FEBRUARY 26, 2019 / 2:00PM, FCN - Q4 2018 FTI Consulting Inc Earnings Call
Of note, during today’s prepared remarks, management will not speak directly to the quarterly earnings presentation posted to the Investor Relations section of our website. To ensure disclosures are consistent, these slides provide the same details as they have historically. And as I said, are available on the — our Investor Relations section of our website.
With these formalities out of the way, I’m joined today by Steven Gunby, our President and Chief Executive Officer; and Ajay Sabherwal, our Chief Financial Officer.
At this time, I will turn the call over to our President and Chief Executive Officer, Steve Gunby.
Steven H. Gunby - FTI Consulting, Inc. - President, CEO & Director
Thank you, Mollie. And good morning, and thank you all for joining us. I’m sure many of you saw our press release this morning. This quarter, once again, we had record results. Record fourth quarter revenues and record fourth quarter adjusted EPS. The record fourth quarter together with record performances in the first 3 quarters of the year resulted, not surprisingly, in the best year this company has ever had. In 2018, our teams delivered record revenues. In particular, they drove double-digit organic growth, which in turn led to record GAAP EPS and in fact marking 6 consecutive years of EPS growth and record adjusted EPS, marking 4 consecutive years of adjusted EPS growth.
And important, we also exited 2018 with arguably the best balance sheet this company has ever had. Terrific results.
Let me take a moment to caveat the results just a tiny bit. As we discussed in the past, our results in any quarter, in fact any year, are driven not only by the underlying fundamental improvements we make in the business but also in part by something we call noise. Short-term factors that don’t necessarily say much about the underlying business. Factors like the timing of success fees, the ending or starting of huge jobs, temporary influencers of cost, or whether we happen to have a particularly high or low batting average in winning big jobs.
Noise, as we’ve discussed is not important over any extended period of time, but it can significantly affect quarterly and annual results. You may recall our discussion in the beginning of 2017, when we shared our view that the underlying fundamentals of this company at that time were significantly better than the indicated by the reported results. That some of the underlying good fundamentals were being obscured by a bunch of negative noise.
In 2018, in contrast, as we talked about during each of our quarterly earnings calls, we didn’t have much negative noise. In fact, to the contrary, more things seem to break we expected. We have, as I’m going to talk about in a moment, improved this company enormously. And importantly, the teams involved are continuing to do that everyday. But given the event-driven nature of our business, I never expect, no matter what our teams are doing perfectly at a moment, that even if we’re doing everything right, that every business in region will be up. And yet that’s what happened in 2018. And though we expect sustained double-digit growth and adjusted EPS overtime, and we have delivered it, we don’t expect to be up more than 70% in adjusted EPS. A number that we saw in 2018. So our conclusion is, we’re doing a terrific job, but we did have some positive noise in 2018 and that noise contributed to record financial performance.
To me, what is much more important and much more powerful is that, when you look below the positive noise, you can see the ways that our folks are building upon a great institution and driving a much more powerful FTI. There are so many ways, I don’t believe I can do them even partial justice but let me illustrate a few. Some of these you’ve heard before, some of these you haven’t, but they’re powerful things that our people everyday are building in this institution. They include the many initiative driven by our Stratcom team, whether you talk about the public affair side, the com side, the work we’re doing in London, in the U.S., in the continent, in Asia-Pacific or Latin America, or in terms of their work collaborating across FTI and across segment initiatives. All of those initiatives have allowed a business that was once struggling to soar, and to soar not just for a year but to soar over multiple years. If you have a moment, go back and look at that, the business’ history, and look at the trajectory over the last 4 years. That team’s focused in changing its trajectory, controlling its destiny, building a better institution, are to me both impressive and inspiring. Or you can look at this myriad of initiatives driven by our tech team, in the U.S. and abroad, on the software side, and the services side, one-discovery front, the information governance front. And our team drove these past couple of years to allow business in a tough market, to fix the strategic disadvantage and return that business to growth. Or you can look at the initiatives that our E Con teams have driven, to reinforce the strength we have in the U.S. or extend that U.S. leadership position around the world. Or most significant in terms of this year’s P&L improvement, you can look at the huge number of changes driven by the teams in Corp Fin and FLC that have allowed these core pillars of the company to return to be key drivers of our growth.
3
