FTI Consulting, Inc.

Good morning. Welcome to the FCI Consulting Conference Call to discuss the company's first quarter 2023 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, ESG-related matters, 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 headings of risk factors and forward-looking information in our quarterly report on Form 10-Q for the quarter ended March 31st, 2023, our annual report on Form 10-K for the year ended December 31st, 2022, and in our other filings with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements which speak only 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 to 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 reconciliation. Lastly, there are two items that have been posted to the investor relations section of our website 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 first quarter 2023 results. Of note, during today's prepared remarks, management will not speak directly to the quarterly earnings presentation posted to the investor relations section of our website. To ensure our disclosures are consistent, these slides provide the same details as they have historically, and as I've said, are available on the investor relations section of our website. With those formalities out of the way, I'm 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. Welcome, everyone, and thank you all for joining us this morning. I am pleased to say that we reported record revenues yet again this quarter. And, in fact, we reported double-digit revenue growth year over year once again. As Ajay will talk about, that level of revenue growth was despite the fact that we had FX headwinds this quarter and we had some revenue deferrals. Disaggregating that revenue performance, each of our segments once again grew year over year. Stratcom's revenues grew mid-single digits despite some significant FX headwinds. Econ, for reasons I'll describe later, only reported modest revenue growth. But all of the rest of our segments' revenues grew at double-digit levels. And when you adjust for FX headwinds, strong double-digit levels. Below that sort of terrific revenue story, as you might imagine, are enormous numbers of success stories. I'm going to leave it to Ajay to share some of them. And if you'd like some further details or elaboration, we can go into more depth during the Q&A. But today I want to move from the revenue story to the bottom line story. Because notwithstanding that strong top line performance, our bottom line, in fact, underperformed our expectations this quarter and did so substantially. Ajay will discuss the reasons for those shortfalls in some depth, but I'd like to give you a few of the top level reasons. First, let me come back to econ. Our econ business, as I think everybody on this call knows, is an incredibly powerful business. that has for many years delivered strong results for our shareholders, and at least as importantly for our clients. We've averaged about 15% average annual adjusted EBITDA margins in that business for the last many, many years, at least 10. For a number of factors, including some slowness in parts of the business in the beginning of the year, some revenue deferrals, a few other things, we happen to deliver an 8% EBITDA, adjusted EBITDA margin this quarter. As we will discuss later, we do not expect adjusted EBITDA margins and ECON to remain at that level for the rest of the year. The second factor is one that we've talked about a lot in the past. In any given quarter, there are a lot of factors that can happen to cut one way or another. We have cell phones. You might be grabbing that and taking it out.

Thank you.