478,612	$	1,397,763
Operating expenses	Operating expenses									Operating expenses
Direct cost of revenues	Direct cost of revenues	472,235		417,179		1,431,381		1,232,437		Direct cost of revenues	520,080		490,722		1,013,184		959,146
Selling, general and administrative expenses	Selling, general and administrative expenses	138,600		122,102		399,076		375,989		Selling, general and administrative expenses	167,940		133,930		316,911		260,476
Special charges		—		7,103		—		7,103

Amortization of intangible assets	Amortization of intangible assets	2,860		2,795		8,515		7,440		Amortization of intangible assets	2,737		2,854		5,005		5,655
		613,695		549,179		1,838,972		1,622,969			690,757		627,506		1,335,100		1,225,277
Operating income	Operating income	88,533		73,070		261,019		211,725		Operating income	64,235		83,980		143,512		172,486
Other income (expense)	Other income (expense)									Other income (expense)
Interest income and other	Interest income and other	5,175		(3,340)		5,297		3,879		Interest income and other	2,994		(912)		2,647		122
Interest expense	Interest expense	(5,073)		(5,151)		(15,164)		(15,169)		Interest expense	(2,448)		(5,294)		(5,090)		(10,091)

		102		(8,491)		(9,867)		(11,290)			546		(6,206)		(2,443)		(9,969)
Income before income tax provision	Income before income tax provision	88,635		64,579		251,152		200,435		Income before income tax provision	64,781		77,774		141,069		162,517
Income tax provision	Income tax provision	19,155		14,407		54,394		45,342		Income tax provision	13,353		14,992		30,320		35,239
Net income	Net income	$	69,480	$	50,172	$	196,758	$	155,093	Net income	$	51,428	$	62,782	$	110,749	$	127,278
Earnings per common share — basic	Earnings per common share — basic	$	2.07	$	1.41	$	5.88	$	4.30	Earnings per common share — basic	$	1.52	$	1.88	$	3.29	$	3.80
Earnings per common share — diluted	Earnings per common share — diluted	$	1.96	$	1.35	$	5.58	$	4.11	Earnings per common share — diluted	$	1.43	$	1.77	$	3.10	$	3.61
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax									Other 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	$	(18,607)	$	21,330	$	(18,042)	$	(204)	Foreign currency translation adjustments, net of tax expense of $0	$	(40,679)	$	5,807	$	(46,870)	$	565
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	(18,607)		21,330		(18,042)		(204)		Total other comprehensive income (loss), net of tax	(40,679)		5,807		(46,870)		565
Comprehensive income	Comprehensive income	$	50,873	$	71,502	$	178,716	$	154,889	Comprehensive income	$	10,749	$	68,589	$	63,879	$	127,843

See accompanying notes to condensed consolidated financial statements

FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(Unaudited)


													Accumulated Other Comprehensive Loss																							Accumulated Other Comprehensive Loss
		Common Stock			Additional Paid-in Capital				Retained Earnings									Common Stock									Additional Paid-in Capital				Retained Earnings
		Shares	Amount								Total				Accumulated Other Comprehensive Loss			Shares					Amount										Total		Accumulated Other Comprehensive Loss
Balance at December 31, 2020		34,481	$	345			$	—			$	1,506,271							$	(106,435)
Balance at December 31, 2021																Balance at December 31, 2021		34,333					$	343					$	13,662			$	1,698,156				$	(128,840)
Net income	Net income	—	$	—	$	—			$	64,496			$	—					$	64,496		Net income	—				$	—			$	—				$	59,321			$	—	$	59,321
Other comprehensive loss:	Other comprehensive loss:																		Other comprehensive loss:
Cumulative translation adjustment	Cumulative translation adjustment	—	—		—				—				(5,242)			(5,242)			Cumulative translation adjustment		—				—				—				—			(6,191)				(6,191)
Issuance of common stock in connection with:	Issuance of common stock in connection with:																		Issuance of common stock in connection with:
Exercise of options	Exercise of options	12	—		434				—				—			434			Exercise of options		26				—				923				—			—				923
Restricted share grants, less net settled shares of 63		157	1		(7,232)				—				—			(7,231)
Restricted share grants, less net settled shares of 54																			Restricted share grants, less net settled shares of 54		134				2				(7,836)				—			—				(7,834)
Stock units issued under incentive compensation plan	Stock units issued under incentive compensation plan	—	—		2,603				—				—			2,603			Stock units issued under incentive compensation plan		—				—				1,664				—			—				1,664
Purchase and retirement of common stock	Purchase and retirement of common stock	(422)	(4)		(3,047)				(43,082)				—			(46,133)			Purchase and retirement of common stock		(22)				—				(3,098)				—			—				(3,098)
Cumulative effect due to adoption of new accounting standard																			Cumulative effect due to adoption of new accounting standard		—				—				(34,131)				22,078			—				(12,053)
Conversion of convertible senior notes due 2023																			Conversion of convertible senior notes due 2023		—				—				(2)				—			—				(2)
Share-based compensation	Share-based compensation	—	—		7,242				—				—			7,242			Share-based compensation		—				—				5,967				—			—				5,967
Balance at March 31, 2021		34,228	$	342	$	—			$	1,527,685			$	(111,677)		$	1,416,350
Net income		—	$	—	$	—			$	62,782			$	—		$	62,782
Other comprehensive income:
Cumulative translation adjustment		—	—		—				—				5,807			5,807
Issuance of common stock in connection with:
Exercise of options		33	1		1,136				—				—			1,137
Restricted share grants, less net settled shares of 13		21	—		(1,814)				—				—			(1,814)

Share-based compensation		—	—		4,948				—				—			4,948
Balance at June 30, 2021		34,282	$	343	$	4,270			$	1,590,467			$	(105,870)		$	1,489,210
Reclassification of negative additional paid-in capital																			Reclassification of negative additional paid-in capital		—				—				22,851				(22,851)			—				—
Balance at March 31, 2022																			Balance at March 31, 2022		34,471				$	345			$	—			$	1,756,704		$	(135,031)			$	1,622,018
Net income	Net income	—	$	—	$	—			$	69,480			$	—		$	69,480		Net income		—				—				—				51,428			—				51,428
Other comprehensive loss:	Other comprehensive loss:																		Other comprehensive loss:
Cumulative translation adjustment	Cumulative translation adjustment	—	—		—				—				(18,607)			(18,607)			Cumulative translation adjustment		—				—				—				—			(40,679)				(40,679)
Issuance of common stock in connection with:	Issuance of common stock in connection with:																		Issuance of common stock in connection with:
Exercise of options	Exercise of options	4	—		126				—				—			126			Exercise of options		22				—				687				—			—				687
Restricted share grants, less net settled shares of 6		9	—		(866)				—				—			(866)
Restricted share grants, less net settled shares of 55																			Restricted share grants, less net settled shares of 55		47				—				(8,907)				—			—				(8,907)

Conversion of convertible senior notes due 2023																			Conversion of convertible senior notes due 2023		—				—				(11)				—			—				(11)
Share-based compensation	Share-based compensation	—	—		4,960				—				—			4,960			Share-based compensation		—				—				6,083				—			—				6,083
Balance at September 30, 2021		34,295	$	343	$	8,490			$	1,659,947			$	(124,477)		$	1,544,303
Reclassification of negative additional paid-in capital																			Reclassification of negative additional paid-in capital		—				—				2,647				(2,647)			—				—
Balance at June 30, 2022																			Balance at June 30, 2022		34,540				$	345			$	499			$	1,805,485		$	(175,710)			$	1,630,619


					Additional Paid-in Capital								Accumulated Other Comprehensive Loss																			Additional Paid-in Capital								Accumulated Other Comprehensive Loss
		Common Stock					Retained Earnings													Common Stock														Retained Earnings
		Shares	Amount						Accumulated Other Comprehensive Loss		Total						Shares						Amount													Accumulated Other Comprehensive Loss		Total
Balance at December 31, 2019		37,390	$	374							$	216,162			$	1,413,453					$	(140,847)		$	1,489,142
Balance at December 31, 2020																		Balance at December 31, 2020		34,481						$	345			$	—			$	1,506,271					$	(106,435)	$	1,400,181
Net income	Net income	—	$	—			$	—					$	56,747				$	—					$	56,747		Net income	—				$	—					$	—			$	64,496			$	—	$	64,496
Other comprehensive loss:	Other comprehensive loss:																				Other comprehensive loss:
Cumulative translation adjustment	Cumulative 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 options	Exercise of options	34	1		1,206				—				—					1,207			Exercise of options		12					—				434				—				—				434
Restricted share grants, less net settled shares of 58		136	1		(6,768)				—				—					(6,767)
Restricted share grants, less net settled shares of 63																					Restricted share grants, less net settled shares of 63		157					1				(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 compensation	Share-based compensation	—	—		7,454				—				—					7,454			Share-based compensation		—					—				7,242				—				—				7,242
Balance at March 31, 2020		37,110	$	371	$	170,062			$	1,470,200			$	(171,949)				$	1,468,684
Balance at March 31, 2021																					Balance at March 31, 2021		34,228					$	342			$	—			$	1,527,685			$	(111,677)			$	1,416,350
Net income	Net income	—	$	—	$	—			$	48,174			$	—				$	48,174		Net income		—					$	—			$	—			$	62,782			$	—			$	62,782
Other comprehensive income:	Other comprehensive income:																				Other comprehensive income:
Cumulative translation adjustment	Cumulative 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 options	Exercise of options	33	—		1,191				—				—					1,191			Exercise of options		33					1				1,136				—				—				1,137
Restricted share grants, less net settled shares of 18		38	1		(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 compensation	Share-based compensation	—	—		4,693				—				—					4,693			Share-based compensation		—					—				4,948				—				—				4,948
Balance at June 30, 2020		36,710	$	367	$	122,743			$	1,518,374			$	(162,381)				$	1,479,103
Net income		—	$	—	$	—			$	50,172			$	—				$	50,172
Other comprehensive income:
Cumulative translation adjustment		—	—		—				—				21,330					21,330
Issuance of common stock in connection with:
Exercise of options		43	—		1,536				—				—					1,536
Restricted share grants, less net settled shares of 2		24	—		(207)				—				—					(207)
Balance at June 30, 2021																					Balance at June 30, 2021		34,282					$	343			$	4,270			$	1,590,467			$	(105,870)			$	1,489,210

Purchase and retirement of common stock		(749)	(7)		(82,859)				—				—					(82,866)
Share-based compensation		—	—		5,429				—				—					5,429
Balance at September 30, 2020		36,028	$	360	$	46,642			$	1,568,546			$	(141,051)				$	1,474,497

See accompanying notes to condensed consolidated financial statements

FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Operating activities	Operating activities					Operating activities
Net income	Net income	$	196,758	$	155,093	Net income	$	110,749	$	127,278
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:						Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	25,631		23,655		Depreciation and amortization	18,095		16,765
Amortization and impairment of intangible assets	Amortization and impairment of intangible assets	8,515		7,440		Amortization and impairment of intangible assets	5,005		5,655
Acquisition-related contingent consideration	Acquisition-related contingent consideration	(1,014)		4,652		Acquisition-related contingent consideration	133		(1,130)
Provision for expected credit losses	Provision for expected credit losses	14,816		15,608		Provision for expected credit losses	8,752		8,236
Share-based compensation	Share-based compensation	17,150		17,576		Share-based compensation	12,050		12,190
Amortization of debt discount and issuance costs and other	Amortization of debt discount and issuance costs and other	8,551		9,073		Amortization of debt discount and issuance costs and other	1,068		5,685

Deferred income taxes	Deferred income taxes	5,128		(1,658)		Deferred income taxes	2,713		9,802

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 unbilled	Accounts receivable, billed and unbilled	(115,544)		(86,491)		Accounts receivable, billed and unbilled	(180,737)		(138,838)
Notes receivable	Notes receivable	4,392		3,346		Notes receivable	(1,985)		8,921
Prepaid expenses and other assets	Prepaid expenses and other assets	1,145		8,294		Prepaid expenses and other assets	(810)		6,728
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	(22,745)		7,713		Accounts payable, accrued expenses and other	13,854		(13,518)
Income taxes	Income taxes	18,025		(14,635)		Income taxes	(14,834)		6,695
Accrued compensation	Accrued compensation	2,803		(18,985)		Accrued compensation	(147,209)		(88,024)
Billings in excess of services provided	Billings in excess of services provided	(7,691)		10,296		Billings in excess of services provided	4,425		(7,471)
Net cash provided by operating activities		155,920		140,977
Net cash used in operating activities						Net cash used in operating activities	(168,731)		(41,026)
Investing activities	Investing activities					Investing activities

Payments for acquisition of businesses, net of cash received	Payments for acquisition of businesses, net of cash received	(9,833)		(25,271)		Payments for acquisition of businesses, net of cash received	(6,698)		(9,833)
Purchases of property and equipment and other	Purchases of property and equipment and other	(52,441)		(25,105)		Purchases of property and equipment and other	(25,637)		(27,696)

Net cash used in investing activities	Net cash used in investing activities	(62,274)		(50,376)		Net cash used in investing activities	(32,335)		(37,529)
Financing activities	Financing activities					Financing activities
Borrowings under revolving line of credit	Borrowings under revolving line of credit	377,500		149,500		Borrowings under revolving line of credit	165,000		292,500

Repayments under revolving line of credit	Repayments under revolving line of credit	(352,500)		(124,500)		Repayments under revolving line of credit	(165,000)		(192,500)

Purchase and retirement of common stock	Purchase and retirement of common stock	(46,133)		(175,832)		Purchase and retirement of common stock	(3,098)		(46,133)
Share-based compensation tax withholdings and other	Share-based compensation tax withholdings and other	(8,277)		(5,195)		Share-based compensation tax withholdings and other	(14,827)		(7,475)
Payments for business acquisition liabilities	Payments for business acquisition liabilities	(7,496)		(3,948)		Payments for business acquisition liabilities	(4,161)		(7,496)
Deposits		1,928		4,561
Deposits and other						Deposits and other	4,887		602

Net cash used in financing activities		(34,978)		(155,414)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	(17,199)		39,498
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(11,094)		98		Effect of exchange rate changes on cash and cash equivalents	(20,490)		979
Net increase (decrease) in cash and cash equivalents		47,574		(64,715)
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(238,755)		(38,078)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	294,953		369,373		Cash and cash equivalents, beginning of period	494,485		294,953
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	342,527	$	304,658	Cash and cash equivalents, end of period	$	255,730	$	256,875
Supplemental cash flow disclosures	Supplemental cash flow disclosures					Supplemental cash flow disclosures
Cash paid for interest	Cash paid for interest	$	8,756	$	7,115	Cash paid for interest	$	4,279	$	4,854
Cash paid for income taxes, net of refunds	Cash paid for income taxes, net of refunds	$	31,240	$	61,636	Cash paid for income taxes, net of refunds	$	42,440	$	18,742
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 plans	Issuance of stock units under incentive compensation plans	$	2,603	$	2,314	Issuance of stock units under incentive compensation plans	$	1,664	$	2,603
Purchase and retirement of common stock not yet paid		$	—	$	8,540

Business acquisition liabilities not yet paid	Business acquisition liabilities not yet paid	$	—	$	3,460	Business acquisition liabilities not yet paid	$	5,370	$	1,093
Non-cash additions to property and equipment	Non-cash additions to property and equipment	$	4,435	$	1,203	Non-cash additions to property and equipment	$	3,695	$	4,150

See accompanying notes to condensed consolidated financial statements

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, ~~2020~~2021 filed with the SEC.

2. New Accounting Standards

Recently Adopted Accounting Standards

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06 ("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 events. On January 1, 2022, we adopted ASU 2020-06 using the modified retrospective method and recorded a cumulative-effect adjustment of approximately $22.1 million to the beginning balance of retained earnings at the date of adoption and a $16.4 million net increase to "Long-term debt, net" on the Condensed Consolidated Balance Sheets. As permitted by the guidance, prior comparative periods were not adjusted under this method.

Pursuant to ASU 2020-06, we are no longer permitted to separately account for the liability and equity components of convertible debt instruments. As such, the carrying amount of our 2.0% convertible senior notes due 2023 ("2023 Convertible Notes") is recognized as a liability as of June 30, 2022 on the Condensed Consolidated Balance Sheets. The ~~amendments~~ASU 2020-06 adoption also resulted in ~~this~~ the derecognition of the embedded conversion option, net of tax effects, of approximately $34.1 million, which is included in “Additional paid-in capital,” as well as the derecognition of the related deferred tax liabilities of approximately $4.3 million on the Condensed Consolidated Balance Sheets.

The net effect of the adoption in the current and future periods as compared to prior periods is to reduce non-cash interest expense, or increase net income, as there is no longer a discount from the separation of the conversion feature within equity. The discount from recognition of debt issuance costs will be amortized over the effective life of the 2023 Convertible Notes using the effective interest method.

ASU ~~are~~2020-06 also no longer allows the use of the treasury stock method for convertible instruments for purposes of calculating diluted earnings per share and instead requires application of the if-converted method. Under that method, diluted earnings per share will generally be calculated assuming that all of the convertible debt instruments were converted solely into shares of common stock at the beginning of the reporting period unless the result would be anti-dilutive. Effective January 1, 2022, pursuant to the terms of the indenture, dated as of August 20, 2018, as amended by the first supplemental indenture, dated as of January 1, 2022 (the "First Supplemental Indenture"), between us and U.S. Bank National Association, as trustee (as so amended, the "Indenture"), the principal amount of the 2023 Convertible Notes being converted is required to be paid in cash and only the premium due upon conversion, if any, is permitted to be settled in shares, cash or a combination of shares and cash. Consequently, the if-converted method produces a similar result as the treasury stock method, which was used prior to the adoption of ASU 2020-06 for the 2023 Convertible Notes.

Accounting Standards Not Yet Adopted

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance, which requires entities to provide disclosures on significant government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. The new standard is effective for annual ~~and interim~~ periods beginning after December 15, 2021 ~~although early adoption is permitted.~~and impacts only annual financial statement footnote disclosures. 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 per 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~~share-based awards (restricted share awards, restricted stock units and performance stock units), each using the treasury stock method.

~~Because~~For the three and six months ended June 30, 2022, we ~~expect to settle~~used the if-converted method for calculating the potential dilutive effect of the conversion feature of the principal amount of the ~~outstanding 2.0% convertible senior notes due 2023 ("~~2023 Convertible ~~Notes") in cash,~~Notes on earnings per common share, as required by the adoption of ASU 2020-06. Prior to the adoption of ASU 2020-06, we ~~use~~used the treasury stock method for calculating the potential dilutive effect of the conversion feature of the principal amount of the 2023 Convertible Notes on earnings per common share ~~if applicable.~~because we had the ability and intent to settle the principal amount of the outstanding 2023 Convertible Notes in cash. The conversion feature had a dilutive impact on earnings per common share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, as the average market price per share of our common stock for the periods exceeded the conversion price of $101.38 per share. See Note 9,8, "Debt" for additional information about the 2023 Convertible Notes.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Numerator — basic and diluted	Numerator — basic and diluted									Numerator — basic and diluted
Net income	Net income	$	69,480	$	50,172	$	196,758	$	155,093	Net income	$	51,428	$	62,782	$	110,749	$	127,278
Denominator	Denominator									Denominator
Weighted average number of common shares outstanding — basic	Weighted average number of common shares outstanding — basic	33,495		35,639		33,478		36,073		Weighted average number of common shares outstanding — basic	33,790		33,458		33,705		33,470
Effect of dilutive restricted shares		662		708		697		774
Effect of dilutive share-based awards										Effect of dilutive share-based awards	586		668		639		714
Effect of dilutive stock options	Effect of dilutive stock options	363		402		369		436		Effect of dilutive stock options	331		376		334		373
Effect of dilutive convertible notes	Effect of dilutive convertible notes	842		337		721		425		Effect of dilutive convertible notes	1,202		872		1,100		661
Weighted average number of common shares outstanding — diluted	Weighted average number of common shares outstanding — diluted	35,362		37,086		35,265		37,708		Weighted average number of common shares outstanding — diluted	35,909		35,374		35,778		35,218
Earnings per common share — basic	Earnings per common share — basic	$	2.07	$	1.41	$	5.88	$	4.30	Earnings per common share — basic	$	1.52	$	1.88	$	3.29	$	3.80
Earnings per common share — diluted	Earnings per common share — diluted	$	1.96	$	1.35	$	5.58	$	4.11	Earnings per common share — diluted	$	1.43	$	1.77	$	3.10	$	3.61
Antidilutive stock options and restricted shares		2		83		5		50
Antidilutive stock options and share-based awards										Antidilutive stock options and share-based awards	23		2		15		5

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; and~~

•~~$2.4 million of severance and other employee-related costs~~ ~~in our Forensic and Litigation Consulting ("FLC") segment~~.

~~The following table details the special charge by segment:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
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

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 fixed 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.

Certain fees in our time and materials arrangements may be subject to approval by a ~~third-party,~~third party, such as a bankruptcy court ~~and~~or other regulatory agency. In such cases, we record revenues based on the amount we estimate we will be entitled to in exchange for our services and only to the extent a significant reversal of ~~revenue~~revenues 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 estimates of potential fee reductions, we record such changes to revenues with a corresponding offset to our 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~~$11.6 million and ~~$23.0~~$13.1 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, and ~~$2.6~~$17.9 million and ~~$15.1~~$16.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, 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~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the aggregate amount of the remaining contract transaction price allocated to unfulfilled performance obligations was ~~$4.1~~$3.4 million and ~~$8.5~~$3.7 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 revenues 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 ~~$1.3~~$1.5 million as of ~~September~~June 30, ~~2021~~2022 and ~~$2.6~~$3.8 million as of December 31, ~~2020.~~2021.

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 immaterial as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~

2021.

6.5. Accounts Receivable and Allowance for Expected Credit Losses

The following table summarizes the components of "Accounts receivable, net" as presented on the Condensed Consolidated Balance Sheets:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Accounts receivable:	Accounts receivable:					Accounts receivable:
Billed receivables	Billed receivables	$	560,046	$	513,459	Billed receivables	$	616,761	$	542,056
Unbilled receivables	Unbilled receivables	290,352		236,285		Unbilled receivables	328,836		248,681
Allowance for expected credit losses	Allowance for expected credit losses	(40,520)		(38,387)		Allowance for expected credit losses	(40,049)		(36,617)
Accounts receivable, net	Accounts receivable, net	$	809,878	$	711,357	Accounts receivable, net	$	905,548	$	754,120

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 our estimate of lifetime expected credit losses concurrently with the initial recognition of the underlying receivable. Accounts receivable, net of the allowance for expected credit losses, represents the

amount we expect to collect. At each reporting date, we adjust the allowance for expected credit losses to reflect our current estimate.

The following table summarizes the total provision for expected credit losses and write-offs:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Provision for expected credit losses (1)	Provision for expected credit losses (1)	$	6,580	$	3,984	$	14,816	$	15,608	Provision for expected credit losses (1)	$	3,894	$	3,404	$	8,752	$	8,236
Write-offs	Write-offs	$	5,746	$	6,182	$	15,464	$	19,707	Write-offs	$	3,249	$	2,802	$	6,040	$	9,718

(1) Adjustments to the allowance for expected credit losses are recorded to selling, general & administrative ("SG&A") expenses on the Condensed Consolidated Statements of Comprehensive Income.

We estimate the current-period provision for expected credit losses on a specific identification basis. Our judgments regarding a specific client’s credit risk considers factors such as the counterparty’s creditworthiness, knowledge of the specific client’s circumstances and historical collection experience for similar clients. Other factors include, but are not limited to, current economic conditions and forward-looking estimates. Our actual 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.

7.6. Goodwill and Intangible Assets

Goodwill

The table below summarizes the changes in the carrying amount of goodwill by reportable segment:


		Corporate Finance & Restructuring (1)		FLC (1)		Economic Consulting (1)		Technology (1)		Strategic Communications (2)		Total			Corporate Finance & Restructuring (1)		Forensic and Litigation Consulting (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
Balance at December 31, 2021														Balance at December 31, 2021	$	501,046	$	237,929	$	268,858	$	96,811	$	128,147	$	1,232,791
Acquisitions(3)	Acquisitions(3)	—		5,493		—		—		—		5,493		Acquisitions(3)	11,095		—		—		—		—		11,095
Foreign currency translation adjustment and other	Foreign currency translation adjustment and other	(4,149)		(680)		(168)		(11)		(1,341)		(6,349)		Foreign currency translation adjustment and other	(5,375)		(3,001)		(723)		(148)		(6,802)		(16,049)
Balance at September 30, 2021		$	501,923	$	238,187	$	268,919	$	96,810	$	128,184	$	1,234,023
Balance at June 30, 2022														Balance at June 30, 2022	$	506,766	$	234,928	$	268,135	$	96,663	$	121,345	$	1,227,837

(1) There were 0 accumulated impairment losses for the Corporate Finance & Restructuring ("Corporate Finance"), ~~FLC,~~Forensic and Litigation Consulting ("FLC"), Economic Consulting or Technology segments as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021.

(2) Amounts for our Strategic Communications segment include gross carrying values of ~~$322.3~~$315.5 million and ~~$323.7~~$322.3 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and accumulated impairment losses of $194.1 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

(3) During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we acquired ~~certain assets of~~ a business that ~~were~~was assigned to the ~~FLC~~Corporate Finance segment. We recorded ~~$5.5~~$11.1 million in goodwill based on a preliminary purchase price allocation as a result of the ~~acquisition and we~~acquisition. We have included the results of the acquired business’s operations in the ~~FLC~~Corporate Finance segment since its acquisition date.

Intangible Assets

Intangible assets were as follows:


		September 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
		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 assets	Amortizing intangible assets													Amortizing intangible assets
Customer relationships (1)	Customer relationships (1)	$	112,818	$	91,069	$	21,749	$	111,556	$	85,180	$	26,376	Customer relationships (1)	$	82,099	$	64,093	$	18,006	$	83,101	$	63,124	$	19,977
Trademarks		11,245		4,292		6,953		11,809		2,768		9,041
Trademarks (1)														Trademarks (1)	10,482		5,563		4,919		10,965		4,732		6,233
Acquired software and other(1)	Acquired software and other(1)	3,461		2,759		702		3,618		2,585		1,033		Acquired software and other(1)	980		392		588		3,114		2,434		680
		127,524		98,120		29,404		126,983		90,533		36,450			93,561		70,048		23,513		97,180		70,290		26,890
Non-amortizing intangible assets	Non-amortizing intangible assets													Non-amortizing intangible assets
Trademarks	Trademarks	5,100		—		5,100		5,100		—		5,100		Trademarks	5,100		—		5,100		5,100		—		5,100
Total	Total	$	132,624	$	98,120	$	34,504	$	132,083	$	90,533	$	41,550	Total	$	98,661	$	70,048	$	28,613	$	102,280	$	70,290	$	31,990

(1)During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we acquired ~~certain assets of~~ a business, and its related intangible assets were assigned to the ~~FLC~~Corporate Finance segment.

Intangible assets with finite lives are amortized over their estimated useful lives. We recorded amortization expense of ~~$2.9~~$2.7 million and ~~$8.5~~$5.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, and ~~$2.8~~$2.9 million and ~~$7.4~~$5.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively.

We estimate our future amortization expense for our intangible assets with finite lives to be as follows:


Year	Year	As of September 30, 2021 (1)		Year	As of June 30, 2022 (1)
2021 (remaining)		$	2,325
2022		8,824
2022 (remaining)				2022 (remaining)	$	4,728
2023	2023	5,122		2023	6,127
2024	2024	3,693		2024	3,859
2025	2025	3,014		2025	3,164
2026				2026	2,028
Thereafter	Thereafter	6,426		Thereafter	3,607
		$	29,404		$	23,513

(1)Actual amortization expense to be reported in future periods could differ from these estimates ~~because~~as a result of new intangible asset acquisitions, impairments, changes in useful lives, or other relevant factors or changes.

7. Financial Instruments

The table below presents the carrying amounts and estimated fair values of our financial instruments by hierarchy level as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		September 30, 2021									June 30, 2022
				Hierarchy Level (Fair Value)									Hierarchy Level (Fair Value)
		Carrying Amount		Level 1		Level 2		Level 3			Carrying Amount		Level 1		Level 2		Level 3
Liabilities	Liabilities									Liabilities
Acquisition-related contingent consideration, including current portion (1)(2)		$	14,568	$	—	$	—	$	14,568
Acquisition-related contingent consideration (1)(2)										Acquisition-related contingent consideration (1)(2)	$	13,363	$	—	$	—	$	13,363
2023 Convertible Notes (3)	2023 Convertible Notes (3)	294,355		—		444,957		—		2023 Convertible Notes (3)	314,337		—		568,551		—
Total	Total	$	308,923	$	—	$	444,957	$	14,568	Total	$	327,700	$	—	$	568,551	$	13,363


		December 31, 2020									December 31, 2021
				Hierarchy Level (Fair Value)									Hierarchy Level (Fair Value)
		Carrying Amount		Level 1		Level 2		Level 3			Carrying Amount		Level 1		Level 2		Level 3
Liabilities	Liabilities									Liabilities
Acquisition-related contingent consideration, including current portion (1)(2)		$	20,118	$	—	$	—	$	20,118
Acquisition-related contingent consideration (1)										Acquisition-related contingent consideration (1)	$	15,110	$	—	$	—	$	15,110
2023 Convertible Notes (3)	2023 Convertible Notes (3)	286,131		—		396,982		—		2023 Convertible Notes (3)	297,158		—		466,619		—
Total	Total	$	306,249	$	—	$	396,982	$	20,118	Total	$	312,268	$	—	$	466,619	$	15,110

(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 ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we acquired ~~certain assets of~~ a business that was assigned to our Corporate Finance segment and recorded an acquisition-related contingent consideration liability.

(3)The carrying ~~values include~~value as of June 30, 2022 includes unamortized deferred debt ~~issue~~issuance costs. The carrying value as of December 31, 2021 includes unamortized deferred debt issuance costs and debt discount.

The fair values of financial instruments not included in the tables above are estimated to be equal to their carrying values as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

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.

We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted discounted cash flow model or a Monte Carlo ~~simulation.~~pricing model. 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. 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.

The ~~table below presents the~~ change in our liability for acquisition-related contingent consideration for our Level 3 financial ~~instruments:~~instruments is as follows:


	Contingent Consideration
Balance at December 31, 2021	$	15,110
Additions	5,370
Accretion expense (1)	(979)
Payments	(4,430)

Foreign currency translation adjustment (2)	(115)
Balance at March 31, 2022	$	14,956

Accretion expense (1)	1,112
Payments	(2,240)
Foreign currency translation adjustment (2)	(465)

Balance at June 30, 2022	$	13,363


	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
Additions	1,093
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~~	~~3,460~~
~~Accretion expense~~ ~~(1)~~	~~3,532~~

~~Foreign currency translation adjustment~~ ~~(2)~~	~~359~~
~~Balance at September 30, 2020~~	$	~~18,545~~

(1)Accretion expense is included in 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)Remeasurement gain or loss resulting from a change in the fair value of an acquisition's contingent consideration liability is recorded in SG&A expenses on the Condensed Consolidated Statements of Comprehensive Income.

9.8. Debt

The table below presents the components of the Company’s debt:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
2023 Convertible Notes	2023 Convertible Notes	$	316,250	$	316,250	2023 Convertible Notes	$	316,222	$	316,245
Credit Facility		25,000		—

Total debt	Total debt	341,250		316,250		Total debt	316,222		316,245
Less: deferred debt discount(1)	Less: deferred debt discount(1)	(19,169)		(26,310)		Less: deferred debt discount(1)	—		(16,724)
Less: deferred debt issue costs		(2,726)		(3,809)
Less: deferred debt issuance costs						Less: deferred debt issuance costs	(1,885)		(2,363)
Long-term debt, net ~~(1)~~(2)	Long-term debt, net ~~(1)~~(2)	$	319,355	$	286,131	Long-term debt, net ~~(1)~~(2)	$	314,337	$	297,158
Additional paid-in capital	Additional paid-in capital	$	35,306	$	35,306	Additional paid-in capital	$	—	$	35,304
Discount attribution to equity	Discount attribution to equity	(1,175)		(1,175)		Discount attribution to equity	—		(1,175)
Equity component, net(1)	Equity component, net(1)	$	34,131	$	34,131	Equity component, net(1)	$	—	$	34,129

(1)Pursuant to the adoption of ASU 2020-06, we derecognized the conversion option of $34.1 million, net of tax, previously attributable to the equity component of the 2023 Convertible Notes. Similarly, the related debt discount is no longer amortized into income as interest expense over the life of the instrument; therefore, we recorded a $16.4 million increase to "Long-term debt, net" on the Condensed Consolidated Balance Sheet as of June 30, 2022.

(2)There were no current portions of long-term debt as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

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~~15 and August ~~15th~~15 of each ~~year and~~year. The 2023 Convertible Notes will mature on August 15, 2023, unless earlier converted or repurchased. As of December 31, 2021, upon conversion, the 2023 Convertible Notes could be settled, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock. Effective January 1, 2022, pursuant to the terms of the Indenture, the principal amount of the 2023 Convertible Notes being converted is required to be paid in cash and only the premium due upon conversion, if any, is permitted to be settled at our election in shares, cash or a combination of shares and cash. 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~~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.~~ 2023 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending 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 5 business day period after any 5 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.

The 2023 Convertible Notes were convertible ~~during~~in each of the ~~three months~~quarters ended September 30, 2021, December 31, 2021, March 31, 2022 and ~~the~~June 30, 2022. The number of ~~notes submitted for~~shares issued upon conversion of the 2023 Convertible Notes in each period was immaterial. The circumstances required to allow the holders to convert their 2023 Convertible Notes prior to maturity were met as of ~~September~~June 30, ~~2021,~~2022; therefore, holders may convert their notes at any time beginning on ~~October~~July 1, ~~2021~~2022 and ending on ~~December 31, 2021.~~ September 30, 2022. Based on the Company's stock price on June 30, 2022, the if-converted value of the 2023 Convertible Notes exceeded the principal amount by $247.9 million.

We ~~continue~~may not redeem the 2023 Convertible Notes prior to ~~classify~~ the ~~net carrying~~maturity date.

Prior to the adoption of ASU 2020-06, the Company separated the 2023 Convertible Notes into liability and equity components. The debt ~~based on our intent~~discount and ~~ability~~debt issuance costs attributable 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~~component were 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 Company adopted ASU 2020-06 on January 1, 2022 using the ~~total amount to the liability and equity components of~~modified retrospective method, which resulted in accounting for the 2023 Convertible Notes ~~based on their relative values. The~~as a single liability and the debt ~~issue costs attributable to~~discount is no longer amortized into income as interest expense. See Note 2, “New Accounting Standards” for additional information about the ~~liability component are amortized to~~adoption of ASU 2020-06.

Contractual interest expense ~~over the term of~~for the 2023 Convertible Notes ~~using~~was $1.6 million and $3.2 million for 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~~three and ~~amortization~~six months ended June 30, 2022 and 2021, respectively. Amortization of the debt discount ~~for~~on the 2023 Convertible ~~Notes:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Contractual interest expense $ 1,581 $ 1,581 $ 4,744 $ 4,744
Amortization of debt discount (1)
2,412 2,286 7,141 6,766
Total $ 3,993 $ 3,867 $ 11,885 $ 11,510

~~(1)The effective interest rate~~Notes prior to the adoption of ASU 2020-06 was $2.4 million and $4.7 million for the ~~liability component is 5.45%.~~

three and six months ended June 30 2021, respectively.

Credit Facility

On June 26, 2015, we entered into a credit agreement, which provides for a $550.0 million senior secured bank revolving credit facility (“Original Credit Facility”) maturing on June 26, 2020. In November 2018, we amended and restated the credit agreement to the Original Credit Facility (the "Amended and Restated Credit Facility"), to, among other things, extend the maturity to November 30, 2023 and incurred an additional $1.7 million of debt issuance ~~costs (the Original~~costs. On February 4, 2022, we entered into the first amendment to the Amended and Restated Credit Facility ~~as amended~~(the "First Amendment to the Amended and ~~restated,~~Restated Credit Facility," and together with the Amended and Restated Credit Facility, the “Credit Facility”).

~~The Company classified the borrowings under~~At the Company’s ~~Credit Facility as long-term debt in the accompanying Condensed Consolidated Balance Sheets, as amounts due~~option, borrowings under the Credit Facility ~~are not contractually required~~in United States dollars ("USD"), euro ("EUR") and British pound ("GBP") will bear interest at either one- or ~~expected to be liquidated for more than one year from~~three-month London Interbank Offered Rate ("LIBOR") or, in the case of USD borrowings, an alternative base rate, in each case plus the applicable ~~balance sheet date.~~margin. Due to the cessation by the ICE Benchmark Administration Limited of the publication on a representative basis of EUR LIBOR and GBP LIBOR as of December 31, 2021, EUR LIBOR is no longer available under our Credit Agreement and one-, three- and six-month GBP LIBOR is available under a "synthetic" methodology until December 31, 2022. The Credit Agreement permits the Company and Bank of America, N.A., as administrative agent thereunder, to agree to a new benchmark rate to replace EUR LIBOR and GBP LIBOR, subject to the negative consent of the Required Lenders (as defined therein). Prior to the incurrence of any borrowings under the Credit Facility in EUR or, after December 31, 2022, GBP, we will need to agree to a replacement benchmark rate for each applicable currency in accordance with the terms of the Credit Agreement. 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 USD 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 applicable margin will fluctuate between 1.25% per annum and 2.00% per annum, in the case of LIBOR borrowings, or between 0.25% per annum and 1.00% per annum, in the case of base rate borrowings, in each case, based upon the Company’s Consolidated Total Net Leverage Ratio (as defined in the Credit Facility) at such time. The lenders under the Credit Facility have a security interest in substantially all of the assets of the Company and substantially all of its domestic subsidiaries.

Under the Credit Facility, we are required to pay a commitment fee rate that fluctuates between 0.20% and 0.35% per annum and a letter of credit fee rate that fluctuates between 1.25% and 2.00% per annum, in each case, based upon the Company’s Consolidated Total Net Leverage Ratio.

There were no borrowings outstanding under the Credit Facility as of June 30, 2022 and December 31, 2021. As of ~~September~~June 30, ~~2021, $1.1~~2022, $0.4 million of the borrowing limit under the Credit Facility was utilized (and, therefore, unavailable) for letters of credit.

There were ~~$1.0~~$0.6 million and ~~$1.3~~$0.9 million of unamortized debt ~~issue~~issuance costs related to the Credit Facility as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. These amounts are included in “Other assets” on our Condensed Consolidated Balance Sheets.

~~10.~~Long-Term Debt Maturities

Our maturity analysis for our remaining future undiscounted cash flows for the principal portion of our long-term debt assumes that payments will be made based on the current payment schedule and excludes any additional revolving line of credit borrowings or repayments subsequent to June 30, 2022 and prior to the November 30, 2023 maturity date of our Credit Facility. We estimate future undiscounted cash flows for the principal portion of our long-term debt to be $316.2 million in 2023.

9. 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~~Condensed Consolidated Balance Sheets 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 one month~~up 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:


Leases	Leases	Classification	September 30, 2021		December 31, 2020		Leases	Classification	June 30, 2022		December 31, 2021
Assets	Assets						Assets
Operating lease assets	Operating lease assets	Operating lease assets	$	224,961	$	156,645	Operating lease assets	Operating lease assets	$	198,893	$	215,995
Total lease assets	Total lease assets		$	224,961	$	156,645	Total lease assets		$	198,893	$	215,995
Liabilities	Liabilities						Liabilities
Current	Current						Current
Operating lease liabilities	Operating lease liabilities	Accounts payable, accrued expenses and other	$	32,924	$	42,716	Operating lease liabilities	Accounts payable, accrued expenses and other	$	33,253	$	30,828
Noncurrent	Noncurrent						Noncurrent
Operating lease liabilities	Operating lease liabilities	Noncurrent operating lease liabilities	232,390		161,677		Operating lease liabilities	Noncurrent operating lease liabilities	218,001		236,026
Total lease liabilities	Total lease liabilities		$	265,314	$	204,393	Total lease liabilities		$	251,254	$	266,854

The table below summarizes total lease costs:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
Lease Cost	Lease Cost	2021		2020		2021		2020		Lease Cost	2022		2021		2022		2021
Operating lease costs	Operating lease costs	$	14,476	$	15,769	$	40,965	$	39,368	Operating lease costs	$	12,092	$	14,407	$	24,453	$	26,489
Short-term lease costs	Short-term lease costs	398		768		1,361		1,778		Short-term lease costs	727		473		1,132		962
Variable lease costs	Variable lease costs	3,368		3,730		9,579		9,563		Variable lease costs	2,749		2,748		5,977		6,211
Sublease income	Sublease income	(1,048)		(1,048)		(3,143)		(3,178)		Sublease income	(196)		(1,048)		(386)		(2,095)
Total lease cost, net	Total lease cost, net	$	17,194	$	19,219	$	48,762	$	47,531	Total lease cost, net	$	15,372	$	16,580	$	31,176	$	31,567

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 ~~$0.8~~$0.5 million in the remainder of ~~2021, $0.8 million in~~ 2022, ~~$0.6~~$0.9 million in 2023, ~~$0.6~~$0.8 million in 2024 and $0.3 million in 2025. There is no future sublease rental income estimated for the years beyond 2025.

1617

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 Sheets:

As of
September 30, 2021
2021 (remaining) $ (969)
2022 51,093
2023 48,335
2024 43,196
2025 36,176
Thereafter 167,613
Total future lease payments 345,444
Less: imputed interest (80,130)
Total $ 265,314


	As of June 30, 2022
2022 (remaining)	$	25,673
2023	48,243
2024	43,110
2025	35,737
2026	31,185
Thereafter	136,533
Total future lease payments	320,481
Less: imputed interest	(69,227)
Total	$	251,254

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,								Six Months Ended June 30,
			2021			2020					2022			2021
Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities		$	45,754		$	41,078		Cash paid for amounts included in the measurement of operating lease liabilities		$	24,831		$	31,050

Operating lease assets obtained in exchange for lease liabilities	Operating lease assets obtained in exchange for lease liabilities		$	98,472		$	23,653		Operating lease assets obtained in exchange for lease liabilities		$	5,756		$	85,221

Weighted average remaining lease term (years)	Weighted average remaining lease term (years)								Weighted average remaining lease term (years)
Operating leases	Operating leases		8.7			6.8			Operating leases		8.9			8.8

Weighted average discount rate	Weighted average discount rate								Weighted average discount rate
Operating leases	Operating leases		5.4		%	5.5		%	Operating leases		5.4		%	5.5		%

~~11.~~10. Commitments and Contingencies

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 doare not aware of any asserted or unasserted legal proceedings or claims that we believe ~~any settlement or judgment relating to any pending legal action~~ would ~~materially affect~~have a material adverse effect on our financial ~~position~~condition or results of our operations.

~~12.~~11. Share-Based Compensation

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we granted ~~106,560~~159,344 restricted share awards, ~~38,169~~27,761 restricted stock units and ~~103,220~~102,543 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 ~~nine~~six months ended ~~September~~June 30, ~~2021, 11,242~~2022, 4,564 shares of restricted stock and no stock options were forfeited prior to the completion of the applicable vesting requirements. Additionally, ~~27,221~~12,198 performance stock units were forfeited during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022 as the award targets were not achieved.

Total share-based compensation expense, net of forfeitures is detailed in the following table:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
Income Statement Classification	Income Statement Classification	2021		2020		2021		2020		Income Statement Classification	2022		2021		2022		2021
Direct cost of revenues	Direct cost of revenues	$	2,441	$	2,404	$	10,172	$	10,268	Direct cost of revenues	$	3,977	$	2,666	$	7,946	$	7,731
Selling, general and administrative expenses	Selling, general and administrative expenses	2,830		2,837		9,762		8,773		Selling, general and administrative expenses	4,146		2,409		7,223		6,932

Total share-based compensation expense	Total share-based compensation expense	$	5,271	$	5,241	$	19,934	$	19,041	Total share-based compensation expense	$	8,123	$	5,075	$	15,169	$	14,663

1718

~~13.~~12. 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.~~million. 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 $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~~June 30, ~~2021,~~2022, we ~~have $167.1~~had $164.0 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 June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Shares of common stock repurchased and retired	Shares of common stock repurchased and retired	—		749		422		1,670		Shares of common stock repurchased and retired	—		—		22		422
Average price paid per share	Average price paid per share	$	—	$	110.57	$	109.37	$	110.27	Average price paid per share	$	—	$	—	$	143.36	$	109.37
Total cost	Total cost	$	—	$	82,852	$	46,124	$	184,196	Total cost	$	—	$	—	$	3,098	$	46,124

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 ~~34.3~~34.5 million shares and ~~34.5~~34.3 million shares as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.~~13. 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 world. Our clients include companies, boards of directors, investors, private equity sponsors, ~~banks,~~ lenders, and other financing sources and creditor groups, as well as other parties-in-interest. We deliver a wide range of services centered around 3 core offerings: business transformation, transactions and turnaround ~~restructuring and bankruptcy.~~& restructuring.

Our FLC segment provides law firms, companies, government entities, private equity firms 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~~solutions, 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 international arbitration, legal and regulatory proceedings, and strategic decision making and public policy debates 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, law firms, private equity firms and government entities with a comprehensive global portfolio of consulting and services to address legal and regulatory risk, including e-discovery, information governance, privacy and security and corporate legal operations solutions. We deliver a full spectrum of services ~~including data collection, data processing, document review, hosting, advanced analytics~~centered around 3 core offerings: corporate legal operations, e-discovery services and ~~consulting to help clients secure, govern, analyze~~expertise, and ~~understand their data in the context of compliance and risk.~~information governance, privacy & security services.

1819

Our Strategic Communications segment develops and executes communications strategies to help management teams, boards of directors, 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 communications and 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 June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues	Revenues									Revenues
Corporate Finance	Corporate Finance	$	250,321	$	236,615	$	707,495	$	690,375	Corporate Finance	$	277,067	$	230,971	$	530,396	$	457,174
FLC	FLC	145,264		119,104		446,831		373,082		FLC	164,248		150,746		318,144		301,567
Economic Consulting	Economic Consulting	172,543		154,978		525,122		438,609		Economic Consulting	164,041		183,306		330,018		352,579
Technology	Technology	64,657		58,585		222,762		164,392		Technology	77,782		78,646		158,266		158,105
Strategic Communications	Strategic Communications	69,443		52,967		197,781		168,236		Strategic Communications	71,854		67,817		141,788		128,338
Total revenues	Total revenues	$	702,228	$	622,249	$	2,099,991	$	1,834,694	Total revenues	$	754,992	$	711,486	$	1,478,612	$	1,397,763
Adjusted Segment EBITDA	Adjusted Segment EBITDA									Adjusted Segment EBITDA
Corporate Finance	Corporate Finance	$	55,635	$	56,215	$	133,248	$	181,425	Corporate Finance	$	54,950	$	40,174	$	108,490	$	77,613
FLC	FLC	16,620		13,591		64,054		25,752		FLC	16,707		18,002		33,964		47,434
Economic Consulting	Economic Consulting	29,917		25,720		87,195		60,124		Economic Consulting	21,646		30,699		42,841		57,278
Technology	Technology	7,835		11,939		47,951		32,858		Technology	8,365		18,518		21,728		40,116
Strategic Communications	Strategic Communications	15,489		8,427		39,388		27,237		Strategic Communications	11,472		13,501		27,185		23,899
Total Adjusted Segment EBITDA	Total Adjusted Segment EBITDA	$	125,496	$	115,892	$	371,836	$	327,396	Total Adjusted Segment EBITDA	$	113,140	$	120,894	$	234,208	$	246,340

The table below reconciles net income to Total Adjusted Segment EBITDA:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income	Net income	$	69,480	$	50,172	$	196,758	$	155,093	Net income	$	51,428	$	62,782	$	110,749	$	127,278
Add back:	Add back:									Add back:
Income tax provision	Income tax provision	19,155		14,407		54,394		45,342		Income tax provision	13,353		14,992		30,320		35,239
Interest income and other	Interest income and other	(5,175)		3,340		(5,297)		(3,879)		Interest income and other	(2,994)		912		(2,647)		(122)
Interest expense	Interest expense	5,073		5,151		15,164		15,169		Interest expense	2,448		5,294		5,090		10,091

Unallocated corporate expenses	Unallocated corporate expenses	25,974		26,061		82,041		79,928		Unallocated corporate expenses	37,716		29,357		69,055		56,067
Segment depreciation expense	Segment depreciation expense	8,130		7,236		23,394		21,573		Segment depreciation expense	8,452		7,834		16,636		15,264
Amortization of intangible assets	Amortization of intangible assets	2,859		2,795		8,512		7,440		Amortization of intangible assets	2,737		2,853		5,005		5,653
Segment special charges		—		6,730		—		6,730

Remeasurement of acquisition-related contingent consideration	Remeasurement of acquisition-related contingent consideration	—		—		(3,130)		—		Remeasurement of acquisition-related contingent consideration	—		(3,130)		—		(3,130)
Total Adjusted Segment EBITDA	Total Adjusted Segment EBITDA	$	125,496	$	115,892	$	371,836	$	327,396	Total Adjusted Segment EBITDA	$	113,140	$	120,894	$	234,208	$	246,340

1920


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~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 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, ~~2020~~2021 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 & 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 world. Our clients include companies, boards of directors, investors, private equity sponsors, ~~banks,~~ lenders, and other financing sources and creditor groups, as well as other parties-in-interest. We deliver a wide range of services centered around three core offerings: business transformation, transactions and turnaround ~~restructuring and bankruptcy.~~& restructuring.

Our Forensic and Litigation Consulting (“FLC”) segment provides law firms, companies, government entities, private equity firms 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~~solutions, 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 five 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 international arbitration, legal and regulatory proceedings, and strategic decision making and public policy debates 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, law firms, private equity firms and government entities with a comprehensive global portfolio of consulting and services to address legal and regulatory risk, including e-discovery, information governance, privacy and security and corporate legal operations solutions. We deliver a full spectrum of services ~~including data collection, data processing, document review, hosting, advanced analytics~~centered around three core offerings: corporate legal operations, e-discovery services and ~~consulting to help clients secure, govern, analyze~~expertise, and ~~understand their data in the context of compliance and risk.~~information governance, privacy & security services.

Our Strategic Communications segment develops and executes communications strategies to help management teams, boards of directors, 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 communications and 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 contract arrangements, ~~that obligate~~which require the client to pay us ~~a fee for~~based on the number of hours ~~that we incur~~worked at contractually agreed-upon rates. Under this arrangement, we typically bill our clients for reimbursable expenses, ~~which may include the cost of producing our work product~~including those relating to travel, out-of-pocket expenses, outside consultants and other ~~direct expenses that we incur on behalf of~~outside service costs. Certain contracts are rendered under fixed-fee arrangements, which require the client ~~such as travel costs. We also render services~~to pay a fixed fee in exchange for ~~which~~a predetermined set of professional services. Fixed-fee arrangements may require certain clients ~~may be required~~ to pay us a ~~fixed-fee or~~ recurring retainer. ~~These~~ Our contract

arrangements ~~are generally cancelable at any time. Some of our engagements~~may also contain success fees or performance-based arrangements in which ~~we earn a contingent or success fee when and if certain predefined outcomes occur.~~our fees are based on the attainment of contractually defined objectives with our client. This type of success fee may supplement a time and

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.

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 another 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. When significant, we identify the impact of acquisition-related revenue growth. 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”~~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,~~13, “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.

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, 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 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~~(used in) 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.

2223

EXECUTIVE HIGHLIGHTS


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

		(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)
Revenues	Revenues	$	702,228	$	622,249	$	2,099,991	$	1,834,694	Revenues	$	754,992	$	711,486	$	1,478,612	$	1,397,763
Special charges (1)		$	—	$	7,103	$	—	$	7,103

Net income	Net income	$	69,480	$	50,172	$	196,758	$	155,093	Net income	$	51,428	$	62,782	$	110,749	$	127,278
Adjusted EBITDA	Adjusted EBITDA	$	100,260	$	90,917	$	292,035	$	249,924	Adjusted EBITDA	$	76,160	$	92,308	$	166,612	$	191,776
Earnings per common share — diluted	Earnings per common share — diluted	$	1.96	$	1.35	$	5.58	$	4.11	Earnings per common share — diluted	$	1.43	$	1.77	$	3.10	$	3.61
Adjusted earnings per common share — diluted	Adjusted earnings per common share — diluted	$	2.02	$	1.54	$	5.64	$	4.39	Adjusted earnings per common share — diluted	$	1.43	$	1.74	$	3.10	$	3.62
Net cash provided by operating activities		$	196,946	$	111,563	$	155,920	$	140,977
Net cash provided by (used in) operating activities										Net cash provided by (used in) operating activities	$	35,047	$	125,558	$	(168,731)	$	(41,026)
Total number of employees	Total number of employees	6,690		6,264		6,690		6,264		Total number of employees	7,048		6,411		7,048		6,411

~~(1)~~ ~~Excluded from non-GAAP financial measures.~~

~~Third~~Second Quarter ~~2021~~2022 Executive Highlights

Revenues

Revenues for the three months ended ~~September~~June 30, ~~2021~~2022 increased ~~$80.0~~$43.5 million, or ~~12.9%~~6.1%, to ~~$702.2~~$755.0 million, as compared to the three months ended ~~September~~June 30, ~~2020,~~2021, which included a ~~1.6%~~3.1% estimated ~~positive~~negative impact from FX. ~~Acquisition-related revenues contributed $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 ~~$66.4~~$65.5 million, or ~~10.7%~~9.2%, primarily due to ~~increased~~higher demand and realized rates in our Corporate Finance segment and higher realized rates in our FLC segment, which was partially offset by lower realization and demand in our Economic Consulting segment.

Net income

Net income for ~~all~~the three months ended June 30, 2022 decreased $11.4 million, or 18.1%, to $51.4 million, as compared to the three months ended June 30, 2021. The decrease in net income was primarily due to higher selling, general and administrative ("SG&A") and direct compensation expenses, which included the impact of ~~our segments~~a 9.4% increase in billable headcount, which was partially offset by an increase in revenues compared to the same quarter in the prior year.

~~Special Charges~~Adjusted EBITDA

~~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; and~~

•~~$2.4 million of severance and other employee-related costs~~ ~~in our FLC segment~~.

~~The following table details the special charge by segment:~~

Three Months Ended September 30,
2021 2020
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

~~Net income~~

~~Net income~~Adjusted EBITDA for the three months ended ~~September~~June 30, ~~2021 increased $19.3~~2022 decreased $16.1 million, or ~~38.5%~~17.5%, to ~~$69.5~~$76.2 million, as compared to the three months ended ~~September~~June 30, ~~2020~~. ~~The increase in net income was primarily due to an increase in revenues and FX remeasurement gains, which was partially offset by an increase in compensation expenses, including the impact~~2021. Adjusted EBITDA Margin of ~~a 6.9% increase in billable headcount and higher variable compensation, as well as higher selling, general and administrative ("SG&A") expenses, compared to the same quarter in the prior year.~~

~~Adjusted EBITDA~~

~~Adjusted EBITDA~~10.1% for the three months ended ~~September~~June 30, ~~2021 increased $9.3 million, or 10.3%, to $100.3 million, as~~2022 compared ~~to the three months ended September 30, 2020. Adjusted EBITDA Margin of 14.3%~~with 13.0% for the three months ended ~~September~~June 30, ~~2021 compared with 14.6% for the three months ended September 30, 2020~~.2021. The ~~increase~~decrease in Adjusted EBITDA was due to an increase in ~~revenues,~~SG&A and direct compensation expenses, which included the impact of a 9.4% increase in billable headcount, which was partially offset by an increase in ~~compensation expenses, including the impact of a 6.9% increase in billable headcount and higher variable compensation, as well as higher SG&A expenses~~revenues compared to the same quarter in the prior year.

EPS and Adjusted EPS

EPS for the three months ended ~~September~~June 30, ~~2021 increased $0.61~~2022 decreased $0.34 to ~~$1.96~~$1.43 compared to ~~$1.35~~$1.77 for the three months ended ~~September~~June 30, ~~2020~~.2021. The ~~increase~~decrease in EPS was primarily due to ~~the higher~~lower net income as described ~~above and a decline in diluted weighted average shares outstanding.~~above.

Adjusted EPS ~~increased $0.48~~decreased $0.31 to ~~$2.02~~$1.43 for the three months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$1.54~~$1.74 for the three months ended ~~September~~June 30, ~~2020~~.2021. Adjusted EPS for the three months ended ~~September~~June 30, 2021 ~~excludes~~ ~~$2.4~~excluded a $3.1 million remeasurement of acquisition-related contingent consideration, which reduced Adjusted EPS by $0.09, and $2.4 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 ~~$0.06~~$0.06. ~~Adjusted EPS for the~~ ~~three months ended September 30, 2020~~ ~~excluded $7.1 million of special charges~~

The Company adopted Accounting Standards Update ("ASU") 2020-06 ("ASU 2020-06") and ~~$2.3 million of~~no longer recognizes non-cash interest expense ~~related to~~on the 2023 Convertible Notes ~~which increased~~effective January 1, 2022. As a result, there was no adjustment between EPS and Adjusted EPS ~~by $0.14 and $0.05, respectively.~~for non-cash interest expense on the 2023 Convertible Notes for the three months ended June 30, 2022. See Note 2, “New Accounting Standards” for additional information about the adoption of ASU 2020-06.

Liquidity and Capital Allocation

Net ~~cash~~cash provided by ~~operating~~operating activities for the three months ended ~~September~~June 30, ~~2021 increased $85.4~~2022 decreased $90.5 million to ~~$196.9~~ $35.0 million compared with ~~$111.6~~$125.6 million for the three months ended ~~September~~June 30, ~~2020.~~2021. The ~~increase~~decrease in net cash provided by operating activities was ~~primarily~~largely due to ~~increased cash collections, which was partially offset by~~ an increase in ~~salaries~~compensation, primarily related to headcount growth, higher operating

expenses and ~~other operating expenses.~~income tax payments, as well as a decrease in cash collections compared to the same quarter in the prior year. Days sales outstanding (“DSO”) ~~of 100~~was 102 days at ~~September~~June 30, 2022 and 2021 ~~compared to 104 days at September 30, 2020.~~.

Free ~~Cash~~Cash Flow was an inflow ~~of $172.2~~of $22.0 million and ~~$99.8~~$105.8 million for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~increase~~ decrease for the three months ended ~~September~~June 30, ~~2021~~2022 was primarily due to ~~higher~~lower net cash provided by operating activities, as described above, partially offset by ~~an increase~~a decrease in net cash used for purchases of property and equipment.

Coronavirus Disease 2019 ("COVID-19") Pandemic

The COVID-19 pandemic created global volatility, economic uncertainty and general market disruption, and it has impacted each of our segments, practices and regions differently. During the three months ended ~~September~~June 30, ~~2021,~~ 2022, the COVID-19 pandemic continued to impact our ability to deliver certain services due to, for example, travel restrictions, ~~court closures,~~ backlogs at courts and government moratoriums on ~~restructuring, which is~~restructuring. These impacts varied ~~in each region.~~across our segments and regions. Although we have not been materially adversely impacted by illness in our employee population, the COVID-19 pandemic itself and the potential evolution of more contagious or dangerous variants, coupled with vaccine hesitancy, declining immunity levels from vaccines over time and delays in developing vaccines targeted to new variants, could ~~negatively impact~~increase the risk that our employees may experience negative health outcomes, impair employee retention or headcount growth, ~~which differs by segment, position~~ and ~~geography~~adversely affect our ability to service clients or win new engagements. We expect that the impact of these potential effects, if experienced, will differ across our segments and isgeographies and will be difficult to quantify. Governmental or client vaccine mandates could also limit our ability to perform services for certain clients or in certain geographies, as well as to attract and retain certain clients. In addition, vaccine hesitancy by some employees could delay or impede in-person back-to-work efforts, reduce the pool of qualified employment candidates that are available to us to staff engagements or to hire, negatively impact our ability to provide client services or win engagements, and result in more adverse health outcomes for our employee population. Evolving business practices, including those related to remote work, as well as governmental fiscal and monetary policies have mitigated the negative economic impact of the pandemic in certain key ~~geographies, such as in North America.~~geographies. The COVID-19 pandemic and its impact on our business and the health and welfare of our employees continues to be difficult to predict, especially due to uncertainty arising from the continuing evolution of COVID-19 variants, the efficacy of vaccinations against new variants, regional variances in the availability 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.

Headcount

Our total headcount increased ~~5.8%~~4.0% from ~~6,321~~6,780 as of December 31, ~~2020~~2021 to ~~6,690~~7,048 as of ~~September~~June 30, ~~2021.~~2022. The following table includes the net billable headcount additions ~~(reductions)~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:

Billable Headcount Corporate
Finance FLC Economic Consulting Technology Strategic
Communications Total
December 31, 2020 1,655 1,343 891 408 770 5,067
Additions (reductions), net 29 24 (1) 15 8 75
March 31, 2021 1,684 1,367 890 423 778 5,142
Additions (reductions), net (52) 32 (6) 6 (7) (27)
June 30, 2021 1,632 1,399 884 429 771 5,115
Additions, net 72 77 41 14 46 250
September 30, 2021 1,704 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 %


Billable Headcount	Corporate Finance		FLC		Economic Consulting		Technology		Strategic Communications		Total
December 31, 2021	1,702		1,496		921		468		814		5,401
Additions, net	55		17		29		28		42		171
March 31, 2022	1,757		1,513		950		496		856		5,572
Additions (reductions), net	12		(4)		(15)		11		21		25
June 30, 2022	1,769		1,509		935		507		877		5,597


Percentage change in headcount from December 31, 2021	3.9	%	0.9	%	1.5	%	8.3	%	7.7	%	3.6	%

CONSOLIDATED RESULTS OF OPERATIONS

Segment and Consolidated Operating Results:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(in thousands, except per share data) (in thousands, except per share data)
Revenues
Corporate Finance $ 250,321 $ 236,615 $ 707,495 $ 690,375
FLC 145,264 119,104 446,831 373,082
Economic Consulting 172,543 154,978 525,122 438,609
Technology 64,657 58,585 222,762 164,392
Strategic Communications 69,443 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
FLC 15,101 8,729 59,599 17,853
Economic Consulting 28,455 24,304 82,891 55,916
Technology 4,416 8,621 38,315 23,642
Strategic Communications 14,219 5,105 35,537 21,395
Total segment operating income 114,507 99,131 343,060 291,653
Unallocated corporate expenses (25,974) (26,061) (82,041) (79,928)
Operating income 88,533 73,070 261,019 211,725
Other income (expense)
Interest income and other 5,175 (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 provision 88,635 64,579 251,152 200,435
Income tax provision 19,155 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


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

	(in thousands, except per share data)				(in thousands, except per share data)
Revenues
Corporate Finance	$	277,067	$	230,971	$	530,396	$	457,174
FLC	164,248		150,746		318,144		301,567
Economic Consulting	164,041		183,306		330,018		352,579
Technology	77,782		78,646		158,266		158,105
Strategic Communications	71,854		67,817		141,788		128,338
Total revenues	$	754,992	$	711,486	$	1,478,612	$	1,397,763
Segment operating income
Corporate Finance	$	50,935	$	40,103	$	100,989	$	74,402
FLC	15,014		16,492		30,556		44,498
Economic Consulting	20,439		29,204		40,382		54,436
Technology	4,930		15,340		15,173		33,899
Strategic Communications	10,633		12,198		25,467		21,318
Total segment operating income	101,951		113,337		212,567		228,553
Unallocated corporate expenses	(37,716)		(29,357)		(69,055)		(56,067)
Operating income	64,235		83,980		143,512		172,486
Other income (expense)
Interest income and other	2,994		(912)		2,647		122
Interest expense	(2,448)		(5,294)		(5,090)		(10,091)

	546		(6,206)		(2,443)		(9,969)
Income before income tax provision	64,781		77,774		141,069		162,517
Income tax provision	13,353		14,992		30,320		35,239
Net income	$	51,428	$	62,782	$	110,749	$	127,278
Earnings per common share — basic	$	1.52	$	1.88	$	3.29	$	3.80
Earnings per common share — diluted	$	1.43	$	1.77	$	3.10	$	3.61

Reconciliation of Net Income to Adjusted EBITDA:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

		(in thousands)				(in thousands)					(in thousands)				(in thousands)
Net income	Net income	$	69,480	$	50,172	$	196,758	$	155,093	Net income	$	51,428	$	62,782	$	110,749	$	127,278
Add back:	Add back:									Add back:
Income tax provision	Income tax provision	19,155		14,407		54,394		45,342		Income tax provision	13,353		14,992		30,320		35,239
Interest income and other	Interest income and other	(5,175)		3,340		(5,297)		(3,879)		Interest income and other	(2,994)		912		(2,647)		(122)
Interest expense	Interest expense	5,073		5,151		15,164		15,169		Interest expense	2,448		5,294		5,090		10,091

Depreciation and amortization	Depreciation and amortization	8,867		7,949		25,631		23,656		Depreciation and amortization	9,188		8,604		18,095		16,765
Amortization of intangible assets	Amortization of intangible assets	2,860		2,795		8,515		7,440		Amortization of intangible assets	2,737		2,854		5,005		5,655
Special charges		—		7,103		—		7,103

Remeasurement of acquisition-related contingent consideration	Remeasurement of acquisition-related contingent consideration	—		—		(3,130)		—		Remeasurement of acquisition-related contingent consideration	—		(3,130)		—		(3,130)
Adjusted EBITDA	Adjusted EBITDA	$	100,260	$	90,917	$	292,035	$	249,924	Adjusted EBITDA	$	76,160	$	92,308	$	166,612	$	191,776

Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(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 notes 2,412 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 notes 0.08 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


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

	(in thousands, except per share data)				(in thousands, except per share data)
Net income	$	51,428	$	62,782	$	110,749	$	127,278
Add back:
Remeasurement of acquisition-related contingent consideration	—		(3,130)		—		(3,130)



Non-cash interest expense on convertible notes	—		2,380		—		4,728
Tax impact of non-cash interest expense on convertible notes	—		(619)		—		(1,229)


Adjusted Net Income	$	51,428	$	61,413	$	110,749	$	127,647
Earnings per common share — diluted	$	1.43	$	1.77	$	3.10	$	3.61
Add back:
Remeasurement of acquisition-related contingent consideration	—		(0.09)		—		(0.09)



Non-cash interest expense on convertible notes	—		0.07		—		0.13
Tax impact of non-cash interest expense on convertible notes	—		(0.01)		—		(0.03)


Adjusted earnings per common share — diluted	$	1.43	$	1.74	$	3.10	$	3.62
Weighted average number of common shares outstanding — diluted	35,909		35,374		35,778		35,218

Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

		(in thousands)				(in thousands)					(in thousands)				(in thousands)
Net cash provided by operating activities		$	196,946	$	111,563	$	155,920	$	140,977
Net cash provided by (used in) operating activities										Net cash provided by (used in) operating activities	$	35,047	$	125,558	$	(168,731)	$	(41,026)
Purchases of property and equipment	Purchases of property and equipment	(24,745)		(11,764)		(52,470)		(25,663)		Purchases of property and equipment	(13,028)		(19,724)		(25,635)		(27,725)
Free Cash Flow	Free Cash Flow	$	172,201	$	99,799	$	103,450	$	115,314	Free Cash Flow	$	22,019	$	105,834	$	(194,366)	$	(68,751)

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2020~~2021

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 three months ended ~~September~~June 30, ~~2021 decreased $0.1~~2022 increased $8.4 million, or ~~0.3%~~28.5%, to ~~$26.0~~$37.7 million compared with ~~$26.1~~$29.4 million for the three months ended ~~September~~June 30, ~~2020.Excluding the impact of special charges recorded in 2020, unallocated corporate expenses increased by $0.3 million, or 1.1%.~~2021. The increase was primarily due to higher ~~corporate compensation costs due to headcount growth.~~travel and entertainment and consulting expenses.

Interest income and other

Interest income and other, which includes FX gains and losses, increased ~~$8.5~~$3.9 million to ~~$5.2~~a $3.0 million gain for the three months ended ~~September~~June 30, ~~2021~~2022 compared with a ~~$3.3~~$0.9 million loss for the three months ended ~~September~~June 30, ~~2020.~~2021. The increase was primarily due to a ~~$7.6~~$1.9 million ~~increase in~~ net FX ~~gains.~~gain for the three months ended June 30, 2022 compared to a $1.4 million net FX loss for the three months ended June 30, 2021.

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~~June 30, ~~2021~~2022 decreased ~~$0.1~~$2.8 million to ~~$5.1~~$2.4 million compared ~~with $5.2~~to $5.3 million for the three months ended ~~September~~June 30, ~~2020.~~2021. The decrease was primarily due to the adoption of ASU 2020-06 as described above.

Income tax provision

Our income tax provision ~~increased $4.7~~decreased $1.6 million, or ~~33.0%~~10.9%, to ~~$19.2~~$13.4 million for the three months ended ~~September~~June 30, ~~2021~~2022 from ~~$14.4~~$15.0 million for the three months ended ~~September~~June 30, ~~2020.~~2021. Our effective tax rate of ~~21.6%~~20.6% for the three months ended ~~September~~June 30, ~~2021~~2022 compared with ~~22.3%~~19.3% for the three months ended ~~September~~June 30, ~~2020.~~2021. The tax rate for the three months ended ~~September~~June 30, 2022 and 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.~~

~~Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020~~

~~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, 2021 increased $2.1 million, or 2.6%, to $82.0 million compared with $79.9 million for the nine months ended September 30, 2020. Excluding the impact of special charges recordedcompensation, which had a more favorable benefit in ~~2020, unallocated corporate expenses increased by $2.5 million, or 3.1%. The increase was primarily~~2022 due to more shares vesting at a higher ~~corporate compensation costs due to headcount growth, as well as higher infrastructure support costs to support growth in the business.~~

~~Interest income and other~~

Interest income and other, which includes FX gains and losses, increased $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. 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, 2021 and 2020.~~

~~Income tax provision~~

Our income tax provision increased $9.1 million, or 20.0%, to $54.4 million for the nine months ended September 30, 2021 from $45.3 million for the nine months ended September 30, 2020. Our effective tax rateshare price of ~~21.7% for the nine months ended September 30, 2021 compared with 22.6% for the nine months ended September 30, 2020.~~our common stock. The tax rate for the ~~nine~~three months ended ~~September~~June 30, 2021 was also favorably impacted by a one-time discrete tax adjustment related to the future change in the United Kingdom (“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,~~In June 2021, the U.K. government approved the U.K. tax rate increase from 19.0% to 25.0% effective in April 2023.

Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021

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 six months ended June 30, 2022 increased $13.0 million, or 23.2%, to $69.1 million compared with $56.1 million for the six months ended June 30, 2021. The increase was primarily due to higher travel and entertainment, consulting and legal expenses.

Interest income and other

Interest income and other, which includes FX gains and losses, increased $2.5 million to a $2.6 million gain for the six months ended June 30, 2022 compared with a $0.1 million gain for the six months ended June 30, 2021. The increase was primarily due to a $0.8 million net FX gain for the six months ended June 30, 2022 compared to a $1.0 million net FX loss for the six months ended June 30, 2021.

Interest expense

Interest expense for the six months ended June 30, 2022 decreased $5.0 million to $5.1 million compared to $10.1 million for the six months ended June 30, 2021. The decrease was primarily due to the adoption of ASU 2020-06 as described above.

Income tax provision

Our income tax provision decreased $4.9 million or 14.0%, to $30.3 million for the six months ended June 30, 2022 from $35.2 million for the six months ended June 30, 2021. Our effective tax rate of 21.5% for the six months ended June 30, 2022 compared to 21.7% for the six months ended June 30, 2021. The tax rate for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ was ~~favorably~~ impacted by a discrete tax adjustment related to share-based ~~compensation.~~compensation, which had a more favorable benefit in 2022 due to more shares vesting at a higher share price of our common stock. The tax rate for the six months ended June 30, 2021 was also favorably impacted by a one-time discrete tax adjustment related to the future change in the U.K. tax rate, which required us to remeasure our deferred tax asset related to an intellectual property license between our U.S. and U.K. subsidiaries. In June 2021, the U.K. government approved the U.K. tax rate increase from 19.0% to 25.0% effective in April 2023.

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~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

		(in thousands)				(in thousands)					(in thousands)				(in thousands)
Net income	Net income	$	69,480	$	50,172	$	196,758	$	155,093	Net income	$	51,428	$	62,782	$	110,749	$	127,278
Add back:	Add back:									Add back:
Income tax provision	Income tax provision	19,155		14,407		54,394		45,342		Income tax provision	13,353		14,992		30,320		35,239
Interest income and other	Interest income and other	(5,175)		3,340		(5,297)		(3,879)		Interest income and other	(2,994)		912		(2,647)		(122)
Interest expense	Interest expense	5,073		5,151		15,164		15,169		Interest expense	2,448		5,294		5,090		10,091

Unallocated corporate expenses	Unallocated corporate expenses	25,974		26,061		82,041		79,928		Unallocated corporate expenses	37,716		29,357		69,055		56,067
Total segment operating income	Total segment operating income	114,507		99,131		343,060		291,653		Total segment operating income	101,951		113,337		212,567		228,553
Add back:	Add back:									Add back:
Segment depreciation expense	Segment depreciation expense	8,130		7,236		23,394		21,573		Segment depreciation expense	8,452		7,834		16,636		15,264
Amortization of intangible assets	Amortization of intangible assets	2,859		2,795		8,512		7,440		Amortization of intangible assets	2,737		2,853		5,005		5,653
Segment special charges		—		6,730		—		6,730

Remeasurement of acquisition-related contingent consideration	Remeasurement of acquisition-related contingent consideration	—		—		(3,130)		—		Remeasurement of acquisition-related contingent consideration	—		(3,130)		—		(3,130)
Total Adjusted Segment EBITDA	Total Adjusted Segment EBITDA	$	125,496	$	115,892	$	371,836	$	327,396	Total Adjusted Segment EBITDA	$	113,140	$	120,894	$	234,208	$	246,340

Other Segment Operating Data


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020				2022			2021			2022			2021
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 Finance	Corporate Finance	1,704			1,608			1,704			1,608			Corporate Finance	1,769			1,632			1,769			1,632
FLC	FLC	1,476			1,371			1,476			1,371			FLC	1,509			1,399			1,509			1,399
Economic Consulting	Economic Consulting	925			880			925			880			Economic Consulting	935			884			935			884
Technology (1)	Technology (1)	443			394			443			394			Technology (1)	507			429			507			429
Strategic Communications	Strategic Communications	817			766			817			766			Strategic Communications	877			771			877			771
Total revenue-generating professionals	Total revenue-generating professionals	5,365			5,019			5,365			5,019			Total revenue-generating professionals	5,597			5,115			5,597			5,115
Utilization rates of billable professionals: (2)	Utilization rates of billable professionals: (2)													Utilization rates of billable professionals: (2)
Corporate Finance	Corporate Finance	62		%	64		%	60		%	68		%	Corporate Finance	62		%	59		%	62		%	59		%
FLC	FLC	54		%	48		%	58		%	50		%	FLC	56		%	60		%	56		%	60		%
Economic Consulting	Economic Consulting	68		%	66		%	73		%	68		%	Economic Consulting	70		%	75		%	71		%	75		%
Average billable rate per hour: (3)	Average billable rate per hour: (3)													Average billable rate per hour: (3)
Corporate Finance	Corporate Finance	$	465		$	460		$	457		$	468		Corporate Finance	$	471		$	456		$	458		$	456
FLC	FLC	$	355		$	337		$	350		$	333		FLC	$	360		$	344		$	357		$	350
Economic Consulting	Economic Consulting	$	539		$	502		$	510		$	482		Economic Consulting	$	477		$	524		$	476		$	504

(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~~600 as-needed employees during the three months ended ~~September~~June 30, ~~2021~~2022 compared with ~~380~~601 as-needed employees during the three months ended ~~September~~June 30, ~~2020.~~2021.

(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)~~Average~~For engagements where revenues are based on number of hours worked by our billable professionals, average 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.

CORPORATE FINANCE & RESTRUCTURING


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020				2022			2021			2022			2021

		(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)
Revenues	Revenues	$	250,321		$	236,615		$	707,495		$	690,375		Revenues	$	277,067		$	230,971		$	530,396		$	457,174
Percentage change in revenues from prior year	Percentage change in revenues from prior year	5.8		%	23.4		%	2.5		%	27.2		%	Percentage change in revenues from prior year	20.0		%	-6.1		%	16.0		%	0.8		%
Operating expenses	Operating expenses													Operating expenses
Direct cost of revenues	Direct cost of revenues	161,638			150,219			479,311			422,088			Direct cost of revenues	181,221			158,560			347,467			317,673
Selling, general and administrative expenses	Selling, general and administrative expenses	34,494			31,290			95,822			89,988			Selling, general and administrative expenses	42,604			30,424			77,813			61,328
Special charges		—			861			—			861

Amortization of intangible assets	Amortization of intangible assets	1,873			1,873			5,644			4,591			Amortization of intangible assets	2,307			1,884			4,127			3,771
		198,005			184,243			580,777			517,528				226,132			190,868			429,407			382,772
Segment operating income	Segment operating income	52,316			52,372			126,718			172,847			Segment operating income	50,935			40,103			100,989			74,402
Percentage change in segment operating income from prior year	Percentage change in segment operating income from prior year	-0.1		%	13.8		%	-26.7		%	32.5		%	Percentage change in segment operating income from prior year	27.0		%	-45.7		%	35.7		%	-38.2		%
Add back:	Add back:													Add back:
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	3,319			2,982			9,660			7,717			Depreciation and amortization of intangible assets	4,015			3,201			7,501			6,341
Special charges		—			861			—			861

Fair value remeasurement of contingent consideration	Fair value remeasurement of contingent consideration	—			—			(3,130)			—			Fair value remeasurement of contingent consideration	—			(3,130)			—			(3,130)
Adjusted Segment EBITDA	Adjusted Segment EBITDA	$	55,635		$	56,215		$	133,248		$	181,425		Adjusted Segment EBITDA	$	54,950		$	40,174		$	108,490		$	77,613
Gross profit (1)	Gross profit (1)	$	88,683		$	86,396		$	228,184		$	268,287		Gross profit (1)	$	95,846		$	72,411		$	182,929		$	139,501
Percentage change in gross profit from prior year	Percentage change in gross profit from prior year	2.6		%	13.2		%	-14.9		%	24.7		%	Percentage change in gross profit from prior year	32.4		%	-29.5		%	31.1		%	-23.3		%
Gross profit margin (2)	Gross profit margin (2)	35.4		%	36.5		%	32.3		%	38.9		%	Gross profit margin (2)	34.6		%	31.4		%	34.5		%	30.5		%
Adjusted Segment EBITDA as a percentage of revenues	Adjusted Segment EBITDA as a percentage of revenues	22.2		%	23.8		%	18.8		%	26.3		%	Adjusted Segment EBITDA as a percentage of revenues	19.8		%	17.4		%	20.5		%	17.0		%
Number of revenue-generating professionals (at period end)	Number of revenue-generating professionals (at period end)	1,704			1,608			1,704			1,608			Number of revenue-generating professionals (at period end)	1,769			1,632			1,769			1,632
Percentage change in number of revenue-generating professionals from prior year	Percentage change in number of revenue-generating professionals from prior year	6.0		%	36.6		%	6.0		%	36.6		%	Percentage change in number of revenue-generating professionals from prior year	8.4		%	19.8		%	8.4		%	19.8		%
Utilization rate of billable professionals	Utilization rate of billable professionals	62		%	64		%	60		%	68		%	Utilization rate of billable professionals	62		%	59		%	62		%	59		%
Average billable rate per hour	Average billable rate per hour	$	465		$	460		$	457		$	468		Average billable rate per hour	$	471		$	456		$	458		$	456

(1)Revenues less direct cost of revenues

(2)Gross profit as a percentage of revenues

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2020~~2021

Revenues increased ~~$13.7~~$46.1 million, or ~~5.8%~~20.0%, to ~~$250.3~~$277.1 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~1.5%~~2.7% estimated ~~positive~~negative impact from FX. Acquisition-related revenues contributed $3.6 million, or 1.6% of the increase, compared to the same quarter in the prior year. Excluding the estimated impact from FX and acquisition-related revenues, revenues increased ~~$10.1~~$48.7 million, or ~~4.3%~~21.1%, primarily due to increased demand and ~~higher realization~~realized rates across our transactions and business transformation services, as well as ~~recognition of deferred revenues, which was partially offset by lower~~increased demand for ~~our~~ restructuring ~~services.~~services in North America.

Gross profit increased ~~$2.3~~$23.4 million, or ~~2.6%~~32.4%, to ~~$88.7~~$95.8 million for the three months ended ~~September~~June 30, ~~2021.~~2022. Gross profit margin ~~decreased 1.1~~increased 3.2 percentage points for the three months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase in gross profit margin was primarily due to a 23 percentage point ~~decline~~increase in ~~utilization.~~utilization, as well as lower compensation as a percentage of revenues.

SG&A expenses increased ~~$3.2~~$12.2 million, or ~~10.2%~~40.0%, to ~~$34.5~~$42.6 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~1.1%~~2.1% estimated ~~negative~~positive impact from FX. SG&A expenses of ~~13.8%~~15.4% of revenues for the three months ended ~~September~~June 30, ~~2021~~2022 compared with 13.2% of revenues for the three months ended ~~September~~June 30, ~~2020.~~2021. The increase in SG&A expenses was primarily due to higher ~~bad debt,~~travel and entertainment, infrastructure support, ~~rent and occupancy~~recruiting, and other general and administrative ~~costs, which was partially offset by a decline in acquisition-related~~ expenses.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Revenues increased ~~$17.1~~$73.2 million, or ~~2.5%~~16.0%, to ~~$707.5~~$530.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~2.5%~~2.0% estimated ~~positive~~negative impact from FX. Acquisition-related revenues contributed ~~$22.0~~$5.9 million, or ~~3.2%~~1.3% of the increase, ~~for~~compared to the ~~nine months ended September 30, 2021.~~same period in the prior year. Excluding the estimated impact from FX and acquisition-related revenues, revenues ~~decreased $22.4~~increased $76.3 million, or ~~3.2%~~16.7%, primarily due to ~~lower~~increased demand ~~for restructuring~~across our business transformation and transactions services, as well as ~~a $6.8 million decline in~~higher realized rates, 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.~~success fees.

Gross profit ~~decreased $40.1~~increased $43.4 million, or ~~14.9%~~31.1%, to ~~$228.2~~$182.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Gross profit margin ~~decreased 6.6~~increased 4.0 percentage points for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase in gross profit margin was ~~largely~~primarily due to ~~an 8~~a 3 percentage point ~~decline~~increase in utilization, ~~primarily for our restructuring services.~~lower compensation as a percentage of revenues and higher realized rates.

SG&A expenses increased ~~$5.8~~$16.5 million, or ~~6.5%~~26.9%, to ~~$95.8~~$77.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~2.6%~~1.8% estimated ~~negative~~positive impact from FX. SG&A expenses of ~~13.5%~~14.7% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~13.0%~~13.4% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The increase in SG&A expenses was primarily due to higher ~~rent~~travel and ~~occupancy, infrastructure support~~entertainment, outside services, and ~~compensation expenses, which was partially offset by lower acquisition-related~~other general and administrative expenses.

FORENSIC AND LITIGATION CONSULTING


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020				2022			2021			2022			2021

		(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)
Revenues	Revenues	$	145,264		$	119,104		$	446,831		$	373,082		Revenues	$	164,248		$	150,746		$	318,144		$	301,567
Percentage change in revenues from prior year	Percentage change in revenues from prior year	22.0		%	-16.5		%	19.8		%	-12.7		%	Percentage change in revenues from prior year	9.0		%	41.7		%	5.5		%	18.7		%
Operating expenses	Operating expenses													Operating expenses
Direct cost of revenues	Direct cost of revenues	103,870			86,335			311,772			280,167			Direct cost of revenues	117,551			108,615			228,029			207,902
Selling, general and administrative expenses	Selling, general and administrative expenses	26,044			20,385			74,813			70,951			Selling, general and administrative expenses	31,438			25,415			59,066			48,769
Special charges		—			3,484			—			3,484

Amortization of intangible assets	Amortization of intangible assets	249			171			647			627			Amortization of intangible assets	245			224			493			398
		130,163			110,375			387,232			355,229				149,234			134,254			287,588			257,069
Segment operating income	Segment operating income	15,101			8,729			59,599			17,853			Segment operating income	15,014			16,492			30,556			44,498
Percentage change in segment operating income from prior year	Percentage change in segment operating income from prior year	73.0		%	-65.8		%	233.8		%	-78.4		%	Percentage change in segment operating income from prior year	-9.0		%	NM (3)			-31.3		%	387.7		%
Add back:	Add back:													Add back:
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	1,519			1,378			4,455			4,415			Depreciation and amortization of intangible assets	1,693			1,510			3,408			2,936
Special charges		—			3,484			—			3,484

Adjusted Segment EBITDA	Adjusted Segment EBITDA	$	16,620		$	13,591		$	64,054		$	25,752		Adjusted Segment EBITDA	$	16,707		$	18,002		$	33,964		$	47,434
Gross profit (1)	Gross profit (1)	$	41,394		$	32,769		$	135,059		$	92,915		Gross profit (1)	$	46,697		$	42,131		$	90,115		$	93,665
Percentage change in gross profit from prior year	Percentage change in gross profit from prior year	26.3		%	-36.3		%	45.4		%	-42.7		%	Percentage change in gross profit from prior year	10.8		%	193.0		%	-3.8		%	55.7		%
Gross profit margin (2)	Gross profit margin (2)	28.5		%	27.5		%	30.2		%	24.9		%	Gross profit margin (2)	28.4		%	27.9		%	28.3		%	31.1		%
Adjusted Segment EBITDA as a percentage of revenues	Adjusted Segment EBITDA as a percentage of revenues	11.4		%	11.4		%	14.3		%	6.9		%	Adjusted Segment EBITDA as a percentage of revenues	10.2		%	11.9		%	10.7		%	15.7		%
Number of revenue-generating professionals (at period end)	Number of revenue-generating professionals (at period end)	1,476			1,371			1,476			1,371			Number of revenue-generating professionals (at period end)	1,509			1,399			1,509			1,399
Percentage change in number of revenue-generating professionals from prior year	Percentage change in number of revenue-generating professionals from prior year	7.7		%	3.4		%	7.7		%	3.4		%	Percentage change in number of revenue-generating professionals from prior year	7.9		%	5.5		%	7.9		%	5.5		%
Utilization rate of billable professionals	Utilization rate of billable professionals	54		%	48		%	58		%	50		%	Utilization rate of billable professionals	56		%	60		%	56		%	60		%
Average billable rate per hour	Average billable rate per hour	$	355		$	337		$	350		$	333		Average billable rate per hour	$	360		$	344		$	357		$	350

(1)Revenues less direct cost of revenues

(2)Gross profit as a percentage of revenues

(3)Fluctuation in terms of percentage change is not meaningful.

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2020~~2021

Revenues increased ~~$26.2~~$13.5 million, or ~~22.0%~~9.0%, to ~~$145.3~~$164.2 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~1.1%~~1.9% estimated ~~positive~~negative 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~~$16.3 million, or ~~17.8%~~10.8%, primarily due to higher demand for our health solutions services and higher realized rates for our investigations services, which was partially offset by lower demand for our disputes and ~~health solutions~~data & analytics services.

Gross profit increased ~~$8.6~~$4.6 million, or ~~26.3%~~10.8%, to ~~$41.4~~$46.7 million for the three months ended ~~September~~June 30, ~~2021.~~2022. Gross profit margin increased ~~1.0~~0.5 percentage ~~point~~points for the three months ended ~~September~~June 30, 2022. The increase in gross profit margin was primarily due to an increase in utilization for our health solutions services and lower variable compensation.

SG&A expenses increased $6.0 million, or 23.7%, to $31.4 million for the three months ended June 30, 2022, which included a 2.1% estimated positive impact from FX. SG&A expenses were 19.1% of revenues for the three months ended June 30, 2022, compared with 16.9% of revenues for the three months ended June 30, 2021. The increase in SG&A expenses was primarily driven by higher travel and entertainment, infrastructure support, and other general and administrative expenses.

Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021

Revenues increased $16.6 million, or 5.5%, to $318.1 million for the six months ended June 30, 2022, which included a 1.3% estimated negative impact from FX. Excluding the estimated impact from FX, revenues increased $20.5 million, or 6.8%, primarily due to higher demand for our health solutions services and higher realized rates for our investigations services, which was partially offset by lower demand for our data & analytics and disputes services.

Gross profit decreased $3.6 million, or 3.8%, to $90.1 million for the six months ended June 30, 2022. Gross profit margin decreased 2.7 percentage points for the six months ended June 30, 2022. The decrease in gross profit margin was largely related to a 64 percentage point ~~increase~~decline in utilization, primarily infor our ~~investigations~~data & analytics and disputes services, ~~which was partially offset by~~as well as higher ~~variable~~ compensation as a percentage of revenues.

SG&A expenses increased ~~$5.7~~$10.3 million, or ~~27.8%~~21.1%, to ~~$26.0~~$59.1 million for the ~~three~~six months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~1.2%~~1.4% estimated ~~negative~~positive impact from FX. SG&A expenses of ~~17.9%~~18.6% of revenues for the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~17.1%~~16.2% of revenues for the ~~three~~six months ended ~~September~~June 30, ~~2020.~~ 2021. 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.

ECONOMIC CONSULTING


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020				2022			2021			2022			2021

		(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)
Revenues	Revenues	$	172,543		$	154,978		$	525,122		$	438,609		Revenues	$	164,041		$	183,306		$	330,018		$	352,579
Percentage change in revenues from prior year	Percentage change in revenues from prior year	11.3		%	9.4		%	19.7		%	-0.2		%	Percentage change in revenues from prior year	-10.5		%	21.0		%	-6.4		%	24.3		%
Operating expenses	Operating expenses													Operating expenses
Direct cost of revenues	Direct cost of revenues	123,079			110,716			383,799			322,002			Direct cost of revenues	122,006			135,579			246,476			260,720
Selling, general and administrative expenses	Selling, general and administrative expenses	21,009			19,879			58,432			60,523			Selling, general and administrative expenses	21,596			18,523			43,160			37,423
Special charges		—			35			—			35
Amortization of intangible assets		—			44			—			133

		144,088			130,674			442,231			382,693				143,602			154,102			289,636			298,143
Segment operating income	Segment operating income	28,455			24,304			82,891			55,916			Segment operating income	20,439			29,204			40,382			54,436
Percentage change in segment operating income from prior year	Percentage change in segment operating income from prior year	17.1		%	35.5		%	48.2		%	-10.1		%	Percentage change in segment operating income from prior year	-30.0		%	44.5		%	-25.8		%	72.2		%
Add back:	Add back:													Add back:
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	1,462			1,381			4,304			4,173			Depreciation and amortization of intangible assets	1,207			1,495			2,459			2,842
Special charges		—			35			—			35

Adjusted Segment EBITDA	Adjusted Segment EBITDA	$	29,917		$	25,720		$	87,195		$	60,124		Adjusted Segment EBITDA	$	21,646		$	30,699		$	42,841		$	57,278
Gross profit (1)	Gross profit (1)	$	49,464		$	44,262		$	141,323		$	116,607		Gross profit (1)	$	42,035		$	47,727		$	83,542		$	91,859
Percentage change in gross profit from prior year	Percentage change in gross profit from prior year	11.8		%	20.3		%	21.2		%	-0.3		%	Percentage change in gross profit from prior year	-11.9		%	15.8		%	-9.1		%	27.0		%
Gross profit margin (2)	Gross profit margin (2)	28.7		%	28.6		%	26.9		%	26.6		%	Gross profit margin (2)	25.6		%	26.0		%	25.3		%	26.1		%
Adjusted Segment EBITDA as a percentage of revenues	Adjusted Segment EBITDA as a percentage of revenues	17.3		%	16.6		%	16.6		%	13.7		%	Adjusted Segment EBITDA as a percentage of revenues	13.2		%	16.7		%	13.0		%	16.2		%
Number of revenue-generating professionals (at period end)	Number of revenue-generating professionals (at period end)	925			880			925			880			Number of revenue-generating professionals (at period end)	935			884			935			884
Percentage change in number of revenue-generating professionals from prior year	Percentage change in number of revenue-generating professionals from prior year	5.1		%	15.2		%	5.1		%	15.2		%	Percentage change in number of revenue-generating professionals from prior year	5.8		%	9.1		%	5.8		%	9.1		%
Utilization rate of billable professionals	Utilization rate of billable professionals	68		%	66		%	73		%	68		%	Utilization rate of billable professionals	70		%	75		%	71		%	75		%
Average billable rate per hour	Average billable rate per hour	$	539		$	502		$	510		$	482		Average billable rate per hour	$	477		$	524		$	476		$	504

(1)Revenues less direct cost of revenues

(2)Gross profit as a percentage of revenues

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2020~~2021

Revenues ~~increased $17.6~~decreased $19.3 million, or ~~11.3%~~10.5%, to ~~$172.5~~$164.0 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~1.7%~~3.9% estimated ~~positive~~negative impact from FX. Excluding the estimated impact offrom FX, revenues ~~increased $14.9~~decreased $12.2 million, or ~~9.6%~~6.6%, primarily due to lower demand for our M&A-related antitrust services and lower realization, largely due to revenue deferrals for our non-M&A-related antitrust services, which was partially offset by 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~~decreased $5.7 million, or ~~11.8%~~11.9%, to ~~$49.5~~$42.0 million for the three months ended ~~September~~June 30, ~~2021.~~2022. Gross profit margin ~~increased 0.1~~decreased 0.4 percentage points for the three months ended ~~September~~June 30, ~~2021.~~2022. The ~~increase~~decrease in gross profit margin was primarily due to lower realization and a 25 percentage point ~~increase~~decrease in utilization, which was partially offset by ~~higher~~lower variable ~~compensation as a percentage of revenues.~~compensation.

SG&A expenses increased ~~$1.1~~$3.1 million, or ~~5.7%~~16.6%, to ~~$21.0~~$21.6 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~1.1%~~4.3% estimated ~~negative~~positive impact from FX. SG&A expenses of ~~12.2%~~13.2% of revenues for the three months ended ~~September~~June 30, ~~2021~~2022 compared with ~~12.8%~~10.1% of revenues for the three months ended ~~September~~June 30, ~~2020.~~2021. The increase in SG&A expenses was primarily driven by higher travel and entertainment, infrastructure support, bad debt and other general and administrative expenses.

Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021

Revenues decreased $22.6 million, or 6.4%, to $330.0 million for the six months ended June 30, 2022, which included a 2.9% estimated negative impact from FX. Excluding the estimated impact from FX, revenues decreased $12.4 million, or 3.5%, primarily due to lower demand for our M&A-related antitrust services and lower realization, largely due to revenue deferrals for

~~Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020~~our non-M&A-related antitrust services, which was partially offset by higher demand for our non-M&A-related antitrust services and higher realization for our M&A-related antitrust services.

~~Revenues increased $86.5~~Gross profit decreased $8.3 million, or ~~19.7%~~9.1%, to ~~$525.1~~$83.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022. Gross profit margin decreased 0.7 percentage points for the six months ended June 30, 2022. The decrease in gross profit margin was primarily due to a 4 percentage point decrease in utilization and lower realization, which was partially offset by lower variable compensation.

SG&A expenses increased $5.7 million, or 15.3%, to $43.2 million for the six months ended June 30, 2022, 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 financial economics and international arbitration services, which was partially offset by lower realized bill rates for M&A-related antitrust services.

Gross profit increased $24.7 million, or 21.2%, to $141.3 million for the nine months ended September 30, 2021. Gross profit margin increased 0.3 percentage points for the nine months ended September 30, 2021. The increase in gross profit margin was primarily due to a 5 percentage point improvement in utilization, which was partially offset by higher variable compensation and contractor expenses as a percentage of revenues.

~~SG&A expenses decreased $2.1 million, or 3.5%, to $58.4 million for the nine months ended September 30, 2021, which included a 3.3% estimated negative impact from FX.~~ SG&A expenses of ~~11.1%~~13.1% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~13.8%~~10.6% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The ~~decrease~~increase in SG&A expenses was primarily driven by ~~lower~~higher bad debt, ~~and~~compensation, infrastructure support, travel and entertainment, ~~expenses, which was partially offset by higher infrastructure support costs.~~

and other general and administrative expenses.

TECHNOLOGY


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020				2022			2021			2022			2021

		(dollars in thousands)						(dollars in thousands)							(dollars in thousands)						(dollars in thousands)
Revenues	Revenues	$	64,657		$	58,585		$	222,762		$	164,392		Revenues	$	77,782		$	78,646		$	158,266		$	158,105
Percentage change in revenues from prior year	Percentage change in revenues from prior year	10.4		%	2.6		%	35.5		%	0.2		%	Percentage change in revenues from prior year	-1.1		%	67.0		%	0.1		%	49.4		%
Operating expenses	Operating expenses													Operating expenses
Direct cost of revenues	Direct cost of revenues	42,637			35,369			133,860			99,077			Direct cost of revenues	53,556			45,666			104,471			91,223
Selling, general and administrative expenses	Selling, general and administrative expenses	17,604			14,319			50,587			41,397			Selling, general and administrative expenses	19,296			17,640			38,622			32,983
Special charges		—			276			—			276

		60,241			49,964			184,447			140,750				72,852			63,306			143,093			124,206
Segment operating income	Segment operating income	4,416			8,621			38,315			23,642			Segment operating income	4,930			15,340			15,173			33,899
Percentage change in segment operating income from prior year	Percentage change in segment operating income from prior year	-48.8		%	-5.2		%	62.1		%	-21.4		%	Percentage change in segment operating income from prior year	-67.9		%	347.0		%	-55.2		%	125.7		%
Add back:	Add back:													Add back:
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	3,419			3,042			9,636			8,940			Depreciation and amortization of intangible assets	3,435			3,178			6,555			6,217
Special charges		—			276			—			276

Adjusted Segment EBITDA	Adjusted Segment EBITDA	$	7,835		$	11,939		$	47,951		$	32,858		Adjusted Segment EBITDA	$	8,365		$	18,518		$	21,728		$	40,116
Gross profit (1)	Gross profit (1)	$	22,020		$	23,216		$	88,902		$	65,315		Gross profit (1)	$	24,226		$	32,980		$	53,795		$	66,882
Percentage change in gross profit from prior year	Percentage change in gross profit from prior year	-5.2		%	-2.4		%	36.1		%	-7.7		%	Percentage change in gross profit from prior year	-26.5		%	99.2		%	-19.6		%	58.9		%
Gross profit margin (2)	Gross profit margin (2)	34.1		%	39.6		%	39.9		%	39.7		%	Gross profit margin (2)	31.1		%	41.9		%	34.0		%	42.3		%
Adjusted Segment EBITDA as a percentage of revenues	Adjusted Segment EBITDA as a percentage of revenues	12.1		%	20.4		%	21.5		%	20.0		%	Adjusted Segment EBITDA as a percentage of revenues	10.8		%	23.5		%	13.7		%	25.4		%
Number of revenue-generating professionals (at period end) (3)		443			394			443			394
Number of revenue-generating professionals (at period end) (3)														Number of revenue-generating professionals (at period end) (3)	507			429			507			429
Percentage change in number of revenue-generating professionals from prior year	Percentage change in number of revenue-generating professionals from prior year	12.4		%	13.2		%	12.4		%	13.2		%	Percentage change in number of revenue-generating professionals from prior year	18.2		%	11.1		%	18.2		%	11.1		%

(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.

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2020~~2021

Revenues ~~increased $6.1~~decreased $0.9 million, or ~~10.4%~~1.1%, to ~~$64.7~~$77.8 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~1.7%~~2.5% estimated ~~positive~~negative impact from FX. Excluding the estimated impact from FX, revenues increased ~~$5.1~~$1.1 million, or ~~8.6%~~1.4%, primarily due to ~~increased~~higher demand for ~~our hosting, consulting and managed review services, largely related to litigation, cross-border investigations and~~processing services. Higher demand for information governance, ~~engagements, which~~privacy and security, and investigations services was partially offset by ~~a decline in~~lower demand for litigation and M&A-related ~~“second request” engagements.~~"second request" services.

Gross profit decreased ~~$1.2~~$8.8 million, or ~~5.2%~~26.5%, to ~~$22.0~~$24.2 million for the three months ended ~~September~~June 30, ~~2021.~~2022. Gross profit margin decreased ~~5.6~~10.8 percentage points for the three months ended ~~September~~June 30, ~~2021.~~2022. The decrease in gross profit margin was primarily due to ~~an increase in~~higher compensation, ~~as a percentage of revenues, including~~which included the impact of ~~a 12.4%~~an 18.2% increase in billable headcount ~~which was partially offset by a favorable mix~~and an increase in as-needed contractors, as well as lower profitability of ~~higher margin hosting~~our managed review services.

SG&A expenses increased ~~$3.3~~$1.7 million, or ~~22.9%~~9.4%, to ~~$17.6~~$19.3 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~1.3%~~2.4% estimated ~~negative~~positive impact from FX. SG&A expenses of ~~27.2%~~24.8% of revenues for the three months ended ~~September~~June 30, ~~2021~~2022 compared with ~~24.4%~~22.4% of revenues for the three months ended ~~September~~June 30, ~~2020.~~2021. The increase in SG&A expenses was primarily ~~driven by~~due to higher ~~compensation~~travel and entertainment, talent development, and other general and administrative expenses.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Revenues increased ~~$58.4~~$0.2 million, or ~~35.5%~~0.1%, to ~~$222.8~~$158.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~2.7%~~1.6% estimated ~~positive~~negative impact from FX. Excluding the estimated impact from FX, revenues increased ~~$54.0~~$2.7 million, or ~~32.8%~~1.7%,primarily due to ~~increased~~higher demand for ~~our managed review and~~ hosting services, largely related to investigation and litigation engagements, and higher demand for processing services, mostly related to investigations, which was partially offset by lower demand for managed review services, primarily related to litigation and M&A-related ~~“second request” and cross-border investigation~~"second request" engagements.

Gross profit ~~increased $23.6~~decreased $13.1 million, or ~~36.1%~~19.6%, to ~~$88.9~~$53.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Gross profit margin ~~increased 0.2~~decreased 8.3 percentage points for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~increase~~decrease 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~~which included the impact of ~~a 12.4%~~an 18.2% increase in billable ~~headcount.~~headcount and an increase in as-needed contractors, as well as the lower profitability of our managed review services.

SG&A expenses increased ~~$9.2~~$5.6 million, or ~~22.2%~~17.1%, to ~~$50.6~~$38.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~2.1%~~1.7% estimated ~~negative~~positive impact from FX. SG&A expenses of ~~22.7%~~24.4% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~25.2%~~20.9% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The increase in SG&A expenses was primarily ~~driven by~~due to higher compensation, ~~bad debt~~travel and entertainment, and other general and administrative expenses.

STRATEGIC COMMUNICATIONS


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020				2022			2021			2022			2021

		(dollars in thousands)						(dollars in thousands)							(dollars in thousands)						(dollars in thousands)
Revenues	Revenues	$	69,443		$	52,967		$	197,781		$	168,236		Revenues	$	71,854		$	67,817		$	141,788		$	128,338
Percentage change in revenues from prior year	Percentage change in revenues from prior year	31.1		%	-11.7		%	17.6		%	-4.8		%	Percentage change in revenues from prior year	6.0		%	19.2		%	10.5		%	11.3		%
Operating expenses	Operating expenses													Operating expenses
Direct cost of revenues	Direct cost of revenues	41,010			34,540			122,638			109,103			Direct cost of revenues	45,747			42,302			86,741			81,628
Selling, general and administrative expenses	Selling, general and administrative expenses	13,477			10,542			37,385			33,576			Selling, general and administrative expenses	15,289			12,572			29,195			23,908
Special charges		—			2,074			—			2,074

Amortization of intangible assets	Amortization of intangible assets	737			706			2,221			2,088			Amortization of intangible assets	185			745			385			1,484
		55,224			47,862			162,244			146,841				61,221			55,619			116,321			107,020
Segment operating income	Segment operating income	14,219			5,105			35,537			21,395			Segment operating income	10,633			12,198			25,467			21,318
Percentage change in segment operating income from prior year	Percentage change in segment operating income from prior year	178.5		%	-55.0		%	66.1		%	-30.3		%	Percentage change in segment operating income from prior year	-12.8		%	38.6		%	19.5		%	30.9		%
Add back:	Add back:													Add back:
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	1,270			1,248			3,851			3,768			Depreciation and amortization of intangible assets	839			1,303			1,718			2,581
Special charges		—			2,074			—			2,074

Adjusted Segment EBITDA	Adjusted Segment EBITDA	$	15,489		$	8,427		$	39,388		$	27,237		Adjusted Segment EBITDA	$	11,472		$	13,501		$	27,185		$	23,899
Gross profit (1)	Gross profit (1)	$	28,433		$	18,427		$	75,143		$	59,133		Gross profit (1)	$	26,107		$	25,515		$	55,047		$	46,710
Percentage change in gross profit from prior year	Percentage change in gross profit from prior year	54.3		%	-23.0		%	27.1		%	-14.5		%	Percentage change in gross profit from prior year	2.3		%	27.8		%	17.8		%	14.7		%
Gross profit margin (2)	Gross profit margin (2)	40.9		%	34.8		%	38.0		%	35.1		%	Gross profit margin (2)	36.3		%	37.6		%	38.8		%	36.4		%
Adjusted Segment EBITDA as a percentage of revenues	Adjusted Segment EBITDA as a percentage of revenues	22.3		%	15.9		%	19.9		%	16.2		%	Adjusted Segment EBITDA as a percentage of revenues	16.0		%	19.9		%	19.2		%	18.6		%
Number of revenue-generating professionals (at period end)	Number of revenue-generating professionals (at period end)	817			766			817			766			Number of revenue-generating professionals (at period end)	877			771			877			771
Percentage change in number of revenue-generating professionals from prior year	Percentage change in number of revenue-generating professionals from prior year	6.7		%	6.5		%	6.7		%	6.5		%	Percentage change in number of revenue-generating professionals from prior year	13.7		%	1.3		%	13.7		%	1.3		%

(1)Revenues less direct cost of revenues

(2)Gross profit as a percentage of revenues

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2020~~2021

Revenues increased ~~$16.5~~$4.0 million, or ~~31.1%~~6.0%, to ~~$69.4~~$71.9 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~2.6%~~5.8% estimated ~~positive~~negative impact from FX. Excluding the estimated impact offrom FX, revenues increased ~~$15.1~~$7.9 million, or ~~28.5%~~11.7%, primarily due to growth in project- and retainer-based revenues, mainly driven by higher demand for our corporate reputation ~~and public affairs~~ services.

Gross profit increased ~~$10.0~~$0.6 million, or ~~54.3%~~2.3%, to ~~$28.4~~$26.1 million for the three months ended ~~September~~June 30, ~~2021.~~2022. Gross profit margin ~~increased 6.2~~decreased 1.3 percentage points for the three months ended ~~September~~June 30, ~~2021.~~2022. The ~~increase~~decrease in gross profit margin was driven by ~~lower~~higher compensation as a percentage of ~~revenues.~~revenues, which included the impact of a 13.7% increase in billable headcount.

SG&A expenses increased ~~$2.9~~$2.7 million, or ~~27.8%~~21.6%, to ~~$13.5~~$15.3 million for the three months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~2.2%~~5.0% estimated ~~negative~~positive impact from FX. SG&A expenses of ~~19.4%~~21.3% of revenues for the three months ended ~~September~~June 30, ~~2021~~2022 compared with ~~19.9%~~18.5% of revenues for the three months ended ~~September~~June 30, ~~2020.~~2021. The increase in SG&A expenses was primarily due to higher ~~outside services,~~travel and entertainment, infrastructure support, and other general and administrative expenses.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Revenues increased ~~$29.5~~$13.5 million, or ~~17.6%~~10.5%, to ~~$197.8~~$141.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~4.4%~~4.3% estimated ~~positive~~negative impact from FX. Excluding the estimated impact offrom FX, revenues increased ~~$22.1~~$18.9 million, or ~~13.1%~~14.7%,primarily due to growth in project- and retainer-based revenues, mainly driven by higher demand for our corporate reputation ~~and public affairs~~ services.

Gross profit increased ~~$16.0~~$8.3 million, or ~~27.1%~~17.8%, to ~~$75.1~~$55.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Gross profit margin increased ~~2.8~~2.4 percentage points for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The increase in gross profit margin was driven by lower compensation as a percentage of revenues ~~as well as~~and a ~~smaller proportion~~lower mix of ~~lower margin~~ pass-through revenues.

SG&A expenses increased ~~$3.8~~$5.3 million, or ~~11.3%~~22.1%, to ~~$37.4~~$29.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, which included a ~~4.1%~~3.8% estimated ~~negative~~positive impact from FX. SG&A expenses of ~~18.9%~~20.6% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~20.0%~~18.6% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The increase in SG&A expenses was primarily ~~driven by~~due to higher ~~outside services and~~ infrastructure support, ~~costs.~~travel and entertainment, and other general and administrative expenses.

CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

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, ~~2020~~2021 describes the significant accounting policies and methods used in preparation of the Condensed Consolidated Financial ~~Statements.~~Statements in this Quarterly Report on Form 10-Q. We evaluate our estimates, including those related to revenues, goodwill and 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, which form the basis for making judgments about the 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~~estimates 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

•Goodwill and Intangible Assets

There were no material changes to our critical accounting ~~policies and~~ estimates from the information provided in “Critical Accounting ~~Policies”~~Estimates” in the Management's Discussion and Analysis of Financial Condition and Results of Operations, in Part II, Item 7, of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021, or from the information provided in Part II, Item 8, of our Annual Report on Form 10-K for the year ended December 31, 2021.

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~~Liquidity

Nine Months Ended September 30,
2021 2020
Cash Flows (dollars in thousands)
Net cash provided by operating activities $ 155,920 $ 140,977
Net cash used in investing activities $ (62,274) $ (50,376)
Net cash used in financing activities $ (34,978) $ (155,414)
DSO 100 104

Our annual cash flows from operations generally exceed our cash needs for capital expenditures and debt service requirements. We ~~generally~~typically 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. We believe that our cash flows from operations, supplemented by short-term borrowings under our senior secured bank revolving credit facility ("Credit Facility"), as necessary, will provide adequate cash to fund our long-term cash needs for at least the next 12 months.

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~~affects the changes in these balances.

Uncertainties and Trends Affecting Liquidity

Our conclusion that we will be able to fund our cash requirements for at least 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, the COVID-19 pandemic that could result in a material adverse impact on our business, other events beyond our control, the impact of any future acquisitions, or unexpected significant changes in the 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 and workforce disruptions arising from the COVID-19 pandemic, or economic or business conditions change from those currently prevailing or from those now anticipated, or if unexpected circumstances or other events beyond our control arise that may have a material 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, 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 borrow under our Credit Facility or raise additional debt or equity funding to meet those needs. Our ability to borrow or 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; 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, 2021.

Cash Flows


	Six Months Ended June 30,
	2022		2021
Cash Flows	(dollars in thousands)
Net cash used in operating activities	$	(168,731)	$	(41,026)
Net cash used in investing activities	$	(32,335)	$	(37,529)
Net cash provided by (used in) financing activities	$	(17,199)	$	39,498
DSO (1)	102		102

(1)DSO is a performance measure used to assess how quickly revenues are collected by the ~~Company collects accounts receivable.~~Company. We calculate DSO at the end of each reporting period by dividing net accounts receivable reduced by billings in excess of services provided, by revenues for the quarter, adjusted for changes in foreign exchange rates. We multiply the result by the number of days in the quarter.

~~Nine~~

Six Months Ended ~~September~~June 30, ~~2021~~2022 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

Net cash ~~provided by~~used in operating activities ~~was $155.9~~of $168.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~$141.0~~$41.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The increase of $127.7 million, or 311.3%, in net cash ~~provided by~~used in operating activities was primarily due to an increase in salaries related to headcount growth, higher ~~cash collections,~~annual bonus payments and higher operating expenses, which was partially offset by an increase in ~~salaries, primarily related~~cash collected resulting from higher revenues compared to ~~headcount growth and higher annual bonus payments, as well as other operating expenses.~~the same period in the prior year. DSO was ~~100~~102 days as of ~~September~~June 30, ~~2021~~2022 and ~~104 days as of September 30, 2020.~~2021.

Net cash used in investing activities ~~was $62.3~~of $32.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~$50.4~~$37.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The ~~increase~~decrease of ~~$11.9~~$5.2 million, or ~~23.6%~~13.8%, in net cash used in investing activities was primarily due to ~~an increase of $26.8~~a $3.1 million decrease 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~~payments for the acquisition of businesses as well as a ~~business compared with $25.3~~decrease of $2.1 million ~~spent on the acquisition of a business~~ in ~~the prior year.~~capital expenditures.

Net cash used in ~~financing~~financing activities ~~was $35.0 million~~ f~~or the nine months ended September 30, 2021 compared with $155.4~~of $17.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2022 compared with $39.5 million of net cash provided by financing activities for the six months ended June 30, 2021. The ~~decrease~~increase of $56.7 million, or 143.5%, in net cash used in financing activities ~~for the nine months ended September 30, 2021~~ was primarily due to a decline in net borrowings of $100.0 million under our Credit Facility, which was partially offset by a decrease of ~~$129.7~~$43.0 million in payments for common stock repurchases under the Repurchase Program as compared ~~with~~to the same period in the prior year.

Principal Sources of Capital Resources

As of ~~September~~June 30, ~~2021,~~2022, our capital resources included ~~$342.5~~$255.7 million of cash and cash equivalents and available borrowing capacity of ~~$523.9~~$549.6 million under the $550.0 million revolving line of credit under our Credit Facility. As of ~~September~~June 30, ~~2021,~~2022, we had ~~$25.0 million of~~no outstanding borrowings under our Credit Facility and ~~$1.1~~$0.4 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 our Credit Facility includes a $75.0 million sublimit for borrowings in currencies other than USD, including the euro ("EUR"), British pound ("GBP"), 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~~EUR and ~~British pound~~GBP bear interest at an annual rate equal to the London Interbank Offered Rate ("LIBOR"), plus an applicable margin or, in the case of USD borrowings, an alternative base rate plus an applicable margin. ~~The alternative base rate means a fluctuating rate per annum equal~~Due to the ~~highest~~cessation by the ICE Benchmark Administration Limited of ~~(1)~~ the ~~rate~~publication on a representative basis of ~~interest in effect for such day~~EUR LIBOR and GBP LIBOR as ~~the prime rate announced by~~of December 31, 2021, EUR LIBOR is no longer available under our Credit Agreement and one-, three- and six-month GBP LIBOR is available under a "synthetic" methodology until December 31, 2022. The Credit Agreement permits FTI Consulting and Bank of America, ~~(2)~~N.A., as administrative agent thereunder, to agree to a new benchmark rate to replace EUR LIBOR and GBP LIBOR, subject to the ~~federal funds rate plus~~negative consent of the ~~sum~~Required Lenders (as defined therein). Prior to the incurrence of ~~50 basis points, and (3) the one-month LIBOR plus 100 basis points. Borrowings~~any borrowings under the Credit Facility in ~~Canadian dollars bear interest at an annual~~EUR or, after December 31, 2022, in GBP, we will need to agree to a replacement benchmark rate ~~equal to~~for each applicable currency in accordance with the ~~Canadian Dealer Offered Rate plus an applicable margin. Borrowings under~~terms of 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.~~Agreement. 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 amended and restated credit agreement entered into in November 2018, as further amended by the ~~Financial Conduct Authority~~first amendment to the amended and restated credit agreement dated as of February 4, 2022 (as amended by the ~~United Kingdom (“FCA”~~first amendment, the "Credit Agreement"), ~~which regulates LIBOR, announced that it intends to stop compelling banks to submit rates for~~governing 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~~our 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

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)~~Agreement). As ~~of September~~of June 30, ~~2021,~~2022, we were in compliance with the covenants contained in the Credit Agreement and the indenture, dated as of August 20, 2018, as amended by the first supplemental indenture, dated as of January 1, 2022, between us and U.S. Bank National Association, as trustee, ~~(the "Indenture"),~~ governing the 2023 Convertible Notes. See Note 8, "Debt" in Part I, Item 1, of this Quarterly Report on Form 10-Q for a further discussion of the 2023 Convertible Notes.

Principal Uses of Capital Resources

Future Capital ~~Needs~~Requirements

We anticipate that our future capital ~~needs~~requirements 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 and information or financial systems, office furniture and leasehold improvements;

•debt service requirements, including interest payments on our long-term ~~debt;~~debt and repayments of the 2023 Convertible Notes principal and conversion premium;

•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.

Capital Expenditures

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we spent ~~$52.5~~$25.6 million in capital expenditures to support our organization, including direct support for specific client engagements. WeFor the remainder of 2022, we currently expect ~~to make~~ additional capital expenditures to support our organization in an aggregate amount ~~betwe~~en ~~$20.0~~of between $32 million and ~~$25.0 million, which includes costs related to leasehold improvements for our new principal office space in New York, New York, for the remainder of 2021.~~$39 million. 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.

Share Repurchase Program

During the six months ended June 30, 2022, we made $3.1 million in payments for common stock repurchases under the Repurchase Program. We had $164.0 million remaining under the Repurchase Program to repurchase additional shares as of June 30, 2022.

Payments for Acquisition of Businesses

During the six months ended June 30, 2022, we acquired a business that was assigned to the Corporate Finance segment for an aggregate of $6.7 million, net of cash received. We also recorded a liability of $5.4 million for acquisition-related contingent consideration.

~~2023 Convertible Notes~~Future Contractual Obligations

Our future contractual obligations as of June 30, 2022 include both current and long-term obligations. We have a current obligation of $6.6 million and long-term obligations of $319.4 million related to 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~~including current and ~~August 15 of each year, beginning on February 15, 2019.~~long-term interest. 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~~As of June 30, 2022, there were no outstanding borrowings under 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~~Credit Facility, which 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 businessmature 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 endedNovember 30, 2023. For more information 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~~

~~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~~Credit Facility, refer 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 9,8, "Debt" in Part I, Item 11. Future contractual obligations related to our long-term debt assume that payments will be made based on the current payment schedule and that interest payments will be at their stated rates and exclude any additional revolving line of ~~this Quarterly Report on Form 10-Q for a further discussion~~credit borrowings or repayments subsequent to June 30, 2022 and prior to the November 30, 2023 maturity date of our Credit Facility. Amounts due under the 2023 Convertible ~~Notes.~~

~~Cash Flows~~

~~For~~Notes and the last several years, our cash flows from operations 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~~that are not contractually required or expected to ~~fund our long-term cash needs~~be liquidated 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, arisingmore than one year 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 effectbalance sheet date are classified as long-term on the ~~cash flow or profitability of~~Condensed Consolidated Balance Sheets. Under our ~~business, including material negative changes~~operating leases as described 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”~~Note 9, “Leases” 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, 2020.

~~Off-Balance Sheet Arrangements~~

~~We have no off-balance sheet arrangements and~~1, 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~~current obligation of ~~operations.~~

~~Future Contractual Obligations~~

~~There have been no material changes in our future contractual~~$33.3 million and long-term obligations ~~as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.~~of $218.0 million.

These amounts reflect future unconditional payments and are based on the terms of the relevant agreements, appropriate classification of items under GAAP currently in effect and certain assumptions such as interest rates. Future events could cause actual payments to differ from these amounts.

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 (the “Exchange Act”), that involve uncertainties and risks. Forward-looking statements include statements concerning our plans, initiatives, projections, prospects, policies and practices, objectives, goals, commitments, 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, climate change-related matters, 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,” "commits," “aspires,” ~~“forecasts”~~“forecasts,” "future," "goal," "seeks" 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 plans, expectations, intentions, aspirations, beliefs, goals, estimates, forecasts and projections will result or be achieved. Our actual financial results, performance or achievements and outcomes could differ materially from those expressed in, or implied by, any forward-looking statements. Any references to standards of measurement and performance made regarding our climate change-, ESG- or other sustainability-related plans, goals, commitments, intentions, aspirations, forecasts or projections, or expectations are developing and based on assumptions, and no assurance can be given that any such plan, goal, commitment, intention, aspiration, forecast or projection, or expectation can or will be achieved. 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 this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 and Part~~ I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, 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, 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, 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 recruit and retain qualified professionals and senior 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, 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;

•damage to our reputation as a result of claims involving the quality of our 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;

•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;

•risks relating to the obsolescence, ofreplacement or the protection of our information and financial systems and software, proprietary software products, intellectual property rights and trade ~~secrets;~~secrets, which could adversely affect our ability to retain or win clients, conduct business, preserve or enhance our reputation, maintain business continuity or report financial results;

•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 climate change and 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;~~regulations; 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, ~~2020.~~2021. There have been no material changes in our market risk exposure during the period covered by this Quarterly Report on Form 10-Q.


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~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4443

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

~~The following~~There have been no material changes in any risk factors ~~are~~previously disclosed in ~~addition to the risk factors set forth in~~Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021 filed with the United States Securities and Exchange Commission ~~(the "SEC"~~("SEC") on February ~~25, 2021.~~24, 2022. 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.

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~~June 30, ~~2021:~~2022:

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 6 (2) $ 137.22 — $ 167,058
August 1 through August 31, 2021 — $ — — $ 167,058
September 1 through September 30, 2021 1 (3) $ 134.67 — $ 167,058
7 —


	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)
April 1 through April 30, 2022	6	(2)	$	159.07	—	$	163,960
May 1 through May 31, 2022	39	(3)	$	161.88	—	$	163,960
June 1 through June 30, 2022	10	(4)	$	169.24	—	$	163,960
	55				—

(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.~~million. 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 $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. There were no repurchases of shares of our common stock pursuant to the Repurchase Program during the quarter ended ~~September~~June 30, ~~2021.~~2022.

(2)Includes ~~5,607~~6,289 shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.

(3)Includes ~~712~~38,572 shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.

(4)Includes 9,829 shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.


Item 3.			Defaults Upon Senior Securities

None.


Item 4.			Mine Safety Disclosures

Not applicable.


Item 5.			Other Information

None.

4645


Item 6.			Exhibits


Exhibit Number						Description

3.1						Articles of Incorporation of FTI Consulting, Inc., as amended and restated. (Filed with the Securities and Exchange Commission on May 23, 2003 as an exhibit to FTI Consulting, Inc.’s Current Report on Form 8-K dated May 21, 2003 and incorporated herein by reference.)

3.2						Articles of Amendment of FTI Consulting, Inc. (Filed with the Securities and Exchange Commission on June 2, 2011 as an exhibit to FTI Consulting, Inc.’s Current Report on Form 8-K dated June 1, 2011 and incorporated herein by reference.)

3.3						Bylaws of FTI Consulting, Inc., as amended and restated on June 1, 2011. (Filed with the Securities and Exchange Commission on June 2, 2011 as an exhibit to FTI Consulting, Inc.’s Current Report on Form 8-K dated June 1, 2011 and incorporated herein by reference.)

3.4						Amendment No. 1 to Bylaws of FTI Consulting, Inc. (Filed with the Securities and Exchange Commission on December 16, 2013 as an exhibit to FTI Consulting, Inc.’s Current Report on Form 8-K dated December 13, 2013 and incorporated herein by reference.)

3.5						Amendment No. 2 to Amended and Restated Bylaws of FTI Consulting, Inc. (Filed with the Securities and Exchange Commission on September 22, 2014 as an exhibit to FTI Consulting, Inc.’s Current Report on Form 8-K dated September 17, 2014 and incorporated herein by reference.)

31.1†						Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended (Section 302 of the Sarbanes-Oxley Act of 2002.)

31.2†						Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended (Section 302 of the Sarbanes-Oxley Act of 2002.)

32.1†**						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002.)

32.2†**						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002.)

101						The 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~~June 30, ~~2021~~2022 and December 31, ~~2020;~~2021; (ii) Condensed Consolidated Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020;~~2021; (iii) Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020;~~2021; (iv) Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020;~~2021; and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.

104						The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2021,~~2022, 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.

4746

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~~July 28, ~~2021~~2022


FTI CONSULTING, INC.

By:						/s/ Brendan Keating
						Brendan Keating
						Chief Accounting Officer and Controller
						(principal accounting officer)

4847


	As of September 30, 2021
2021 (remaining)	$	(969)
2022	51,093
2023	48,335
2024	43,196
2025	36,176
Thereafter	167,613
Total future lease payments	345,444
Less: imputed interest	(80,130)
Total	$	265,314