UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~FORM 10-Q~~

☒

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, ~~2017~~

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~~File Number: 001-14875

FTI CONSULTING, INC.

(Exact Name of Registrant as Specified in its Charter)

~~Maryland~~	~~52-1261113~~


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

~~1101 K~~555 12th Street NW ~~Washington, D.C.~~	~~20005~~
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 ~~and posted on its corporate Web Site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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.~~

Act.


Large accelerated filer		☒		Accelerated filer		☐

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~		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~~
Class			Outstanding at ~~October 19, 2017~~ July 21, 2022
Common ~~stock,~~Stock, $0.01 par value ~~$0.01 per share~~			~~37,956,648~~ 34,539,548

FTI CONSULTING, INC. AND SUBSIDIARIES

INDEX

	~~Page~~
			Page
PART I—FINANCIAL INFORMATION

Item 1.		Financial Statements	3

		Condensed Consolidated Balance Sheets—~~September 30, 2017~~June 3 0 , 2022 and December 31, ~~2016~~2021	3

		Condensed Consolidated Statements of Comprehensive Income—Three and ~~Nine~~Six Months Ended ~~September 30, 2017~~June 3 0 , 2022 and ~~2016~~2021	4

		Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity—~~Nine~~ Three and Six Months Ended ~~September 30, 2017~~ June 3 0 , 2022 and 2021	5

		Condensed Consolidated Statements of Cash ~~Flows—Nine~~Flows —Six Months Ended ~~September 30, 2017~~June 3 0 , 2022 and ~~2016~~2021	6 7

		Notes to Condensed Consolidated Financial Statements	7 8

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	19 21

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	38 43

Item 4.		Controls and Procedures	38 43

PART II—OTHER INFORMATION

Item 1.		Legal Proceedings	39 44

Item 1A.		Risk Factors	39 44

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	39 44

Item 3.		Defaults Upon Senior Securities	40 45

Item 4.		Mine Safety Disclosures	40 45

Item 5.		Other Information	40 45

Item 6.		Exhibits	41 46

~~SIGNATURE~~SIGNATURES			42 47

PART I—~~FINANCIA~~LFINANCIAL INFORMATION

FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except per share data)


Item 1.			Financial Statements

September 30,

December 31,

2017

2016

Assets

(Unaudited)

Current assets

Cash and cash equivalents

$
157,961

$
216,158

Accounts receivable:

Billed receivables

415,090

365,385

Unbilled receivables

328,526

288,331

Allowance for doubtful accounts and unbilled services

(196,484
)

(178,819
)
Accounts receivable, net

547,132

474,897

Current portion of notes receivable

23,924

31,864

Prepaid expenses and other current assets

59,196

60,252

Total current assets

788,213

783,171

Property and equipment, net of accumulated depreciation

70,982

61,856

Goodwill

1,204,164

1,180,001

Other intangible assets, net of amortization

46,788

52,120

Notes receivable, net of current portion

106,462

104,524

Other assets

43,984

43,696

Total assets

$
2,260,593

$
2,225,368

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable, accrued expenses and other

$
108,054

$
87,320

Accrued compensation

232,291

261,500

Billings in excess of services provided

26,521

29,635

Total current liabilities

366,866

378,455

Long-term debt, net

461,095

365,528

Deferred income taxes

181,293

173,799

Other liabilities

120,410

100,228

Total liabilities

1,129,664

1,018,010

Stockholders' equity

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 — 37,941 (2017) and 42,037 (2016)

379

420

Additional paid-in capital

273,765

416,816

Retained earnings

978,886

941,001

Accumulated other comprehensive loss

(122,101
)

(150,879
)
Total stockholders' equity

1,130,929

1,207,358

Total liabilities and stockholders' equity

$
2,260,593

$
2,225,368


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




Accounts receivable, net	905,548		754,120
Current portion of notes receivable	29,773		30,256
Prepaid expenses and other current assets	100,668		91,166
Total current assets	1,291,719		1,370,027
Property and equipment, net	144,053		142,163
Operating lease assets	198,893		215,995
Goodwill	1,227,837		1,232,791
Intangible assets, net	28,613		31,990
Notes receivable, net	55,230		53,539
Other assets	56,823		54,404
Total assets	$	3,003,168	$	3,100,909
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other	$	165,455	$	165,025
Accrued compensation	357,222		507,556
Billings in excess of services provided	48,217		45,535

Total current liabilities	570,894		718,116
Long-term debt, net	314,337		297,158
Noncurrent operating lease liabilities	218,001		236,026
Deferred income taxes	167,797		170,612
Other liabilities	101,520		95,676
Total liabilities	1,372,549		1,517,588
Commitments and contingencies (Note 10)	0		0
Stockholders' equity
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 34,540 (2022) and 34,333 (2021)	345		343
Additional paid-in capital	499		13,662
Retained earnings	1,805,485		1,698,156
Accumulated other comprehensive loss	(175,710)		(128,840)
Total stockholders' equity	1,630,619		1,583,321
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,

2017

2016

2017

2016

Revenues

$
448,962

$
438,042

$
1,340,021

$
1,368,474

Operating expenses

Direct cost of revenues

294,851

293,702

907,994

902,532

Selling, general and administrative expenses

103,909

106,220

318,546

318,074

Special charges

—

—

30,074

6,811

Acquisition-related contingent consideration

252

201

1,424

1,541

Amortization of other intangible assets

2,882

2,845

7,797

8,041

401,894

402,968

1,265,835

1,236,999

Operating income

47,068

35,074

74,186

131,475

Other income (expense)

Interest income and other

1,103

3,213

3,300

9,895

Interest expense

(6,760
)

(6,304
)

(18,811
)

(18,836
)

(5,657
)

(3,091
)

(15,511
)

(8,941
)
Income before income tax provision

41,411

31,983

58,675

122,534

Income tax provision

9,197

10,292

17,601

44,115

Net income

$
32,214

$
21,691

$
41,074

$
78,419

Earnings per common share — basic

$
0.86

$
0.53

$
1.05

$
1.92

Earnings per common share — diluted

$
0.85

$
0.52

$
1.03

$
1.88

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments,
net of tax expense of $0

$
11,234

$
(4,478
)

$
28,778

$
(23,645
)
Total other comprehensive income (loss), net of tax

11,234

(4,478
)

28,778

(23,645
)
Comprehensive income

$
43,448

$
17,213

$
69,852

$
54,774


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues	$	754,992	$	711,486	$	1,478,612	$	1,397,763
Operating expenses
Direct cost of revenues	520,080		490,722		1,013,184		959,146
Selling, general and administrative expenses	167,940		133,930		316,911		260,476


Amortization of intangible assets	2,737		2,854		5,005		5,655
	690,757		627,506		1,335,100		1,225,277
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
Other comprehensive income (loss), net of tax
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	(40,679)		5,807		(46,870)		565
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 ~~Statement~~Statements of Stockholders’ Equity

(in thousands)

(Unaudited)

Accumulated

Additional

Other

Common Stock

Paid-in

Retained

Comprehensive

Shares

Amount

Capital

Earnings

Loss

Total

Balance at December 31, 2016

42,037

$
420

$
416,816

$
941,001

$
(150,879
)

$
1,207,358

Net income

—

$
—

$
—

$
41,074

$
—

$
41,074

Other comprehensive income:

Cumulative translation adjustment

—

—

—

—

28,778

28,778

Issuance of common stock in connection with:

Exercise of options

57

1

1,989

—

—

1,990

Restricted share grants, less net settled shares
   of 87

213

2

(4,234
)

—

—

(4,232
)
Stock units issued under incentive compensation
   plan

—

—

1,547

—

—

1,547

Purchase and retirement of common stock

(4,366
)

(44
)

(155,241
)

—

—

(155,285
)
Cumulative effect due to adoption of new accounting
   standard

—

—

—

(3,189
)

—

(3,189
)
Share-based compensation

—

—

12,888

—

—

12,888

Balance at September 30, 2017

37,941

$
379

$
273,765

$
978,886

$
(122,101
)

$
1,130,929


								Accumulated Other Comprehensive Loss
	Common Stock			Additional Paid-in Capital		Retained Earnings
	Shares	Amount								Total
Balance at December 31, 2021	34,333	$	343	$	13,662	$	1,698,156	$	(128,840)	$	1,583,321
Net income	—	$	—	$	—	$	59,321	$	—	$	59,321
Other comprehensive loss:
Cumulative translation adjustment	—	—		—		—		(6,191)		(6,191)
Issuance of common stock in connection with:
Exercise of options	26	—		923		—		—		923
Restricted share grants, less net settled shares of 54	134	2		(7,836)		—		—		(7,834)
Stock units issued under incentive compensation plan	—	—		1,664		—		—		1,664
Purchase and retirement of common stock	(22)	—		(3,098)		—		—		(3,098)
Cumulative effect due to adoption of new accounting standard	—	—		(34,131)		22,078		—		(12,053)
Conversion of convertible senior notes due 2023	—	—		(2)		—		—		(2)
Share-based compensation	—	—		5,967		—		—		5,967
Reclassification of negative additional paid-in capital	—	—		22,851		(22,851)		—		—
Balance at March 31, 2022	34,471	$	345	$	—	$	1,756,704	$	(135,031)	$	1,622,018
Net income	—	—		—		51,428		—		51,428
Other comprehensive loss:
Cumulative translation adjustment	—	—		—		—		(40,679)		(40,679)
Issuance of common stock in connection with:
Exercise of options	22	—		687		—		—		687
Restricted share grants, less net settled shares of 55	47	—		(8,907)		—		—		(8,907)



Conversion of convertible senior notes due 2023	—	—		(11)		—		—		(11)
Share-based compensation	—	—		6,083		—		—		6,083
Reclassification of negative additional paid-in capital	—	—		2,647		(2,647)		—		—
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
	Common Stock					Retained Earnings
	Shares	Amount								Total
Balance at December 31, 2020	34,481	$	345	$	—	$	1,506,271	$	(106,435)	$	1,400,181
Net income	—	$	—	$	—	$	64,496	$	—	$	64,496
Other comprehensive loss:
Cumulative translation adjustment	—	—		—		—		(5,242)		(5,242)
Issuance of common stock in connection with:
Exercise of options	12	—		434		—		—		434
Restricted share grants, less net settled shares of 63	157	1		(7,232)		—		—		(7,231)
Stock units issued under incentive compensation plan	—	—		2,603		—		—		2,603
Purchase and retirement of common stock	(422)	(4)		(3,047)		(43,082)		—		(46,133)

Share-based compensation	—	—		7,242		—		—		7,242
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

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,

Operating activities

2017

2016

Net income

$
41,074

$
78,419

Adjustments to reconcile net income to net cash provided by operating
activities:

Depreciation and amortization

23,768

25,359

Amortization and impairment of other intangible assets

7,797

8,041

Acquisition-related contingent consideration

1,547

1,541

Provision for doubtful accounts

10,510

5,903

Non-cash share-based compensation

12,888

13,381

Non-cash interest expense

1,489

1,489

Other

297

(1,159
)
Changes in operating assets and liabilities, net of effects from
acquisitions:

Accounts receivable, billed and unbilled

(72,640
)

(67,318
)
Notes receivable

8,449

(3,674
)
Prepaid expenses and other assets

935

(3,575
)
Accounts payable, accrued expenses and other

16,823

10,900

Income taxes

8,876

28,204

Accrued compensation

(34,123
)

4,486

Billings in excess of services provided

(3,657
)

9,578

Net cash provided by operating activities

24,033

111,575

Investing activities

Payments for acquisition of businesses, net of cash received

(8,929
)

(56
)
Purchases of property and equipment

(20,021
)

(22,855
)
Other

74

74

Net cash used in investing activities

(28,876
)

(22,837
)
Financing activities

Borrowings under revolving line of credit, net

95,000

(25,000
)
Deposits

3,585

2,806

Purchase and retirement of common stock

(155,285
)

(2,903
)
Net issuance of common stock under equity compensation plans

(2,354
)

18,394

Other

(79
)

357

Net cash used in financing activities

(59,133
)

(6,346
)
Effect of exchange rate changes on cash and cash equivalents

5,779

(6,968
)
Net increase (decrease) in cash and cash equivalents

(58,197
)

75,424

Cash and cash equivalents, beginning of period

216,158

149,760

Cash and cash equivalents, end of period

$
157,961

$
225,184

Supplemental cash flow disclosures

Cash paid for interest

$
12,424

$
12,590

Cash paid for income taxes, net of refunds

$
8,742

$
15,909

Non-cash investing and financing activities:

Issuance of stock units under incentive compensation plans

$
1,547

$
1,842


	Six Months Ended June 30,
	2022		2021
Operating activities
Net income	$	110,749	$	127,278
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	18,095		16,765
Amortization and impairment of intangible assets	5,005		5,655
Acquisition-related contingent consideration	133		(1,130)
Provision for expected credit losses	8,752		8,236
Share-based compensation	12,050		12,190
Amortization of debt discount and issuance costs and other	1,068		5,685

Deferred income taxes	2,713		9,802

Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled	(180,737)		(138,838)
Notes receivable	(1,985)		8,921
Prepaid expenses and other assets	(810)		6,728
Accounts payable, accrued expenses and other	13,854		(13,518)
Income taxes	(14,834)		6,695
Accrued compensation	(147,209)		(88,024)
Billings in excess of services provided	4,425		(7,471)
Net cash used in operating activities	(168,731)		(41,026)
Investing activities

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


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

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

Purchase and retirement of common stock	(3,098)		(46,133)
Share-based compensation tax withholdings and other	(14,827)		(7,475)
Payments for business acquisition liabilities	(4,161)		(7,496)
Deposits and other	4,887		602

Net cash provided by (used in) financing activities	(17,199)		39,498
Effect of exchange rate changes on cash and cash equivalents	(20,490)		979
Net decrease in cash and cash equivalents	(238,755)		(38,078)
Cash and cash equivalents, beginning of period	494,485		294,953
Cash and cash equivalents, end of period	$	255,730	$	256,875
Supplemental cash flow disclosures
Cash paid for interest	$	4,279	$	4,854
Cash paid for income taxes, net of refunds	$	42,440	$	18,742
Non-cash investing and financing activities:
Issuance of stock units under incentive compensation plans	$	1,664	$	2,603

Business acquisition liabilities not yet paid	$	5,370	$	1,093
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,”~~“our” or “FTI Consulting”), presented herein, have been prepared in accordance with generally accepted accounting principles ~~generally accepted~~ 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, ~~2016~~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 ASU 2020-06 adoption also resulted in 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 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 periods beginning after December 15, 2021 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.

3. Earnings ~~Per~~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 share-based awards (restricted share awards, restricted ~~shares,~~stock units and performance stock units), each using the treasury stock method.

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Numerator — basic and diluted

Net income

$
32,214

$
21,691

$
41,074

$
78,419

Denominator

Weighted average number of common shares
outstanding — basic

37,431

41,239

39,301

40,856

Effect of dilutive stock options

31

350

96

266

Effect of dilutive restricted shares

284

476

318

483

Weighted average number of common shares
outstanding — diluted

37,746

42,065

39,715

41,605

Earnings per common share — basic

$
0.86

$
0.53

$
1.05

$
1.92

Earnings per common share — diluted

$
0.85

$
0.52

$
1.03

$
1.88

Antidilutive stock options and restricted shares

2,328

753

1,755

1,595

~~3. New Accounting Standards~~

~~Adopted Accounting Standards~~

~~In March 2016,~~For the ~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard makes several modifications to Topic 718, including~~three and six months ended June 30, 2022, we used the ~~accounting~~if-converted method for ~~forfeitures, employer tax withholding on share-based compensation and income tax consequences, and clarifies~~calculating the ~~statement of cash flows presentation for certain components of share-based awards, all of which are intended to simplify various aspects~~potential dilutive effect of the ~~accounting for share-based compensation.~~ We adopted this standard as of January 1, 2017, and since then we have recorded the excess benefits realized from stock compensation transactions in the Condensed Consolidated Statement of Comprehensive Income. Additionally, we elected to recognize forfeiture expense as forfeitures occur, rather than estimating forfeitures based on historical data.

~~In October 2016, the~~ ~~FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~, which removes the prohibition against immediate recognition of current and deferred income tax effects on intra-entity transfers of assets other than inventory. We elected to early adopt this standard as of January 1, 2017, and recorded a $3.2 million

cumulative effect adjustment to the beginning balance of retained earnings on January 1, 2017 which resulted in a net impact of increasing deferred tax assets by $2.6 million and decreasing a deferred tax charge in other assets by $5.8 million related to a prior period intra-entity transfer of intellectual property.

~~Accounting Standards Not Yet Adopted~~

~~In January 2017, the~~ ~~FASB issued ASU 2017-04: Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard requires entities to measure goodwill impairment using the difference between the carrying amount and the fair value~~conversion feature of the ~~reporting unit, instead~~principal amount of ~~performing a hypothetical purchase price allocation. This guidance is effective beginning January 1, 2020, although early adoption is permitted. The adoption of this guidance would only impact~~ the ~~measurement of a future goodwill impairment to the extent applicable.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842), which supersedes existing lease guidance. Under this ASU, we will be~~2023 Convertible Notes on earnings per common share, as required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. We have not yet determined the impact thatby the adoption of ~~this guidance will have on our consolidated financial statements.~~

~~In May 2014,~~ASU 2020-06. Prior to the ~~FASB issued~~adoption of ASU ~~2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606). Under this ASU and subsequently issued amendments, revenues are recognized at~~2020-06, we used the ~~time when goods or services are transferred to a customer in an amount that reflects~~treasury stock method for calculating the consideration it expects to receive in exchange for those goods or services. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. We will adopt this standard using the modified retrospective method effective January 1, 2018. Substantially allpotential dilutive effect of the ~~Company’s engagements~~conversion feature of the principal amount of the 2023 Convertible Notes on earnings per common share 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 six months ended June 30, 2022 and 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 8, "Debt" for additional information about the 2023 Convertible Notes.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator — basic and diluted
Net income	$	51,428	$	62,782	$	110,749	$	127,278
Denominator
Weighted average number of common shares outstanding — basic	33,790		33,458		33,705		33,470
Effect of dilutive share-based awards	586		668		639		714
Effect of dilutive stock options	331		376		334		373
Effect of dilutive convertible notes	1,202		872		1,100		661
Weighted average number of common shares outstanding — diluted	35,909		35,374		35,778		35,218
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
Antidilutive stock options and share-based awards	23		2		15		5

4. Revenues

We generate the majority of our revenues by providing consulting services to our clients. Most of our consulting service contracts are ~~performed either under time-and-expense or fixed-fee~~based on one of the following types of contract ~~arrangements. The Company will use~~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 ~~to account for time-and-expense contract arrangements when the Company has~~because we have a right to consideration ~~from~~for services completed to date. When a ~~customer~~time and expense arrangement has a not-to-exceed or "cap" amount and we expect to perform work in ~~an amount that corresponds directly with the value~~excess of the ~~entity’s~~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 ~~completed~~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 ~~which is consistent with~~by applying the ~~Company’s current revenue recognition policy.~~

~~We believe that the adoption of this standard will primarily impact contracts that contain some form~~proportional performance method. Generally, these arrangements have one performance obligation.

•Performance-based or contingent arrangements represent forms of variable ~~consideration, where~~consideration. In these arrangements, our fees are based on the ~~Company will earn~~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 ~~if certain predefined outcomes occur in the future and which will be subject~~earned to ~~probability assessments as defined by the new standard.~~

~~Contracts with success fees~~ – The Company may recognize revenue under certain contract arrangements that contain success fees earlier upon the adoption of this standard than we do under current practice, when the related performance obligations are satisfied over time. The Company will estimate revenue using either the expected value method or the most likely amount method, as appropriate, anddate in an amount that is probable not to ~~result~~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, such as a bankruptcy court 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 ~~cumulative revenue recognized.~~

~~Fixed-fee contract arrangements~~ ~~– The Company will recognize revenue as individual performance obligations are satisfied, using a measure of progress that~~revenues is ~~based on~~not likely to occur when the efforts and costs incurred (i.e. an input method measure of progress). This may lead to a difference from current practice when applying the definition of a performance obligation under the new standard.

~~Other contract attributes~~ – We believe this standard could affect the timing of revenue recognition for contracts that provide volume-based discounts, time-and-expense contract arrangements that have a cap on total fees, and contract arrangement fees that are subject to third-party approval, among others.

We continue to evaluate the potential impacts of the new guidance on the measurement and presentation of our revenues, as well as required enhancements to disclosures. The Company is underway in its implementation plan which includes information system and process changes to identify and assess contracts which are impacted by the new revenue recognition criteria and accumulate data to satisfy new disclosure requirements. We are unable to provide an assessment of the financial impact which will be recognized upon adoption as our assessment is dependent on an analysis of individual contracts which exist at the date of adoption.

~~4. Special Charges~~

~~There~~ were no special charges recorded during the three months ended September 30, 2017.

During the nine months ended September 30, 2017, we recorded a special charge of $30.1 million. The charge includes the impact of certain targeted reductions in areas of each segment where we needed to re-align our workforce with current business demand. In addition, cost cutting actions were taken in certain corporate departments where we were able to streamline support activities and reduce our real estate costs. $37.6 million of the charge will be paid in cash. The total charge is net of a $7.5 million

~~non-cash reduction to expense primarily for the reversal of a deferred rent liability. The special charge includes the following components:~~

~~$16.1 million of employee severance and other employee related costs~~uncertainty associated with the ~~reduction in workforce of 201 employees in our segments and certain corporate departments. All of these amounts will be paid in cash;~~

$12.4 million of exit costs associated with the curtailment of our lease on our executive office in Washington, D.C. $20.5 million of the charge will be paid in cash. The exit costs include an $8.1 million non-cash reduction to expense primarily for the reversal of a deferred rent liability; and

~~$1.6 million of other expenses, including costs related to disposing or closing several small international offices, of which $0.6 million was a non-cash expense.~~

~~There were no special charges recorded during the three months ended September 30, 2016.~~

During the nine months ended September 30, 2016, we recorded special charges of $6.8 million related to employee terminations in the health solutions practice of our Forensic and Litigation Consulting segment and employee terminations in our Technology segment.

~~The following table details the special charges by segment for the nine months ended September 30, 2017 and 2016:~~

Nine Months Ended September 30

Special Charges by Segment

2017

2016

Corporate Finance & Restructuring

$
3,049

$
—

Forensic and Litigation Consulting

10,445

1,750

Economic Consulting

5,910

—

Technology

3,827

5,061

Strategic Communications

3,599

—

26,830

6,811

Unallocated Corporate

3,244

—

Total

$
30,074

$
6,811

~~Activity related to the liability for the special charges for the nine months ended September 30, 2017~~estimate is ~~as follows:~~

Employee

Lease

Termination

Termination

Other

Costs

Costs

Costs

Total

Balance at December 31, 2016

$
8,225

$
3,335

$
—

$
11,560

Additions

15,980

19,985

570

36,535

Reductions

(15,947
)

(2,941
)

(526
)

(19,414
)
Foreign currency translation adjustment and other

153

(19
)

6

140

Balance at September 30, 2017⁽¹⁾

$
8,411

$
20,360

$
50

$
28,821

⁽¹⁾

Of the $28.8 million remaining liability for the special charges, $5.2 million is expected to be paid in the remainder of 2017, $10.5 million is expected to be paid in 2018, $4.8 million is expected to be paid in 2019, $4.0 million is expected to be paid in 2020 and the remaining balance of $4.3 million is expected to be paid from 2021 to 2025.

~~5. Allowance for Doubtful Accounts and Unbilled Services~~

~~We record adjustments to the allowance for doubtful accounts and unbilled services as a reduction in revenues when there are changes in estimates of~~subsequently resolved. Potential fee reductions ~~that may be~~ imposed by bankruptcy courts and other regulatory ~~institutions for both~~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 ~~receivables.~~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 $11.6 million and $13.1 million for the three and six months ended June 30, 2022, respectively, and $17.9 million and $16.7 million for the three and six months ended June 30, 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 June 30, 2022 and December 31, 2021, the aggregate amount of the remaining contract transaction price allocated to unfulfilled performance obligations was $3.4 million and $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 $1.5 million as of June 30, 2022 and $3.8 million as of December 31, 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 June 30, 2022 and December 31, 2021.

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:


	June 30, 2022		December 31, 2021
Accounts receivable:
Billed receivables	$	616,761	$	542,056
Unbilled receivables	328,836		248,681
Allowance for expected credit losses	(40,049)		(36,617)
Accounts receivable, net	$	905,548	$	754,120

We maintain an allowance for ~~doubtful~~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 ~~unbilled services is also adjusted after the related work has been billed~~write-offs:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Provision for expected credit losses (1)	$	3,894	$	3,404	$	8,752	$	8,236
Write-offs	$	3,249	$	2,802	$	6,040	$	9,718

(1) Adjustments to the ~~client and we discover that collectability is not reasonably assured. These adjustments~~allowance for expected credit losses are recorded to ~~“Selling,~~selling, general ~~and~~& administrative ~~expenses”~~("SG&A") expenses on the Condensed Consolidated Statements of Comprehensive ~~Income~~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 ~~totaled $4.5~~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.

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)		Forensic and Litigation Consulting (1)		Economic Consulting (1)		Technology (1)		Strategic Communications (2)		Total
Balance at December 31, 2021	$	501,046	$	237,929	$	268,858	$	96,811	$	128,147	$	1,232,791
Acquisitions (3)	11,095		—		—		—		—		11,095
Foreign currency translation adjustment and other	(5,375)		(3,001)		(723)		(148)		(6,802)		(16,049)
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"), Forensic and Litigation Consulting ("FLC"), Economic Consulting or Technology segments as of June 30, 2022 and December 31, 2021.

(2) Amounts for our Strategic Communications segment include gross carrying values of $315.5 million and ~~$10.5~~$322.3 million as of June 30, 2022 and December 31, 2021, respectively, and accumulated impairment losses of $194.1 million as of June 30, 2022 and December 31, 2021.

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

Intangible Assets

Intangible assets were as follows:


	June 30, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets
Customer relationships (1)	$	82,099	$	64,093	$	18,006	$	83,101	$	63,124	$	19,977
Trademarks (1)	10,482		5,563		4,919		10,965		4,732		6,233
Acquired software and other (1)	980		392		588		3,114		2,434		680
	93,561		70,048		23,513		97,180		70,290		26,890
Non-amortizing intangible assets
Trademarks	5,100		—		5,100		5,100		—		5,100
Total	$	98,661	$	70,048	$	28,613	$	102,280	$	70,290	$	31,990

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

Intangible assets with finite lives are amortized over their estimated useful lives. We recorded amortization expense of $2.7 million and $5.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, respectively, and ~~$1.6~~$2.9 million and ~~$5.9~~$5.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2021, respectively.

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

~~6. Research~~


Year	As of June 30, 2022 (1)
2022 (remaining)	$	4,728
2023	6,127
2024	3,859
2025	3,164
2026	2,028
Thereafter	3,607
	$	23,513

(1)Actual amortization expense to be reported in future periods could differ from these estimates 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 ~~Development Costs~~

~~Research~~estimated fair values of our financial instruments by hierarchy level as of June 30, 2022 and development costs related to software development totaled $3.3 million and $11.8 million for the three and nine months ended September 30, 2017, respectively, and $4.5 million and $13.0 million for the three and nine months ended September 30, 2016 respectively. Research and development costs areDecember 31, 2021:


	June 30, 2022
			Hierarchy Level (Fair Value)
	Carrying Amount		Level 1		Level 2		Level 3
Liabilities
Acquisition-related contingent consideration (1)(2)	$	13,363	$	—	$	—	$	13,363
2023 Convertible Notes (3)	314,337		—		568,551		—
Total	$	327,700	$	—	$	568,551	$	13,363


	December 31, 2021
			Hierarchy Level (Fair Value)
	Carrying Amount		Level 1		Level 2		Level 3
Liabilities
Acquisition-related contingent consideration (1)	$	15,110	$	—	$	—	$	15,110
2023 Convertible Notes (3)	297,158		—		466,619		—
Total	$	312,268	$	—	$	466,619	$	15,110

(1)The short-term portion is included in ~~“Selling, general~~“Accounts payable, accrued expenses and ~~administrative expenses”~~other” and the long-term portion is included in “Other liabilities” on the Condensed Consolidated ~~Statements~~Balance Sheets.

(2)During the six months ended June 30, 2022, we acquired a business that was assigned to our Corporate Finance segment and recorded an acquisition-related contingent consideration liability.

(3)The carrying value as of ~~Comprehensive Income.~~

~~7. Financial Instruments~~

June 30, 2022 includes unamortized deferred debt 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 June 30, 2022 and December 31, 2021.

We ~~consider the recorded value of certain financial assets and liabilities, which consist primarily of cash equivalents, accounts receivable and accounts payable, to approximate~~estimate the fair value of ~~the respective assets and liabilities at September 30, 2017 and December 31, 2016,~~our 2023 Convertible Notes based on ~~the short-term nature of the assets and liabilities.~~ their last actively traded prices. The fair value of our ~~total debt at September 30, 2017 was~~ ~~$475.1~~ ~~million compared to a carrying value of~~ ~~$465.0~~ ~~million. At December 31, 2016, the fair value of our total debt was~~ ~~$382.8~~ ~~million compared to a carrying value of~~ ~~$370.0~~ ~~million. We determine the fair value of our long-term debt primarily based on quoted market prices for our 6% Senior~~2023 Convertible Notes ~~Due~~ ~~2022~~ (“~~2022~~ Notes”). The fair value of our borrowings on our $550.0 million senior secured bank revolving credit facility (“Senior Bank Credit Facility”) approximates the carrying amount. The fair value of our long-term debt 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 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 change in our liability for acquisition-related contingent consideration for our Level 3 financial 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

(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.

8. ~~Goodwill~~Debt

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


	June 30, 2022		December 31, 2021
2023 Convertible Notes	$	316,222	$	316,245

Total debt	316,222		316,245
Less: deferred debt discount (1)	—		(16,724)
Less: deferred debt issuance costs	(1,885)		(2,363)
Long-term debt, net (1)(2)	$	314,337	$	297,158
Additional paid-in capital	$	—	$	35,304
Discount attribution to equity	—		(1,175)
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 June 30, 2022 and ~~Other Intangible Assets~~

~~Goodwill~~

December 31, 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 15 and August 15 of each 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). 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 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 in each of the quarters ended September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022. The number of 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 June 30, 2022; therefore, holders may convert their notes at any time beginning on July 1, 2022 and ending on 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 may not redeem the 2023 Convertible Notes prior to the maturity date.

If we undergo a fundamental change (as defined in the Indenture), subject to certain conditions, holders may require us to repurchase for cash all or part of their 2023 Convertible Notes in principal amounts of $1,000 or a multiple thereof. The fundamental change repurchase price will be equal to 100% of the principal amount of the 2023 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, in certain circumstances, we may be required to increase the conversion rate for any 2023 Convertible Notes converted in connection with a make-whole fundamental change (as defined in the Indenture).

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

Contractual interest expense for the 2023 Convertible Notes was $1.6 million and $3.2 million for the three and six months ended June 30, 2022 and 2021, respectively. Amortization of the debt discount on the 2023 Convertible Notes prior to the adoption of ASU 2020-06 was $2.4 million and $4.7 million for the 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. On February 4, 2022, we entered into the first amendment to the Amended and Restated Credit Facility (the "First Amendment to the Amended and Restated Credit Facility," and together with the Amended and Restated Credit Facility, the “Credit Facility”). At the Company’s option, borrowings under the Credit Facility in United States dollars ("USD"), euro ("EUR") and British pound ("GBP") will bear interest at either one- or three-month London Interbank Offered Rate ("LIBOR") or, in the case of USD borrowings, an alternative base rate, in each case plus the applicable 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 June 30, 2022, $0.4 million of the borrowing limit under the Credit Facility was utilized (and, therefore, unavailable) for letters of credit.

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

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 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 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 table below summarizes the ~~changes in the~~ carrying amount of ~~goodwill~~our operating lease assets and liabilities:


Leases	Classification	June 30, 2022		December 31, 2021
Assets
Operating lease assets	Operating lease assets	$	198,893	$	215,995
Total lease assets		$	198,893	$	215,995
Liabilities
Current
Operating lease liabilities	Accounts payable, accrued expenses and other	$	33,253	$	30,828
Noncurrent
Operating lease liabilities	Noncurrent operating lease liabilities	218,001		236,026
Total lease liabilities		$	251,254	$	266,854

The table below summarizes total lease costs:


	Three Months Ended June 30,				Six Months Ended June 30,
Lease Cost	2022		2021		2022		2021
Operating lease costs	$	12,092	$	14,407	$	24,453	$	26,489
Short-term lease costs	727		473		1,132		962
Variable lease costs	2,749		2,748		5,977		6,211
Sublease income	(196)		(1,048)		(386)		(2,095)
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 ~~reportable segment:~~

Corporate

Forensic and

Finance &

Litigation

Economic

Strategic

Restructuring

Consulting

Consulting

Technology

Communications

Total

Balance at December 31, 2016

Goodwill

$
440,666

$
230,544

$
268,209

$
117,607

$
317,114

$
1,374,140

Accumulated goodwill impairment

—

—

—

—

(194,139
)

(194,139
)
Goodwill, net at December 31, 2016

440,666

230,544

268,209

117,607

122,975

1,180,001

Acquisitions

11,900

—

—

—

—

11,900

Foreign currency translation adjustment and
other

2,292

2,967

712

122

6,170

12,263

Balance at September 30, 2017

Goodwill

454,858

233,511

268,921

117,729

323,284

1,398,303

Accumulated goodwill impairment

—

—

—

—

(194,139
)

(194,139
)
Goodwill, net at September 30, 2017

$
454,858

$
233,511

$
268,921

$
117,729

$
129,145

$
1,204,164

~~During~~sublease rental income, which is recorded to SG&A expenses on the ~~three months ended September 30, 2017, we made an initial payment~~Condensed Consolidated Statements of ~~$8.9 million at closing~~Comprehensive Income. Our sublease arrangements do not contain renewal options or restrictive covenants. We estimate future sublease rental income to ~~acquire a restructuring business within our Corporate Finance & Restructuring segment. We recorded $11.9~~be $0.5 million in ~~goodwill as a result~~the remainder of ~~the acquisition. We have included the results of the acquired business’ operations~~2022, $0.9 million in ~~the Corporate Finance & Restructuring segment since its acquisition date.~~

~~Other Intangible Assets~~

~~Other intangible assets with finite lives are amortized over their~~2023, $0.8 million in 2024 and $0.3 million in 2025. There is no future sublease rental income estimated ~~useful lives. We recorded amortization expense of $2.9 million and $7.8 million~~ for the ~~three and nine months ended September 30, 2017, respectively, and $2.8 million and $8.0 million for~~years beyond 2025.

The maturity analysis below summarizes the ~~three and nine months ended September 30, 2016, respectively.~~

~~We estimate our~~remaining future ~~amortization expense~~undiscounted cash flows for our ~~intangible assets with finite lives~~operating leases and includes a reconciliation to ~~be as follows:~~

Year

As of September 30, 2017⁽¹⁾

2017 (remaining)

$
2,771

2018

8,223

2019

7,561

2020

7,387

2021

6,773

Thereafter

8,473

$
41,188

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

~~9. Long-Term Debt~~

~~The components of long-term debt obligations are presented in~~operating lease liabilities reported on the ~~table below:~~

September 30,

December 31,

2017

2016

2022 Notes

$
300,000

$
300,000

Senior Bank Credit Facility

165,000

70,000

Total debt

465,000

370,000

Less: deferred debt issue costs

(3,905
)

(4,472
)
Long-term debt, net

$
461,095

$
365,528

~~The Company has classified the borrowings under the Company’s Senior Bank Credit Facility as long-term debt in the accompanying~~ Condensed Consolidated Balance ~~Sheets as amounts due under the credit agreement entered into as of June 26, 2015, which expires on June 26, 2020, are not contractually required or expected to be liquidated~~Sheets:


	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 ~~more than one year from the applicable balance sheet date. Additionally, $0.7 million of the borrowing limit was utilized for letters of credit as of September 30, 2017.~~

our operating lease liabilities, other non-cash information, our weighted average remaining lease term and weighted average discount rate:


	Six Months Ended June 30,
		2022			2021
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		$	5,756		$	85,221

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

Weighted average discount rate
Operating leases		5.4		%	5.5		%

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.

11. Share-Based Compensation

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, we granted ~~248,509~~159,344 restricted ~~stock~~share awards, ~~stock options exercisable for up to 130,650 shares, 53,175~~27,761 restricted stock units and ~~100,052 performance-based restricted~~102,543 performance stock ~~units.~~ 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, ~~2017, stock options exercisable for up to 96,802 shares and 24,920~~2022, 4,564 shares of restricted stock ~~awards~~and no stock options were forfeited prior to the completion of the applicable vesting requirements.

Additionally, 12,198 performance stock units were forfeited during the six months ended June 30, 2022 as the award targets were not achieved.

Total share-based compensation expense, net of forfeitures ~~for the three months and nine months ended September 30, 2017 and 2016~~ 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	2017		2016		2017		2016		Income Statement Classification	2022		2021		2022		2021
Direct cost of revenues	$	1,350	$	2,243	$	8,371	$	8,370	Direct cost of revenues	$	3,977	$	2,666	$	7,946	$	7,731
Selling, general and administrative expenses		1,781		2,617		3,833		7,825	Selling, general and administrative expenses	4,146		2,409		7,223		6,932
Special charges		—		—		96		105

Total share-based compensation expense	$	3,131	$	4,860	$	12,300	$	16,300	Total share-based compensation expense	$	8,123	$	5,075	$	15,169	$	14,663

12. Stockholders’ Equity

On June 2, 2016, our Board of Directors authorized a stock repurchase program of up to $100.0 million (the ~~“Stock Repurchase~~“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. On each of July 28, 2020 and December 3, 2020, our Board of Directors authorized an additional $200.0 million, increasing the ~~Stock~~ Repurchase Program to an aggregate authorization of ~~$200.0~~$900.0 million. No time limit has been established for the completion of the ~~program,~~Repurchase Program, and the ~~program~~Repurchase Program may be suspended, discontinued or replaced by the Board of Directors at any time without prior notice. As of ~~September~~June 30, ~~2017,~~2022, we ~~have $26.1~~had $164.0 million available under ~~this program~~the Repurchase Program to repurchase additional shares.

The following table details our stock ~~repurchases:~~

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,
	2017		2016		2017		2016			2022		2021		2022		2021
Shares of common stock repurchased and retired		1,599		—		4,366		85	Shares of common stock repurchased and retired	—		—		22		422
Average price paid per share	$	32.98	N/A		$	35.55	$	34.12	Average price paid per share	$	—	$	—	$	143.36	$	109.37
Total cost	$	52,741	N/A		$	155,198	$	2,903	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.

Common stock outstanding was 34.5 million shares and 34.3 million shares as of June 30, 2022 and December 31, 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.

13. Segment Reporting

We manage our business in ~~five~~5 reportable segments: Corporate Finance, ~~& Restructuring, Forensic and Litigation Consulting,~~FLC, Economic Consulting, Technology and Strategic Communications.

Our Corporate Finance ~~& Restructuring~~ segment focuses on the strategic, operational, financial, transactional and capital needs of our clients around the ~~world~~world. Our clients include companies, boards of directors, investors, private equity sponsors, lenders, and ~~delivers~~other financing sources and creditor groups, as well as other parties-in-interest. We deliver a wide range of ~~distressed~~services centered around 3 core offerings: business transformation, transactions and ~~non-distressed practice offerings.~~ turnaround & restructuring.

Our distressed practice offerings include corporate restructuring (and bankruptcy) and interim management services. Our non-distressed practice offerings include financings, mergers and acquisitions (“M&A”), M&A integration, valuations and tax advice, as well as financial, operational and performance improvement services.

~~Our Forensic and Litigation Consulting~~FLC segment provides law firms, companies, government ~~clients~~entities, private equity firms and other interested parties with a multidisciplinary and independent ~~dispute advisory,~~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 ~~forensic accounting,~~solutions, which help our clients analyze large, disparate sets of data related to their business ~~intelligence~~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 ~~mitigation services, as well as interim management~~ and ~~performance improvement services for our health solutions practice clients.~~

investigations.

Our Economic Consulting segment, including subsidiary Compass Lexecon LLC, provides law firms, companies, government entities and other interested parties with ~~analysis~~analyses of complex economic issues for use in ~~legal, regulatory and~~ international arbitration, legal and regulatory proceedings, and strategic decision making and public policy debates ~~in the U.S. and~~ around the world.

We deliver a wide range of services centered around 3 core offerings: antitrust & competition economics, financial economics and international arbitration.

Our Technology segment ~~offers a comprehensive portfolio of information governance and e-discovery software, services and consulting support to~~provides companies, law firms, ~~courts~~private equity firms and government ~~agencies worldwide. Our~~entities with a comprehensive global portfolio of consulting and services ~~allow our clients~~ to ~~control the~~address legal and regulatory risk, including e-discovery, information governance, privacy and ~~expense~~security and corporate legal operations solutions. We deliver a full spectrum of services centered around 3 core offerings: corporate legal operations, e-discovery ~~events, as well as manage their data in the context of compliance~~services and ~~risk.~~

expertise, and information governance, privacy & security services.

Our Strategic Communications segment ~~designs~~develops and executes communications strategies ~~for~~to help management teams, ~~and~~ boards of directors, ~~to help them seize opportunities,~~law firms, governments and regulators manage change and mitigate risk surrounding transformational and disruptive events, including transactions, investigations, disputes, crises, regulation and legislation. We deliver a wide range of services centered around 3 core offerings: corporate reputation, financial ~~regulatory~~communications and ~~reputational challenges, navigate market disruptions, articulate their brand, stake a competitive position, and preserve and grow their operations.~~

public affairs.

We evaluate the performance of our operating segments based on Adjusted Segment ~~EBITDA.~~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,
	2017		2016		2017		2016			2022		2021		2022		2021
Revenues									Revenues
Corporate Finance & Restructuring	$	128,121	$	110,617	$	351,509	$	369,915
Forensic and Litigation Consulting		118,639		115,045		341,455		352,242
Corporate Finance									Corporate Finance	$	277,067	$	230,971	$	530,396	$	457,174
FLC									FLC	164,248		150,746		318,144		301,567
Economic Consulting		111,753		122,480		374,978		371,217	Economic Consulting	164,041		183,306		330,018		352,579
Technology		42,282		44,072		133,935		134,235	Technology	77,782		78,646		158,266		158,105
Strategic Communications		48,167		45,828		138,144		140,865	Strategic Communications	71,854		67,817		141,788		128,338
Total revenues	$	448,962	$	438,042	$	1,340,021	$	1,368,474	Total revenues	$	754,992	$	711,486	$	1,478,612	$	1,397,763
Adjusted Segment EBITDA									Adjusted Segment EBITDA
Corporate Finance & Restructuring	$	26,734	$	17,762	$	57,107	$	81,406
Forensic and Litigation Consulting		22,539		16,554		49,092		51,552
Corporate Finance									Corporate Finance	$	54,950	$	40,174	$	108,490	$	77,613
FLC									FLC	16,707		18,002		33,964		47,434
Economic Consulting		12,061		18,354		47,680		55,054	Economic Consulting	21,646		30,699		42,841		57,278
Technology		5,973		7,398		19,198		20,256	Technology	8,365		18,518		21,728		40,116
Strategic Communications		8,073		7,509		17,206		22,057	Strategic Communications	11,472		13,501		27,185		23,899
Total Adjusted Segment EBITDA	$	75,380	$	67,577	$	190,283	$	230,325	Total Adjusted Segment EBITDA	$	113,140	$	120,894	$	234,208	$	246,340

The table below reconciles ~~Net~~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,
	2017			2016			2017			2016				2022		2021		2022		2021
Net income	$	32,214		$	21,691		$	41,074		$	78,419		Net income	$	51,428	$	62,782	$	110,749	$	127,278
Add back:													Add back:
Income tax provision		9,197			10,292			17,601			44,115		Income tax provision	13,353		14,992		30,320		35,239
Interest income and other		(1,103	)		(3,213	)		(3,300	)		(9,895	)	Interest income and other	(2,994)		912		(2,647)		(122)
Interest expense		6,760			6,304			18,811			18,836		Interest expense	2,448		5,294		5,090		10,091
Unallocated corporate expenses⁽¹⁾		18,827			21,738			60,166			60,890

Unallocated corporate expenses													Unallocated corporate expenses	37,716		29,357		69,055		56,067
Segment depreciation expense		6,603			7,920			20,602			22,128		Segment depreciation expense	8,452		7,834		16,636		15,264
Amortization of intangible assets		2,882			2,845			7,797			8,041		Amortization of intangible assets	2,737		2,853		5,005		5,653
Segment special charges		—			—			26,830			6,811

Remeasurement of acquisition-related contingent consideration		—			—			702			980		Remeasurement of acquisition-related contingent consideration	—		(3,130)		—		(3,130)
Total Adjusted Segment EBITDA	$	75,380		$	67,577		$	190,283		$	230,325		Total Adjusted Segment EBITDA	$	113,140	$	120,894	$	234,208	$	246,340

⁽¹⁾	~~Includes $3.2 million special charges for corporate for the nine months ended September 30, 2017.~~

~~14. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information~~

Substantially all of our domestic subsidiaries are guarantors of borrowings under our Senior Bank Credit Facility and 2022 Notes. The guarantees are full and unconditional and joint and several. All of our guarantors are wholly owned, direct or indirect, subsidiaries.

The following financial information presents condensed consolidating balance sheets, statements of comprehensive income and statements of cash flows for FTI Consulting, all the guarantor subsidiaries, all the non-guarantor subsidiaries and the eliminations necessary to arrive at the consolidated information for FTI Consulting and its subsidiaries. For purposes of this presentation, we have accounted for our investments in our subsidiaries using the equity method of accounting. The principal eliminating entries eliminate investment in subsidiary and intercompany balances and transactions.

~~Condensed Consolidating Balance Sheet as of September 30, 2017~~

FTI

Guarantor

Non-Guarantor

Consulting

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Assets

Cash and cash equivalents

$
20,704

$
159

$
137,098

$
—

$
157,961

Accounts receivable, net

164,357

173,846

208,929

—

547,132

Intercompany receivables

—

1,060,086

23,912

(1,083,998
)

—

Other current assets

34,862

21,344

26,914

—

83,120

Total current assets

219,923

1,255,435

396,853

(1,083,998
)

788,213

Property and equipment, net

33,317

14,749

22,916

—

70,982

Goodwill

570,876

416,053

217,235

—

1,204,164

Other intangible assets, net

19,730

11,772

31,023

(15,737
)

46,788

Investments in subsidiaries

2,149,817

549,280

—

(2,699,097
)

—

Other assets

39,279

64,537

46,630

—

150,446

Total assets

$
3,032,942

$
2,311,826

$
714,657

$
(3,798,832
)

$
2,260,593

Liabilities

Intercompany payables

$
1,083,998

$
—

$
—

$
(1,083,998
)

$
—

Other current liabilities

118,584

139,369

108,913

—

366,866

Total current liabilities

1,202,582

139,369

108,913

(1,083,998
)

366,866

Long-term debt, net

461,095

—

—

—

461,095

Other liabilities

238,336

11,362

52,005

—

301,703

Total liabilities

1,902,013

150,731

160,918

(1,083,998
)

1,129,664

Stockholders' equity

1,130,929

2,161,095

553,739

(2,714,834
)

1,130,929

Total liabilities and stockholders' equity

$
3,032,942

$
2,311,826

$
714,657

$
(3,798,832
)

$
2,260,593

~~Condensed Consolidating Balance Sheet as of December 31, 2016~~

FTI

Guarantor

Non-Guarantor

Consulting

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Assets

Cash and cash equivalents

$
47,420

$
156

$
168,582

$
—

$
216,158

Accounts receivable, net

137,523

163,820

173,554

—

474,897

Intercompany receivables

—

1,029,800

—

(1,029,800
)

—

Other current assets

44,708

24,944

22,464

—

92,116

Total current assets

229,651

1,218,720

364,600

(1,029,800
)

783,171

Property and equipment, net

25,466

14,118

22,272

—

61,856

Goodwill

558,978

416,053

204,970

—

1,180,001

Other intangible assets, net

21,959

13,393

34,725

(17,957
)

52,120

Investments in subsidiaries

2,065,819

490,634

—

(2,556,453
)

—

Other assets

47,308

65,398

35,514

—

148,220

Total assets

$
2,949,181

$
2,218,316

$
662,081

$
(3,604,210
)

$
2,225,368

Liabilities

Intercompany payables

$
1,027,050

$
—

$
2,750

$
(1,029,800
)

$
—

Other current liabilities

137,710

129,810

110,935

—

378,455

Total current liabilities

1,164,760

129,810

113,685

(1,029,800
)

378,455

Long-term debt, net

365,528

—

—

—

365,528

Other liabilities

211,535

16,411

46,081

—

274,027

Total liabilities

1,741,823

146,221

159,766

(1,029,800
)

1,018,010

Stockholders' equity

1,207,358

2,072,095

502,315

(2,574,410
)

1,207,358

Total liabilities and stockholders' equity

$
2,949,181

$
2,218,316

$
662,081

$
(3,604,210
)

$
2,225,368

~~Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended September 30, 2017~~

FTI

Guarantor

Non-Guarantor

Consulting

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Revenues

$
163,311

$
136,827

$
151,197

$
(2,373
)

$
448,962

Operating expenses

Direct cost of revenues

105,857

95,432

95,874

(2,312
)

294,851

Selling, general and administrative expenses

44,781

30,280

28,909

(61
)

103,909

Special charges

—

—

—

—

—

Acquisition-related contingent consideration

—

252

—

—

252

Amortization of other intangible assets

1,304

541

1,795

(758
)

2,882

151,942

126,505

126,578

(3,131
)

401,894

Operating income

11,369

10,322

24,619

758

47,068

Other income (expense)

(5,912
)

(4,548
)

4,803

—

(5,657
)
Income before income tax provision

5,457

5,774

29,422

758

41,411

Income tax provision

4,438

2,260

2,499

—

9,197

Equity in net earnings of subsidiaries

31,195

21,731

—

(52,926
)

—

Net income

$
32,214

$
25,245

$
26,923

$
(52,168
)

$
32,214

Other comprehensive income, net of tax:

Foreign currency translation adjustments, net of
tax expense of $0

$
—

$
—

$
11,234

$
—

$
11,234

Other comprehensive income, net of tax

—

—

11,234

—

11,234

Comprehensive income

$
32,214

$
25,245

$
38,157

$
(52,168
)

$
43,448

~~Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended September 30, 2016~~

FTI

Guarantor

Non-Guarantor

Consulting

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Revenues

$
159,431

$
153,986

$
126,995

$
(2,370
)

$
438,042

Operating expenses

Direct cost of revenues

107,579

104,109

84,313

(2,299
)

293,702

Selling, general and administrative expenses

47,388

30,704

28,199

(71
)

106,220

Acquisition-related contingent consideration

—

201

—

—

201

Amortization of other intangible assets

986

541

1,823

(505
)

2,845

155,953

135,555

114,335

(2,875
)

402,968

Operating income

3,478

18,431

12,660

505

35,074

Other income (expense)

(6,913
)

(794
)

4,616

—

(3,091
)
Income (loss) before income tax provision

(3,435
)

17,637

17,276

505

31,983

Income tax provision (benefit)

(1,402
)

8,194

3,500

—

10,292

Equity in net earnings of subsidiaries

23,724

11,878

—

(35,602
)

—

Net income

$
21,691

$
21,321

$
13,776

$
(35,097
)

$
21,691

Other comprehensive loss, net of tax:

Foreign currency translation adjustments, net of
tax expense of $0

$
—

$
—

$
(4,478
)

$
—

$
(4,478
)
Total other comprehensive loss, net of tax

—

—

(4,478
)

—

(4,478
)
Comprehensive income

$
21,691

$
21,321

$
9,298

$
(35,097
)

$
17,213

~~Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended September 30, 2017~~

FTI

Guarantor

Non-Guarantor

Consulting, Inc.

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Revenues

$
478,767

$
459,569

$
408,780

$
(7,095
)

$
1,340,021

Operating expenses

Direct cost of revenues

325,560

321,606

267,742

(6,914
)

907,994

Selling, general and administrative expenses

136,487

92,217

90,023

(181
)

318,546

Special charges

13,592

7,306

9,176

—

30,074

Acquisition-related contingent consideration

—

1,424

—

—

1,424

Amortization of other intangible assets

3,089

1,621

5,306

(2,219
)

7,797

478,728

424,174

372,247

(9,314
)

1,265,835

Operating income

39

35,395

36,533

2,219

74,186

Other income (expense)

(16,525
)

(5,046
)

6,060

—

(15,511
)
Income (loss) before income tax provision

(16,486
)

30,349

42,593

2,219

58,675

Income tax provision (benefit)

(8,179
)

17,397

8,383

—

17,601

Equity in net earnings of subsidiaries

49,381

26,442

—

(75,823
)

—

Net income

$
41,074

$
39,394

$
34,210

$
(73,604
)

$
41,074

Other comprehensive income, net of tax:

Foreign currency translation adjustments, net of
tax expense of $0

$
—

$
—

$
28,778

$
—

$
28,778

Total other comprehensive income, net of tax:

—

—

28,778

—

28,778

Comprehensive income

$
41,074

$
39,394

$
62,988

$
(73,604
)

$
69,852

~~Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended September 30, 2016~~

FTI

Guarantor

Non-Guarantor

Consulting, Inc.

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Revenues

$
517,703

$
463,152

$
394,618

$
(6,999
)

$
1,368,474

Operating expenses

Direct cost of revenues

337,262

312,921

259,184

(6,835
)

902,532

Selling, general and administrative expenses

138,038

92,490

87,710

(164
)

318,074

Special charges

1,750

4,563

498

—

6,811

Acquisition-related contingent consideration

6

1,535

—

—

1,541

Amortization of other intangible assets

2,958

1,639

5,584

(2,140
)

8,041

480,014

413,148

352,976

(9,139
)

1,236,999

Operating income

37,689

50,004

41,642

2,140

131,475

Other income (expense)

(18,882
)

(3,063
)

13,004

—

(8,941
)
Income before income tax provision

18,807

46,941

54,646

2,140

122,534

Income tax provision

9,781

21,918

12,416

—

44,115

Equity in net earnings of subsidiaries

69,393

38,867

—

(108,260
)

—

Net income

$
78,419

$
63,890

$
42,230

$
(106,120
)

$
78,419

Other comprehensive loss, net of tax:

Foreign currency translation adjustments, net of
tax expense of $0

$
—

$
—

$
(23,645
)

$
—

$
(23,645
)
Total other comprehensive loss, net of tax:

—

—

(23,645
)

—

(23,645
)
Comprehensive income

$
78,419

$
63,890

$
18,585

$
(106,120
)

$
54,774

~~Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2017~~

FTI

Guarantor

Non-Guarantor

Consulting

Subsidiaries

Subsidiaries

Consolidated

Operating activities

Net cash provided by (used in) operating activities

$
(6,155
)

$
40,052

$
(9,864
)

$
24,033

Investing activities

Payments for acquisition of businesses, net of cash received

(8,929
)

—

—

(8,929
)
Purchases of property and equipment

(5,943
)

(9,762
)

(4,316
)

(20,021
)
Other

74

—

—

74

Net cash used in investing activities

(14,798
)

(9,762
)

(4,316
)

(28,876
)
Financing activities

Borrowings under revolving line of credit, net

95,000

—

—

95,000

Deposits

—

—

3,585

3,585

Purchase and retirement of common stock

(155,285
)

—

—

(155,285
)
Net issuance of common stock under equity compensation
plans

(2,354
)

—

—

(2,354
)
Other

(79
)

—

—

(79
)
Intercompany transfers

56,955

(30,287
)

(26,668
)

—

Net cash used in financing activities

(5,763
)

(30,287
)

(23,083
)

(59,133
)
Effects of exchange rate changes on cash and cash equivalents

—

—

5,779

5,779

Net increase (decrease) in cash and cash equivalents

(26,716
)

3

(31,484
)

(58,197
)
Cash and cash equivalents, beginning of year

47,420

156

168,582

216,158

Cash and cash equivalents, end of year

$
20,704

$
159

$
137,098

$
157,961

~~Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2016~~

FTI

Guarantor

Non-Guarantor

Consulting

Subsidiaries

Subsidiaries

Consolidated

Operating activities

Net cash provided by operating activities

$
16,670

$
70,744

$
24,161

$
111,575

Investing activities

Payments for acquisition of businesses, net of cash received

—

—

(56
)

(56
)
Purchases of property and equipment

(2,714
)

(16,145
)

(3,996
)

(22,855
)
Other

74

—

—

74

Net cash used in investing activities

(2,640
)

(16,145
)

(4,052
)

(22,837
)
Financing activities

Repayments under revolving line of credit, net

(25,000
)

—

—

(25,000
)
Deposits

—

—

2,806

2,806

Purchase and retirement of common stock

(2,903
)

—

—

(2,903
)
Net issuance of common stock under equity compensation
plans

18,394

—

—

18,394

Other

930

(573
)

—

357

Intercompany transfers

45,805

(54,030
)

8,225

—

Net cash provided by (used in) financing activities

37,226

(54,603
)

11,031

(6,346
)
Effects of exchange rate changes on cash and cash equivalents

—

—

(6,968
)

(6,968
)
Net increase (decrease) in cash and cash equivalents

51,256

(4
)

24,172

75,424

Cash and cash equivalents, beginning of year

35,211

165

114,384

149,760

Cash and cash equivalents, end of year

$
86,467

$
161

$
138,556

$
225,184


Item 2.			~~Management’s~~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, ~~2017~~2022 and ~~2016~~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, ~~2016~~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 ~~and~~& regulatory, reputational and transactional. Individually, each of our segments and practices is staffed with experts recognized for the depth of their knowledge and a track record of making an impact. Collectively, FTI Consulting offers a comprehensive suite of services designed to assist clients across the business cycle, from proactive risk management to rapid response to unexpected events and dynamic environments.

We report financial results for the following five reportable segments:

OurCorporate Finance & Restructuring (“Corporate Finance”)segment focuses on the strategic, operational, financial, transactional and capital needs of our clients around the ~~world~~world. Our clients include companies, boards of directors, investors, private equity sponsors, lenders, and ~~delivers~~other financing sources and creditor groups, as well as other parties-in-interest. We deliver a wide range of ~~distressed~~services centered around three core offerings: business transformation, transactions and ~~non-distressed practice offerings.~~ turnaround & restructuring.

Our distressed practice offerings include corporate restructuring (and bankruptcy) and interim management services. Our non-distressed practice offerings include financings, M&As, M&A integration, valuations and tax advice, as well as financial, operational and performance improvement services.

~~Our~~Forensic and Litigation Consulting (“FLC”) segment provides law firms, companies, government ~~clients~~entities, private equity firms and other interested parties with a multidisciplinary and independent ~~dispute advisory,~~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 ~~forensic accounting,~~solutions, which help our clients analyze large, disparate sets of data related to their business ~~intelligence~~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 ~~mitigation services, as well as interim management~~ and ~~performance improvement services for our health solutions practice clients.~~

investigations.

OurEconomic Consulting segment, including subsidiary Compass Lexecon LLC, provides law firms, companies, government entities and other interested parties with ~~analysis~~analyses of complex economic issues for use in ~~legal, regulatory and~~ international arbitration, legal and regulatory proceedings, and strategic decision making and public policy debates ~~in the U.S. and~~ around the world.

We deliver a wide range of services centered around three core offerings: antitrust & competition economics, financial economics and international arbitration.

OurTechnology segment ~~offers a comprehensive portfolio of information governance and e-discovery software, services and consulting support to~~provides companies, law firms, ~~courts~~private equity firms and government ~~agencies worldwide.~~ 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 centered around three core offerings: corporate legal operations, e-discovery services and expertise, and information governance, privacy & security services.

Our ~~services allow our clients to control the risk and expense of e-discovery events, as well as manage their data in the context of compliance and risk.~~

~~Our~~Strategic Communications segment ~~designs~~develops and executes communications strategies ~~for~~to help management teams, ~~and~~ boards of directors, ~~to help them seize opportunities,~~law firms, governments and regulators manage change and mitigate risk surrounding transformational and disruptive events, including transactions, investigations, disputes, crises, regulation and legislation. We deliver a wide range of services centered around three core offerings: corporate reputation, financial ~~regulatory~~communications and ~~reputational challenges, navigate market disruptions, articulate their brand, stake a competitive position, and preserve and grow their operations.~~

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~~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 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~~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.~~ 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 ~~also~~ billed based on the amount of data ~~stored on our electronic systems,~~storage used or the volume of information ~~processed, or the number of users licensing our Ringtail~~^® ~~software products for use or installation within their own environments. We license certain products directly to end users, as well as indirectly through our channel partner relationships.~~processed. Unit-based revenues are defined as revenues billed on a ~~per-item, per-page~~per item, per page or ~~some other~~another unit-based method and include revenues from data processing and ~~hosting, software usage and software licensing.~~hosting. Unit-based revenues include revenues associated with ~~our proprietary~~the software products that are made available to customers ~~either~~ via a web browser (“on-demand”~~) or installed at our customer or partner locations (“on-premise”~~). On-demand revenues are charged on a unit or monthly basis and include, but are not limited to, processing and review related functions. On-premise revenues are comprised of upfront license fees, with recurring support and maintenance. Seasonal factors, such as the timing of our employees’ and clients’ vacations and holidays, impact the timing of our revenues.

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;

~~licensing of our software products and other technology services;~~

•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 ~~translation~~ (“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. The estimated impact of FX~~results is calculated as the difference between the prior period results, multiplied by the average ~~foreign currency~~FX exchange rates to USD in the current period and the prior period results, multiplied by the average ~~foreign currency~~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 ~~United States (“GAAP”~~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 Segment 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 13, “Segment Reporting” in Part 1,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 Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. We define Adjusted Segment EBITDA Margin as Adjusted Segment EBITDA as a percentage of a segment’s revenues.~~

We define Total Adjusted Segment EBITDA, which is a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We define Adjusted EBITDA, which is a non-GAAP financial measure, as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges, gain or loss on sale of a business and losses on early extinguishment of debt. We believe that ~~the~~these non-GAAP financial measures, ~~which exclude the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges,~~ when considered together with 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, ~~and~~ losses on early extinguishment of ~~debt.~~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 ~~this~~these non-GAAP financial ~~measure, which excludes the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt,~~measures, when considered together with our GAAP financial results ~~provides~~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.~~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.

EXECUTIVE HIGHLIGHTS

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

(dollar amounts in thousands,
except per share data)

(dollar amounts in thousands,
except per share data)

Revenues

$
448,962

$
438,042

$
1,340,021

$
1,368,474

Special charges⁽¹⁾

$
—

$
—

$
30,074

$
6,811

Net income

$
32,214

$
21,691

$
41,074

$
78,419

Adjusted EBITDA

$
57,420

$
47,229

$
136,527

$
172,666

Earnings per common share —
   diluted

$
0.85

$
0.52

$
1.03

$
1.88

Adjusted earnings per common share —
   diluted

$
0.83

$
0.52

$
1.55

$
2.00

Net cash provided by operating
   activities

$
106,233

$
70,942

$
24,033

$
111,575

Total number of employees

4,654

4,767

4,654

4,767

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


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

	(dollar amounts in thousands, except per share data)				(dollar amounts in thousands, except per share data)
Revenues	$	754,992	$	711,486	$	1,478,612	$	1,397,763

Net income	$	51,428	$	62,782	$	110,749	$	127,278
Adjusted EBITDA	$	76,160	$	92,308	$	166,612	$	191,776
Earnings per common share — diluted	$	1.43	$	1.77	$	3.10	$	3.61
Adjusted earnings per common share — diluted	$	1.43	$	1.74	$	3.10	$	3.62
Net cash provided by (used in) operating activities	$	35,047	$	125,558	$	(168,731)	$	(41,026)
Total number of employees	7,048		6,411		7,048		6,411

~~Third~~

Second Quarter ~~2017~~2022 Executive Highlights

Revenues

Revenues for the three months ended ~~September~~June 30, ~~2017~~2022 increased ~~$10.9~~$43.5 million, or ~~2.5%~~6.1%, to ~~$449.0~~$755.0 million, as compared ~~with revenues of $438.0 million for~~to the three months ended ~~September~~June 30, ~~2016~~2021, which included a 3.1% estimated negative impact from FX. Excluding the estimated impact from FX, revenues increased $65.5 million, or 9.2%, primarily ~~driven by~~due to higher ~~revenue~~demand and realized rates in our Corporate Finance segment and higher realized rates in our FLC ~~segments,~~segment, which was partially offset by ~~declines~~lower realization and demand in our Economic Consulting segment.

~~Special charges~~

~~There were no special charges recorded during the three months ended September 30, 2017.~~

Net income

Net income for the three months ended ~~September~~June 30, ~~2017 was $32.2~~2022 decreased $11.4 million, or 18.1%, to $51.4 million, as compared ~~with net income of $21.7 million for~~to the three months ended ~~September~~June 30, ~~2016. This increase from the prior year quarter~~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 ~~operating profits driven~~a 9.4% increase in billable headcount, which was partially offset by ~~segment performance and a lower effective income tax rate.~~

an increase in revenues compared to the same quarter in the prior year.

Adjusted EBITDA

Adjusted EBITDA for the three months ended ~~September~~June 30, ~~2017 increased $10.2~~2022 decreased $16.1 million, or ~~21.6%~~17.5%, to ~~$57.4~~$76.2 million, as compared ~~with $47.2 million~~to the three months ended June 30, 2021. Adjusted EBITDA Margin of 10.1% for the three months ended ~~September~~June 30, ~~2016. Adjusted EBITDA was 12.8% of revenues~~2022 compared with 13.0% for the three months ended ~~September~~June 30, ~~2017 compared with 10.8% of revenues for the three months ended September 30, 2016.~~2021. The ~~increase~~decrease in Adjusted EBITDA was due to ~~higher margin~~an increase in 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 revenues ~~including success fees, and improved utilization largely within our Corporate Finance and FLC segments.~~

~~Earnings per diluted share (EPS)~~compared to the same quarter in the prior year.

EPS and Adjusted EPS

~~Earnings per diluted share~~

EPS for the three months ended ~~September~~June 30, ~~2017 increased $0.33~~2022 decreased $0.34 to ~~$0.85~~$1.43 compared ~~with $0.52~~to $1.77 for the three months ended ~~September~~June 30, ~~2016.~~2021. The decrease in EPS was primarily due to lower net income as described above.

Adjusted EPS decreased $0.31 to $1.43 for the three months ended June 30, 2022 compared to $1.74 for the three months ended June 30, 2021. Adjusted EPS for the three months ended ~~September~~June 30, ~~2017~~2021 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 ~~$0.31 to $0.83 compared with $0.52~~Adjusted EPS by $0.06.

The Company adopted Accounting Standards Update ("ASU") 2020-06 ("ASU 2020-06") and no longer recognizes non-cash interest expense on the 2023 Convertible Notes effective January 1, 2022. As a result, there was no adjustment between EPS and Adjusted EPS for non-cash interest expense on the 2023 Convertible Notes for the three months ended ~~September~~June 30, ~~2016. The increases~~2022. See Note 2, “New Accounting Standards” for ~~both EPS and Adjusted EPS were due to~~additional information about the ~~operating results described above, lower weighted average shares outstanding as a result~~adoption of ~~repurchases made under our Stock Repurchase Program and a lower effective income tax rate.~~

ASU 2020-06.

Liquidity and ~~capital allocation~~

Capital Allocation

Net ~~cash~~cash provided by ~~operating~~operating activities for the three months ended ~~September~~June 30, ~~2017 increased $35.3~~2022 decreased $90.5 million to ~~$106.2~~ $35.0 million compared with $70.9 million for the prior year quarter mainly due to higher cash collections as a result of higher revenues, lower income tax payments and benefits related to the timing of certain other operating expenditures. Days sales outstanding (“DSO”) was slightly lower (DSO was 105 days at September 30, 2017 and 106 days at September 30, 2016). Free cash flow for the three months ended September 30, 2017 was $99.3 million compared with $60.1$125.6 million for the three months ended ~~September~~June 30, ~~2016.~~

~~A portion of~~2021. The decrease in net cash provided by operating activities was largely due to an increase in compensation, primarily related to headcount growth, higher operating

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

Free Cash Flow was an inflow of $22.0 million and $105.8 million for the three months ended June 30, 2022 and 2021, respectively. The decrease for the three months ended June 30, 2022 was primarily due to lower net cash provided by operating activities, as described above, partially offset by a decrease in net cash used ~~to repurchase~~for purchases of property and ~~retire 1,599,400 shares~~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 ~~common stock for an average price per share of $32.98, at a total cost of $52.7 million~~segments, practices and ~~make $20.0 million of net repayments under the Company’s $550.0 million senior secured bank revolving credit facility (“Senior Bank Credit Facility”).~~

~~Other strategic activities~~

regions differently. During the three months ended ~~September~~June 30, ~~2017,~~2022, the COVID-19 pandemic continued to impact our ability to deliver certain services due to, for example, travel restrictions, backlogs at courts and government moratoriums on restructuring. These impacts varied across our segments and regions. Although we ~~acquired~~have not been materially adversely impacted by illness in our employee population, the ~~operations~~COVID-19 pandemic itself and the potential evolution of ~~a restructuring advisory firm~~more contagious or dangerous variants, coupled with vaccine hesitancy, declining immunity levels from vaccines over time and delays in ~~New York. As part~~developing vaccines targeted to new variants, could increase the risk that our employees may experience negative health outcomes, impair employee retention or headcount growth, and 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 geographies 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 ~~transaction, 19 professionals,~~pandemic in certain key 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, including ~~five Senior Managing Directors, joined~~vaccine mandates imposed by governments that could apply to us and our employees and requirements imposed by our clients relating to the ~~Company’s Corporate Finance segment. The addition~~vaccination status of ~~these professionals will further enhance~~ our ~~top restructuring position in North America by strengthening our company-side and interim management capabilities.~~

employees who serve such clients.

Headcount

~~Headcount~~

Our total headcount ~~decreased 1.4%~~increased 4.0% from ~~4,718 at~~6,780 as of December 31, ~~2016~~2021 to ~~4,654 at September~~7,048 as of June 30, ~~2017.~~2022. The following table includes the net billable headcount additions ~~(reductions)~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~

2022:

Billable Headcount

Corporate
Finance &
Restructuring ⁽¹⁾

Forensic and
Litigation
Consulting

Economic
Consulting

Technology

Strategic
Communications

Total

December 31, 2016

895

1,110

656

288

647

3,596

Additions, net

5

—

4

8

10

27

March 31, 2017

900

1,110

660

296

657

3,623

Additions (reductions), net

(19
)

(40
)

(8
)

5

2

(60
)
June 30, 2017

881

1,070

652

301

659

3,563

Additions (reductions), net

53

10

36

(10
)

(33
)

56

September 30, 2017

934

1,080

688

291

626

3,619

Percentage change in headcount
from December 31, 2016

4.4
%

-2.7
%

4.9
%

1.0
%

-3.2
%

0.6
%


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	%

⁽¹⁾	~~There were 19 revenue-generating professionals added during the three months ended September 30, 2017 related to a business acquisition.~~

CONSOLIDATED RESULTS OF OPERATIONS

Segment and Consolidated Operating Results:


														Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2022		2021		2022		2021
	2017			2016			2017			2016
	(in thousands, except per share data)													(in thousands, except per share data)				(in thousands, except per share data)
Revenues													Revenues
Corporate Finance & Restructuring	$	128,121		$	110,617		$	351,509		$	369,915
Forensic and Litigation Consulting		118,639			115,045			341,455			352,242
Corporate Finance													Corporate Finance	$	277,067	$	230,971	$	530,396	$	457,174
FLC													FLC	164,248		150,746		318,144		301,567
Economic Consulting		111,753			122,480			374,978			371,217		Economic Consulting	164,041		183,306		330,018		352,579
Technology		42,282			44,072			133,935			134,235		Technology	77,782		78,646		158,266		158,105
Strategic Communications		48,167			45,828			138,144			140,865		Strategic Communications	71,854		67,817		141,788		128,338
Total revenues	$	448,962		$	438,042		$	1,340,021		$	1,368,474		Total revenues	$	754,992	$	711,486	$	1,478,612	$	1,397,763
Segment operating income													Segment operating income
Corporate Finance & Restructuring	$	24,706		$	16,182		$	48,902		$	76,740
Forensic and Litigation Consulting		21,127			14,867			34,234			45,005
Corporate Finance													Corporate Finance	$	50,935	$	40,103	$	100,989	$	74,402
FLC													FLC	15,014		16,492		30,556		44,498
Economic Consulting		10,524			16,888			37,034			51,390		Economic Consulting	20,439		29,204		40,382		54,436
Technology		3,002			2,869			5,874			2,569		Technology	4,930		15,340		15,173		33,899
Strategic Communications		6,536			6,006			8,308			16,661		Strategic Communications	10,633		12,198		25,467		21,318
Total segment operating income		65,895			56,812			134,352			192,365		Total segment operating income	101,951		113,337		212,567		228,553
Unallocated corporate expenses		(18,827	)		(21,738	)		(60,166	)		(60,890	)	Unallocated corporate expenses	(37,716)		(29,357)		(69,055)		(56,067)
Operating income		47,068			35,074			74,186			131,475		Operating income	64,235		83,980		143,512		172,486
Other income (expense)													Other income (expense)
Interest income and other		1,103			3,213			3,300			9,895		Interest income and other	2,994		(912)		2,647		122
Interest expense		(6,760	)		(6,304	)		(18,811	)		(18,836	)	Interest expense	(2,448)		(5,294)		(5,090)		(10,091)
		(5,657	)		(3,091	)		(15,511	)		(8,941	)
														546		(6,206)		(2,443)		(9,969)
Income before income tax provision		41,411			31,983			58,675			122,534		Income before income tax provision	64,781		77,774		141,069		162,517
Income tax provision		9,197			10,292			17,601			44,115		Income tax provision	13,353		14,992		30,320		35,239
Net income	$	32,214		$	21,691		$	41,074		$	78,419		Net income	$	51,428	$	62,782	$	110,749	$	127,278
Earnings per common share — basic	$	0.86		$	0.53		$	1.05		$	1.92		Earnings per common share — basic	$	1.52	$	1.88	$	3.29	$	3.80
Earnings per common share — diluted	$	0.85		$	0.52		$	1.03		$	1.88		Earnings per common share — diluted	$	1.43	$	1.77	$	3.10	$	3.61

Reconciliation of Net Income to Adjusted EBITDA:


														Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2022		2021		2022		2021
	2017			2016			2017			2016
	(in thousands)						(in thousands)							(in thousands)				(in thousands)
Net income	$	32,214		$	21,691		$	41,074		$	78,419		Net income	$	51,428	$	62,782	$	110,749	$	127,278
Add back:													Add back:
Income tax provision		9,197			10,292			17,601			44,115		Income tax provision	13,353		14,992		30,320		35,239
Interest income and other		(1,103	)		(3,213	)		(3,300	)		(9,895	)	Interest income and other	(2,994)		912		(2,647)		(122)
Interest expense		6,760			6,304			18,811			18,836		Interest expense	2,448		5,294		5,090		10,091

Depreciation and amortization		7,470			9,310			23,768			25,359		Depreciation and amortization	9,188		8,604		18,095		16,765
Amortization of other intangible assets		2,882			2,845			7,797			8,041
Special charges		—			—			30,074			6,811
Amortization of intangible assets													Amortization of intangible assets	2,737		2,854		5,005		5,655

Remeasurement of acquisition-related contingent consideration		—			—			702			980		Remeasurement of acquisition-related contingent consideration	—		(3,130)		—		(3,130)
Adjusted EBITDA	$	57,420		$	47,229		$	136,527		$	172,666		Adjusted EBITDA	$	76,160	$	92,308	$	166,612	$	191,776

Reconciliation of Net Income and ~~Earnings Per Diluted Share~~EPS to Adjusted Net Income and Adjusted EPS:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

(in thousands, except per share data)

(in thousands, except per share data)

Net income

$
32,214

$
21,691

$
41,074

$
78,419

Add back:

Special charges

—

—

30,074

6,811

Tax impact of special charges⁽¹⁾

(832
)

—

(9,935
)

(2,483
)
Remeasurement of acquisition-related contingent
   consideration

—

—

702

980

Tax impact of remeasurement of acquisition-related
   contingent consideration

—

—

(269
)

(380
)
Adjusted net income

$
31,382

$
21,691

$
61,646

$
83,347

Earnings per common share — diluted

$
0.85

$
0.52

$
1.03

$
1.88

Add back:

Special charges

—

—

0.76

0.16

Tax impact of special charges⁽¹⁾

(0.02
)

—

(0.25
)

(0.06
)
Remeasurement of acquisition-related contingent
   consideration

—

—

0.02

0.02

Tax impact of remeasurement of acquisition-related
   contingent consideration

—

—

(0.01
)

—

Adjusted earnings per common share — diluted

$
0.83

$
0.52

$
1.55

$
2.00

Weighted average number of common shares
   outstanding — diluted

37,746

42,065

39,715

41,605

⁽¹⁾	~~Tax impact of special charges during the three months ended September 30, 2017 represents the favorable impact of a reduction in foreign net operating losses and related valuation allowances.~~


	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,
	2017			2016			2017			2016				Three Months Ended June 30,				Six Months Ended June 30,
	(in thousands)						(in thousands)							2022		2021		2022		2021
Net cash provided by operating activities	$	106,233		$	70,942		$	24,033		$	111,575

														(in thousands)				(in thousands)
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		(6,894	)		(10,872	)		(20,021	)		(22,855	)	Purchases of property and equipment	(13,028)		(19,724)		(25,635)		(27,725)
Free Cash Flow	$	99,339		$	60,070		$	4,012		$	88,720		Free Cash Flow	$	22,019	$	105,834	$	(194,366)	$	(68,751)

Three Months Ended ~~September~~June 30, ~~2017~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2016~~

2021

Revenues and operating income

See “Segment ~~Results”~~Results” for an expanded discussion of revenues, gross profit and ~~selling, general and administrative (“~~SG~~&A”) expense.~~

&A expenses.

Unallocated corporate expenses

Unallocated corporate expenses for the three months ended ~~September~~June 30, ~~2017 decreased $2.9~~2022 increased $8.4 million, or ~~13.4%~~28.5%, to ~~$18.8~~$37.7 million compared ~~to $21.7~~with $29.4 million for the three months ended ~~September~~June 30, ~~2016.~~2021. The ~~decrease~~increase was primarily due to ~~lower infrastructure departments spend~~higher travel and ~~lower executive compensation expense, which was partially offset by higher legal~~entertainment and consulting expenses.

Interest income and other

Interest income and other, which includes ~~foreign currency transaction~~FX gains and losses, ~~decreased $2.1~~increased $3.9 million to $1.1 million for the three months ended September 30, 2017 compared with $3.2 million for the three months ended September 30, 2016. The decrease was primarily due to net unrealized foreign currency transaction losses, which were $0.3 million for the three months ended September 30, 2017 compared with a ~~$1.3~~$3.0 million gain for the three months ended ~~September~~June 30, ~~2016. Transaction~~2022 compared with a $0.9 million loss for the three months ended June 30, 2021. The increase was primarily due to a $1.9 million net FX 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~~third-party and intercompany receivables and payables.

Interest expense

Interest expense for the three months ended ~~September~~June 30, ~~2017 increased $0.5~~2022 decreased $2.8 million ~~or 7.2%,~~ to ~~$6.8~~$2.4 million compared to ~~$6.3~~$5.3 million ~~for three months ended September 30, 2016. Interest expense~~ for the three months ended ~~September~~June 30, ~~2017~~2021. The decrease was ~~negatively impacted by higher average interest rates on our borrowings under~~primarily due to the ~~Senior Bank Credit Facility.~~

adoption of ASU 2020-06 as described above.

Income tax provision

~~The~~

Our income tax provision decreased $1.6 million, or 10.9%, to $13.4 million for the three months ended June 30, 2022 from $15.0 million for the three months ended June 30, 2021. Our effective ~~income~~tax rate of 20.6% for the three months ended June 30, 2022 compared with 19.3% for the three months ended June 30, 2021. The tax rate for the three months ended ~~September~~June 30, ~~2017~~2022 and 2021 was ~~22.2% compared with 32.2%~~impacted by a discrete tax adjustment related to share-based 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 three months ended ~~September~~June 30, ~~2016. The current quarter rate declined as~~2021 was also favorably impacted by a ~~result of~~one-time discrete tax adjustment related to the ~~favorable impact of an intercompany service fee that reduced certain foreign net operating losses and related valuation allowances, and higher foreign earnings which are~~future change in ~~lower taxed jurisdictions. The effective~~the United Kingdom (“U.K.”) tax rate, ~~prior~~which required us to ~~discrete items, declined by 7.9 percentage points, primarily as a result of these benefits as compared~~remeasure our deferred tax asset related to an intellectual property license between our U.S. and U.K. subsidiaries. In June 2021, the ~~prior year period. In addition certain discrete adjustments reduced~~U.K. government approved the U.K. tax rate ~~by 2.1 percentage points as compared~~increase from 19.0% to ~~the prior year period.~~

~~Nine~~25.0% effective in April 2023.

Six Months Ended ~~September~~June 30, ~~2017~~2022 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~

2021

Revenues and operating income

See “Segment ~~Results”~~Results” for an expanded discussion of revenues, gross profit and SG&A ~~expense.~~

expenses.

Unallocated corporate expenses

Unallocated corporate expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased $0.7~~2022 increased $13.0 million, or ~~1.2%~~23.2%, to ~~$60.2~~$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 ~~$60.9~~$10.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. Excluding the impact of special charges of $3.2 million recorded in 2017, unallocated corporate expenses decreased by $3.9 million in 2017 or 6.5%.~~2021. The decrease was primarily due to ~~lower infrastructure departments spend and lower executive compensation expense, which was partially offset by higher legal expenses and~~ the ~~2017 global senior management meeting.~~

~~Interest~~adoption of ASU 2020-06 as described above.

Income tax provision

Our income ~~and other~~

~~Interest income and other, which includes foreign currency transaction gains and losses,~~tax provision decreased ~~$6.6~~$4.9 million or 14.0%, to ~~$3.3~~$30.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared with $9.9~~2022 from $35.2 million for the ~~nine~~six months ended ~~September~~June 30, 2016. The decrease was primarily due to net unrealized foreign currency transaction losses, which were $0.1 million for the nine months ended September 30, 2017 compared with a $5.7 million gain for the nine months ended September 30, 2016. Transaction gains and losses, both realized and unrealized, relate to the remeasurement or settlement of monetary assets and liabilities that are denominated in a currency other than an entity’s functional currency. These monetary assets and liabilities include cash as well as third party and intercompany receivables and payables.

~~Interest expense~~

~~Interest expense for the nine months ended September 30, 2017 of $18.8 million was consistent with the nine months ended September 30, 2016.~~

~~Income tax provision~~

2021. Our effective tax rate of 21.5% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 was 30.0%~~2022 compared to ~~36.0%~~21.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2021. The current year rate declined as a result of a mix of higher foreign earnings which are in lower taxed jurisdictions partially offset by an increase in valuation allowances on certain foreign net operating losses. The effective tax rate ~~prior~~for the six months ended June 30, 2022 and 2021 was impacted by a discrete tax adjustment related to share-based 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 ~~items, declined by 3.7 percentage points, primarily as a result of these benefits as compared~~tax adjustment related to the ~~prior year period.~~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 ~~addition certain discrete adjustments reduced~~June 2021, the U.K. government approved the U.K. tax rate ~~by 2.3 percentage points compared~~increase from 19.0% to ~~the prior year period.~~

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. We define Total Adjusted Segment~~ EBITDA, which is a ~~non-GAAP~~GAAP financial ~~measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses.~~measure. The following table reconciles ~~Net Income~~net income to Total Adjusted Segment EBITDA, a non-GAAP financial measure, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~

2021:


														Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2022		2021		2022		2021
	2017			2016			2017			2016
	(in thousands)													(in thousands)				(in thousands)
Net income	$	32,214		$	21,691		$	41,074		$	78,419		Net income	$	51,428	$	62,782	$	110,749	$	127,278
Add back:													Add back:
Income tax provision		9,197			10,292			17,601			44,115		Income tax provision	13,353		14,992		30,320		35,239
Interest income and other		(1,103	)		(3,213	)		(3,300	)		(9,895	)	Interest income and other	(2,994)		912		(2,647)		(122)
Interest expense		6,760			6,304			18,811			18,836		Interest expense	2,448		5,294		5,090		10,091
Unallocated corporate expenses⁽¹⁾		18,827			21,738			60,166			60,890

Unallocated corporate expenses													Unallocated corporate expenses	37,716		29,357		69,055		56,067
Total segment operating income		65,895			56,812			134,352			192,365		Total segment operating income	101,951		113,337		212,567		228,553
Add back:													Add back:
Segment depreciation expense		6,603			7,920			20,602			22,128		Segment depreciation expense	8,452		7,834		16,636		15,264
Amortization of other intangible assets		2,882			2,845			7,797			8,041
Segment special charges		—			—			26,830			6,811
Amortization of intangible assets													Amortization of intangible assets	2,737		2,853		5,005		5,653

Remeasurement of acquisition-related contingent consideration		—			—			702			980		Remeasurement of acquisition-related contingent consideration	—		(3,130)		—		(3,130)
Total Adjusted Segment EBITDA	$	75,380		$	67,577		$	190,283		$	230,325		Total Adjusted Segment EBITDA	$	113,140	$	120,894	$	234,208	$	246,340

⁽¹⁾	~~Includes $3.2 million in special charges for corporate for the nine months ended September 30, 2017.~~

Other Segment Operating Data

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Number of revenue-generating professionals:
(at period end)

Corporate Finance & Restructuring

934

904

934

904

Forensic and Litigation Consulting

1,080

1,145

1,080

1,145

Economic Consulting

688

647

688

647

Technology ⁽¹⁾

291

298

291

298

Strategic Communications

626

624

626

624

Total revenue-generating professionals

3,619

3,618

3,619

3,618

Utilization rates of billable professionals:⁽²⁾

Corporate Finance & Restructuring

64
%

61
%

61
%

68
%
Forensic and Litigation Consulting

63
%

57
%

61
%

60
%
Economic Consulting

62
%

69
%

68
%

74
%
Average billable rate per hour:⁽³⁾

Corporate Finance & Restructuring

$
390

$
379

$
383

$
388

Forensic and Litigation Consulting

$
326

$
330

$
318

$
329

Economic Consulting

$
520

$
534

$
519

$
516

⁽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 218 as-needed employees during the three months ended September 30, 2017 compared with 258 as-needed employees during the three months ended September 30, 2016.

⁽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


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Number of revenue-generating professionals (at period end):
Corporate Finance	1,769			1,632			1,769			1,632
FLC	1,509			1,399			1,509			1,399
Economic Consulting	935			884			935			884
Technology (1)	507			429			507			429
Strategic Communications	877			771			877			771
Total revenue-generating professionals	5,597			5,115			5,597			5,115
Utilization rates of billable professionals: (2)
Corporate Finance	62		%	59		%	62		%	59		%
FLC	56		%	60		%	56		%	60		%
Economic Consulting	70		%	75		%	71		%	75		%
Average billable rate per hour: (3)
Corporate Finance	$	471		$	456		$	458		$	456
FLC	$	360		$	344		$	357		$	350
Economic Consulting	$	477		$	524		$	476		$	504

	for part-time hours, local country standard work weeks and local country holidays. Available working hours include vacation and professional training days, but exclude holidays. Utilization rates are presented for our segments that primarily bill clients on an hourly basis. We have not presented utilization rates for our Technology and Strategic Communications segments as most of the revenues of these segments are not generated on an hourly basis.

⁽³⁾

For engagements where revenues are based on number of hours worked by our billable professionals, 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.

(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 600 as-needed employees during the three months ended June 30, 2022 compared with 601 as-needed employees during the three months ended June 30, 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)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 June 30,						Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2022			2021			2022			2021
	2017			2016			2017			2016
	(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	$	128,121		$	110,617		$	351,509		$	369,915		Revenues	$	277,067		$	230,971		$	530,396		$	457,174
Percentage change in revenues from prior year		15.8	%		-2.5	%		-5.0	%		12.5	%	Percentage change in revenues from prior year	20.0		%	-6.1		%	16.0		%	0.8		%
Operating expenses													Operating expenses
Direct cost of revenues		81,749			73,444			233,492			229,769		Direct cost of revenues	181,221			158,560			347,467			317,673
Selling, general and administrative expenses		20,449			20,109			63,270			60,915		Selling, general and administrative expenses	42,604			30,424			77,813			61,328
Special charges		—			—			3,049			—
Amortization of other intangible assets		1,217			882			2,796			2,491

Amortization of intangible assets													Amortization of intangible assets	2,307			1,884			4,127			3,771
		103,415			94,435			302,607			293,175			226,132			190,868			429,407			382,772
Segment operating income		24,706			16,182			48,902			76,740		Segment operating income	50,935			40,103			100,989			74,402
Percentage change in segment operating income from prior year		52.7	%		-35.6	%		-36.3	%		13.2	%	Percentage change in segment operating income from prior year	27.0		%	-45.7		%	35.7		%	-38.2		%
Add back:													Add back:
Depreciation and amortization of intangible assets		2,028			1,580			5,156			4,666		Depreciation and amortization of intangible assets	4,015			3,201			7,501			6,341
Special charges		—			—			3,049			—

Fair value remeasurement of contingent consideration													Fair value remeasurement of contingent consideration	—			(3,130)			—			(3,130)
Adjusted Segment EBITDA	$	26,734		$	17,762		$	57,107		$	81,406		Adjusted Segment EBITDA	$	54,950		$	40,174		$	108,490		$	77,613
Gross profit ⁽¹⁾	$	46,372		$	37,173		$	118,017		$	140,146		Gross profit (1)	$	95,846		$	72,411		$	182,929		$	139,501
Percentage change in gross profit from prior year		24.7	%		-17.1	%		-15.8	%		9.4	%	Percentage change in gross profit from prior year	32.4		%	-29.5		%	31.1		%	-23.3		%
Gross profit margin⁽²⁾		36.2	%		33.6	%		33.6	%		37.9	%	Gross profit margin (2)	34.6		%	31.4		%	34.5		%	30.5		%
Adjusted Segment EBITDA as a percent of revenues		20.9	%		16.1	%		16.2	%		22.0	%
Adjusted Segment EBITDA as a percentage of revenues													Adjusted Segment EBITDA as a percentage of revenues	19.8		%	17.4		%	20.5		%	17.0		%
Number of revenue-generating professionals (at period end)		934			904			934			904		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		3.3	%		8.9	%		3.3	%		8.9	%	Percentage change in number of revenue-generating professionals from prior year	8.4		%	19.8		%	8.4		%	19.8		%
Utilization rates of billable professionals		64	%		61	%		61	%		68	%
Utilization rate of billable professionals													Utilization rate of billable professionals	62		%	59		%	62		%	59		%
Average billable rate per hour	$	390		$	379		$	383		$	388		Average billable rate per hour	$	471		$	456		$	458		$	456

⁽¹⁾	~~Revenues less direct cost of revenues~~

⁽²⁾	~~Gross profit as a percent of revenues~~

(1)Revenues less direct cost of revenues

(2)Gross profit as a percentage of revenues

Three Months Ended ~~September~~June 30, ~~2017~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2016~~

2021

Revenues increased ~~$17.5~~$46.1 million, or ~~15.8%~~20.0%, to ~~$128.1~~$277.1 million for the three months ended ~~September~~June 30, ~~2017,~~2022, which included ~~$3.7~~a 2.7% estimated negative impact from FX. Acquisition-related revenues contributed $3.6 million, or ~~3.4%, from an acquisition that closed~~1.6% of the increase, compared to the same quarter in the ~~quarter.~~prior year. Excluding the ~~acquisition,~~estimated impact from FX and acquisition-related revenues, revenues increased ~~organically by $13.8~~$48.7 million, or ~~12.5%. This increase was~~21.1%, primarily due to increased demand ~~globally~~and realized rates across our transactions and business transformation services, as well as increased demand for restructuring services ~~and an $8.5 million increase~~ in ~~success fees.~~

North America.

Gross profit increased ~~$9.2~~$23.4 million, or ~~24.7%~~32.4%, to ~~$46.4~~$95.8 million for the three months ended ~~September~~June 30, ~~2017.~~2022. Gross profit margin increased ~~2.6~~3.2 percentage points for the three months ended ~~September~~June 30, ~~2017. This~~2022. The increase in gross profit margin was primarily due to a ~~result~~3 percentage point increase in utilization, as well as lower compensation as a percentage of ~~higher success fees and improved utilization.~~

revenues.

SG&A ~~expense~~expenses increased ~~$0.3~~$12.2 million, or ~~1.7%~~40.0%, to ~~$20.4~~$42.6 million for the three months ended ~~September~~June 30, ~~2017.~~2022, which included a 2.1% estimated positive impact from FX. SG&A expenses ~~were 16.0%~~of 15.4% of revenues for the three months ended ~~September~~June 30, ~~2017~~2022 compared with ~~18.2% for the three months ended September 30, 2016.~~

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

Revenues decreased $18.4 million, or 5.0%, to $351.5 million for the nine months ended September 30, 2017, which included a 0.8% estimated negative impact from FX. Excluding the estimated impact of FX, revenues decreased $15.5 million, or 4.2%. This decrease was primarily driven by lower demand for restructuring services globally, partially offset by higher success fees.

Gross profit decreased $22.1 million, or 15.8%, to $118.0 million for the nine months ended September 30, 2017. Gross profit margin decreased 4.3 percentage points for the nine months ended September 30, 2017. This decrease was due to lower utilization across all regions, partially offset by higher success fees in North America.

SG&A expenses increased $2.4 million, or 3.9%, to $63.3 million for the nine months ended September 30, 2017. SG&A expenses were 18.0% of revenues for the nine months ended September 30, 2017 compared with 16.5% for the nine months ended September 30, 2016. The increase in SG&A expense was due to an increase in bad debt expense and higher infrastructure support costs. Bad debt expense in 2016 included a collection of a prior period write-off.

~~FORENSIC AND LITIGATION CONSULTING~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

(dollars in thousands,
except rate per hour)

(dollars in thousands,
except rate per hour)

Revenues

$
118,639

$
115,045

$
341,455

$
352,242

Percentage change in revenues from prior year

3.1
%

-1.0
%

-3.1
%

-3.6
%
Operating expenses

Direct cost of revenues

75,251

77,140

229,489

238,693

Selling, general and administrative expenses

21,861

22,554

66,091

65,269

Special charges

—

—

10,445

1,750

Acquisition-related contingent consideration

—

—

—

6

Amortization of other intangible assets

400

484

1,196

1,519

97,512

100,178

307,221

307,237

Segment operating income

21,127

14,867

34,234

45,005

Percentage change in segment operating income
   from prior year

42.1
%

24.5
%

-23.9
%

-11.6
%
Add back:

Depreciation and amortization of intangible assets

1,412

1,687

4,413

4,797

Special charges

—

—

10,445

1,750

Adjusted Segment EBITDA

$
22,539

$
16,554

$
49,092

$
51,552

Gross profit ⁽¹⁾

$
43,388

$
37,905

$
111,966

$
113,549

Percentage change in gross profit from prior year

14.5
%

8.8
%

-1.4
%

-8.4
%
Gross profit margin ⁽²⁾

36.6
%

32.9
%

32.8
%

32.2
%
Adjusted Segment EBITDA as a percent of revenues

19.0
%

14.4
%

14.4
%

14.6
%
Number of revenue-generating professionals (at period
   end)

1,080

1,145

1,080

1,145

Percentage change in number of revenue-generating
   professionals from prior year

-5.7
%

-5.3
%

-5.7
%

-5.3
%
Utilization rates of billable professionals

63
%

57
%

61
%

60
%
Average billable rate per hour

$
326

$
330

$
318

$
329

⁽¹⁾	~~Revenues less direct cost of revenues.~~

⁽²⁾	~~Gross profit as a percent of revenues.~~

~~Three Months Ended September 30, 2017 Compared with Three Months Ended September 30, 2016~~

Revenues increased $3.6 million, or 3.1%, to $118.6 million for the three months ended September 30, 2017. This increase in revenues was primarily due to higher demand for forensic accounting and advisory services and construction solutions offerings, partially offset by a $4.5 million decrease in success fees in our health solutions practice.

Gross profit increased $5.5 million, or 14.5%, to $43.4 million for the three months ended September 30, 2017. Gross profit margin increased 3.7 percentage points for the three months ended September 30, 2017. This increase is related to a 6 percentage point improvement in utilization, which was partially offset by the impact of lower success fees in our health solutions practice.

~~SG&A expenses decreased $0.7 million, or 3.1%, to $21.9 million for the three months ended September 30, 2017. SG&A expenses were 18.4%~~13.2% of revenues for the three months ended ~~September~~June 30, ~~2017 compared with 19.6% for the three months ended September 30, 2016.~~2021. The ~~decrease~~increase in SG&A ~~expense~~expenses was primarily due to ~~lower compensation~~higher travel and ~~travel expenses, partially offset by higher bad debt expense.~~

~~Nine~~entertainment, infrastructure support, recruiting, and other general and administrative expenses.

Six Months Ended ~~September~~June 30, ~~2017~~2022 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~

2021

Revenues ~~decreased $10.8~~increased $73.2 million, or ~~3.1%~~16.0%, to ~~$341.5~~$530.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017. This decrease was~~2022, which included a 2.0% estimated negative impact from FX. Acquisition-related revenues contributed $5.9 million, or 1.3% of the increase, compared to the same period in the prior year. Excluding the estimated impact from FX and acquisition-related revenues, revenues increased $76.3 million, or 16.7%, primarily ~~driven by lower~~due to increased demand inacross our ~~global investigations~~business transformation and ~~health solutions practices, partially offset by increased volume in our global construction solutions~~transactions services, as well as higher realized rates, pass-through revenues and ~~North America data and analytics practices.~~

success fees.

Gross profit ~~decreased $1.6~~increased $43.4 million, or ~~1.4%~~31.1%, to ~~$112.0~~$182.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2022. Gross profit margin increased ~~0.6~~4.0 percentage points for the six months ended June 30, 2022. The increase in gross profit margin was primarily due to a 3 percentage point ~~for the nine months ended September 30, 2017. This~~ increase ~~is related to better~~in utilization, ~~in our global construction solutions practice coupled with~~ lower ~~personnel costs in our health solutions practice partially offset by lower utilization in our global investigations.~~

compensation as a percentage of revenues and higher realized rates.

SG&A expenses increased ~~$0.8~~$16.5 million, or ~~1.3%~~26.9%, to ~~$66.1~~$77.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2022, which included a 1.8% estimated positive impact from FX. SG&A expenses ~~were 19.4%~~of 14.7% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared with ~~18.5%~~13.4% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2021. The increase in SG&A ~~expense~~expenses was primarily due to higher ~~bad debt expense, partially offset by lower~~ travel ~~expenses~~and entertainment, outside services, and other ~~declines in~~ general ~~overhead~~and administrative expenses.

~~ECONOMIC~~

FORENSIC AND LITIGATION CONSULTING


														Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2022			2021			2022			2021
	2017			2016			2017			2016
	(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	$	111,753		$	122,480		$	374,978		$	371,217		Revenues	$	164,248		$	150,746		$	318,144		$	301,567
Percentage change in revenues from prior year		-8.8	%		6.9	%		1.0	%		12.7	%	Percentage change in revenues from prior year	9.0		%	41.7		%	5.5		%	18.7		%
Operating expenses													Operating expenses
Direct cost of revenues		83,949			88,682			278,901			268,517		Direct cost of revenues	117,551			108,615			228,029			207,902
Selling, general and administrative expenses		17,123			16,745			52,653			50,775		Selling, general and administrative expenses	31,438			25,415			59,066			48,769
Special charges		—			—			5,910			—
Acquisition-related contingent consideration		3			11			17			43
Amortization of other intangible assets		154			154			463			492

Amortization of intangible assets													Amortization of intangible assets	245			224			493			398
		101,229			105,592			337,944			319,827			149,234			134,254			287,588			257,069
Segment operating income		10,524			16,888			37,034			51,390		Segment operating income	15,014			16,492			30,556			44,498
Percentage change in segment operating income from prior year		-37.7	%		9.0	%		-27.9	%		28.2	%	Percentage change in segment operating income from prior year	-9.0		%	NM (3)			-31.3		%	387.7		%
Add back:													Add back:
Depreciation and amortization of intangible assets		1,537			1,466			4,736			3,664		Depreciation and amortization of intangible assets	1,693			1,510			3,408			2,936
Special charges		—			—			5,910			—

Adjusted Segment EBITDA	$	12,061		$	18,354		$	47,680		$	55,054		Adjusted Segment EBITDA	$	16,707		$	18,002		$	33,964		$	47,434
Gross profit ⁽¹⁾	$	27,804		$	33,798		$	96,077		$	102,700		Gross profit (1)	$	46,697		$	42,131		$	90,115		$	93,665
Percentage change in gross profit from prior year		-17.7	%		7.8	%		-6.4	%		18.4	%	Percentage change in gross profit from prior year	10.8		%	193.0		%	-3.8		%	55.7		%
Gross profit margin⁽²⁾		24.9	%		27.6	%		25.6	%		27.7	%	Gross profit margin (2)	28.4		%	27.9		%	28.3		%	31.1		%
Adjusted Segment EBITDA as a percent of revenues		10.8	%		15.0	%		12.7	%		14.8	%
Adjusted Segment EBITDA as a percentage of revenues													Adjusted Segment EBITDA as a percentage of revenues	10.2		%	11.9		%	10.7		%	15.7		%
Number of revenue-generating professionals (at period end)		688			647			688			647		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		6.3	%		8.9	%		6.3	%		8.9	%	Percentage change in number of revenue-generating professionals from prior year	7.9		%	5.5		%	7.9		%	5.5		%
Utilization rates of billable professionals		62	%		69	%		68	%		74	%
Utilization rate of billable professionals													Utilization rate of billable professionals	56		%	60		%	56		%	60		%
Average billable rate per hour	$	520		$	534		$	519		$	516		Average billable rate per hour	$	360		$	344		$	357		$	350

⁽¹⁾	~~Revenues less direct cost of revenues~~

⁽²⁾	~~Gross profit as a percent of revenues~~

(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, ~~2017~~2022 Compared with Three Months Ended ~~September~~June 30, ~~2016~~

2021

Revenues ~~decreased $10.7~~increased $13.5 million, or ~~8.8%~~9.0%, to ~~$111.8~~$164.2 million for the three months ended ~~September~~June 30, ~~2017. This decrease was primarily driven by lower demand for antitrust and financial economics services in North America.~~

Gross profit decreased $6.0 million, or 17.7%, to $27.8 million for the three months ended September 30, 2017. Gross profit margin decreased 2.7 percentage points for the three months ended September 30, 2017. This decrease was primarily due to a 7 percentage point decline in utilization, resulting from lower demand and an increase in billable staff.

SG&A expenses increased $0.4 million, or 2.3%, to $17.1 million for the three months ended September 30, 2017. SG&A expenses were 15.3% of revenues for the three months ended September 30, 2017 compared with 13.7% for the three months ended September 30, 2016.

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

~~Revenues increased $3.8 million, or 1.0%, to $375.0 million for the nine months ended September 30, 2017,~~2022, which included a 1.5% estimated negative impact from FX. Excluding the estimated impact of FX, revenues increased by $9.2 million, or 2.5%. This increase was primarily driven by higher demand and realized rates for antitrust services in North America, which was partially offset by lower demand for our financial economics services in North America.

Gross profit decreased $6.6 million, or 6.4%, to $96.1 million for the nine months ended September 30, 2017. Gross profit margin decreased 2.1 percentage points for the nine months ended September 30, 2017. This decrease was primarily due to a 5 percentage point decline in utilization, with an increase in billable staff.

SG&A expenses increased $1.9 million, or 3.7%, to $52.7 million for the nine months ended September 30, 2017. SG&A expenses were 14.0% of revenues for the nine months ended September 30, 2017 compared with 13.7% for the nine months ended September 30, 2016. The increase in SG&A expense was driven primarily by higher depreciation, bad debt, and infrastructure support costs, which was partially offset by lower legal fees.

~~TECHNOLOGY~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

(dollars in thousands)

(dollars in thousands)

Revenues

$
42,282

$
44,072

$
133,935

$
134,235

Percentage change in revenues from prior year

-4.1
%

-20.7
%

-0.2
%

-22.0
%
Operating expenses

Direct cost of revenues

24,206

25,666

77,276

78,526

Selling, general and administrative expenses

14,916

15,129

46,481

47,354

Special charges

—

—

3,827

5,061

Amortization of other intangible assets

158

408

477

725

39,280

41,203

128,061

131,666

Segment operating income

3,002

2,869

5,874

2,569

Percentage change in segment operating income
   from prior year

4.6
%

-58.0
%

128.6
%

-88.0
%
Add back:

Depreciation and amortization of intangible assets

2,971

4,529

9,497

12,626

Special charges

—

—

3,827

5,061

Adjusted Segment EBITDA

$
5,973

$
7,398

$
19,198

$
20,256

Gross profit ⁽¹⁾

$
18,076

$
18,406

$
56,659

$
55,709

Percentage change in gross profit from prior year

-1.8
%

-24.6
%

1.7
%

-26.5
%
Gross profit margin⁽²⁾

42.8
%

41.8
%

42.3
%

41.5
%
Adjusted Segment EBITDA as a percent of revenues

14.1
%

16.8
%

14.3
%

15.1
%
Number of revenue-generating professionals (at period
   end) ⁽³⁾

291

298

291

298

Percentage change in number of revenue-generating
   professionals from prior year

-2.3
%

-15.8
%

-2.3
%

-15.8
%

⁽¹⁾	~~Revenues less direct cost of revenues~~

⁽²⁾	~~Gross profit as a percent of revenues~~

⁽³⁾	~~Includes personnel involved in direct client assistance and revenue generating consultants~~

~~Three Months Ended September 30, 2017 Compared with Three Months Ended September 30, 2016~~

Revenues decreased $1.8 million, or 4.1%, to $42.3 million for the three months ended September 30, 2017. This decrease was primarily driven by lower demand for managed review and lower pricing for hosting services, partially offset by increased demand for consulting services. These decreases were related to the wind down of large cross-border investigations, partially offset by new M&A-related “second requests.”

Gross profit decreased $0.3 million, or 1.8%, to $18.1 million for the three months ended September 30, 2017. Gross profit margin increased by 1.0 percentage point for the three months ended September 30, 2017. This margin increase is due to lower data center costs partially offset by an unfavorable revenue mix.

SG&A expenses decreased $0.2 million, or 1.4%, to $14.9 million for the three months ended September 30, 2017. SG&A expenses were 35.3% of revenues for the three months ended September 30, 2017 compared with 34.3% for the three months ended

September 30, 2016. Research and development expense related to software development was $3.3 million for the three months ended September 30, 2017, a decline of $1.2 million, compared with $4.5 million for the three months ended September 30, 2016. This reduction was offset by higher selling expenses and bad debt expense.

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

Revenues decreased $0.3 million, or 0.2%, to $133.9 million for the nine months ended September 30, 2017. Revenues were relatively consistent with the prior year period primarily driven by lower pricing for hosting, which was offset by higher demand and pricing for consulting. This was due to higher demand in M&A second request and investigation work offset by the wind down of certain hosting services engagements.

Gross profit increased $1.0 million, or 1.7%, to $56.7 million for the nine months ended September 30, 2017. Gross profit margin increased 0.8 percentage points for the nine months ended September 30, 2017. This margin increase is due to lower data center costs largely offset by an unfavorable revenue mix.

SG&A expenses decreased $0.9 million, or 1.8%, to $46.5 million for the nine months ended September 30, 2017. SG&A expenses were 34.7% of revenues for the nine months ended September 30, 2017 compared with 35.3% for the nine months ended September 30, 2016. Research and development expense related to software development was $11.8 million for the nine months ended September 30, 2017, a decline of $1.2 million, compared with $13.0 million for the nine months ended September 30, 2016.

~~STRATEGIC COMMUNICATIONS~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

(dollars in thousands)

(dollars in thousands)

Revenues

$
48,167

$
45,828

$
138,144

$
140,865

Percentage change in revenues from prior year

5.1
%

-17.7
%

-1.9
%

-0.2
%
Operating expenses

Direct cost of revenues

29,695

28,770

88,832

87,027

Selling, general and administrative expenses

10,734

9,945

33,133

32,871

Special charges

—

—

3,599

—

Remeasurement of acquisition-related contingent
   consideration

—

—

702

980

Acquisition-related contingent consideration

249

190

705

512

Amortization of other intangible assets

953

917

2,865

2,814

41,631

39,822

129,836

124,204

Segment operating income

6,536

6,006

8,308

16,661

Percentage change in segment operating income
   from prior year

8.8
%

-17.0
%

-50.1
%

7.1
%
Add back:

Depreciation and amortization of intangible assets

1,537

1,503

4,597

4,416

Special charges

—

—

3,599

—

Fair value remeasurement of contingent consideration

—

—

702

980

Adjusted Segment EBITDA

$
8,073

$
7,509

$
17,206

$
22,057

Gross profit ⁽¹⁾

$
18,472

$
17,058

$
49,312

$
53,838

Percentage change in gross profit from prior year

8.3
%

-7.3
%

-8.4
%

7.3
%
Gross profit margin⁽²⁾

38.3
%

37.2
%

35.7
%

38.2
%
Adjusted Segment EBITDA as a percent of revenues

16.8
%

16.4
%

12.5
%

15.7
%
Number of revenue-generating professionals (at period
   end)

626

624

626

624

Percentage change in number of revenue-generating
   professionals from prior year

0.3
%

5.1
%

0.3
%

5.1
%

⁽¹⁾	~~Revenues less direct cost of revenues~~

⁽²⁾	~~Gross profit as a percent of revenues~~

~~Three Months Ended September 30, 2017 Compared with Three Months Ended September 30, 2016~~

Revenues increased $2.3 million, or 5.1%, to $48.2 million for the three months ended September 30, 2017, which included 1.0% estimated favorable impact from FX. Excluding the estimated impact of FX, revenues increased $1.9 million, or 4.1%, primarily driven by higher retainer based revenues, partially offset by lower pass-through revenues.

Gross profit increased $1.4 million, or 8.3%, to $18.5 million for the three months ended September 30, 2017. Gross profit margin increased 1.1 percentage points for the three months ended September 30, 2017. This increase was primarily due to a lower proportion of lower margin pass-through revenues and the impact of a success fee.

SG&A expenses increased $0.8 million, or 7.9%, to $10.7 million for the three months ended September 30, 2017. SG&A expenses were 22.3% of revenues for the three months ended September 30, 2017 compared with 21.7% for the three months ended September 30, 2016. The increase in SG&A expenses was largely driven by higher general overhead expenses.

~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

~~Revenues decreased $2.7 million, or~~ 1.9%~~, to $138.1 million for the nine months ended September 30, 2017, which included 2.2%~~ estimated negative impact from FX. Excluding the estimated impact from FX, revenues ~~were~~increased $16.3 million, or 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 data & analytics services.

Gross profit increased $4.6 million, or 10.8%, to $46.7 million for the three months ended June 30, 2022. Gross profit margin increased 0.5 percentage points for the three months ended June 30, 2022. The increase in ~~line with prior year but include~~gross profit margin was primarily due to an increase in ~~retainer based~~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 ~~across all regions~~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 ~~declining project income, mainly in North America.~~

lower demand for our data & analytics and disputes services.

Gross profit decreased ~~$4.5~~$3.6 million, or ~~8.4%~~3.8%, to ~~$49.3~~$90.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2022. Gross profit margin decreased ~~2.5~~2.7 percentage points for the ~~nine~~six months ended ~~September~~June 30, ~~2017. This~~2022. The decrease in gross profit margin was largely related to a 4 percentage point decline in utilization, primarily ~~due to fewer large, high margin engagements in North America~~for our data & analytics and disputes services, as well as higher compensation as a ~~result~~percentage of ~~increased average headcount.~~

revenues.

SG&A expenses increased ~~$0.3~~$10.3 million, or ~~0.8%~~21.1%, to ~~$33.1~~$59.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2022, which included a 1.4% estimated positive impact from FX. SG&A expenses ~~were 24.0%~~of 18.6% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared with ~~23.3%~~16.2% of revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~

2021. The increase in SG&A expenses was primarily driven by higher travel and entertainment, infrastructure support, and other general and administrative expenses.

ECONOMIC CONSULTING


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

	(dollars in thousands, except rate per hour)						(dollars in thousands, except rate per hour)
Revenues	$	164,041		$	183,306		$	330,018		$	352,579
Percentage change in revenues from prior year	-10.5		%	21.0		%	-6.4		%	24.3		%
Operating expenses
Direct cost of revenues	122,006			135,579			246,476			260,720
Selling, general and administrative expenses	21,596			18,523			43,160			37,423


	143,602			154,102			289,636			298,143
Segment operating income	20,439			29,204			40,382			54,436
Percentage change in segment operating income from prior year	-30.0		%	44.5		%	-25.8		%	72.2		%
Add back:
Depreciation and amortization of intangible assets	1,207			1,495			2,459			2,842

Adjusted Segment EBITDA	$	21,646		$	30,699		$	42,841		$	57,278
Gross profit (1)	$	42,035		$	47,727		$	83,542		$	91,859
Percentage change in gross profit from prior year	-11.9		%	15.8		%	-9.1		%	27.0		%
Gross profit margin (2)	25.6		%	26.0		%	25.3		%	26.1		%
Adjusted Segment EBITDA as a percentage of revenues	13.2		%	16.7		%	13.0		%	16.2		%
Number of revenue-generating professionals (at period end)	935			884			935			884
Percentage change in number of revenue-generating professionals from prior year	5.8		%	9.1		%	5.8		%	9.1		%
Utilization rate of billable professionals	70		%	75		%	71		%	75		%
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 June 30, 2022 Compared with Three Months Ended June 30, 2021

Revenues decreased $19.3 million, or 10.5%, to $164.0 million for the three months ended June 30, 2022, which included a 3.9% estimated negative impact from FX. Excluding the estimated impact from FX, revenues decreased $12.2 million, or 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 services.

Gross profit decreased $5.7 million, or 11.9%, to $42.0 million for the three months ended June 30, 2022. Gross profit margin decreased 0.4 percentage points for the three months ended June 30, 2022. The decrease in gross profit margin was primarily due to lower realization and a 5 percentage point decrease in utilization, which was partially offset by lower variable compensation.

SG&A expenses increased $3.1 million, or 16.6%, to $21.6 million for the three months ended June 30, 2022, which included a 4.3% estimated positive impact from FX. SG&A expenses of 13.2% of revenues for the three months ended June 30, 2022 compared with 10.1% 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, 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

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.

Gross profit decreased $8.3 million, or 9.1%, to $83.5 million for the six months ended June 30, 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. SG&A expenses of 13.1% of revenues for the six months ended June 30, 2022 compared with 10.6% of revenues for the six months ended June 30, 2021. The increase in SG&A expenses was primarily driven by higher bad debt, compensation, infrastructure support, travel and entertainment, and other general and administrative expenses.

TECHNOLOGY


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

	(dollars in thousands)						(dollars in thousands)
Revenues	$	77,782		$	78,646		$	158,266		$	158,105
Percentage change in revenues from prior year	-1.1		%	67.0		%	0.1		%	49.4		%
Operating expenses
Direct cost of revenues	53,556			45,666			104,471			91,223
Selling, general and administrative expenses	19,296			17,640			38,622			32,983


	72,852			63,306			143,093			124,206
Segment operating income	4,930			15,340			15,173			33,899
Percentage change in segment operating income from prior year	-67.9		%	347.0		%	-55.2		%	125.7		%
Add back:
Depreciation and amortization of intangible assets	3,435			3,178			6,555			6,217

Adjusted Segment EBITDA	$	8,365		$	18,518		$	21,728		$	40,116
Gross profit (1)	$	24,226		$	32,980		$	53,795		$	66,882
Percentage change in gross profit from prior year	-26.5		%	99.2		%	-19.6		%	58.9		%
Gross profit margin (2)	31.1		%	41.9		%	34.0		%	42.3		%
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)	507			429			507			429
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 June 30, 2022 Compared with Three Months Ended June 30, 2021

Revenues decreased $0.9 million, or 1.1%, to $77.8 million for the three months ended June 30, 2022, which included a 2.5% estimated negative impact from FX. Excluding the estimated impact from FX, revenues increased $1.1 million, or 1.4%, primarily due to higher demand for processing services. Higher demand for information governance, privacy and security, and investigations services was partially offset by lower demand for litigation and M&A-related "second request" services.

Gross profit decreased $8.8 million, or 26.5%, to $24.2 million for the three months ended June 30, 2022. Gross profit margin decreased 10.8 percentage points for the three months ended June 30, 2022. The decrease in gross profit margin was primarily due to higher compensation, which included the impact of an 18.2% increase in billable headcount and an increase in as-needed contractors, as well as lower profitability of our managed review services.

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

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

Revenues increased $0.2 million, or 0.1%, to $158.3 million for the six months ended June 30, 2022, which included a 1.6% estimated negative impact from FX. Excluding the estimated impact from FX, revenues increased $2.7 million, or 1.7%,primarily due to higher demand for 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" engagements.

Gross profit decreased $13.1 million, or 19.6%, to $53.8 million for the six months ended June 30, 2022. Gross profit margin decreased 8.3 percentage points for the six months ended June 30, 2022. The decrease in gross profit margin was primarily due to higher compensation, which included the impact of an 18.2% increase in billable headcount and an increase in as-needed contractors, as well as the lower profitability of our managed review services.

SG&A expenses increased $5.6 million, or 17.1%, to $38.6 million for the six months ended June 30, 2022, which included a 1.7% estimated positive impact from FX. SG&A expenses of 24.4% of revenues for the six months ended June 30, 2022 compared with 20.9% of revenues for the six months ended June 30, 2021. The increase in SG&A expenses was primarily due to higher compensation, travel and entertainment, and other general and administrative expenses.

STRATEGIC COMMUNICATIONS


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

	(dollars in thousands)						(dollars in thousands)
Revenues	$	71,854		$	67,817		$	141,788		$	128,338
Percentage change in revenues from prior year	6.0		%	19.2		%	10.5		%	11.3		%
Operating expenses
Direct cost of revenues	45,747			42,302			86,741			81,628
Selling, general and administrative expenses	15,289			12,572			29,195			23,908


Amortization of intangible assets	185			745			385			1,484
	61,221			55,619			116,321			107,020
Segment operating income	10,633			12,198			25,467			21,318
Percentage change in segment operating income from prior year	-12.8		%	38.6		%	19.5		%	30.9		%
Add back:
Depreciation and amortization of intangible assets	839			1,303			1,718			2,581


Adjusted Segment EBITDA	$	11,472		$	13,501		$	27,185		$	23,899
Gross profit (1)	$	26,107		$	25,515		$	55,047		$	46,710
Percentage change in gross profit from prior year	2.3		%	27.8		%	17.8		%	14.7		%
Gross profit margin (2)	36.3		%	37.6		%	38.8		%	36.4		%
Adjusted Segment EBITDA as a percentage of revenues	16.0		%	19.9		%	19.2		%	18.6		%
Number of revenue-generating professionals (at period end)	877			771			877			771
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 June 30, 2022 Compared with Three Months Ended June 30, 2021

Revenues increased $4.0 million, or 6.0%, to $71.9 million for the three months ended June 30, 2022, which included a 5.8% estimated negative impact from FX. Excluding the estimated impact from FX, revenues increased $7.9 million, or 11.7%, primarily due to growth in project- and retainer-based revenues, mainly driven by higher demand for our corporate reputation services.

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

SG&A expenses increased $2.7 million, or 21.6%, to $15.3 million for the three months ended June 30, 2022, which included a 5.0% estimated positive impact from FX. SG&A expenses of 21.3% of revenues for the three months ended June 30, 2022 compared with 18.5% of revenues for the three months ended June 30, 2021. The increase in SG&A expenses was primarily due to 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 $13.5 million, or 10.5%, to $141.8 million for the six months ended June 30, 2022, which included a 4.3% estimated negative impact from FX. Excluding the estimated impact from FX, revenues increased $18.9 million, or 14.7%,primarily due to growth in project- and retainer-based revenues, mainly driven by higher demand for our corporate reputation services.

Gross profit increased $8.3 million, or 17.8%, to $55.0 million for the six months ended June 30, 2022. Gross profit margin increased 2.4 percentage points for the six months ended June 30, 2022. The increase in gross profit margin was driven by lower compensation as a percentage of revenues and a lower mix of pass-through revenues.

SG&A expenses increased $5.3 million, or 22.1%, to $29.2 million for the six months ended June 30, 2022, which included a 3.8% estimated positive impact from FX. SG&A expenses of 20.6% of revenues for the six months ended June 30, 2022 compared with 18.6% of revenues for the six months ended June 30, 2021. The increase in SG&A expenses was primarily due to higher infrastructure support, 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 7,8, of our Annual Report on Form 10-K for the year ended December 31, ~~2016 filed with the SEC,~~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 ~~allowance for doubtful accounts~~revenues, goodwill and ~~unbilled services, goodwill,~~intangible assets, income taxes and contingencies, on an ongoing basis. ~~We base our~~Our estimates are based on current facts and circumstances, historical experience and on various other assumptions that we believe are ~~reasonable. These results~~reasonable, which form the basis for making judgments about the ~~carrying~~ values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting ~~policies~~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~~

Recognition

~~Allowance for doubtful accounts and unbilled services~~

•Goodwill and ~~other intangible assets~~

Intangible Assets

~~Income taxes~~

There ~~have been~~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, ~~2016 filed with~~2021, or from the ~~SEC.~~

~~Goodwill and Other Intangible Assets~~

~~On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test~~information provided in Part II, Item 8, of our ~~goodwill and intangible assets. Factors we consider important that could trigger an interim impairment review include, but are not limited to,~~Annual Report on Form 10-K for the following: significant underperformance relative to historical or projected future operating results; a significant change in the manner of our use of the acquired asset or strategy for our overall business; a significant negative industry or

year ended December 31, 2021.

~~economic trend; and our market capitalization relative to net book value. When we evaluate these factors and determine that a triggering event has occurred, we perform an interim impairment analysis.~~

As of October 1, 2016, the date of our last annual goodwill impairment test, the estimated fair value of each of our reporting units significantly exceeded their respective carrying values and no further testing was required. Through our quarterly assessment, we determined that there were no events or circumstances that more likely than not would reduce the fair value of any of our reporting units below their carrying value.

There can be no assurance that the estimates and assumptions used in our goodwill impairment testing will prove to be accurate predictions of the future. If our assumptions regarding forecasted cash flows are not achieved, we may be required to perform the two-step quantitative goodwill impairment analysis prior to our next annual impairment test. In addition, if the aforementioned factors have the effect of changing one of the critical assumptions or estimates we use to calculate the value of our goodwill or intangible assets, we may be required to record goodwill and/or intangible asset impairment charges in future periods, whether in connection with our next annual impairment test or if a triggering event occurs outside of the quarter during which the annual goodwill impairment test is performed. It is not possible at this time to determine if any future impairment charge would result or, if it does, whether such charge would be material.

SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS

See Note 3,2, “New Accounting Standards” in Part I, Item 1, of this Quarterly Report on Form 10-Q.

LIQUIDITY AND CAPITAL RESOURCES

~~Cash Flows~~

Nine Months Ended September 30,

Cash flows

2017

2016

(dollars in thousands)

Net cash provided by operating activities

$
24,033

$
111,575

Net cash used in investing activities

$
(28,876
)

$
(22,837
)
Net cash used in financing activities

$
(59,133
)

$
(6,346
)
DSO

105

106

Liquidity

Our annual cash flows from operations generally exceed our cash needs for capital expenditures and debt service requirements. We ~~have generally financed~~typically finance our day-to-day operations, capital expenditures, acquisitions and ~~acquisitions~~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 ~~are~~ generally ~~positive~~exceed our cash needs subsequent to the ~~first~~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. 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, ~~2017~~2022 Compared with ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~

2021

Net cash ~~provided by~~used in operating activities ~~for the nine months ended September 30, 2017 was $24.0 million compared with $111.6~~of $168.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022 compared with $41.0 million for the six months ended June 30, 2021. The ~~decrease~~ increase of $127.7 million, or 311.3%, in net cash ~~provided by~~used in operating activities was primarily due to ~~lower cash collections as a result of lower revenues~~an increase in salaries related to headcount growth, higher annual bonus payments and ~~increased compensation and severance payments~~higher operating expenses, which was partially offset by ~~lower income tax payments~~an increase in cash collected resulting from higher revenues compared to the same period in the prior year. DSO was 102 days as of June 30, 2022 and ~~timing of operating expense payments.~~

2021.

Net cash used in investing activities ~~for the nine months ended September 30, 2017 was $28.9 million compared with $22.8~~of $32.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. Cash payment~~2022 compared with $37.5 million for the six months ended June 30, 2021. The decrease of $5.2 million, or 13.8%, in net cash used in investing activities was primarily due to a $3.1 million decrease in payments for the acquisition ~~completed~~of businesses as well as a decrease of $2.1 million in ~~the three months ended September 30, 2017 was $8.9 million. Capital expenditures were $20.0~~capital expenditures.

Net cash used in financing activities of $17.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared with ~~$22.9~~$39.5 million of net cash provided by financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~

~~Net~~2021. The increase of $56.7 million, or 143.5%, in net cash used in financing activities ~~for the nine months ended September 30, 2017~~ was ~~$59.1 million compared with $6.3 million for the nine months ended September 30, 2016. Cash used~~primarily due to a decline in ~~financing activities in the nine months ended September 30, 2017 included payments of $155.3 million used to settle repurchases of our common stock, which included $95.0 million of~~ net borrowings of $100.0 million under our ~~Senior Bank~~ Credit Facility, and $3.6 million of refundable deposits related to one of our foreign entities. Our financing activities for the nine months ended September 30, 2016 included a $25.0 million repayment of borrowings under our Senior Bank Credit Facility and payments in a total amount of $2.9 million to settle repurchases of our common stock,which was partially offset by ~~$18.4~~a decrease of $43.0 million in ~~cash received from the issuance of~~payments for common stock repurchases under ~~our equity compensation plan and~~ the ~~receipt~~Repurchase Program as compared to the same period in the prior year.

Principal Sources of ~~$2.8 million of refundable deposits related to one of our foreign entities.~~

Capital Resources

As of ~~September~~June 30, ~~2017,~~2022, our capital resources included ~~$158.0~~$255.7 million of cash and cash equivalents and available borrowing capacity of ~~$384.3~~$549.6 million under the $550.0 million revolving line of credit under our ~~Senior Bank~~ Credit Facility. As of ~~September~~June 30, ~~2017,~~2022, we had ~~$165.0 million of borrowing~~no outstanding borrowings under our ~~Senior Bank~~ Credit Facility and ~~$0.7~~$0.4 million of outstanding letters of credit, which reduced the availability of ~~borrowings.~~borrowings under the Credit Facility. We ~~primarily~~ 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, EUR and 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. 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 FTI Consulting 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, in 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 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.

The amended and restated credit agreement entered into in November 2018, as further amended by the first amendment to the amended and restated credit agreement dated as of February 4, 2022 (as amended by the first amendment, the "Credit Agreement"), governing the Credit Facility 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, 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). As of June 30, 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, 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;

~~compensating~~•compensation to designated executive management and senior managing directors under our various long-term incentive compensation programs;

•discretionary funding of the ~~Stock~~ Repurchase Program;

•contingent obligations related to our acquisitions;

•potential acquisitions of ~~businesses~~

businesses; and

•other known future contractual obligations.

Capital Expenditures

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, we spent ~~$20.0~~$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 of between $5$32 million and ~~$12 million for the remainder of 2017.~~$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 ~~for their purposes or~~ if we pursue and complete additional acquisitions.

Our cash flows from operations have historically exceeded our cash needs for capital expenditures and debt service requirements. We believe that our cash flows from operations, supplemented by borrowings under our Senior Bank Credit Facility, as necessary, will provide adequate cash to fund our long-term cash needs from normal operations for

Share Repurchase Program

During the ~~next 12~~six months ~~or longer.~~

Our conclusion that we will be able to fund our cash requirements by using existing capital resources and cash generated from operations does not take into account the impact of any unanticipated capital expenditures, future acquisitions, unexpected significant changes in numbers of employees or other unanticipated uses of cash. The anticipated cash needs of our businesses could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if economic conditions change from those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that may have a material effect on the cash flow or profitability of our businesses, including material negative changes in the operating performance or financial results of our businesses. 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 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; and~~

~~the market prices of our securities.~~

Any new debt funding, if available, may be on terms less favorable to us than our Senior Bank Credit Facility or the Indenture that governs our senior notes due 2022. See “Forward-Looking Statements” of this Quarterly Report on Form 10-Q and “Risk Factors” previously disclosed in Part II, Item 1A, of our Quarterly Report on Form 10-Q for the second quarter ended June 30, ~~2017, filed with~~2022, we made $3.1 million in payments for common stock repurchases under the ~~SEC on July 27, 2017.~~

~~Off-Balance Sheet Arrangements~~

Repurchase Program. We ~~have no off-balance sheet arrangements, other than operating leases, and~~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 ~~have not entered into any transactions involving unconsolidated subsidiaries or special purpose entities.~~

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.

Future Contractual Obligations

~~There have been no significant changes in our~~

Our future contractual obligations as ~~disclosed~~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, including current and long-term interest. The 2023 Convertible Notes will mature on August 15, 2023, unless earlier converted or repurchased. As of June 30, 2022, there were no outstanding borrowings under our Credit Facility, which will mature on November 30, 2023. For more information on our 2023 Convertible Notes and Credit Facility, refer to Note 8, "Debt" in Part I, Item 1. Future contractual obligations related to our ~~Annual Report~~long-term debt assume that payments will be made based on ~~Form 10-K~~the current payment schedule and that interest payments will be at their stated rates and exclude 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. Amounts due under the 2023 Convertible Notes and the Credit Facility that are not contractually required or expected to be liquidated for more than one year from the ~~year ended December 31, 2016 filed with~~balance sheet date are classified as long-term on the ~~SEC.~~

Condensed Consolidated Balance Sheets. Under our operating leases as described in Note 9, “Leases” in Part I, Item 1, we have a current obligation of $33.3 million and long-term obligations 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~~“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,~~“estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” ~~“forecasts”~~"commits," “aspires,” “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,~~I, Item 1A, of our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~September 30, 2017 filed~~December 31, 2021, as well as in other information that we file with the ~~SEC.~~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 ~~attract~~recruit and retain qualified professionals and senior ~~management;~~

management, including segment, industry and regional leaders;

•conflicts resulting in our inability to represent certain clients;

•our former employees joining or forming competing businesses;

•our ability to manage our headcount needs and our professionals’ utilization and billing rates and maintain or increase the pricing of our services and products;

•our ability to identify suitable acquisition candidates, negotiate favorable terms, take advantage of opportunistic acquisition situations and integrate the operations of acquisitions, as well as the costs of integration;

•our ability to adapt to and manage the risks associated with operating in non-U.S. markets;

•our ability to replace key personnel, including former executives, officers, senior managers and practice and regional leaders who have highly specialized skills and experience;

•our ability to protect the confidentiality of internal and client data and proprietary and confidential information, including from cyberattacks, systems failures or other similar events, or the use or misuse of social media;

•

~~our ability to protect the confidentiality of internal and client data and proprietary and confidential information;~~

•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;~~

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 ~~terminations~~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;

~~headcount~~•uncertainty from the expected discontinuance of LIBOR and ~~cost reductions during periods of reduced demand;~~

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; 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~~About Market Risk

For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures ~~about~~About Market Risk” in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, ~~2016 filed with the SEC.~~2021. There have been no ~~significant~~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, ~~2017~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

~~Part II, Item 1A of our Quarterly Report on Form 10-Q for the second quarter ended June 30, 2017, filed with the SEC on July 27, 2017, included amended and restated~~

There have been no material changes in any risk factors ~~associated with our business, which included material changes to and supersedes the risk factors associated with our business~~ previously disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2016,~~2021 filed with the United States Securities and Exchange Commission ("SEC") on February ~~18, 2017. There has been no material change in any of the risk factors previously disclosed in our Quarterly Report on Form 10-Q for the second quarter ended June 30, 2017.~~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.


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, ~~2017:~~

2022:

Total
Number of
Shares
Purchased

Average
Price
Paid per
Share

Total Number of
Shares
Purchased as
Part of Publicly
Announced
Program ⁽⁴⁾

Approximate
Dollar Value
that May Yet Be
Purchased
Under the
Program

(in thousands, except per share data)

July 1 through July 31, 2017

114

⁽¹⁾
$
33.04

86

⁽⁵⁾
$
76,060

August 1 through August 31, 2017

1,353

⁽²⁾
$
32.88

1,351

⁽⁶⁾
$
31,616

September 1 through September 30, 2017

163

⁽³⁾
$
33.79

162

⁽⁷⁾
$
26,129

Total

1,630

1,599


	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⁾	~~Includes 27,532 shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.~~

(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. On each of July 28, 2020 and December 3, 2020, our Board of Directors authorized an additional $200.0 million, 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 June 30, 2022.

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

(3)Includes 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.


Item 6.			Exhibits

⁽²⁾	~~Includes 2,250 shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.~~

⁽³⁾	~~Includes 669 shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.~~

⁽⁴⁾

On June 2, 2016, our Board of Directors authorized a stock repurchase program for up to $100.0 million. On May 18, 2017, the Board of Directors authorized an additional $100.0 million to repurchase shares of our common stock for an aggregate stock repurchase authorization of $200.0 million (the “Stock Repurchase Program”). During the three months ended September 30, 2017, we repurchased an aggregate of 1,599,400 shares of our outstanding common stock under the Stock Repurchase Program at an average repurchase price of $32.98 per share for a total cost of approximately $52.7 million.

⁽⁵⁾	~~During the month ended July 31, 2017, we repurchased and retired 86,500 shares of common stock, at an average per share price of $32.83, for an aggregate cost of $2.8 million.~~

⁽⁶⁾	~~During the month ended August 31, 2017, we repurchased and retired 1,350,700 shares of common stock, at an average per share price of $32.88, for an aggregate cost of $44.4 million.~~

⁽⁷⁾	~~During the month ended September 30, 2017, we repurchased and retired 162,200 shares of common stock, at an average per share price of $33.81, for an aggregate cost of $5.5 million.~~

~~Item 3.~~

~~Defaults Upon Senior Securities~~

~~None.~~

~~Item 4.~~

~~Mine Safety Disclosures~~

~~Not applicable.~~

~~Item 5.~~

~~Other Information~~

~~None.~~

~~Item 6.~~

~~Exhibits~~

~~Exhibit~~ ~~Number~~	~~Description~~
Exhibit Number		Description
~~3.1~~
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)~~15d-14(a) under the Securities Exchange Act of 1934, as amended (Section 302 of the Sarbanes-Oxley Act of ~~2002).~~2002.)
~~31.2†~~
31.2†		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and ~~15D-14(a)~~15d-14(a) under the Securities Exchange Act of 1934, as amended (Section 302 of the Sarbanes-Oxley Act of ~~2002).~~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).~~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).~~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~~(eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016;~~2021; (ii) Condensed Consolidated Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~September 30, 2016;~~2021; (iii) Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017;~~2022 and 2021; (iv) Condensed Consolidated Statements of Cash Flows for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~September 30, 2016;~~2021; and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.

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

~~SIGNATURES~~

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 26, 2017~~

July 28, 2022


FTI CONSULTING, INC.

By:						/s/ ~~Catherine M. Freeman~~ Brendan Keating
						~~Catherine M. Freeman~~ Brendan Keating
						~~Senior Vice President, Controller and~~ Chief Accounting Officer and Controller
						(principal accounting officer)

	September 30,			December 31,
	2017			2016
Assets	(Unaudited)
Current assets
Cash and cash equivalents	$	157,961		$	216,158
Accounts receivable:
Billed receivables		415,090			365,385
Unbilled receivables		328,526			288,331
Allowance for doubtful accounts and unbilled services		(196,484	)		(178,819	)
Accounts receivable, net		547,132			474,897
Current portion of notes receivable		23,924			31,864
Prepaid expenses and other current assets		59,196			60,252
Total current assets		788,213			783,171
Property and equipment, net of accumulated depreciation		70,982			61,856
Goodwill		1,204,164			1,180,001
Other intangible assets, net of amortization		46,788			52,120
Notes receivable, net of current portion		106,462			104,524
Other assets		43,984			43,696
Total assets	$	2,260,593		$	2,225,368
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other	$	108,054		$	87,320
Accrued compensation		232,291			261,500
Billings in excess of services provided		26,521			29,635
Total current liabilities		366,866			378,455
Long-term debt, net		461,095			365,528
Deferred income taxes		181,293			173,799
Other liabilities		120,410			100,228
Total liabilities		1,129,664			1,018,010
Stockholders' equity
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 — 37,941 (2017) and 42,037 (2016)		379			420
Additional paid-in capital		273,765			416,816
Retained earnings		978,886			941,001
Accumulated other comprehensive loss		(122,101	)		(150,879	)
Total stockholders' equity		1,130,929			1,207,358
Total liabilities and stockholders' equity	$	2,260,593		$	2,225,368

													Accumulated
							Additional						Other
	Common Stock						Paid-in			Retained			Comprehensive
	Shares			Amount			Capital			Earnings			Loss			Total
Balance at December 31, 2016		42,037		$	420		$	416,816		$	941,001		$	(150,879	)	$	1,207,358
Net income		—		$	—		$	—		$	41,074		$	—		$	41,074
Other comprehensive income:
Cumulative translation adjustment		—			—			—			—			28,778			28,778
Issuance of common stock in connection with:
Exercise of options		57			1			1,989			—			—			1,990
Restricted share grants, less net settled shares of 87		213			2			(4,234	)		—			—			(4,232	)
Stock units issued under incentive compensation plan		—			—			1,547			—			—			1,547
Purchase and retirement of common stock		(4,366	)		(44	)		(155,241	)		—			—			(155,285	)
Cumulative effect due to adoption of new accounting standard		—			—			—			(3,189	)		—			(3,189	)
Share-based compensation		—			—			12,888			—			—			12,888
Balance at September 30, 2017		37,941		$	379		$	273,765		$	978,886		$	(122,101	)	$	1,130,929

	Nine Months Ended September 30
Special Charges by Segment	2017		2016
Corporate Finance & Restructuring	$	3,049	$	—
Forensic and Litigation Consulting		10,445		1,750
Economic Consulting		5,910		—
Technology		3,827		5,061
Strategic Communications		3,599		—
		26,830		6,811
Unallocated Corporate		3,244		—
Total	$	30,074	$	6,811

	Employee			Lease
	Termination			Termination			Other
	Costs			Costs			Costs			Total
Balance at December 31, 2016	$	8,225		$	3,335		$	—		$	11,560
Additions		15,980			19,985			570			36,535
Reductions		(15,947	)		(2,941	)		(526	)		(19,414	)
Foreign currency translation adjustment and other		153			(19	)		6			140
Balance at September 30, 2017⁽¹⁾	$	8,411		$	20,360		$	50		$	28,821

	Corporate		Forensic and
	Finance &		Litigation		Economic				Strategic
	Restructuring		Consulting		Consulting		Technology		Communications			Total
Balance at December 31, 2016
Goodwill	$	440,666	$	230,544	$	268,209	$	117,607	$	317,114		$	1,374,140
Accumulated goodwill impairment		—		—		—		—		(194,139	)		(194,139	)
Goodwill, net at December 31, 2016		440,666		230,544		268,209		117,607		122,975			1,180,001
Acquisitions		11,900		—		—		—		—			11,900
Foreign currency translation adjustment and other		2,292		2,967		712		122		6,170			12,263
Balance at September 30, 2017
Goodwill		454,858		233,511		268,921		117,729		323,284			1,398,303
Accumulated goodwill impairment		—		—		—		—		(194,139	)		(194,139	)
Goodwill, net at September 30, 2017	$	454,858	$	233,511	$	268,921	$	117,729	$	129,145		$	1,204,164

Year	As of September 30, 2017⁽¹⁾
2017 (remaining)	$	2,771
2018		8,223
2019		7,561
2020		7,387
2021		6,773
Thereafter		8,473
	$	41,188

	FTI		Guarantor		Non-Guarantor
	Consulting		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	20,704	$	159	$	137,098	$	—		$	157,961
Accounts receivable, net		164,357		173,846		208,929		—			547,132
Intercompany receivables		—		1,060,086		23,912		(1,083,998	)		—
Other current assets		34,862		21,344		26,914		—			83,120
Total current assets		219,923		1,255,435		396,853		(1,083,998	)		788,213
Property and equipment, net		33,317		14,749		22,916		—			70,982
Goodwill		570,876		416,053		217,235		—			1,204,164
Other intangible assets, net		19,730		11,772		31,023		(15,737	)		46,788
Investments in subsidiaries		2,149,817		549,280		—		(2,699,097	)		—
Other assets		39,279		64,537		46,630		—			150,446
Total assets	$	3,032,942	$	2,311,826	$	714,657	$	(3,798,832	)	$	2,260,593
Liabilities
Intercompany payables	$	1,083,998	$	—	$	—	$	(1,083,998	)	$	—
Other current liabilities		118,584		139,369		108,913		—			366,866
Total current liabilities		1,202,582		139,369		108,913		(1,083,998	)		366,866
Long-term debt, net		461,095		—		—		—			461,095
Other liabilities		238,336		11,362		52,005		—			301,703
Total liabilities		1,902,013		150,731		160,918		(1,083,998	)		1,129,664
Stockholders' equity		1,130,929		2,161,095		553,739		(2,714,834	)		1,130,929
Total liabilities and stockholders' equity	$	3,032,942	$	2,311,826	$	714,657	$	(3,798,832	)	$	2,260,593

	FTI			Guarantor			Non-Guarantor
	Consulting, Inc.			Subsidiaries			Subsidiaries		Eliminations			Consolidated
Revenues	$	478,767		$	459,569		$	408,780	$	(7,095	)	$	1,340,021
Operating expenses
Direct cost of revenues		325,560			321,606			267,742		(6,914	)		907,994
Selling, general and administrative expenses		136,487			92,217			90,023		(181	)		318,546
Special charges		13,592			7,306			9,176		—			30,074
Acquisition-related contingent consideration		—			1,424			—		—			1,424
Amortization of other intangible assets		3,089			1,621			5,306		(2,219	)		7,797
		478,728			424,174			372,247		(9,314	)		1,265,835
Operating income		39			35,395			36,533		2,219			74,186
Other income (expense)		(16,525	)		(5,046	)		6,060		—			(15,511	)
Income (loss) before income tax provision		(16,486	)		30,349			42,593		2,219			58,675
Income tax provision (benefit)		(8,179	)		17,397			8,383		—			17,601
Equity in net earnings of subsidiaries		49,381			26,442			—		(75,823	)		—
Net income	$	41,074		$	39,394		$	34,210	$	(73,604	)	$	41,074
Other comprehensive income, net of tax:
Foreign currency translation adjustments, net of tax expense of $0	$	—		$	—		$	28,778	$	—		$	28,778
Total other comprehensive income, net of tax:		—			—			28,778		—			28,778
Comprehensive income	$	41,074		$	39,394		$	62,988	$	(73,604	)	$	69,852

Billable Headcount	Corporate Finance & Restructuring ⁽¹⁾			Forensic and Litigation Consulting			Economic Consulting			Technology			Strategic Communications			Total
December 31, 2016		895			1,110			656			288			647			3,596
Additions, net		5			—			4			8			10			27
March 31, 2017		900			1,110			660			296			657			3,623
Additions (reductions), net		(19	)		(40	)		(8	)		5			2			(60	)
June 30, 2017		881			1,070			652			301			659			3,563
Additions (reductions), net		53			10			36			(10	)		(33	)		56
September 30, 2017		934			1,080			688			291			626			3,619
Percentage change in headcount from December 31, 2016		4.4	%		-2.7	%		4.9	%		1.0	%		-3.2	%		0.6	%