Good day, everyone, and welcome to the FTI Consulting First Quarter 2017 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.

Good morning. Welcome to the FTI Consulting conference call to discuss the Company's first quarter of 2017 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, adjusted net income, adjusted EBITDA or adjusted segment EBITDA margin and free cash flow. For a discussion of these and other non-GAAP financial measures, as well as our reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures, investors should review the press release and accompanying financial tables that we issued this morning, which includes these reconciliation. 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 first quarter of 2017 results. Of note, during today's prepared remarks, management will speak directly to - will not speak directly to the quarterly earnings presentation posted on our Investor Relations website. To ensure our disclosures are consistent, these slides provide the same details as they have historically, and as I have said, are available on the Investor Relations section of our website. With these formalities out of the way, I am 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, Molly, and welcome to all of you who are joining us on the phone. This was a tough quarter. As we noted in our press release, the first quarter results are disappointing. The business did get stronger over the quarter and some of the causes of the disappointment are items that can cut negatively in one quarter and then surprise you by reversing themselves in another. Nevertheless in total, the results in this quarter were sufficiently far enough below our expectations that we have reduced our guidance for the year. Ajay and I will seek during these remarks to give you a sense of the sources of that weakness, as well as how we see the rest of the year unfolding, and we will leave plenty of time for questions. Overall we have two messages. First is the message I just delivered that Ajay and I, but important, not just Ajay and I, the management team, as a whole, are obviously not happy with the performance of this quarter. But perhaps more important is the second message, which is that no one on the management team sees this performance as acceptable and we have substantial confidence that we can and we will get the business back on track going forward. Let me start with a summary description of the quarter that Ajay will then elaborate upon. The weakest part of our business this quarter, and the bulk of the weakness overall, came from Corp Fin in the United States, a business that in fact is one of our mainstays. It is in fact a great business, a business in which we have a powerful competitive position in the market but a business that had significant weakness this quarter. That weakness this quarter had four main causes. The first…

Thanks Steve. In my prepared remarks, first I will summarize our quarterly results. Then I will review significant segment level, quarter-over-prior-quarter and sequential quarter comparisons. After that, I will discuss our balance sheet and our revised guidance. Starting with earnings per share, or EPS. For the first quarter of 2017, GAAP EPS and adjusted EPS were $0.34, compared to GAAP EPS of $0.73 and adjusted EPS of $0.83 in the prior-year quarter. Revenues for the first quarter of 2017 were $446.3 million, down 5.1% compared to record revenues of $470.3 million in the prior-year quarter. Excluding the estimated impact of FX, revenues were $454.1 million, or down 3.4%, compared to the prior-year quarter. First quarter net income of $14 million, decreased 53.6% compared to $30.2 million in the prior-year quarter. First quarter adjusted EBITDA was $38.3 million, or 8.6% of revenues, compared to $68.9 million, or 14.6% of revenues in the prior-year quarter. As Steve said, we are disappointed in our first quarter results. Our disappointment was primarily driven by our U.S. Restructuring business, which was the main driver of our year-over-year revenue and adjusted EBITDA declines. This business was up against tough comparisons, compared to the first quarter of 2016, and was affected by the lower demand for restructuring services. To a lesser extent looking at our businesses in aggregate, the decline in the adjusted EBITDA was also a result of higher compensation from higher headcount and higher SG&A, primarily related to an increase in bad debt expense, compared to a relatively low level of bad debt in the prior-year quarter. Sequentially compared to Q4 of 2016, our results were better. Revenue increased 1%; net income increased 97.4%; and adjusted EBITDA increased 26.3% as our Forensic and Litigation Consulting, or FLC, and Technology segments, both reported mid-single-digit increases in…

Thank you. [Operator Instructions]. We'll go first to Tobey Sommer with SunTrust.

Thank you very much. I wanted to start out by asking - you've been at the helm now looking at this collection of businesses and how it performs together in a relatively slow economic growth environment. What are the - in aggregate with the collection of businesses, what's the best backdrop in terms of economies in order for you to grow not only the top line, but increase EBITDA? Thank you.

Yes, thanks Tobey. Shall I take that, Ajay?

Yes.

Let me answer that in two ways; in our current situation and then where I think we're moving. Let me start with where I think we're moving. I think I believe our business has enormous potential to actually grow even without the benefit from the economy. And I think where we have made the right investments aggressively and hard-nosed investments, you can't just invest, you have to invest in the right places. We are showing that. The change in the trajectory of Strat Comm wasn't because the economy got better. It was because we started to invest behind the better propositions and stopped investing behind some of the propositions where we didn't have a right to win. And in Europe, you can't say the European economy has been doing better than the U.S. economy, and that's going forward. I think so that is the aspiration. But that requires some hard-nosed look at each of the positions and hard-nosed investments, and we've been moving through the business to get there. And I think we are getting there, but we're not fully there, and you see that this quarter. I think in the absence of that, this business is so affected by the restructuring market, right. It's just - it is such a powerful competitive position that when there were deals out there, we tend to win, and it's a business with great professionals. We have a pretty high fixed cost structure because of our comp structure, and therefore, when we win, a lot of it goes to the bottom line. When we don't have it, a lot of them hits the bottom line. So over the history of this company, the best market is when there is a lot of restructuring. It's clearly you can tie that. The second best thing is a lot of M&A and sometimes those are inconsistent, but I would say that's the history. What I am trying to do and what I think we now have the management team committed to do is to never belie the - some reality to that, but make sure we're doing enough to offset that. And we just haven't yet got there some places in the U.S. Let me say one more thing on that. For example, performance improvement is not dependent on that and we're just behind on where I would hope we would be in performance improvement. And the people who were doing really good performance improvement work, the downturn in restructuring doesn't affect it. But given where we are, it affects us a lot. Did I get that part of your question, Tobey?

You did. I just had one follow-up, if I could. What does your guidance imply for the trajectory of EBITDA this year? Will that be down a comparable amount to EPS, or how should we think about it? Certainly you've got some repurchase in the guidance. Thank you.

The answer is we haven't given specific EBITDA guidance, but this change relates to EBITDA, not repurchase. Repurchases were already factored into our earlier guidance, so it is corresponding reduction.

Okay. Thank you.

Thanks Tobey.

We'll go next to Kevin McVeigh with Deutsche Bank.

Good morning, Kevin.

Good morning. Hi, thanks for taking my question. Just wanted to follow-up on the restructuring a little bit in terms of trying to just get a better understanding of the timing from when you folks would get engaged relative to actual distress. So looking at the retail space, I'd imagine you folks start to come in before there is actually filing, so has the process started where you're coming in to maybe try to optimize cost structures and things like that, and in an effort to try to stave off the bankruptcy and without getting too specific with clients, how does that typically come about in terms of lead time and when you start to see that firm up in the revenue?

Yes, it's a good question, Kevin. Look, it varies by what role we play in the restructuring. And I'm not the expert on the exact timing. But what I think is the case is when we take creditors side positions, those tend to be later, those tend to be actually– often after somebody has filed occasionally we'll start to get involved ahead of time. On Company side positions, sometimes it's late but often you're right. We're getting involved earlier to try to help somebody stave off bankruptcy, and so there is some lead time and certainly the conversations start quite a bit ahead of time. And so it's just a mixture depending on the role we play. Does that begin to address your question?

It does. And then just another question on that was it looks like the FTEs on the restructuring side picked up a little bit, utilization down. Is there any way to think about or rather up sequentially put still sub-60? Is there any way to think about utilization targets in that business in the back half for the year?

Well, yes. I don't know what we disclosed publicly, but I would say that nobody in the business thinks utilization targets in the 50s is a good target. Can I say that?

Yes.

And look, I think the trick is that what you have to do in a professional services business is always be careful. If you have great talent, you can't do something based on a bad quarter because it's too hard to get good talent. Now you have to do two other things in addition. You have to make sure that you're looking for people who are going to be here long-term, and that's something you should be doing even in good times because if you have - you just have to continually look through and make sure you have the right group of people and you have to do that and that's an ongoing thing. And then, obviously if you have bad businesses, you have to confront those and exit them like we did for Brazil and some parts of FLC in Brazil and so forth. In Corp Fin in the U.S., it's a complicated thing because it's a really good business where we have a lot of good people. And so there is - you got to go always prune the people who aren't doing well but you also have to then say, if I got really good people, I got to go bust my tail and get them busy because I want these people here for the next boom. And I would say all of those things are being looked at. And Carlyn Taylor, who is Co-Leader of this, I think, has flown three times to Australia to help sell project back there and we have people flying around and I think there is real opportunity to get people busy, but nobody thinks utilization in the 50s is the right number. Does that help?

Yes. It's very helpful. Thank you all.

[Operator Instructions]. We'll go next to Tim McHugh with William Blair.

Yes, thank you.

Good morning, Tim.

Good morning. First I guess I just wanted to ask somewhat connected to the last question. But the expense growth as we go through the remainder of the year, I guess, have you already started to take actions, or what would be the expectation? Are you - is the guidance assuming you grow into the expense base. Can you help give us any context for, I guess, how you're approaching it at this point?

Look, I would say this that in terms of you're talking about overhead expenses, I think the answer is you either do one of two things. You either grow into the expense base or you reduce the expense base, and those have to be conversations that one has after a tough quarter. And I'll just maybe leave it at that, Tim.

Okay. Well, I have - I'm going to guess have you had those conversations or are...

Of course, we had those conversations, right.

Okay.

The question is - but both of those are very viable because we have such different parts of our business. We do have, even in the slow quarter, some businesses that are growing extraordinary successfully and you're not going to address cost issues there and you're not going to address cost issues in business that had a temporally blip down. But where you have now a rethinking of where - what the trajectory of the business is, you have to have cost structures that support them in the right way, and those conversations of course are going on.

Okay. And then in Strat Comm, I know it's - obviously it had a good run for a while but weaker this quarter. Is there - I guess, what part was weaker, and could give more color there, and how comfortable are you that that's just timing or a blip versus has something changed in the demand environment or your positioning or something?

Yes, look, so let me be clear on that. I don't think you can ever hold any one of our businesses to having no blips down. If you're going to hold any business to that, they're going to fail at some point. And there is a certain number of - certain amount of randomness in the business, so could Strat Comm or any other business have another down quarter? Of course, they can. What you can have is a sense of whether you feel like it's on the right trajectory, which actually I think if you have that clear sense, it means over any multi quarter period, it will be up. And we clearly have that conviction with Strat Comm. This was just a little bit off. There is no change. Actually frankly, our competitive position continues to grow in that business. We are attracting very talented people from the outside. We have good discipline, promotion processes and so forth. But I think this - I don't think this business has ever been in a better shape competitively as we have it now. The first quarter just happened to be an off quarter. I can't guarantee, Tim, that any business doesn't have another off quarter in this year, but there is no change in our confidence that this business is positioned in the right way going forward. Does that answer?

Yes, it does. And then, lastly just the comments around, I guess, going back to the restructuring market, you mentioned you're conflicted out of some of the bigger engagements, but I guess, just market share-wise, did you feel like you've won, absent factors like that, has your - I guess, your ability to capture the work that's come out remained consistent with what you would have thought and it's just the number of opportunities, or I guess, talk about that dynamic.

Yes. It's certainly mostly the number of opportunities. As overall, we can't see that we've lost share. We look pretty hard at different sub-sectors and say how many did we win in this quarter? And then it gets really hard because when you look at sub-sectors, you can be looking at there were three jobs for this sub-sector and did you win one or did you win two and those sorts of things. We feel pretty good about our competitive position in the various verticals that have historically been strong here, mining, energy and retail. And we don't feel like we're worse competitively but we do think the market is down, and we think energy and mining will continue to be down. I think it'll be important that we continue to win a good share of the retail things going forward, because the retail business - there are more filings now. They weren't the biggest filings but we think the dip in retail that we saw the second half of last year was a temporary dip down and we think that business is going to come back, so it will be important that we win our share of those going forward. But as of now, we're feeling pretty good about our competitive position. Does that answer your question, Tim?

Yes, thanks.

And with no further questions in the queue at this time, we will - that does conclude today's presentation. We thank you for your participation.