FTI CONSULTING, INC

FTI Consulting is a leading global expert firm for organizations facing crisis and transformation, operating through five reportable segments: Corporate Finance, Forensic and Litigation Consulting (FLC), Economic Consulting, Technology, and Strategic Communications. The Company serves clients including Fortune 500 corporations, FTSE 100 companies, major law firms, leading private equity firms, global banks, and local, state, and national governments and agencies around the globe. The Company's operations span 32 countries with 37 U.S. offices and numerous international locations across the Americas, Asia Pacific, and Europe, Middle East and Africa. Key structural forces shaping demand include AI and emerging technologies, cybersecurity risk, developing markets, emerging data, financial markets, litigation and disputes, M&A activity, operational challenges, and regulatory complexity and public scrutiny.

The Company competes primarily on the basis of the breadth of its services, the quality of its work, the prominence of its professionals, its geographic reach, its reputation and performance record, its specialized industry expertise, and its strong client relationships. Primary competitors include large organizations such as global accounting firms, large management and financial consulting companies, investment banking firms, information technology consulting and software companies, and small firms and independent contractors. The Company is an advisor to 95 of the Fortune 100 companies and 82 of the top 100 private equity firms on the Private Equity International 300 list, and 99 of the top 100 law firms as ranked by American Lawyer Global 100 Most Revenue List refer or engage the Company directly or on behalf of numerous clients.

The Company generates substantially all of its revenues from providing professional services to both U.S. and international clients. Most services are rendered under time and expense contract arrangements, with certain contracts under fixed-fee arrangements or containing success fees or performance-based arrangements. In the Technology segment, certain clients are billed based on the amount of data storage used or the volume of information processed. Reimbursable expenses are generally included in revenues. The Company's financial results are primarily driven by the number, size and type of engagements, the number of billable professionals, utilization rates, rate per hour or fixed charges, timing of revenue recognition, length of billing and collection cycles, and geographic locations.

The Corporate Finance segment focuses on strategic, operational, financial, transactional and capital needs, delivering services centered around three core offerings: Transactions, Transformation, and Turnaround & Restructuring. For the year ended December 31, 2025, this segment contributed 41% of consolidated revenues and had 2,297 billable professionals. Segment revenues were $1,550,969 thousand ¹ and segment operating income was $288,761 thousand ². The Forensic and Litigation Consulting (FLC) segment provides services across risk & investigations and disputes, centered around five core offerings: Construction, Projects & Assets and Environmental Solutions, Data & Analytics, Dispute Advisory Services, Healthcare Risk Management & Advisory, and Risk & Investigations. For the year ended December 31, 2025, this segment contributed 20% of consolidated revenues and had 1,541 billable professionals. Segment revenues were $764,687 thousand ³ and segment operating income was $121,223 thousand ⁴.

The Economic Consulting segment provides analyses of complex economic issues for use in international arbitration, legal and regulatory proceedings and strategic decision making, centered around three core offerings: Antitrust & Competition Economics, Financial Economics, and International Arbitration. For the year ended December 31, 2025, this segment contributed 19% of consolidated revenues and had 1,014 billable professionals. Segment revenues were $720,829 thousand ⁵ and segment operating income was $18,794 thousand ⁶. The Technology segment provides a comprehensive global portfolio of digital insights and risk management, AI and data services, driven by five core client needs: Blockchain & Digital Assets, Information Governance, Privacy & Security, Investigations, Litigation, and M&A, Antitrust and Competition. For the year ended December 31, 2025, this segment contributed 10% of consolidated revenues and had 662 billable professionals. Segment revenues were $373,883 thousand ⁷ and segment operating income was $28,109 thousand ⁸. The Strategic Communications segment develops and executes communications strategies centered around three core offerings: Corporate Reputation, Financial Communications, and Public Affairs. For the year ended December 31, 2025, this segment contributed 10% of consolidated revenues and had 907 billable professionals. Segment revenues were $378,489 thousand ⁹ and segment operating income was $60,027 thousand ¹⁰.

During the year ended December 31, 2025, the Company recorded special charges of $25,295 thousand ¹¹ related to targeted headcount reductions in areas of each segment and region where the Company realigned its workforce with current business demand. The majority of the special charges were paid during the year ended December 31, 2025 and the remaining amounts will be paid in cash in the next three months. During the year ended December 31, 2025, the Company repurchased and retired 5,264,916 shares of its common stock under the Repurchase Program for an average price per share of $163.07 ¹², at a total cost of $858,575 thousand ¹³, excluding commissions. The Company had $491,756 thousand ¹⁴ remaining under the Repurchase Program to repurchase additional shares as of December 31, 2025. On October 21, 2025, the Board of Directors increased the Repurchase Program by $500.0 million ¹⁵ to an aggregate authorization of $2.2 billion ¹⁶. On November 21, 2025, the Company entered into a material lease agreement for new office space in London, England for an initial fixed term of 15 years ¹⁷, with fixed rental payments aggregating to approximately $115.0 million ¹⁸.

For the year ended December 31, 2025, total revenues were $3,788,857 thousand ¹⁹, an increase of 2.4% compared to $3,698,652 thousand ²⁰ for the year ended December 31, 2024. Net income was $270,871 thousand ²¹, a decrease of 3.3% compared to $280,088 thousand ²² in the prior year. Diluted EPS was $8.24 ²³ compared to $7.81 ²⁴ in the prior year. Adjusted EBITDA was $463,615 thousand ²⁵ compared to $403,685 thousand ²⁶ in the prior year, an increase of 14.8%. Adjusted EBITDA Margin was 12.2% ²⁷ of revenues compared to 10.9% ²⁸ of revenues in the prior year. Net cash provided by operating activities was $152,132 thousand ²⁹ compared to $395,097 thousand ³⁰ in the prior year. Free Cash Flow was an inflow of $93,601 thousand ³¹ compared to $360,197 thousand ³² in the prior year.

The Company continues to invest in machine learning and AI-related platforms to support its internal infrastructure and help clients adapt to the changing technological, regulatory and ethical landscape. The Company has seen, and continues to believe, that the demand for AI and other technology-enabled consulting services will continue to grow as these capabilities advance in sophistication. The Company's AI experts craft tailored AI strategies that align with clients' business objectives, leveraging AI and other technologies to respond to the market, unlock growth opportunities and manage risk. The Company continues to invest in its open-source approach while making judicious investments in new and emerging technologies, adapting and refining its strategy by embracing new ways of working to develop services, identify commercial opportunities, improve performance, increase internal efficiencies and otherwise add value for clients.

The Company's growth strategy includes leveraging its practitioners' and businesses' expertise, geographic reach, diverse service offerings and client relationships. The Company aims to grow organically by identifying where it is best positioned to help clients solve their most complex issues, investing behind those positions and leveraging that success. The Company also considers strategic and opportunistic acquisition opportunities on a selective basis, seeking to integrate completed acquisitions and manage investments in a way that fosters organic growth, expands geographic presence or complements its segments, services and industry positions. The Company typically structures its acquisitions to retain the services of key individuals from the acquired companies.The Company's business model has several characteristics that produce consistent cash flows, which support business operations, capital expenditures and the ability to service indebtedness and pursue growth and other strategies. The Company endeavors to leverage its investments to build positions that will support profitable growth on a sustained basis through a variety of economic conditions.

During 2026, the Company currently expects to make capital expenditures to support its organization in an aggregate amount of between $48 million and $58 million ³³. This estimate takes into consideration the needs of existing businesses but does not include the impact of any expenditures that may be required as a result of future acquisitions or specific client engagements that are not completed or not currently contemplated. The Company's capital expenditure requirements may change if staffing levels or technology needs change significantly from what is currently anticipated, if the Company is required to purchase additional equipment specifically to support new client engagements or if the Company pursues and completes acquisitions.

The strength of the Company's balance sheet gives it the flexibility to allocate capital and create shareholder value in numerous ways, including investments in organic growth, share repurchases and acquisitions, among other capital allocation vehicles. As of December 31, 2025, the Company had $491,756 thousand ³⁴ remaining under the Repurchase Program to repurchase additional shares. The Repurchase Program has no time limit established for its completion and may be suspended, discontinued or replaced by the Board of Directors at any time without prior notice. The Company's capital resources as of December 31, 2025 included $265,091 thousand ³⁵ of cash and cash equivalents and available borrowing capacity of $535.0 million ³⁶ under the revolving line of credit under its Credit Facility.

The Company faces headwinds from fluctuations in U.S. and/or global economies, including economic downturns or recessions and the strength and rate of any general economic recoveries. Changes in capital markets, M&A activity, legal or regulatory requirements, general economic conditions and monetary or geopolitical disruptions, as well as other factors beyond the Company's control, could reduce demand for one or more of its segment or practice offerings or services. The Company's restructuring practice tends to experience its highest demand during periods when market and/or industry conditions are less favorable for many businesses, while those same factors may cause other segments, such as M&A-related services in Technology, to experience reduced demand.

The Company faces execution risks related to the rapid introduction, integration, deployment, evolution and use of new technologies, including AI. The benefits and risks of adopting and implementing new and emerging technologies necessitates, in most cases, the Company's review and analysis of such technology and its risks and benefits on a service-by-service basis, which could result in significant delays. The Company may not be successful in its AI or other technology-related initiatives, and the adoption of new technologies may require the investment of significant capital, time and resources. New technologies, such as AI, continue to evolve and as a result, risks continue to be unknown or uncertain.

Changes in capital markets, M&A activity, legal or regulatory requirements, general economic conditions and monetary or geopolitical disruptions could reduce demand for one or more of the Company's segment or practice offerings or services, in which case revenues and profitability could decline. The Company's revenues, operating income and cash flows are likely to fluctuate due to factors including the types, complexity, number, size, timing and duration of client engagements, utilization of billable professionals, billing rates and fee arrangements, and the geographic locations of clients. The Company faces risks related to cybersecurity and the failure to protect the confidentiality of its or its clients' information against misuse or disclosure, and while as of December 31, 2025 the Company is not aware of any risks from cybersecurity threats that have materially affected it, such attacks are evolving and unpredictable. The Company's failure to recruit and retain qualified professionals and manage headcount needs and utilization could negatively affect its financial results and its ability to staff client engagements, maintain relationships with clients and drive future growth. The Company's leverage could adversely affect its financial condition or operating flexibility if it fails to comply with operating covenants under its Credit Facility, which includes a financial covenant requiring it not to exceed a maximum consolidated total net leverage ratio (the ratio of funded debt (less unrestricted cash up to $300.0 million ³⁷) to Consolidated EBITDA, as defined in the Credit Facility).

Management's message emphasizes that FTI Consulting is a leading global expert firm for organizations facing crisis and transformation, with each segment and practice staffed with experts recognized for the depth of their knowledge and a track record of making an impact. The Company's business strategy includes leveraging its practitioners' and businesses' expertise, geographic reach, diverse service offerings and client relationships; growing organically; pursuing profitable growth; enhancing value through capital allocation; pursuing strategic acquisitions; and marketing through senior professionals. The Company's competitive strengths include pre-eminent positions and professionals, diversified service offerings, a diversified portfolio of elite clients, demand for integrated solutions and a consultative approach, and strong cash flows. The Company reported full year 2025 revenues of $3,788,857 thousand ³⁸, net income of $270,871 thousand ³⁹, diluted EPS of $8.24 ⁴⁰, Adjusted EBITDA of $463,615 thousand ⁴¹, and Adjusted EPS of $8.83 ⁴².