Please standby, we're about to begin. Good day everyone and welcome to the FTI Consulting First Quarter 2016 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 Mollie Hawkes, Managing Director 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 first quarter of 2016 earnings 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 21 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 relating to financial performance, acquisitions, business trends, and other information or other matters that are not historical, including statements regarding estimates of our 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 our 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 our other filings filed with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as 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 earnings per share, adjusted net income, and adjusted segment EBITDA margin. 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 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 file and PDF of our historical financial and operating data, which has been updated to include our first quarter of 2016 results. With these formalities out of the way, I'm joined today by Steve Gunby, our President and Chief Executive Officer and Cathy Freeman, our Interim Chief Financial Officer, Senior Vice President, Controller and Chief Accounting Officer. At this time, I will turn the call over to our President and Chief Executive Officer, Steve Gunby.

Thank you Mollie and thanks to everyone who joined the call this morning. As usual let me say a few words upfront and then turn it over to Cathy who will take you through the details of our first quarter and our updated outlook for the year. And after that the two of us look forward to your questions. As you saw in this morning's press release this was a terrific quarter. On a number of key metrics this was the best quarter the company has ever seen. If you look at revenues we had organic revenue growth of over 8% and if you adjust for exchange rate it is over 10% which is the highest year-over-year organic growth rate that we have achieved in close to a decade. The adjusted EPS of $0.83 was up 46% versus the year ago and it is at an all time high. So, this was a terrific quarter. What I thought I would do in these introductory remarks was spend a few minutes talking about where these results come from and a little bit about what we think they mean. And let me start with what I would characterize as the least important driver of the results. In this quarter there are some things that in any given quarter can cut positively or negatively versus expectations and a whole lot of those things cut positively this quarter. Those are things such as bad debt recovery, translation gains, the timing of success fees, those all cut more positively than we expected in this quarter. So, the way I look at that there is a part of the drivers of this success that I just set aside, that I say please that is nice to have but it is not critical to have it, it…

Thanks Steve. Just to start this stage I am going to start with a review of our quarterly consolidated and segment results. And then conclude with our revised guidance and outlook for the company. Turning now to slide 4. Revenues for Q1 were $470.3 million up 8.8% from prior year and up 6.4% from Q4, almost all of which was organic. Excluding an estimated negative impact of foreign currency translation or FX, revenues increased 10.4% compared to the prior year quarter. Adjusted EBITDA in the first quarter was $68.9 million or 14.6% of revenues up $10 million compared to $58.7 million or 13.6% of revenues in the prior year quarter. Sequentially adjusted EBITDA was up $33.5 million from $35.2 million or 8% of revenues in Q4 of 2015. Fully diluted or GAAP EPS was $0.73 compared to $0.57 in the prior year quarter and $0.25 in Q4 2015. First quarter EPS included a special charge of $5.1 million for severance related to the previously announced headcount reductions in our technology segment and a $1 million charge for an increase in our estimate of a future contingent consideration or earn out payment related to an acquisition in our strategic communications segment. These items reduced EPS by $0.08 and $0.02 respectively. Adjusted EPS for Q1 which excludes the special charge and the increase in our contingent liability were $0.83 which compared to $0.57 in the prior year quarter and $0.24 in Q4 of 2015. Within our GAAP and adjusted EPS on a below the line basis, a reduction in interest expense as a result of our debt restructuring in the third quarter of last year positively impacted EPS by $0.10 compared to the prior year quarter. This was partially offset by our current quarter effective tax rate of 37.6% compared to 33%…

[Operator Instructions]. We will take our first question from Kevin McVeigh from Macquarie.

Great, hey, congratulations on a great outcome on all fronts. Hey, Steve or Cathy I wondered can you help us understand on the corp fin product side how much of that is counted distressed versus non-distressed and if we think about this restructuring cycle how does it -- how should it compare to the last two in terms of duration?

Cathy, how is your crystal ball.

I think in terms of the first quarter it's non-distress is still part of the picture but it is largely related to restructuring engagements as we talked about in both retail, media, energy, etc. and mining. So, I think as I mentioned, we do have a backlog and a strong backlog into the second quarter. But those are much harder to predict in the second half of the year in terms of when they ramp up. If our normal restructuring work turns into bankruptcies, the timing of that is hard to understand. But I say about 70% in the quarter really relates to the distressed activity.

Got it.

And Kevin in terms of the crystal ball, look it -- as you know I am not from this industry but I talked to all our guys and even they don’t have a crystal ball. I think the thing that would give you encouragement over the long-term is we still have a very loose money situation out there and if you look at the 30 year average of bankruptcies, even with the comeback in mining and energy across corporate sectors as whole we are not at the 30 year average. And so if you say okay, sometime over the next ex years we are going to get back to average of maybe above average that could be a bullish thing. Now the reality is though we have loose money out there and if oil prices go back up and commodity prices go back, things that are fueling the current mini boom in the -- or the boom in those things could go away. And so you don’t know. So, I guess I would say I think there is fundamental positive forces over the next ex years but whether that could mean we go backwards for a few quarters, the guys in the segment say they could. We don’t expect that in the second quarter but even by the second half or fourth quarter of this year we don’t have much visibility. So, really I am telling you that my crystal ball is positive over an extended period but pretty cloudy beyond a couple of quarters. Do you have a better crystal ball Kevin.

If I did I wouldn’t be in this business Steve.

Okay. Thanks, good question, anything else.

No, all set, congrats.

Thanks very much, nice to hear your voice.

And our next question comes from Randy Reece from Avondale Partners.

Good morning Randy.

Good morning. I have been impressed by the ramp of headcounts in corporate financing and restructuring and e-con as well. Supports even though there is some potentially unsustainable surge of business you have an underlying belief in the strength that to some degree, how when you do increase headcount there how flexible is that, when I see an increase like that is there a portion of that that is attached specifically to engagements and would go away pretty quickly or do you -– are you a little more careful about making decisions about adding heads in that business because you can't flex it as quickly?

I think it’s a mixture of two if I could comment on that, right. And let me use this as a pivot to making to try underscore a strategic point which is, look when we are committed to organic growth which we are we are committed to adding great heads and keeping them even if the business isn't strong for a few quarters. And I think that is the essential element of organic growth and you have to have a belief that with the right best heads if you put them in the right places where we have a right to win you keep those people leaving if times are slowing. My experience is, the slow periods don’t last for more than 12 or 18 months. Great professionals figure out what to do. And so that’s the strategy we are on. Now there is a second part which is in professional services firm, there is a certain amount of turnover at any point. When you hire people in there is 15% turnover a year in the junior ranks as people go back to graduate school or all that sort of stuff. And so that is actually -- that is also a phenomenon. So it is not like when you hire 18% new people, if the business goes totally away you are stuck with everybody because some there is natural attrition on that but we are going to stick with the people who we believe are key to the future. That is a commitment we are making to those people. It’s a commitment we are making to our future. It is frankly a commitment we’ve made over the last two years and in a couple of quarters it didn’t look so good based on it but if we hadn't made those commitments we wouldn’t have had the capacity and energy and elsewhere to do what we are doing now. And so that’s part of what we are doing. It may create a little bit more volatility in quarters. But I think it is part of what leaves me to believe we are sustainable growth company on a long-term basis. So does that help Randy?

Yes, one more question really quickly. If we look over the last few years in FLC, there have been periodic dips of utilization rates into the low 60s and there is not always -- usually not driven by just seasonal headcount additions but significant fluctuations in activity levels. Wondering you made some progress over this quarter after being at low utilization to the second half of last year, I am wondering what your strategic intent is as far as objective for a utilization rate in FLC?

I am not sure we have specific utilization metrics that we talk about but maybe I can give a more -- I mean in terms of intent but let me give maybe a summary of sort of the conversations that I’ve had with the leaders there and the leaders are having among themselves. I think where we have low utilization, where we believe we have a business that is in a process of establishing itself we’ll tolerate that for an extended period of time. Where we have a little utilization in a great business like right now I think in construction in North America we are not having the utilization rate that we’ve historically had. That’s a great business. We’re not going to do stupid things. And now where we have low utilization of businesses, where we don’t really have a theory on what the right to win is and we need to take action on that. And we as you know we sold off our TSC business in Brazil, we took some action in some overseas markets, and so it’s a mixture. But I think again, look FLC is one of the strong powerful core businesses for us. I think we have a real right to grow it in the U.S. and overseas. It is a matter of how do we make the right bets, how do we make sure we monitor those and make sure they are working and then re-bet and then of course correct if we make a mistake along the way. And I think that is how we are thinking about it. Does that help?

Yes, thank you very much.

Thanks very much.

And our next question comes from David Gold from Sidoti.

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Hi, good morning. Just a little bit by way of follow-up actually to that last question. Thinking more broadly, I mean I guess few goes out to the quarter, and it sounds like obviously second quarter going well with some maybe questions from the business lines about sustainability. But if we layer that over how to think about you having to continue to balance that utilization with hiring, how should we look at that, can you give us a sense for hiring plans in some of the business lines anywhere you might be adding this year particularly in light of the demand you have and what you view as sustainable?

Let me just check here whether we do -- do we give our hiring plans out, no. I guess we don’t, I am asking the colleagues here.

Even if it is broad brush.

Look I would say broad brush we are committed to growing headcount in -- look in every business we have opportunities to grow. What you will see is that sometimes you can't see that in the numbers. Like for one year I think the first year I was here we grew headcount in a subset of strat-com substantially but we also shrunk headcount in another subset of strat-com. And so you look like the headcount for strat-com was flat. And then last year we continued to grow headcount in the places we are betting on in strat-com and because we didn’t have the offset it looked like we were growing. I would say that's the strategy we are following. We don’t have -- it is sort of hard to think about it because we have five segments that we report on but each of those segments have subsegments and then frankly each of those subsegments have geographies. Right, I mean our position and the talent level we have in Spain isn’t the same thing as the talent level we have in Morocco actually, we don’t have operations in Morocco. But -- and so you make these individual bets and you say okay we like this team, they are doing the right stuff lets, we believe they can grow they can’t grow without headcount so let's support them. And we make different decisions in other places. So, that is the planning process that we go on. And I think it is an important -- it is a pretty basic process but I think it is actually the most important process in some ways and a professional services thing because forecasting revenue is a hard thing but you can actually forecast to deliver on growth of people and then if you make the right bets overtime at least most of the bets turn out to be right. Overtime you grow the business. So that is how we are thinking about that and that is true with an FLC as well as -- I would say that is true for every segment. Does that help David a little bit.

It does, I guess from looking at sort of we are more curious on is -- when we think about utilization, particularly you are thinking about economic consulting at 79%, historically not a sustainable level. Obviously there were some factors but we do think there will be some cooling there. But basically what we have is how does one manage that, could it go another quarter at 79% if need be?

Well, we would love it to go another quarter. We would love it to go another 10 years of 79%. I doubt it will is my guess. I mean as Cathy mentioned we had some stuff that surged in the first quarter there and that kind of which ended actually by the end of the quarter or right at the beginning of this quarter, I can't remember which. So, I doubt we will continue at that run rate. But I am just going to say two things, I mean we are not -- the thing that is interesting about organic growth, you don’t have to run at 79% to be building a business both for your professionals but also for your shareholders. I mean, if you add staff and add leverage to your senior people and the additional staff is reasonably utilized then lower than your current the average utilization goes down. Your profits can actually go up and one of the issues we had in the past was we had allowed our leverage ratios to get out of whack on the low side and one of the things we are doing is rebuilding our leverage ratios. So I think at some of our businesses you could say at the same utilization rate we are actually making more money than we did two years ago. And that is because of increased leverage and so you know we’re looking not at utilization as a single metric. It is not a really good metric by itself, it is not even really a very good metric to think about how to build a firm or to build shareholder value. I mean you got to look at it for your tiny --utilization for extended period of time, you have to ask questions. But we’re looking at building businesses and building over a medium period of time real returns to our shareholders. And so utilizations are kind of funky metric in that regard. So I am pretty comfortable that if e-con drops utilization we are not going to do something stupid there. We got a great business there and we are investing in that business and I just asked the asked the guys in e-con where else can we grow and where can we extend. And if we have any good ideas we are going to continue to invest and if it means a quarter or two utilization levels are lower, if in 6 and 12 and 18 months our profits are higher and our brand is even higher I’ll make that trade off anytime, does that help?

It does, perfect. Thank you.

And our next question is from Timothy McHugh from William Blair.

Good morning Tim, how are you?

I am good, how are you doing?

We are doing good, thanks.

Alright, a couple of questions I guess one let me just ask on the restructuring side you have talked about it in a couple of different ways but and I think you were a little cautious on how significant the energy sector and energy and mining if I drove them together might be for you guys say in terms of given this relative to the strength you had last year. And I’ve seen you win a few things, I guess were you just surprised at the things you won and the strength you have seen there. I mean has your view changed on I guess how significant that might be for you guys?

Yeah look, I think there is several questions embedded in that let me take a crack and Cathy you can correct me if I say something wrong. I was surprised not about our strength in those sectors but just how strong this quarter was. And remember we were cycling really strong year last year. I think we did better than the market as far as we can tell last year and so even though we had -- we know the strength we have in mining and we know some of the strengths we have in energy we were not predicting as strong as we have in this first quarter. And part of that was that a lot of the stuff that hit this quarter wasn’t even visible to us early in the quarter. Our January was very consistent with our plan for the year and then as I mentioned like in the energy side we sold a whole bunch of stuff after the first of the year which I think we had in some backlog as theoretical but they were timed for later in the year. Some of this stuff moved faster than we thought and I think that’s the dynamic nature of this. My sense is there is a dynamic nature in all of our businesses and in a lot of times we have gotten caught on the negative side of that. Here I think we got caught on the positive side. We did not anticipate a strong as the business was going to be in the first quarter. And even into January that wasn’t their projection. So did that start to address part of your question.

Yes, I think I was trying to get to the sustainability…

Yes, that’s a crystal ball question that Kevin also asked. Look we don’t know. You have visibility into the second quarter and then you have backlog reports which are the same backlog reports that we used to forecast our first quarter. And I think some of the work we did in this first quarter was stuff we anticipated doing later in the year. So when someone sensed we borrowed against later in this year and then some of this is incremental. So we’re certainly not anticipating at this point four quarters like this first quarter. Cathy you want to add something.

Yes, the energy sector I think the one thing that was a little bit surprising is we won more work on the debtor side. You may have been seeing last quarter that our sweet spot has been on the creditor side.

Particularly in mining we won that.

In mining and a few in energy and on the debtor side that work can go on a little bit longer and its usually a little bit -- at a little bit higher rate. So again that’s maybe not the crystal ball again, but that’s a bit of a shift from what we’ve seen historically.

Okay.

But let me say this again, I just want to reiterate although we were cautious on how much incremental improvement we saw this year versus last year when we first forecast this year, it has never been because of a lack of confidence in that practice. I think we have the strongest professionals in that practice of anybody. It’s a matter of just how much we outperformed last year and not assuming sustained outperformance. We got surprised, we got even more sustained out performance in the first quarter. I am reluctant to say we’re going to just I’d like Bryce Harper to continue to hit nine home runs in every 14 games this year which would set a new record. I think most people would think he is unlikely to continue at that rate although he is a great professional. He is maybe the best baseball player in the world but he is not going to hit that many home runs. And I think that’s the same thing we got to believe here. But we have a lot of confidence in this business not just in the U.S. but around the world. And we are excited about it over the rest of this year and going forward. Does that give some help Tim?

Sure, yes. And I guess just because it’s been in the process I think it is probably and I am getting questions, you mentioned the change in the leadership and I think there is a couple of people who left the ranks in their corporate finance segment. Their names were attached to some big kind of more retail type of stuff last year, what's the risk I guess or the impact around that and is that any part of what the commentary you are giving about the run rate I guess you would expect going forward.

Yes, that’s not the key part of the commentary or the run rate going forward but look I think it is -- look we are in professional services business. You gain lots of people, you sometimes lose people, a lot of the people you lose you are not concerned about, its mutual or it’s a normal attrition and sometimes you lose people who you really like. And when you lose people you really like that hits you. It hits you emotionally really and it hits you emotionally in terms of particularly the people they work with closely. Because contrary to popular belief consultants are human too and there is tight relationships and those sorts of stuff. And so you have to work through those things when you lose good people. But I mean look from an investor perspective you got to put some perspective on that too, right. I mean, we have gained a huge number of great people over the while. I mean you never want to lose people you want to keep and my sense is over the while we’ve done way better than the average firm on that. Our attrition rate overall is lower than the firm I came from which was a great firm. Its lower than just the averages that Holly gets from some industry sources. And net, net over the last years for a long time we have been net gainers and particularly in the last couple of years as we’ve committed to organic growth we have been net gainers. We been -- we’ve had people return from other firms who had left us earlier. We’ve had people just call us from other firms and say we want to join you guys, you guys are moving. And so it is always sad when you lose good people and we will fight to make sure we don’t have too many good people leave ever. But from a perspective I would say net, net we are moving ahead and our headcount is obviously substantially up and I'd say the practice has never been stronger than it ever has been in the past, does that help Tim?

Yes and then just one last question. You talked about what the economics of the timing I guess one case as you did a bunch of work ahead of a potential trial that I guess isn't going to end up happening. How much of the strength is really one case? I recognize you can have some big cases but and trying to think about what was just kind of a more of a steady improvement if you will in the economics practice versus if you are highlighting kind of a lift from one case that won't continue trying to can you help us think about how much of an extra lift if you will that was adding in the first quarter?

Let me take a crack and then let Cath add any details. It depends on which part of our segment, I mean I think in general our e-con business is not as hit business as some other business where like our tech business at some points in time has had a very high concentration ratio and general e-con is not that. Now within that our M&A business given the prominence of some of the M&A assignments can have real spikes in any given quarter, where we’re involved in the biggest M&A cases in the world and the stakes are huge. And if you are getting ready for trial in one of those and it’s a contested, a major contested thing there can be a lot of people on that. So for any small period of time as a percentage of our M&A revenues one client can spike. As a percentage of our overall e-con revenue is less and of course on the firm is less. So that’s the general answer I’d give, I don’t -- you want to give any more specifics Cath or not.

No, I think it certainly was maybe part of our unexpected ramp up in February and March. So in terms of the out performance that we saw or heard of it. But if you look at just our internal metrics, in terms of – cases and average size [ph] per case they certainly have been ticking up from the end of the year kind of at a steady pace. That’s more than one but again we pointed out that one in terms of it is kind of a quick spurt in February and March and how it impacted our expectations for those months.

Okay, thanks.

Thanks Tim.

And our next question comes from Tobey Sommer from SunTrust.

Good morning. This is [indiscernible] on for Tobey.

Hey Kwan [ph], how are you?

Good what is your expectation for CAPEX this year and maybe give us a sense for how much would be tech related?

I think currently we’re estimating our CAPEX to be about $35 million to $45 million and which is what we thought at the end of the year. We’ll continue to take a look at that as time goes by but that does include our estimate around technology spending which is not -- it’s a part of it but in the other part of the spending includes our infrastructure spend, our facilities, lease spending, etc. So it does include some of that. And as I talked about some of the investment that we are spending will not be capitalized but will be expensed certainly as we are in the predevelopment stage. So, there will be higher expense which we’ll see in the P&L and then somewhat of a normal trend within the capital portion.

Got it, thank you.

Thanks Kwan.

And it appears there are no further questions at this time. Mr. Gunby I’d like to turn the conference back to you for any additional or closing remarks.

Well thanks everybody. Thanks for your attention and thanks to everybody to put your support over this last file. I mean let me maybe just close with echoing some of the comments Cathy that you made at the end of your speech. This was a terrific quarter and that’s nice in and of itself. I think we really have two messages here, one was the one that Cathy want to make sure you heard. Which is don’t take the first quarter and multiply it by four. And because we have some one-off factors in there and there is cyclical factors and there is some cyclical forces particularly in the second half of the year that could cut against us. And we need to take those seriously. And so that’s the one message. The other message though is the one that those of us who are not trying to just forecast quarters but are trying to say where is the company is going I think that you should take away from this or at least I take away from this is this is a real testament to what our teams are doing in the marketplace. And yes, I know some of you have concerns. Sometimes we invest headcount and they are sitting there idle and we are going to get that wrong sometimes. We are not going to get that right all the time. But my experience in professional services if you have terrific people and you bet behind those people and you give them the license to go follow their head, challenge their proposition, make sure they are real and then give them the headcount to try to build the business and they are going to succeed a lot of time. And they might not succeed in the first quarter…

That concludes today's call. Thank you for your participation. You can now disconnect.