FTI Consulting, Inc.

Welcome to the FTI Consulting Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the call over to Molly Hawkes, Vice President of Investor Relations. Please go ahead.

Good morning. Welcome to the FDI Consulting Conference Call to discuss the company's second quarter 2021 earnings results as reported this morning. Management will begin with formal remarks, after which they will 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 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 annual report on Form 10-K for the year ended December 31, 2020, and in our other filings 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 total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin, and free cash flow. For discussion of these and other non-GAAP financial measures, as well as our reconciliations of non-GAAP financial measures, the most directly comparable GAAP measures Investors should review the press release and the accompanying financial tables that we issued this morning, which include the reconciliations. 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 have been updated to include our second quarter 2021 results. With these formalities out of the way, I am joined today by Stephen Gumby, our President and Chief Executive Officer, and Ajay Savarwal, our Chief Financial Officer. At this time, I will turn the call over to our President and Chief Executive Officer, Steve Gumby.

Thank you, Molly. Good morning to everyone. And thank you all for joining us. I hope everyone and your families continue to be well. I know we all can see light at the end of the tunnel regarding the pandemic. but I also know that in no place around the world, no place around the world are we yet fully in that light. So I'm hoping everybody remains safe. I'm also hoping that we are, is there a binging in the background there? Yeah, well, I'm in a new place doing the call, so unfortunately we might have a little background noise. Sorry about that. So look, I'm hoping everybody stays safe. I'm also hoping that we all are getting a chance to reconnect with our loved ones and our colleagues in a somewhat deeper way. Over the last several weeks, like this week, I've had the pleasure of starting to see clients in person and traveling to some of our offices to see our people. I hope you have begun to have the equivalent. For me, it has been wonderful to get the chance to see people person in person again. Obviously, technology is incredibly terrific about connecting us. It changes our abilities to feel connected when we're apart. Now, some technologies are better than others. I think letter writing from my youth wasn't that great, notwithstanding the fact that my parents celebrated the fact that I sent them a postcard from summer camp. And telegrams, except for emergencies, weren't much better. But telephones obviously helped, right? They were real-time. They were interactive. They allowed you to talk with somebody and stay connected. And Zoom and Teams are incredibly better. They give us eye contact. They give us the ability to see authenticity in somebody's face. It's a powerful thing. But when we get back out in the world, I, for one, am rediscovering the fact that even today, even today, nothing is better than getting a chance to see someone in person and maybe giving that person a hug. So my best wishes for everybody on this call as we're each trying to navigate our way back closer to those rich parts of life. Turning to our results, I'm going to let Ajay give you all the details of this yet again terrific quarter. It is a terrific quarter, and there's lots of details, but I'm going to leave that to him. What I'd like to do, with your permission, is share a bit of a longer-term perspective. On these earnings calls, we often are talking about market forces, the forces that are external to our firm. Last year, for example, we talked about the courts being closed and travel restrictions. and the impact of each of those. And other times we've talked about the restructuring market either being up or down, or whether their transaction market is booming or not. Obviously, those discussions are important. We wouldn't be talking about them if they weren't. Markets do affect our individual businesses, and they can affect them sharply over any short period of time. What is also true, and to me, far more powerful, is how little the markets determine our performance over any extended period of time. How much, when you look back over two years, four years, six years, seven years of our history, how much of our business is not driven by quarters or by market factors, but is driven by us, by what our teams do. It's about what our ability over any extended period of time to not get driven by quarterly market forces, but rather for us, control our destiny. Now, I know there's some long-time observers of our company on the call, and some of you have suggested that at one point this company was never up unless the restructuring business was up, and the restructuring business was not up unless the restructuring market was up. And as a consequence, at one point we were seen by some as a cork that floats up and down with restructuring waves. I don't know whether that was ever fully true. But I believe our track record over the last two, four, five-plus years suggests it is not the case today. Our teams have been and are building businesses that are global, diverse, but most important, powerful. Each can, as we've seen, be whipsawed by markets in the short term. But over the last years, we have shown that if we do the right things, Over any extended period of time, we are not forks on the wave, but rather folks who determine our future. By now, I believe you can see examples of this in every one of our businesses and every one of our regions. For example, our technology business. This quarter is being helped by the strong M&I markets. Markets matter. Having said that, by far the more fundamental change in our trajectory in this business wasn't driven by markets. It was driven by the team's driving strategic changes that they engineered four years ago. At that point, some of you might remember, the business was headed in the wrong direction, even with solid markets. The strategic changes the team drove reversed that. That business started to move up even before the M&A boom. As a consequence, I believe we have been the fastest-growing major player, at least organically, in the e-discovery business over the last few years. not because of the market, but because of what our teams have done. Similarly, in econ, yes, the M&A and antitrust clearance markets are hot. If you look underneath that, you see the cornerstone of our multi-year growth that we've driven is actions taken by teams to support and add to the fabulous positions we have in the U.S. and extend those positions abroad. Not market phenomena, but the phenomenon of great people attracting other great people. FLC obviously saw the market's effects last year due to the halted court activities and travel. As a consequence, as I think many of you will remember, the business operated at a loss at some points last year. As you know, we remain convinced that we have a very good business in FLC with terrific professionals, and we hired even in the face of that downturn. A side note, look, in my experience, you can hurt a business seriously by overreacting to short-term headwinds. For example, by failing to hire great people or getting rid of good people. But my experience also is if you don't make those steps, if instead you support great people in a downturn, you see ultimately that the short-term headwinds dissipate. and the powerful underlying strength and potential of that great group of people emerges. And we are seeing that this year with FLC. In Stratcoms, you saw our teams, beginning six years ago and since, drive a set of strategic changes that turned this business from what was once a declining business into a terrific growth engine, a business that's growing in brand, in revenue, in capability, not on every dimension, perfectly every quarter. but robustly and powerfully over any extended periods of time, including this year. I've saved Corp Fin for last. Some, I suspect, worry that Corp Fin is the counterexample, since at least this year, the market forces seem to be trumping everything. I would argue that Corp Fin, in fact, fully reinforces the overall point. Yes, the restructuring market is down a huge amount, And we are, therefore, down in restructuring substantially versus last year. But it's worth noting that our restructuring business in the face of this terrible market is still up substantially from six years ago. For example, my first year here, reflecting the team's strengthening of that business, strengthening an already strong predator rights business we had in the U.S., expanding substantially our U.S. company-side business, and dramatically strengthening our restructuring positions abroad in multiple markets. And the CF results today also reflect the efforts of our team made over the same period to build business transformation and transactions business that today are soaring. The result is if you look out over multiple years, not just this year versus last year, you look through the ups and downs of the markets, We have been able to develop and attract great professionals in the U.S. and around the world, and as a result, though the CF results are down year on year, they are not over an extended period of time. They are up. For example, the profits in the first half of this year, even with the hit of the market, the restructuring, are still at a run rate that is essentially triple my first year here. So are we affected by markets? Sure, of course. But are we determined by those markets? I don't think the data suggests that. I think the data explicitly suggests otherwise. Market forces affect us sometimes dramatically over short periods of time in our individual businesses. They cause zigs and zags. But we have also seen that if we don't overreact to the zigs and zags... If instead we assess our businesses and when we find that we have confidence in those businesses and in the teams driving them and we commit to investing in those businesses, even in a slow period, even if it hurts those financials in that slow period, as we did back in FLC and are fully willing to do so in CF, our experiences over any longer period of time, we get rewarded powerfully. We end up building businesses that great people want to stay in and help build and that great people want to be part of, businesses that attract great people, that support their ambitions and their development, and allow them to build businesses they're proud of and client relationships that make an impact. When you have great people doing great work and feeling supported, you end up with people who are developing themselves, feeling good about themselves, and great people outside of your firm who want to be part of that. You create businesses that, through the zigs and zags, become sustainable, powerful, durable, resilient and exciting growth engines. That is what our teams, through the zigs and zags, to me, have demonstrated. And together, I believe we will continue to do so. With that, let me turn it over to you, Ajay, to take us through the quarter.