Good day everyone, and welcome to the FTI Consulting Third Quarter of 2015 Earnings Conference Call. As a reminder, today's call is being recorded. And now for opening remarks and introductions, I’ll turn the call over to Aby Healy, Manager of Investor Relations at FTI Consulting. Please go ahead ma'am.

Good morning. Welcome to the FTI Consulting conference call to discuss the company's third quarter 2015 results as reported this morning. Management will begin with formal remarks, after which we'll take your questions. Before we begin I would like to remind everyone that this conference call may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions related to financial performance, acquisitions, business trends and other information or other matters that are not historical, including statements regarding estimates of our medium growth targets, future financial results and other matters. For a discussion of risks and other factors that may cause actual results or events to differ from those contemplated by forward-looking statements, investors should review the Safe Harbor statement in the earnings press release issued this morning, a copy of which is available on our website at www.fticonsulting.com, as well as other disclosures under the heading of Risk Factors and forward-looking information in our most recent Form 10-K, and in other filings filed with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this earnings call and will not be updated. During the call we will discuss certain non-GAAP financial measures, such as, adjusted EBITDA, adjusted segment EBITDA, total adjusted segment EBITDA, adjusted segment EBITDA margins, adjusted earnings per share and adjusted net income. For a discussion of these and other non-GAAP financial measures, as well as a reconciliation of non-GAAP financial measures to the most recently comparable GAAP measures, investors should review the press release and the accompanying financial tables that we issued this morning. Lastly, there are two items that have been posted to our Investor Relations website this morning for your reference. These include a quarterly earnings call presentation that we will refer to during this morning's call and an Excel and PDF of our historical financial and operating data, which has been updated to include our third quarter of 2015 results. With these formalities out of the way, I am joined today by Steve Gunby, our President and Chief Executive Officer; and David Johnson, our Chief Financial Officer. At this time, I'll turn our call over to our President and Chief Executive Officer, Steve Gunby.

Thank you, Aby. Good morning and welcome. We've a fair amount of detail to cover this morning, so let me briefly introduce some key messages and turn it over to David to give you some granular detail and I'll come back before Q&A and share a few perspectives on where I see us on the overall changed journey. I would like to start the session by talking about three points, two that are somewhat sobering and one that's substantially more positive. First, though the Q3 numbers look reasonably solid as David will talk about embedded in those numbers are some concerning trends and a couple of businesses that we believe will persist into Q4 and well into next year. As a result of those trends and some timing issues, we're taking our guidance for 2015 for adjusted EPS down to a range of $1.80 and $1.95. Second in a message that I find our toughest to swallow is that based on that lower platform we can no longer transmit confidence that we will meet the $2.50 per share aspirational targets in the timeframe we had originally hoped, which was 2016. That change is an important one for me the $2.50 per share was not just a number to me. For me, it's somewhat of a milestone for our firm, marking a targeted end of the first phase of the major change efforts that we are collectively driving here. Though we'll talk about it, the progress we're making I and we had serious hopes of getting there in the next 12 months. Though we are making considerable progress in our changed efforts and the efforts are showing momentum, both in qualitative terms and in financial terms, there are some current business headwinds and some legacy headwinds that have persisted longer than…

Thanks Steve. Turning to Slide 4, revenues for Q3 were $455.5 million up 1% from the prior year quarter. FX kind of estimated 3.1% from revenue growth and adjusted we grew 4.1% year-over-year with 3.6% of that being organic. Revenues were up sequentially from Q2 2015 by 1.4% with minimal impact from FX. Fully diluted GAAP EPS were $0.25 in the quarter compared to $0.55 in the prior year. EPS in the current quarter included our previously disclosed $19.6 million loss on early extinguishment of debt, which decreased EPS by $0.28. Adjusted EPS for Q3 were $0.53 versus $0.63 last year. Adjusted EBITDA was $56.1 million or 12.3% of revenues compared to $63.4 million or 14.1% of revenues in the third quarter 2014 and up fractionally from 55.8% in Q2. Turning to our segments on Slide 5, corporate financing restructuring revenues increased 13.4% or $113.5 million compared to $100 million last year. This was net of an estimated 4.3% negative hit from FX. Excluding FX, revenues increased 17.8% driven by continued high demand in North America particularly for distressed services. Revenues increased 4.9% sequentially from Q2 excluding FX. Adjusted segment EBITDA for the quarter was $26.7 million or 23.5% of revenues compared to a 15.5% margin in the prior year and 22.2% margin in Q2. The 20 point plus margins we've seen so far this year are driven by increased volume from North American distressed work, which in turn drove higher utilization and improvements in staff leverage. We’re particularly pleased with the improvement in leverage. Corporate finance grew headcount 15% year-over-year and 7% sequentially exactly when they were needed. Turning to the outlook, several of our largest North American distressed projects will likely wind down in the fourth quarter. Our backlog is good, but it did not match the levels…

Thank you, David. Let me pick on David’s points and bridge a bit between the results this quarter, the fact that its taking us longer to reach $2.50 a share and the positives that we're seeing. One way I’d like to do that is provide some historical perspective disaggregating our business into two parts, a group of four businesses that I got a lot of questions on when I first started and the other two businesses. The four businesses that I received a lot of questions about when I started were Stratcom, Corpfin, FLC and Health Solutions and if you look at the slide on Page 8 you'll see I guess why many of the people were asking about those businesses. From 2009 to 2013 as I think most of you know these businesses were down substantially in adjusted EBITDA, cumulatively $114 million, which is about a $1.70 EPS impact for company that as you know only earned a $1.64 last year. This huge impact was notwithstanding the fact that during this period, we invested a substantial amount of money in acquisitions behind some of these businesses. Some of the decline was the aftermath of the restructuring boom in 2009, but as you know and to see on Slide 9 the decline persisted for an existed time after the restructuring boom ended and collectively dropped before the low pre restructuring boom levels and hence the many questions. We've since focused a lot on these businesses. When you look at them, they cry out that we have a right to win, to succeed to grow in these businesses, not to shrink, but to be growing them. We have great professionals and in many geographies we've very strong comparative positions. We should be able to do better and we made changes. We…

[Operator Instructions] We'll go first to Tim McHugh from William Blair & Company.

Thanks. I guess, first I guess maybe just to focus on discovery and economics, you made some comments maybe to start with economics that you feel like you've kind of stopped the declines and are in a better place, but what's going to drive, I guess can you elaborate on what gives you confidence that we're in a better trajectory here other than another comparisons and so forth get easier, but just maybe a little bit more detail there?

Well I think actually the comparisons are a big part of it. Year-over-year we've had weakness in -- we had weakness in financial economics and private antitrust that started fourth quarter last year and those have persisted, but we bottomed out and actually now started to see sequential, some signs of sequential growth. So we're now not going to be fighting negative comparisons from fourth quarter onward in those segments and in the other businesses where we've been seeing substantial growth, which has been offset by those weaknesses and further positive efforts we have there now can go to the bottom line. Now M&A again, you can't -- that's volatile too and we will rise or fall with the volume of global M&A revenue, but our franchise is fantastic, our share is great there and we've been doing really good in that area and in arbitration all through the year. It's just offset by the comparisons in the other two segments. Those are now stabilized with sometimes the sequential growth and we're still looking for good stuff in the international arbitration and M&A. And arbitration is not as volatile or susceptible just to the wave of M&A going up and down. That's when where if you add incremental professionals, you get incremental share and volume and we're continuing to invest. So it's all positive signs that we think we've bottomed and at the minimum hopefully this will not be a source of negative surprise and hopefully we can have some upside going forward.

Okay. And then let me just ask a bigger picture or somewhat bigger picture, I guess you've resisted wanting to talk about profit margins in the past and I know you've pointed out more revenue at lower margin is still a good thing, but given your new guidance implies margins will be down again this year and despite all the headcount, the growth is really fairly modest at this point. I get you've got different segments with puts and takes but can you -- does the thought of a margin for the next year or two or some sort of medium term margin target -- do you have thoughts on where you sit I guess and balancing those factors?

But we've never resisted talking about what our margins are, but as you correctly point out, we've resisted saying what is the perfect target margin for the overall company and for each segment and actually I think the results of the quarter give a good example of one of the reasons why we do resist that, not that we don't think about it, not that we're not willing to talk about it in pieces. But so for example in corporate finance we've added heads at a dramatic amount and because as Steve said, many of the investments that we've made over time have been so successful there. Those heads not only were immediately rushed to the front lines to do the work, but they did it in a way that improved our operating leverage and further boosted the margins. So in FLC on the other hand, we also added the heads, but because the revenue and the demand was not there, degraded it. So kind of on a rolling three-year basis, if you have revenue -- sustained revenue growth, those headcounts in both cases are part of structurally improving the margin and by giving us the benefit of operating leverage when we’ve adequate demand to put them to work in a more profitable way. And if you look at our core finance numbers, the cost for billable head is dropping as revenue is going up. So it's working as you want, but the margin is in some ways a little bit more volatile because you have the cost. So we definitely are willing to talk about it, but it's most impossible on a quarterly and even in annual basis to nail a target margin when you're trying to build for a long term sustainably more profitable and on average higher margin business. I don't know if Steve has views on this too.

Does that answer your question Tim or start to your question.

Yes, That’s all I have. Thanks guys.

Thanks Tim.

We'll go next to Tobey Sommer of SunTrust.

Good morning, Tobey

Good morning, within your headcount growth is there a difference in the rates of year-over-year consulting growth if you look at it from SMD and top level mid-level and kind of at the junior end?

For sure, there is a huge amount of variation across our segments depending on their starting place Tobey, but absolutely we’re up on all levels. Our SMD headcount is up as is across the Board by level, but it’s different by level. The percentage headcount growth in the SMD is the lowest because part of what we’re trying to do is rebuild leverage that we didn’t have. When you can’t achieve the profitability targets that we think we deserve or the growth aspirations with the low leverage that we had allowed ourselves to get to for a while. So most of the headcount growth is not at the SMD level, but we have growth at each level in the pyramid, does that answer your question.

So without specific percentages, somewhat lower in the SMD level, maybe it’s mid single digits rather than 8% or 9% like the aggregate in the low level, is in the double digit somewhere.

Yes, I think that’s about right. Again it depends, but even low single digits on SMDs depending on the practice.

I am curious about, thank you. You've never been at the helm for several quarters and you've seen variation in the company’s forecasting versus actual results. Has anything -- have you altered anything about your forecasting process is one question? And then I am curious if the sharp focus on boarding new talent is at all maybe taken precedence over the financial forecasting thank you?

I'll answer the first one. I think actually we have since I joined in and since David, joined we've done a number of steps to upgrade our forecasting. I think we could have just done a better job. There is some inherent un-forecast ability about this business, which you'll never get rid of and then there is some part where if we had been little more probing in our question and challenging and challenging our data with historical analogues and so forth, we could have gotten rid of some less probabilistic forecast. And I think that’s just part of the continuous improvement. I would say we’re now significantly better at forecasting than we were but it's probably still work to do. The second part of your question, was are we focusing on on-boarding and is that distracting from our financial forecasting. I don’t think those two are connected at all actually. We do have a lot of focus on on-boarding. I think we have some conversation internally as to how much work we've put into make sure we’re getting the right talent and to get the right talent, sometimes means you have to have your senior-most professionals involved in hiring and whether that has helped distract from the marketplace activities and contributed to some of the slowdown we’re seeing in a couple of places and we’re talking about that. But I have not seen any connection between that in the financial forecasting. David would you agree?

No, it’s completely different people for the most part. So yes we've increased the frequency and the depth of the re-forecasting exercise. It certainly tends when I first started and on a segment by segment basis we’re improving the backlog. I guess you would call interrogation tools. But inherently there is always going to be a portion of even a quarter's forecast for business that has to be acquired and you have greater or lesser amounts of confidence depending on how much of the expected business for the quarter is in firm backlog as opposed to how much to be acquired. Generally the surprises in my now 15 months in the company generally seem to come from matters winding up a little faster than expected that's usually when you get a vivid of expectation within the current quarter.

And my last question is on the economic practice, the slowdown in the topline did seem to occur more or less when the change in compensation occurred. At this point do you see a linkage between the two or do you consider it a market phenomenon?

I don’t see a linkage between the two. That I don’t think is a pause link between those two if that’s the question. There are market phenomenon there are going on in all of these businesses and whether we've lost or gain share in a subset of our businesses another factor we talk about internally, but I don’t see a connection between that and the new compensation arrangements Tobey.

Okay. And can I sneak one more in? In prior election cycles there has been a kind of a slowdown around government led investigations as kind of top regulators go back out into private employment and their custodian subordinates don’t tend to launch as many new investigation, but rather just execute on ones that are already ongoing? Have you looked at that as a potential explanation for activity in the marketplace? Is there anything you are seeing?

I’m sure that those discussions on going on in FLC right now. I have actually a bit resisted those. I think the truth is that even though that could be a macro factor, my sense here Tobey is we’ve been a little bit too willing to go to macro factors. Yes, that could be true. The truth is that we have great professionals who even if there is market slowdown will typically gain share and I think we need to not use that as an excuse. If the market is a macro slowdown we need to be figuring out how do we gain share so we can deploy the professionals that we’ve added and get this business back to growing. So I think, I don’t think that we should be -- that might be true and I’ll be meeting with FLC tomorrow to go through the latest hypothesis going through and I'll see what they say about that. But I want to be clear. I don’t think we should be using that as an excuse. We have slow down in some of the office with the most outstanding professional. My experience is the outstanding professionals focused on the market can get their people back busy. The question is how long will it take, but I believe we can and need to get the folks back busy does that answer to your question Tobey?

It does, thank you.

We’ll go next to David Gold of Sidoti.

Good morning, David.

Hi, good morning. Just a couple of question. First on the FLC side just following up there as we think about that business, do you think there are secular changes there that maybe now with the focus on a little more closely and therefore if maybe we should be going about that business in a different way.

We’ll be taking through all those hypothesis. I have strategy conversation every three months with each of the segments and I have one tomorrow with FLC. So we talk about all of that stuff. At this point, I don’t -- its similar to the question with Tobey. At this point, I don’t think there is enough of the secular change in that market that we should be changing direction. What we need to do is get our professionals back in the market and get the people busy and does that mean there aren’t specific geographies and specific sub practices and so forth around the world we’re very complicated business. There is always the truth to that in sub practices and sub geographies, but as a whole I don’t think so David. That’s not our conclusion. Our conclusion is we got to get back to work and get our people busy.

Okay. And then broader question, as we think about what’s going on over the last year or say versus the strategic review process that went on when you initially joined. I guess two questions, first at this point your level of confidence in that strategic review process and maybe the plans -- the planned outcome there given that we went into some bumps in the road. And then two, is it time perhaps for closer re-review maybe of all the business lines? Forgive me if it’s unfair -- I’m just -- it's just a…

No, no, that’s fine. So in terms of re-review the business lines, we are -- look you recognized that when you first start you get a strategic review and you need to look at each of those businesses sequentially and make sure it holds and we’re doing that every quarter and we’re doing deeper dives with different businesses or sub parts of our businesses periodically. It is a part of our process. So I agree with that. In terms of the business versus what I saw there are surprises, but I would say, again let me go back to my remark, the biggest surprise is actually with one of our best businesses is Econ where we thought that where there is going to be a cost hit in 2014, but we would rapidly overcome that with growth and that growth hasn’t come. It doesn’t make the business less of a great business, but that is a big gap in where we are today versus where I thought we would be today and mainly because it is such a great business. It was very -- given the trajectory it was very easy to believe what I believe last management believe which was that with the cost hits would rapidly be overcome by growth. The cost hits have come and they haven’t been rapidly overcome by growth and that's a new reality and it’s a key part of it. If you adjusted it for that reality, the noise around all the rest of the businesses would even out. Corp Fin is outperforming where I thought we would be at this point. FLC is below. Stratcom is I think there is a lot of skepticism about Stratcom. Stratcom has done a terrific job of moving its thing. So there is clearly differences from where we were a year ago. I would say there is only one fundamental surprise and it's with one of our businesses and I think we’ve got that understood at this point. And we do have important set of questions with Tech driven by the market and we have a look at that going on right now. So does that help David?

It does, it does. Okay. And then just one last one, I know one of key points has been making some investments in some broader bets or maybe planned procedure growth longer term, any of those bets that you can either talk about just yet or is it too early? And part two at this point do we backlog some of that investment or do we keep that going?

Look, I think there is a lot of detail we could go into, I don’t know whether we want to go into all that here. In every one of the businesses we have investments, in Stratcom, the key of the turnaround to Stratcom was to figure out sub parts of that business where we thought we could invest at that time we were disinvesting or slowing the growth in some other parts. And we've invested behind as we have talked about public affairs, which we have a very strong position in, we have invested behind our energy practice in the U.S. or public affairs business in Brussels and there is terrific result there. I don’t know if we are releasing numbers of headcount in our Brussels office but I guess we are not. But there is substantial growth and I think by many measures we're the number one public affairs business in Brussels right now. And so there is those sorts of stories in every business, we've talked about some of the investments we’ve made to drive businesses in Corp Fin business, non-distressed businesses in the U.S., some businesses in Europe. The businesses in Europe were a big loss drag in the first year of investment. This year they are net positive by the end of this year and we expect good things going forward and the same thing for some of the U.S. businesses there. So even in FLC which is weak right now there are some very strong successes. Our Construction Solutions business that we’ve invested in is growing extremely -- is growing very solidly. So I would say that we have not had too many investment failures, which we had to pull the plug on. We had a couple. The biggest investment of course though is in the headcount and right now you see the issue that happens if you add the heads and you don’t get the revenue and you see that in FLC and I think we’re very resolved to get that improved by next year by getting the revenue in to employ those people. So does that help?

It does, it does. Thank you.

We’ll go next to Paul Ginocchio of Deutsche Bank.

Good morning, Paul.

Hi good morning, this is [Atto] [ph] on for Paul. Good morning.

Good morning, Atto.

So just couple of questions on your healthcare business, first can you size that business and secondly, have you seen any changes or can you give us some thoughts on what you're seeing as far as the demand picture? Have you seen any slow down or any pull back in demand as hospitals are having better margins in that maybe influencing some of your performance improvement projects? And third, net of those and what you're seeing from demand picture can you just remind me what you're -- whether or not that has changed your hiring plans for that group?

Okay. Yes, healthcare is a relatively small part of the segment that we reported FLC and we don’t break that out specifically. I think we play some fairly defined in particular places in the healthcare space and the dynamics we see are probably a little bit different than some of our competitors whose results you may have seen. So we have a business there that is in kind of advisory and investigations, which really runs on its own dynamic volumes there very much driven by our origination activity and then we have performance improvement business that again is not as oriented around the very large research institutions and is more in the regional and then smaller space. And again, there we really -- while we certainly see what’s going on in the larger healthcare space typically our demand is driven by our origination activities, which does tend to go in some cycles. So I think the business is doing okay this year. It's roughly comparable to its performance last year, which was down from a very good 2013, but it’s not a particular drag or boost to our results this year and we're pleased with what we are doing.

Great. And just one more, you mentioned across the number of segments that you've had some positive results driven by your exposure to the M&A cycle. So previously FCN that your overall revenue exposure to mergers and acquisitions was about 10% to 15%. Do you think that somewhat is true and if not about what you think that exposure is now?

Yes. I am not sure that I haven’t tallied that up in that way recently and I think the two segments -- well we have three segments that have some -- well we have four segments. We have all of our segments some participation in M&A as I think it’s through here. But how it varies is rather dramatic and different. Our Corp Fin business has a growing transaction advisory service particularly in Europe, but also in the U.S. That can obviously -- but that plays in a different cycle than our antitrust business, which will tend to not to be on the diligent side, but on the support of the approval, strategic communications business obviously has some participation in M&A too. I’d say the only two segments were generally you would call out M&A as being a material driver of better or worse would be the economic segment and Strategic Communications and I think really the only one where you would say a large defined portion that can move materially as preferably economics. Those strategic communication is important, but it’s kind of we're in ongoing dialogue with these clients. Much of it is retainer based and when they do M&A obviously the business grows a lot, but it’s not that it's kind of as big or episodic is the way it could be in economics. And generally, I don’t think we would sign up for a 10% to 15% but the fact that it is not half of our business or that we are not a M&A cycle dominated company we definitely would agree with.

Okay, great. Just one more like to sneak in, looking at some of the strength that you've have seen in North America on the distressed work that you've been doing within corporate finance and restructuring. Is that primarily driven by pre-filing work that you're doing with debtor side or is it more are you guys getting more engagements on the creditor side? Probably you can just parse out those projects at all.

I think historically 10 years ago this company was seen as a creditor side shop and we have probably the leading creditor side practice in North America, but I think people don’t realize that the deader side work that we do is significantly more than half of our revenue in the Corp Fin business. We made huge strides on that deader side particularly in specific industry verticals we have a terrific tech vertical, we have a terrific retail vertical. So you heard this past year about some of the places we were doing work in those. So it’s a combination of both actually, but I think if you look through some of our past statements you'll see a lot of debtor side work that might be a little bit more surprising to people who knew us 10 years ago. Does that help?

Yes, that’s great. Thank you very much.

We’ll go next to Randy Reece of Avondale Partners.

Good morning, Randy

I was just wondering if you were contemplating some changes in the investments that you've made in let's say the selling side of the business. If you could evaluate what you've done in the effectiveness of what you've done to date and what the next step is?

Are you talking about origination side of the business?

Yes.

That varies a lot by segment. I think there are two things we've done. One which I think we've done pretty well. The other one which I think we're starting it a little more aggressively. The one that I think we've done pretty well is continue to acquire talent from the outside. We're not doing acquisition, but we've really ramped up the ladder hire program selectively. Obviously we've been adding more junior staff than senior staff consciously have increased leverage, but we have across all over segments attracted a fair amount of talent laterally. Now usually at the more senior levels it takes a little while for those people to get busy. Junior people you hope that they get busy within six months or at worst 12 months. The more senior people can take 12 or 18 months or even a little longer sometimes to get to the full run rate. We feel very good about those lateral hires and I think that’s a process that we're continuing to go through. The other side is just commercial excellence and I think we really have not historically had a lot of discussion internally about just what is the best program for leveraging this terrific set of relationships we have. We have such good professionals that the phone often rings. And like in many businesses like that if the phone doesn’t ring, it’s a different set of skills than simply answering the phone and being great professionals and we have had some conversation in here about the need to upgrade our discussions internally and we have this all SMD Meeting coming up that’s going to be a primary focus on it. So that’s an area where we've started to work, but I think we've got a long way ahead and that’s a pure commercial excellence as well as some of the stuff we have piloted this past year, which is around just leveraging the terrific relationships we have in one segment across to other segments that some places where we've made some investments and some progress but we're planning to turbo charge over the next 24 months. Does that help Randy. Q – Randy Reece: Yes. Thank you.

At this time, we have no further questions. I’d like to turn the call back over to our speakers for any additional or closing comments.

Thank you very much for your time, your support. We know that this is not the quarter that we typically like to deliver, but I hope you walk away from this in understanding that we've notwithstanding this quarter or the forecast for the rest of this year, we believe that this company is headed in the right direction and will be. So many thanks for your support. Bye, bye.