Good day, everyone, and welcome to the FTI Consulting Fourth Quarter and Full-Year 2016 Earnings Conference Call. As a reminder, today's call is being recorded. And now for opening remarks and introductions, I would turn the call over to Mollie Hawkes, Managing Director of Investor Relations at FTI Consulting. Please go ahead.

Good morning. Welcome to the FTI Consulting conference call to discuss the company's 2016 fourth quarter and full-year 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, share repurchases, 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 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 our other filings filed with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements, which speaks 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, total adjusted segment EBITDA, adjusted earnings per share and adjusted net income. For a discussion of these and other non-GAAP financial measures, as well as our 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 the Investor Relations section of our website this morning for your reference. These include a quarterly earnings presentation and an Excel and PDF of our historical financial and operating data, which has been updated to include our 2016 fourth quarter and full-year results. Of note, during today's prepared remarks, management will not speak directly to the quarterly and full-year 2016 earnings presentation. To ensure disclosures are consistent, these slides provide the same details as they had historically, and as I've said, are available on the Investor Relations section of our website. With these formalities out of the way, I'm joined today by Steve 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.

Thank you, Mollie, and welcome to everybody and thanks for joining us. I'd like to talk about 2017 but before we get there, let me spend a few minutes on 2016. 2016 was a superb year for our company. It was the second year in a row of double-digit EPS gains, which is the first time the company has achieved double-digit EPS gains two years in a row since 2007 to 2009. At that level this was a superb year, but in fact something we expected. We actually expected double-digit EPS gains two years in a row. What we didn't expect as the year started was just how strong double-digit growth we would ultimately achieve. GAAP EPS was not up10% or 12%, but rather was up 30% year-over-year with adjusted EPS up 22% year-over-year. Over the last two years, GAAP EPS is up 42% and adjusted EPS is up 36%. Said another way over the last two years we've delivered three years of double-digit growth and that was something we did not anticipate. Some of these powerful forces – results were driven by positive market forces, particularly in Corp Fin. And some of the results were delivered driven by items that you just can't count on recurring every year. For example, our tax rate benefited GAAP and adjusted EPS by $0.13 and $0.15 respectively this year compared to 2015. If you adjust for those discrete items and some of the market tailwinds, you'll end up closer to the original adjusted EPS guidance we provided at this time last year. But said, another way, even stripping out these discrete items we are left with a picture of a year of strong double-digit EPS growth, even while making substantial investments. And to me that is the most important element of these results,…

Thanks, Steve. In my prepared remarks, I will take you through our financial results for both the quarter and the full year 2016 and end with providing you with our guidance for 2017. I will be discussing quarter over prior year quarter and year over prior year results. First, I will speak to highlights of our results and lay out the special charges and other items that affected our fourth quarter and full year. Second, like last quarter, instead of walking through every aspect of each segment's results individually, I will speak to those aspects at the segment level which have a significant impact on our consolidated financial results. Then, I'm going to discuss our capital allocation and net cash position. Before finishing, I will speak to our 2017 guidance. Starting with some of the highlights of the year, our full year 2016 GAAP EPS was $2.05. Our adjusted EPS of $2.24 were in line with our most recent guidance of $2.15 to $2.45. As Steve said earlier, 2016 was the second year in a row of double-digit EPS gains with GAAP EPS up 29.7%, and adjusted EPS up 21.7% compared to 2015. As for operating results, our Economic Consulting, Corporate Finance & Restructuring, and Strategic Communications segments reported both revenue and very strong adjusted EBITDA growth. Our Technology and Forensic and Litigation Consulting, or FLC, segments declined in both revenues and adjusted EBITDA. But as I will speak to when I get to our guidance, we expect these segments to grow in 2017 in part because of the head count actions we took in 2016, but just as significant, because of the refresh strategies and new leadership we've put in place. Our balance sheet is strong with low leverage and we benefited in 2016 from the lower interest charges…

Thank you. And we will take our first question from Kevin McVeigh with Deutsche Bank.

Great. Thanks.

Good morning.

Hey. Good morning, Kevin.

Good morning, Kevin.

Good morning, Ajay. Good morning, Mollie.

Good morning.

Hey. I'm wondering if you could give us a sense of – and very helpful on the guidance, kind of, how we would get to, kind of the low end versus the high end of range, kind of, what's implied in that?

It's the volatility, Kevin, around the rising mean. So, if we have certain assumptions, for example, on where our Corporate Finance segment would go and we have set an assumptions on the extent of the turnaround, for example, in FLC in health solutions and in the Tech area, if you assume pessimism, you get to the lower end.

Got it. And then, Ajay, in the retail space in particular, I mean obviously, there's been a fair amount of dislocation and you can continue to see it on some of the larger retails. Prior to bankruptcy, have you seen any business, kind of, increasing on maybe some initial restructuring to try to take that business to more optimal expense levels or just given the kind of structural issues in that business? Any thoughts on the outlook there in the near term, retail specific?

Yeah. You're saying – or you're asking us are we planning to restructure and reduce our professionals, or are you saying the restructuring...

No. No. The business in general. I mean, obviously, even Target coming out this morning, a disappointing guidance, I mean, clearly there's a lot of structural issues on the Big Box side.

Yeah. Yeah. So, Kevin, look, let me just say, maybe there's a broader – there's a narrow question – answer to your question and a broader one. This is a volatile business, but you can't look out in the market and not believe over the next several years this is going to be a growing business. I mean, yes, there were like almost no bankruptcies filed in the last few months and certainly no significant ones. So you can say, oh, my God, retail bankruptcies are gone. And then you look out in the market and just like you did and you know there are going to be major restructurings in retail over the next couple of years. And I think that's a general point on this business. We're thinking we're facing major headwinds in this business this year because the energy stuff has rolled off and we still have loose money in the economy. And so, what you could do is say, we should cut back our hiring in this thing. We're not going to do that because we think it is only a matter of time before there is a movement of this business as a whole back to levels that we've seen historically and we're extraordinarily well-positioned against it. And so, we believe this is a great business over the next few years, just not a great business in the first half of this year and probably for the year as a whole, and generally and then also specifically with respect to retail. Did I answer your question?

It did. And just one more and I'll jump back in the queue if I could. From an M&A perspective, any thoughts on this administration versus the prior one in terms of how it sits across the enterprise? And then just, are you seeing more second looks or do you think there'll be more activity that offsets maybe more stringent government approach to it?

Yeah. Look, that's a conversation that we're having a lot inside. At this point, I think, our current view is you don't know. I mean, that's the real bottom line. But I think at a higher level, I think, it's this that you look back over time as administrations come in, and frankly, as the world evolves, certain businesses slowdown, but other businesses grow, and I think that is our history. You look back, at one point, we were doing back dating options stuff in FLC and then that's gone away. But then the mortgage-backed securities work came. And when the SEC stopped prosecuting because of – it was distracted by the financial crisis, there were huge amounts of work to grow in bank monitorships and other sorts of things. I think this nature of our business is that government policy and changes in government policy, on average, creates more work. It doesn't always create it in places where we've done it historically. Sometimes, it creates in adjacent areas. So, I think, we're pretty optimistic about the general demand environment over the next few years, but the real talk internally is for us to be on top of what's going on so we can pivot into adjacencies as is necessary. And that's kind of our high level view at this point. Kevin, do you have a different view?

No. I agree. Again, I think overall, even if you get less kind of the second reviews and things like that to the extent there's more activity, that's just going to help you folks, and I fully expect that. I mean, I think depending upon the sector and even retail being another one, you'd probably start to see some consolidation. But I mean, that's obviously a large portion of the economy that's going to go through a major restructuring, and I think that bodes well.

Thanks, Kevin.

Yeah. Thank you.

And we will now hear from Tim McHugh with William Blair & Company. Timothy McHugh - William Blair & Co. LLC: Yes. Thanks. I just wondered given the moving parts below the EBITDA line, I guess, can you just talk about the EBITDA margin or the EBITDA growth rate that's embedded in the guidance. And then secondly, I think just the – I guess, the confidence in – it seemed like you're pointing to the second halfs for Technology and FLC to improve. I guess, is that cost-related or is that revenue -related that you're expecting in the second half?

So, let me answer it simply. The answer to the EBITDA and the margins, the quick answer is flat. It's in line with the earnings guidance that we're giving you. When we make the earnings guidance, we're not expecting, for example, tax rate changes, and those are very difficult to predict. So, you don't – we're assuming the standard 36%, 37% on the tax rate. The interest savings, we've already reduced the debt. And so, we continue to get the interest savings, but not the year-over-year impact. So, as you see flat EPS, you are assuming flat EBITDA. Now certainly changes in mix between the segments can affect it, but largely that's where we're at. In terms of the FLC and the Tech, health solutions, it's both revenue and cost. Cost actions are usually more in one's control, and as you've seen in fourth quarter, we've taken the actions. In terms of revenue, they gain traction over time.

And maybe I can add a little bit to that on – I think, the other reason we're saying the second half of the year, if you look back at Tech and at FLC as a whole, but also health solutions, which we don't break out, the revenue side was much weaker in the second half of the year. In the first half of the year, the revenue side was not. So, we believe we're going to make progress on the revenue side in all those businesses in the first half of the year relative to the run rate we were running in the second half of last year, but it won't show up on year-on-year comparisons until the second half of the year, Tim. Was that clear? Timothy McHugh - William Blair & Co. LLC: Yeah. That helped. I guess just, Ajay, one quick follow-up. The tax rate then given the movement last year, what's assumed there?

For 2017, 36%, 37% in that order of magnitude. Timothy McHugh - William Blair & Co. LLC: Okay. Thank you very much.

Which is quite a bit higher than what we actually experienced in 2016, right?

Yes, sir.

So, that's a headwind for us, Tim, versus 2016, because 2016 we had these one-time stuff that benefited. Thanks, Tim. You're sending us good weather from Chicago again? Timothy McHugh - William Blair & Co. LLC: Doubt that. Thanks.

Okay.

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

Morning, Randy.

Good morning. Hi. I noticed in here you had a major EBITDA beat buried in an EBITDA miss because of one segment, FLC. And I was wondering if there was some amount of severance expense or something that would explain the levels of expenses and low level of segment profit contribution from FLC in the fourth quarter.

Yeah. No. I don't think there's anything extraordinary. Ajay, you can correct me, if you will. Look, I think, there's three things with respect to FLC. Two of which we were addressing and then one of which I was surprised by in the fourth quarter, and I think, Ajay was too. I mean, I think, FLC you can think about three parts of the business. Our health solutions business which we have a potential for great business, but we really needed to rethink its strategy and that effort after we changed management took force during last year, and I think we have now got that business headed in the right direction. But that was a drag in 2016. The second part of FLC that you want to think about is the overseas positions. Over the last while, we have really looked hard at the overseas positions and retooled them. Some places we've shrunk considerably like we exited a business in Brazil, some other places we shrunk because we just didn't think we had the right to win, and other places we have made big bets because we think we have a right to win and create stronger positions. And I feel like we made a lot of progress over the last year in that, in FLC as well. And that helps going into 2017. The third issue with FLC, which was a surprise is that some of our strongest businesses for FLC, like our U.S. businesses underperformed in the second half of last year and that was a surprise to our leaders in that practice, it was a surprise to Ajay and me, and so we've had some serious conversations about that. The truth is the answer to that is not restructuring. It's a great business with great professionals. It's a series of things that we got to get in the marketplace and solve, and there's a lot of activity underway on that. But I would say, the big surprise for me in the second half of the year on FLC was that one. The other stuff I knew about, that one surprised me, and it was disappointing. Does that answer your question, Randy?

Yes. Thank you very much.

And our next participant is Marc Riddick with Sidoti & Company. Marc Riddick - Sidoti & Co. LLC: Hi. Good morning.

Good morning, Marc. How are you? Marc Riddick - Sidoti & Co. LLC: Good. Good. Yourself?

I'm doing fine. Thanks. Marc Riddick - Sidoti & Co. LLC: I wanted to, I guess maybe start on the head count adjustments that you've talked about, and I wanted to get a sense of – and it was nicely laid out sort of where they were, and the one-third were non-billable, but I wanted to get a sense of now that as we've come past the end of the year, should we expect that to continue, sort of where are you in that process? And I mean, if you want to put it as what inning you are in as to where you are with your head count adjustments, but I was wondering if you could start with that.

Yeah. I'll give a take on that. Look, I think, we've gone through a series of major relooks at our businesses and unfortunately, actually, it's required looking at almost every one of our businesses. And as we've done that, it's led to substantial increases in head count some places, but also some rationalizations of positions. And I think that's the process you go through all the time in professional services, but I would say, the first time you've gone through it in a lot of years, you tend to have bigger changes and we've just gone through that. We started that first with Strat Comm when I got here, and then we walked through each of the other businesses. I think, we are through the bulk of that first round of look. We've done that across the businesses. And so, I don't expect us to be having major head count announcements on a routine basis across all of our businesses over the next while. That doesn't mean you don't have to continue to fine-tune things and you will always in professional services. And it doesn't mean that if Ebola breaks out worldwide, we don't have to adjust to new environmental conditions. But I think the systematic walkthrough of the businesses that has led to that I think is largely behind us. Does that answer your question, Marc? Marc Riddick - Sidoti & Co. LLC: Yes, it does. And it actually sort of leads me into the next thing I was kind of getting to, and you touched on this a little bit, but maybe you could expand a bit. As you look at the business with that strategic view, I was wondering if there are any differences or takeaways that you would be willing to share as to how you view the EMEA region? International overall, but the EMEA region in particular and whether or not there is any – whether you want to view it as a post-Brexit changes into priorities or things of that nature that you might want to share.

Yeah, look, I think, the opportunities we have internationally are enormous. I just want to say I also think they are enormous in the U.S., and I think for a while we were neglecting the U.S. in terms of a growth engine, and I think, we are committed to turning the U.S. back to growth engine. But I think, our opportunities overseas are substantial, and I don't think it requires the market. I think, the truth is as the guy we now have heading Europe says, this is our time in Europe. Kevin Hewitt is now the leader of that. And I think, he believes that we now have a critical mass of professionals that our brand is at a higher level, such that just we're getting many more referrals than we used to in the past, many more professionals are looking at us and saying, wow, this is the place to be. And I think that can happen independent of whether what Brexit does to various forces, because it's just about us getting stronger in that market. And I think that's an important powerful force over the next couple of years, particularly in Europe. I think in Asia Pac, we're continuing to strengthen those positions. It's not as big a region, it will not have as material a benefit to our P&L over the next few years as we expect Europe will, but we think of that as an important position to strengthen for the long-term future of our company and the same thing for Latin America. Does that help, Marc? Marc Riddick - Sidoti & Co. LLC: Yeah. It does. Thank you. And just the last thing and sort of a little bit of a housekeeping type items. I was wondering if the guidance for 2017, if you have a FX impact assessment embedded in that and the second part of that being the mention of the SMD meeting in the first quarter that will have an impact, I was wondering if you had a dollar value impact into the first quarter expenses on that. Thank you.

Yeah. So, certainly we incorporate FX when we think about our guidance, and we base our guidance on our internal plans with certain variability and our internal plans are based on year-end FX. So, we don't take a sort of a forward curve or a future's curve. We take where FX was at the end of the year and we take it from there. And I want to emphasize that FX has a significant impact on revenue as we have mentioned, but on profitability, the impact is muted because our costs are also in the same currency. There is an impact, but it's not as large as it is on revenue. So, that was the first comment. And then, the SMD meeting, I think we said it's a $0.04 earnings impact in the first quarter. Marc Riddick - Sidoti & Co. LLC: Okay. Thank you very much.

Thank you.

And we will now hear from Tobey Sommer with SunTrust.

Good morning, Tobey.

Good morning. I just wondered, you already commented a little bit about this, but to give you an opportunity to expand perhaps, what are the changes under Trump administration that you think may be impactful on your business both from a tailwind and headwind perspective?

Look, I think, truth, I sit here in Washington. I don't think actually anyone knows exactly what the changes are going to actually come out of the Trump administration, let alone the impact on the business, right? I mean, you just read the paper. There are lots of thrusts. There are lots of stated intentions. What actually happens is still quite unclear to the world as a whole, at least the ones that I listen to. And then, therefore, the second order of consequence of how will that affect our business is even more unclear. I think, we have a lot of conversation about that. At this all SMD meeting, we talked a lot about – actually more about the potential opportunities coming out of different speculative changes and how do we make sure we're front and center of it. I think people are more bullish about the opportunities for us than they are pessimistic. But candidly, I think the big takeaway was that we need to be nimble, that any sort of changes in the economy shuts down certain businesses or affects certain businesses in negative ways, but also almost always creates other opportunities in adjacent areas that we are well-equipped to serve. And, frankly, there was a little bit of reflection, that said, at some points in the past, we haven't been as nimble as we need to be and some statement of determination that we are going to be on top of this and make sure that we figure out regardless of how this flows, how – that we are best-positioned to serve that. So, that's really as good as I can do, Tobey. I mean, if you know exactly what's going to come out of this administration, you should at least, take a major role in one of the newspapers, perhaps. But that's hopefully helpful.

In the Technology business, just wondering if you could try to provide a little color on how the new strategy is working and if 2016 represented a bottom in terms of profitability and growth.

Yeah. Look, I think I'm actually pretty excited about this. I mean, there's a lot of elements. Some of which will not only start to kick-in in the second half of 2017, and some which we have expectations for 2018 and beyond. But let me be clear on that. We think the cumulative effort that we've taken will make 2016 the bottom for this business. Some of this is long term, but some of it is actually very near term. Look, I think the truth is for that business, the first half of 2016 was the strongest part in terms of sales, because I think if you remember part of what we've been doing in this business is running off some very big jobs and then having to sell a lot of singles and doubles to make up for some very big jobs. And we still had one of the very big jobs running the first half of 2016. So, when you look on the first two quarters of this year, you're going to see us up on the revenue side against that and you might be saying, well, Steve – where's all this stuff that Steve is saying is already starting to make progress. But if you normalize a bit for that, you'll be able to see that we are out there hustling and having some success even on the revenue side, and the cost side is there. So, I have a lot of confidence that we have – this business historically was a great business. And if you talk to the leaders of this business, they'll be quite frank about the fact that they were slow to re-examine their strategy, but we've retained really strong talent, and people in that group are incredibly enthusiastic about the direction we're heading going forward and feel that we're really making progress. So, I have a lot of confidence that 2016 was the bottom for that business. Does that help?

It does. Last question from me. EBITDA's seen a decline, adjusted EBITDA is in decline for a couple of years, and I think, Ajay, you mentioned kind of flattish adjusted EBITDA the outlook for this year. When do you think we can get to EBITDA growth because in our interactions, we kind of feel that investors focus more on that than the EPS. Thank you.

Yeah. So let me be clear. I think, the way to think about the last couple of years is basically a flat EBITDA, not a decline. I mean, frankly we're within the noise range of flat, particularly if you do any adjustment for FX and so forth. Let me give me a broader answer on that, Tobey and maybe actually some thoughts. Look, the business as you know, right, from 2009 to 2014, dropped EBITDA $20 million a year. It was an average of $20 million a year for that multi-year period. And that is actually at a time when we were doing a lot of acquisitions. I think, we spent roughly $50 million a year in acquisitions. So, you're buying $10 million a year of EBITDA. You adjust for that, we're dropping at $30 million a year, or you can say, we're adjusting at $20 million, while dumping a lot of cash back into the business. What we have managed to do, while investing in organic growth, while fixing some of the businesses, is turn that to flat, flat without the help of acquisitions. And so, what do you see on that regard is an enormous surge in our cash generation capability. I mean, I think it's important for people who look at that, because I think, if you're in an acquisition mode, you don't really look at cash so much, you don't look at the balance sheet strength because you think you're using all your cash for acquisitions. Here, we have not been using our cash for acquisitions. And so, the stuff we did for refinancing debt, the cash we have, the repurchase of shares, all of this is sustainable and it's also usable when a great acquisition comes along. So, the strength of our balance sheet and…

Thank you. Thank you.

All right. I think thank you very much for your attention and your time, and we look forward to ongoing engagement. Thanks very much. Bye.

And that concludes your conference for today. Thank you for your participation. You may now disconnect.