FTI sulting(FCN) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of comprehensive income, stockholders' equity, and cash flows, along with their accompanying notes, providing a snapshot of the company's financial position, performance, and cash movements. Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (vs Dec 31, 2024) | Percentage Change | |---|---|---|---|---| Selected Balance Sheet Data | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | |---|---|---| - Total assets decreased by $102.67 million (2.85%) from $3,596.83 million at December 31, 2024, to $3,494.16 million at June 30, 2025, primarily driven by a significant decrease in cash and cash equivalents[8] - Long-term debt increased from $0 at December 31, 2024, to $470.00 million at June 30, 2025, indicating new borrowings[8] Condensed Consolidated Statements of Comprehensive Income Selected Comprehensive Income Data | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (YoY) | Percentage Change (YoY) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (YoY) | Percentage Change (YoY) | |---|---|---|---|---|---|---|---|---| - Net income decreased by 14.6% for the three months ended June 30, 2025, and by 18.5% for the six months ended June 30, 2025, compared to the respective prior year periods[10] - Diluted EPS decreased from $2.34 to $2.13 (9.0%) for the three months and from $4.58 to $3.87 (15.5%) for the six months ended June 30, 2025, compared to the prior year[10] Condensed Consolidated Statements of Stockholders' Equity Stockholders' Equity Changes (Dec 2024 to Jun 2025) | Metric | Balance at Dec 31, 2024 (in thousands) | Balance at June 30, 2025 (in thousands) | Change (in thousands) | |---|---|---|---| - Total stockholders' equity decreased by $358.41 million from December 31, 2024, to June 30, 2025, primarily due to significant common stock repurchases and reclassification of negative additional paid-in capital[12] - The company purchased and retired common stock totaling $187.68 million in Q1 2025 and $358.24 million in Q2 2025, including excise tax[12] Condensed Consolidated Statements of Cash Flows Selected Cash Flow Data | Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (YoY) | Percentage Change (YoY) | |---|---|---|---|---| - Net cash used in operating activities significantly increased from $139.59 million in H1 2024 to $409.52 million in H1 2025, primarily due to increased forgivable loan issuances, compensation, and income tax payments, and decreased cash collections[16][155] - Net cash used in financing activities increased from $58.32 million provided in H1 2024 to $84.19 million used in H1 2025, mainly due to $536.7 million in common stock repurchases, partially offset by increased net borrowings under the Credit Facility[16][157] Notes to Condensed Consolidated Financial Statements 1. Basis of Presentation and Significant Accounting Policies The financial statements are prepared in accordance with GAAP and SEC rules for interim information, with certain disclosures condensed or omitted, and management confirms all necessary adjustments for fair presentation were made, with prior period amounts reclassified for conformity and fair values of financial instruments estimated to equal carrying values. - Unaudited condensed consolidated financial statements prepared in accordance with GAAP and SEC rules for interim financial information[17] - Certain prior period amounts have been reclassified to conform to the current period presentation[17] - Fair values of all financial instruments are estimated to be equal to their carrying values as of June 30, 2025, and December 31, 2024[17] 2. New Accounting Standards The company is evaluating the impact of two new FASB ASUs: ASU 2023-09 (Income Taxes), effective for annual periods after December 15, 2024, which expands income tax disclosures; and ASU 2024-03 (Income Statement Expenses), effective for annual periods after December 15, 2026, requiring disaggregated expense disclosures. - FASB issued ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, expanding annual disclosures in income tax rate reconciliation and cash taxes paid[19] - FASB issued ASU 2024-03, 'Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,' effective for annual periods beginning after December 15, 2026, requiring additional disaggregated disclosure around certain income statement expense line items[20] - The Company is in the process of evaluating the impact of both new ASUs on its consolidated financial statements[19][20] 3. Earnings per Common Share Basic EPS is calculated by dividing net income by the weighted average common shares outstanding, while diluted EPS adjusts for potentially dilutive common shares from equity compensation plans using the treasury stock method. Earnings Per Common Share Data | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| - Antidilutive stock options and share-based awards were 260 for the three months ended June 30, 2025, compared to 40 in the prior year, and 241 for the six months ended June 30, 2025, compared to 32 in the prior year[22] 4. Revenues Revenues are recognized when performance obligations are satisfied, and changes in estimated transaction price for performance-based and contingent arrangements led to $13.5 million and $15.9 million in recognized revenues for the three and six months ended June 30, 2025, respectively, with unfulfilled performance obligations totaling $24.5 million as of June 30, 2025, most expected to be recognized within 24 months. - Revenues are recognized when performance obligations are satisfied by transferring services to a customer, reflecting the expected consideration[23] Revenues from Changes in Transaction Price | Period | Revenues Recognized from Change in Transaction Price (in millions) | |---|---| Unfulfilled Performance Obligations | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | |---|---|---| 5. Accounts Receivable and Allowance for Expected Credit Losses Accounts receivable, net, increased to $1,126.92 million as of June 30, 2025, from $1,020.17 million at December 31, 2024, driven by increases in both billed and unbilled receivables, while the provision for expected credit losses decreased significantly for both the three and six months ended June 30, 2025, compared to the prior year. Accounts Receivable, Net | Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | |---|---|---| Provision for Expected Credit Losses and Write-offs | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 3