Q2 2024 FTI Consulting Inc Earnings Call

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Operator: Good day, and welcome to the FTI Consulting 2nd Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode.

Speaker Change: Good day and welcome to the F. T I consulting second quarter 2024 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

Operator: Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone screen.

Speaker Change: After todays presentation, there will be an opportunity to ask questions.

To ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: And to withdraw your question. Please press Star then two.

Speaker Change: Please note. This event is being recorded I would now like to turn the conference over to MS. Mollie Hawkes head of Investor Relations. Please go ahead ma'am.

Operator: To withdraw your question, please press the star then. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Mollie Hawkes, HITM Investor Relations. Please go ahead, Ms. Hawkes.

Mollie Hawkes: Good morning. Welcome to the FTI Consulting conference call to discuss the company's second quarter 2024 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 uncertainty.

Mollie Hawkes: Good morning, welcome to the STI consulting conference call to discuss the company second quarter 'twenty 'twenty four earnings results as reported this morning.

Speaker Change: Management will begin with formal remarks, after which they will take your question.

Mollie Hawkes: Forward-looking statements include statements concerning plans, initiatives, projections, prospects, policies, processes, and practices, objectives, goals, commitments, strategies, future events, future revenues, future results, and performance, future capital allocations and expenditures, expectations, plans, or intentions relating to acquisitions, share repurchases, and other matters, business trends, ESG-related matters, climate change-related matters, new or changes to laws and regulations, scientific or technological 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.ftigonsulting.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 Investors are cautioned not to place a point of reliance on any forward-looking statements that speak only as of the date of this earnings call and will not be updated.

Speaker Change: Before we begin I would like to remind everyone that this conference call may include forward looking statements within the meaning of section 27, a of the Securities Act of 1933 and section 21 of the Securities Exchange Act of 1934 that involve risks and uncertainties.

Speaker Change: Forward looking statements include statements concerning plans initiatives projections prospects policy.

Speaker Change: Officers and practices.

Justin: Justin go old commitment strategies future events future revenues future results and performance future capital allocations and expenditures expectations plans or intentions relating to acquisitions share repurchases and other matters business trend yes.

Related matters climate change related matters, new or changes to laws and regulations scientific or technological developments and other information or other matters that are not historical including statements regarding estimates of our future financial results and other matters.

Speaker Change: 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 Dot MTI consulting dot com as well as us.

Speaker Change: Their disclosures under the heading of risk factors and forward looking information in our quarterly report on Form 10-Q for the quarter ended June 30th Twenty-twenty for our annual report on Form 10-K for the year ended December 31, 2023, and in our other filings with the SEC invest.

You are cautioned not to place.

Speaker Change: On any forward looking statements, which speak only as of the date of this earnings call and will not be updated.

Mollie Hawkes: 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 a 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 these reconciliations.

Speaker Change: 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.

Speaker Change: For a 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 these records that reconciliation.

Speaker Change: The Asian <unk>.

Mollie Hawkes: 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 second quarter 2024 results. Of note, during today's prepared remarks, management will not speak directly to the quarterly earnings presentation posted to the website.

Speaker Change: 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 has been updated to include our second quarter 2024 result of note. During today's prepared remarks management will not speak directly to the court.

Steven H. Gunby: To ensure our disclosures are consistent, these slides provide the similar details they have historically, and as I said, are available on the investor relations section of our website. With these formalities out of the way, I'm joined today by Steven 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.

Speaker Change: Quarterly earnings presentation posted to the website.

Speaker Change: To ensure our disclosures are consistent besides provide the similar details they have historically and as I've said are available on the Investor Relations section of our website.

Steven H. Gunby: With these formalities out of the way I'm joined today by Steven Gunby, Our President and Chief Executive Officer, and now as I saw her wall, our Chief Financial Officer at this time I will turn the call over to our President and Chief Executive Officer, Steve Gunby.

Steven H. Gunby: Welcome, everyone, and thank you all for joining us this morning. As I'm sure many of you saw in our press release this morning, we once again delivered terrific results this quarter. As usual, certain sub-businesses and geographies either outperformed or underperformed their specific expectations. But overall, it was a terrific quarter and, combined with a strong first quarter, delivered an exceptional first half of the year. As Ajay will talk about in a moment, we had some one-time factors that positively affected the results this quarter, most notably a lower than expected tax rate. But even normalizing for those one-time factors, it was a great first half of the year.

Steven H. Gunby: Molly welcome everyone and thank you all for joining us this morning.

Steven H. Gunby: As I'm sure. Many of you saw in our press release this morning.

Speaker Change: We once again delivered terrific results this quarter.

Speaker Change: As usual certain sub businesses and geographies, either outperformed or underperformed their specific expectations.

Steven H. Gunby: But overall it was a terrific quarter and combined with a strong first quarter delivered an exceptional first half of the year.

Steven H. Gunby: As Jay will talk about in a moment, we had some onetime factors this quarter positively affected the results, most notably a lower than expected tax rate.

Jay: But even normalizing for those one time factors. It was a great first half of the year our revenue in aggregate grew 12% almost all of which was organic growth.

Steven H. Gunby: Our revenue in aggregate grew 12%, almost all of which was organic growth, and our adjusted EBITDA was up 27% compared to the first half of the year. We feel pretty good about the first half of the year and, importantly, the strength of our business. With respect to the second half of the year, let me share a couple of points. First, Ajay always points out at this time of year that the second half of the year, and particularly the fourth quarter, includes the holidays, which is a time when many of our professionals and our clients take time off.

Jay: And our adjusted EBITDA was up 27% compared to the first half of the year.

Jay: And we feel pretty good about the first half of the year and importantly, the strength of our businesses.

Steven H. Gunby: With respect to the second half of the year, let me share a couple of points first RJ always points out at this time of year, the second half of the year and particularly in the fourth quarter includes the holidays, which is a time when many of our professionals and our clients take time off.

Steven H. Gunby: The December effect does not actually happen every year because there are so many variations in our business. You're going to have transactions pick up. You're going to have little booms in December, and so forth.

RJ: The December effect does not actually happened every year because there's so many variations in our business you can have transactions pick up again, a little booms in December and so forth.

Steven H. Gunby: For example, last year we were surprised by how strong December was, and therefore our fourth quarter. But a December slowdown does happen more times than not, and it can have a considerable effect on our results. So we build that into our forecast. That's a general point.

Speaker Change: For example, last year, we were surprised by how strong December was in there for fourth quarter.

Steven H. Gunby: But the December slowdown does happened more times than not we can have a considerable effect on our results. So we build that into our forecast that's a general point.

Steven H. Gunby: Yeah.

Steven H. Gunby: More unique to this year is something about the comparisons with last year that I want to underscore. So far this year, we've been cycling a very weak, prior-year, first half of the year. For the rest of this year, we're forecasting that our business will continue to be strong, because we are cycling a much stronger set of comparables from last year. That does not mean we expect business to be weak in the second half.

Speaker Change: More unique to this year is something about the comparisons with last year.

Steven H. Gunby: To underscore so far this year, we've been cycling a very weak.

Steven H. Gunby: Higher year first half of the year for the rest of this year and we're forecasting our business will continue to be strong we are cycling a much stronger set of comparables from last year. It does not mean, we expect that business to be weak in the second half. It does mean, however that as the year unfolds, we expect to grow year on year will look different than what we've delivered so far.

Steven H. Gunby: It does mean, however, that as the year unfolds, we expect growth year on year to look different than what we've delivered so far. The third point is, to me, the more contentious point, which is that so far this year, for a variety of reasons, we have not shown the level of headcount growth that I aspire to, that we typically have had over these last few years, and that is required to meet my and our multi-year growth aspirations and the level of growth that we have been delivering. And so we have clear plans to correct those shortfalls in the second half of the year. As always, the bulk of our campus hires will join us, as they typically do, in the third quarter.

Steven H. Gunby: The third point is to me the more contextual point, which is that so far this year for a variety of reasons we.

Steven H. Gunby: We have not shown this level of head count growth that I aspire to that we typically have had over these many last few years.

Steven H. Gunby: And that is required to meet.

Steven H. Gunby: And our multi year growth aspirations in the level of growth that we have been delivering.

Steven H. Gunby: So we have clear plans to correct those shortfalls in the second half of the year.

Steven H. Gunby: As always the bulk of our campus hires with join US as they typically do in the third quarter, but as I will come back to in a moment. We also continue to find and invest behind senior talent.

Steven H. Gunby: But, as I will come back to in a moment, we also continue to find and invest in senior talent. Before I come back to that senior talent point, let me just summarize an aggregate. These first two quarters, notwithstanding these uncertain economic terms, leave us feeling terrific, not only about the performance so far this year but about the strength of our positions around the world. So let me come back and elaborate a bit on the third point I made, which is a point that I referred to briefly last quarter, which is that we have been having and continue to have what I believe may be the most robust and broad set of discussions regarding potential senior talent that we've ever had, or at least during my tenure here. After I mentioned that last time, a couple of people queried Mollie about the fact that it didn't seem co So let me talk about that a bit.

Steven H. Gunby: Before I come back to that senior counterpoint, let me just summarize in aggregate.

Steven H. Gunby: These first two quarters notwithstanding these uncertain economic times, we've seen terrific not only about the performance so far this year.

Steven H. Gunby: What about the strength of our positions around the world.

Steven H. Gunby: So let me come back and elaborate a bit on the third point I made which is the point that I referred to briefly last quarter.

Steven H. Gunby: Which is that we have been having and continue to have what I believe maybe the most robust and broad set of discussions regarding potential senior talent that we've ever had or at least during my tenure here.

Steven H. Gunby: After I mentioned that last time couple people carry Molly about the fact that it didnt seem contaminants with a lot of announcements. So let me talk to that a bit.

Steven H. Gunby: First of all, I hope by now you're starting to see some of those announcements. I think so far we've announced 19 S&D hires, and they are across the breadth of our segments in geography. Business Transformation and Strategy, Transaction, IG Privacy and Security, Forensic Accounting, Cyber, and hires here in the US, in Asia, on the continent, UK, and elsewhere. So, they're starting to show up, and I hope you're seeing them.

Steven H. Gunby: First of all I hope by now Youre, starting to see some of those announcements I think so far we've announced 19 F&B hires and it's across the breadth of our segments and geographies.

Steven H. Gunby: Is this transformation and strategy transactions.

Steven H. Gunby: Privacy and security forensic accounting cyber and hires here in the U S and Asia on the continent U K and elsewhere. So we're starting to show up and I hope you've seen them.

Steven H. Gunby: And, importantly, those are on top of the terrific set of promotions we made earlier in the year. 56 promotions at the S&B level and hundreds and hundreds of promotions below that level. But, beyond the promotions and the announcements, let me share a couple of other points.

Steven H. Gunby: And of course importantly, those are on top of a terrific set of promotions. We made earlier in the year 56 promotions at the SMB level and hundreds and hundreds of promotions below that level.

Steven H. Gunby: Yeah.

Steven H. Gunby: But beyond the promotions and the announced Tigers, let me share a couple of other points.

Steven H. Gunby: We are having a lot of conversations with very senior people. When you're at the very highest levels, there's often more of a lag between when we come to an agreement with a person and when we actually announce them publicly, because those senior people typically have important existing obligations at a company.

Steven H. Gunby: We are having a lot of conversations with very senior people.

Steven H. Gunby: When you're at the very most senior levels, there's often more of a lag between when we come to an agreement with a person Columbia actually announce them publicly.

Steven H. Gunby: Those senior people typically have important existing obligations of the company.

Steven H. Gunby: And we typically will support them as they deliver on those expectations and obligations. So, given that, we will typically delay the announcement until they're clear of their obligations. We probably have at least another 15 SMBs beyond the 19 that we've announced that have agreed to come join us, and we simply haven't announced them while they're delivering on their prior obligations. And beyond the ones we've announced and the ones we've signed but not yet been able to announce, we're also having an amazing set of further conversations. Now, of course, with any early stage conversation or even mid stage conversation, the obvious question is, will they ultimately come to fruition? First, are you going to give them an offer? Are they going to come?

Steven H. Gunby: We typically will support them as they deliver on those expectations and our obligations.

Steven H. Gunby: But given that we would typically they may delay the announcement until there are clear of the obligations. We probably have at least another 15 F&B beyond the 19 that we've announced that we've agreed to come and agreed to come join us and we simply haven't been announced them, while they're delivering on the prior obligations.

Steven H. Gunby: And beyond the ones, we've announced and the ones, we've signed but not yet been able to announce we're also having an amazing set of further conversations now.

Steven H. Gunby: Now.

Steven H. Gunby: Of course with any early stage conversation or even mid stage conversation. The obvious question is will they ultimately come.

Steven H. Gunby: Come to fruition first are you going to give them an offer or are they going to come of course do not know on any individual conversation for sure I will say however.

Steven H. Gunby: We, of course, do not know for sure in any individual conversation. I will say, however... Given the number of conversations underway, some of the people I've had a chance to talk to in there, and the quality of that set of people we're talking with, and the richness of the dialogue we're having with them, I suspect a lot of them, in fact, will come to fruition. But, as Ajay always points out, those investments could hurt our P&L in the second half of the year or into 2025. And, of course, they can.

Steven H. Gunby: Given the number of conversations underway.

Steven H. Gunby: Some of the people I've had a chance to talk to and they're in the quality of that.

Steven H. Gunby: Set of people, we're talking with and the richness of the dialogue, we're having with them.

Steven H. Gunby: I suspect a lot of them in fact will come to fruition.

Speaker Change: As <unk> points out those investments could hurt our P&L in the second half of the year or into 'twenty five and of course, we can.

Steven H. Gunby: Typically, senior hires because they often have non-competes or non-solicits, or even if not, you're not going to just hire them; you're going to hire the people behind them. For all those reasons, they typically do not make us money the minute they hit the ground. But that, I hope, is a conversation that you will recall from many of these calls. For me, it's that commitment.

Speaker Change: Typically senior hires because they often have noncompete through non solicit or even if not you're not going to just hire them, they're going to hire people behind them.

Speaker Change: For all those reasons, they typically do not make us money.

Speaker Change: Hit the ground.

Speaker Change: With that I hope, it's a conversation that you will recall from many of these calls.

Speaker Change: For me it's that commitment.

Steven H. Gunby: The commitment to making those sorts of investments behind great talent, talent that can address important client needs in fundamentally important ways, and our willingness to do that, yes, in good quarters but also in bad quarters, has been that commitment that has allowed us to turn this company into the growth engine that it is. It's one that has allowed us to build our businesses across so many geographies in every segment.

Speaker Change: Our commitment to making those sorts of investments behind great talent talent that can address important client needs and fundamentally important ways and our willingness to do that you have some good quarters, but also in bad quarters. It has been that commitment.

Steven H. Gunby: That has allowed us to turn this company into the growth engine that it is it's one that has allowed us to build our business is across so many geographies in every segment. It has allowed us to achieve multiple years of growth.

Steven H. Gunby: It has allowed us to achieve multiple years of growth, and to me, it has transformed our company's reach. Our relevance, our profitability, our reputation, and our ability to attract great professionals to deliver those results for our fabulous clients. My sense is that as long as we continue that philosophy, and yes, we always have to accompany it with the discipline around that philosophy, which is making sure that we are finding great hires.

Steven H. Gunby: And to me, it's transformed our company's reach.

Steven H. Gunby: Our relevance our profitability our reputation.

Steven H. Gunby: And our ability to attract great professionals.

Steven H. Gunby: To deliver those results for our Fabulous.

Steven H. Gunby: Fabulous results for our clients.

Steven H. Gunby: My sense is as long as we continue that philosophy and yes, we always have to accompany with the discipline around the philosophy, which is making sure that we are finding great hires.

Steven H. Gunby: We're spending time on those hires to make sure they're people we're truly excited about, and we spend time integrating them into our company. As long as we have that discipline, and together with it, we maintain the commitment, when we are excited, to invest boldly and with conviction in them and the teams that we build around them. My sense is that as long as we continue that discipline and that boldness.

Steven H. Gunby: We are spending time on those hires to make sure that people were truly excited about.

Steven H. Gunby: <unk> time integrating them into our company.

Steven H. Gunby: But as long as we have that discipline.

Steven H. Gunby: Together with as we maintain that commitment when we are excited to invest boldly and with conviction in them and the teams that we build around them.

Steven H. Gunby: My sense is as long as we continue that discipline and that bonus.

Ajay Sabherwal: We will continue to build on this company's long history and, in any way, accelerate this company's powerful growth journey. With that, let me turn this over to Ajay for the details of the quarter. Thank you, Steve. Good morning, everybody.

Steven H. Gunby: We'll continue to build on this companies.

Steven H. Gunby: So long history and if anything.

Steven H. Gunby: Accelerate this company's powerful.

Steven H. Gunby: Jeremy.

Steven H. Gunby: With that let me turn this over to Ajay for the details for the quarter.

Ajay Sabherwal: In my prepared remarks, I will take you through our company-wide and segment results and discuss guidance for the full year, beginning with our second quarter results. We had a strong quarter with earnings per share of $2.34, which grew 33.7% year-over-year. Let me warn you at the outset, though, that in this quarter we had significant tax benefits that resulted in an effective tax rate of 18.2% compared to 26.7% in the prior year quarter. We expect these benefits to be largely behind us now, resulting in an expected effective tax rate for full year 2024 of between 20 and 22 percent.

Ajay: Thank you, Steve and good morning, everybody and my prepared remarks, I will take you through our company wide and segment results and discuss guidance for the full year.

Ajay: Beginning with our second quarter results, we had a strong quarter with earnings per share of $2.34, which grew 33, 7% year over year.

Speaker Change: Let me at the outset, though.

Steven H. Gunby: Option.

Steven H. Gunby: That in this quarter, we had significant tax benefits that resulted in an effective tax rate of 18, 2% compared to 26, 7% in the prior year quarter.

Steven H. Gunby: We expect these benefits to be largely behind us now.

Steven H. Gunby: <unk> and an expected effective tax rate for full year 2024 of between 2022%.

Ajay Sabherwal: Even without this tax benefit, I am pleased to report that our underlying results were strong. Overall, year-over-year revenue growth of 9.8% more than offset an 8.4% increase in direct costs and a 10.7% increase in selling general and administrative, or SG&A expenses, resulting in adjusted EBITDA growth of 15.7% year over year. All of our segments grew, with particularly strong growth in corporate finance and restructuring, economic consulting, and technology. These segments also had year-over-year Adjusted Segment EBITDA growth, which offset a decline in Adjusted Segment EBITDA in Forensic and Litigation Consulting, or FLC, and in Strategic Communication.

Steven H. Gunby: Okay.

Steven H. Gunby: Even without this tax benefit I am pleased to report that our underlying results were strong.

Steven H. Gunby: Overall year over year revenue growth of nine 8% more than offset an eight 4% increase in direct costs and a 10, 7% increase in selling general and administrative or SG&A expenses, resulting in our adjusted EBITDA growth of 15.

Steven H. Gunby: <unk>, 7% year over year.

Operator: All of our segments grew, with particularly strong growth in corporate finance and restructuring, economic consulting, and technology. The segments also had year-over-year adjusted segment EBDA growth, which offset a decline in adjusted segment EBDA in forensic and litigation consulting or FLC and in strategic communications.

Steven H. Gunby: All of our segments grew with particularly strong growth in corporate finance and restructuring economic consulting and technology.

Steven H. Gunby: These segments also had year over year adjusted segment, EBITDA growth, which offset a decline in adjusted segment, EBITDA, and forensic and litigation consulting or <unk> and <unk> strategic communications.

Operator: Considering our record revenues and EPS in the first half of the year, we are raising our revenue and EPS guidance ranges for the year.

Ajay Sabherwal: Considering our record revenues and EPS in the first half of the year, we are raising our revenue and EPS guidance ranges for the year. Turning to our second quarter 2024 results in more detail, revenues of $949.2 million compared to $864.6 million in the prior year quarter, and earnings per share of $2.34 compared to $1.75 in the prior year quarter.

Steven H. Gunby: Considering our record revenues and EPS in the first half of the year, we are raising our revenue and EPS guidance ranges for the year.

Operator: Turning to our second quarter 2020 for results in more detail. Revenue of $949.2 million compared to $864.6 million in the prior year quarter.

Steven H. Gunby: Turning to our second quarter 2024 results in more detail.

Steven H. Gunby: Revenues of $949 2 million compared to $864 6 million in the prior year quarter.

Operator: Turning to $2.34. Compared to $1.75 in the prior year quarter. In net income of $83.9 million compared to $62.4 million in the prior year quarter.

Steven H. Gunby: Earnings per share of $2 34, compared to $1 75 in the prior year quarter.

Ajay Sabherwal: Net income of $83.9 million compared to $62.4 million in the prior year quarter. This increase was primarily due to higher revenues, a lower effective tax rate, and FX remeasurement gains compared to losses in the prior year quarter, which was partially offset by an increase in compensation and SG&A expenses. SG&A expenses of $206.2 million were 21.7% of revenue.

Steven H. Gunby: Net income of $83 9 million.

Steven H. Gunby: Compared to $62 4 million in the prior year quarter.

Operator: This increase was primarily due to higher revenues, a lower effective backstrate, and effects re-measurement gains compared to losses in the prior year quarter, which was partially offset by an increase in compensation and SGNA expenses. SG&A expenses of $26.2 million were 21.7% of revenues. This compares to SG&A expenses of $186.4 million or 21.6% of revenues in the second quarter of 2023. The increase in SG&A was primarily due to higher compensation and bad debt. Second quarter 2024 adjusted EBITDA of $115.9 million, or 12.2% of revenues, compared to $100.2 million, or 11.6% of revenues, in the prior year quarter.

Steven H. Gunby: This increase was primarily due to higher revenues and lower effective tax rate and FX re measurement gains compared to losses in the prior year quarter, which was partially offset by an increase in compensation and SG&A expenses.

Steven H. Gunby: SG&A expenses of $206 $2 million were 21, 7% of revenues. This compares to SG&A expenses of $186 $4 million or 21, 6% of revenues in the second quarter of 2023.

Ajay Sabherwal: This compares to SG&A expenses of $186.4 million, or 21.6% of revenues, in the second quarter of 2023. The increase in SG&A was primarily due to higher compensation and bad debt. Second quarter 2024 adjusted EBITDA of $115.9 million, or 12.2% of revenues compared to $100.2 million, or 11.6% of revenues in the prior year quarter. Our second quarter effective tax rate was 18.2% compared to 26.7% in the prior year quarter. The lower tax rate was primarily because of a higher, discrete, favorable tax adjustment related to share-based compensation due to the exercise of a larger number of non-qualified stock options, which is not expected to recur to the same extent, and a decrease in foreign taxes compared to the prior year quarter.

Steven H. Gunby: The increase in SG&A was primarily due to higher compensation and bad debt.

Steven H. Gunby: Second quarter 2024, adjusted EBITDA of $115 9 million or 12, 2% of revenues compared to $102 million or 11, 6% of revenues in the prior year quarter.

Operator: Our second quarter effective backstrate of $18.2% compared to $26.7% in the prior year quarter.

Steven H. Gunby: Our second quarter effective tax rate of 18, 2% compared to 26, 7% in the prior year quarter.

Operator: The lower tax rate was primarily because of a higher, discrete, favorable tax adjustment related to share-based compensation due to the exercise of a larger number of non-qualified stock options, which is not expected to recur to the same extent. And a decrease in foreign taxes compared to the prior year quarter. For the second half of the year, we now expect our effective tax rate to be between 22 and 24%. Resulting in an overall expected effective tax rate for full year 2020-4 of between 20 and 22%. We did average shares outstanding or ratio for Q2 of 35.8 million shares compared to 35.7 million shares in the prior quarter.

Steven H. Gunby: The lower tax rate was primarily because of a higher discrete favorable tax adjustment related to share based compensation.

Steven H. Gunby: Due to the exercise of a larger number of nonqualified stock options.

Steven H. Gunby: Which is not expected to recur to the same extent.

Steven H. Gunby: And a decrease in foreign taxes compared to the prior year quarter.

Ajay Sabherwal: For the second half of the year, we now expect our effective tax rate to be between 22 and 24 percent, resulting in an overall expected effective tax rate for the full year 2024 of between 20 and 22 percent.

Steven H. Gunby: For the second half thoughts for the second half of the year, we now expect our effective tax rate to be between 22 and 24%.

Steven H. Gunby: Resulting in an overall expected effective tax rate for full year 2020 before of between 2022%.

Ajay Sabherwal: Weighted average shares outstanding, or WASO, for Q2 of 35.8 million shares compared to 35.7 million shares in the prior year quarter. Billable headcount increased by 103 professionals or 1.7% compared to the prior year quarter. Non-billable headcount increased by 81 professionals, or 5%, for the same period. However, sequentially, deliverable headcount decreased by 32 professionals as attrition slightly exceeded gross hiring. Non-billable headcount increased by 14 professionals. Now, I will share some insights at the segment level.

Steven H. Gunby: Weighted average shares outstanding our ratio for Q2 of $35 8 million shares compared to 35 7 million shares in the prior year quarter.

Operator: Billable headcount increased by 103 professionals or 1.7% compared to the prior year quarter. Non-villable headcount increased by 81 professionals or 5% for the same period.

Steven H. Gunby: Billable headcount increased by 103 professionals are one 7% compared to the prior year quarter.

Steven H. Gunby: Non billable head count increased by 81 professionals are 5% for the same period.

Operator: Sequentially, billable headcount decreased by 32 professionals as a creation slightly exceeded girls hiring. Non-villable headcount increased by 14 professionals.

Steven H. Gunby: Sequentially billable head count decreased by 32 professionals as attrition slightly exceeded gross hiring.

Steven H. Gunby: Non billable head count increased by 14 professionals.

Operator: Now I will share some insights at the segment level. In corporate finance and restructuring, revenues of $348 million increased 9.5% compared to the prior year quarter. The increase in revenues was primarily due to higher demand and realized bill rates for business transformation and strategy and transactions services, which was partially offset by lower restructuring revenues. Adjusted segmented by the DA of $66.5 million or 19.1% of segment revenues compared to $45.5 million or 14.3% of segment revenues in the prior year quarter. The increase in adjusted segmented by the DA was primarily due to higher revenues, which was partially offset by an increase in variable compensation.

Steven H. Gunby: Okay.

Steven H. Gunby: Now I will share some insights at the segment level in corporate finance and restructuring revenues of $348 million increased nine 5% compared to the prior year quarter the.

Ajay Sabherwal: In corporate finance and restructuring, revenues of $348 million increased 9.5% compared to the prior year quarter. The increase in revenues was primarily due to higher demand and realized bill rates for business transformation and strategy and transaction services, which was partially offset by lower Adjusted segment EBITDA of $66.5 million, or 19.1% of segment revenues compared to $45.5 million, or 14.3% of segment revenues in the prior year quarter. The increase in adjusted segment EBITDA was primarily due to higher revenues, which was partially offset by an increase in variable compensation. In the second quarter, restructuring represented 43% of business transformation and strategy, 32%, and transactions represented 25% of segment revenue.

Steven H. Gunby: The increase in revenues was primarily due to higher demand and realized bill rates for business transformation and strategy and transaction services, which was partially offset by lower restructuring revenues.

Steven H. Gunby: Adjusted segment EBITDA of $66 5 million or 19, 1% of segment revenues compared to $45 5 million or 14, 3% of segment revenues in the prior year quarter.

Steven H. Gunby: The increase in adjusted segment EBITDA was primarily due to higher revenues, which was partially offset by an increase in variable compensation.

Operator: In the second quarter, restructuring represented 43%; business transformation and strategy represented 32%; and transactions represented 25% of segment revenues. This compares to a split of 47% for restructuring, 28% for business transformation and strategy, and 25% for transactions in the prior year quarter. Year over year, business transformation and strategy revenues grew 24%, and transactions revenues grew 13%, while restructuring revenues declined 1%. Sequentially, corporate finance and restructuring revenues decreased $18 million, or 4.9%, as 10% growth in transactions revenues was more than offset by a 13% decline in restructuring revenues and a 3% decline in business transformation and strategy revenues.

Steven H. Gunby: In the second quarter restructuring represented 43%.

Steven H. Gunby: Business transformation and strategy represented 32% and transactions represented 25% of segment revenues.

Ajay Sabherwal: This compares to a split of 47% for restructuring, 28% for business transformation and strategy, and 25% for transactions in the prior year quarter. Year over year, business transformation and strategy revenues grew 24%, and transactions revenues grew 13%, while restructuring revenues declined 1%. Sequentially, corporate finance and restructuring revenues decreased $18 million, or 4.9%, as 10% growth in transactions revenues was more than offset by a 13% decline in restructuring revenues and a 3% decline in business transformation and strategy revenues. The sequential decline in restructuring activity occurred as several large engagements concluded. Adjusted segment EBITDA decreased $8.8 million sequentially.

Steven H. Gunby: This compares to a split of 47% for restructuring, 28% for business transformation and strategy.

Steven H. Gunby: 25% for transactions in the prior year quarter.

Steven H. Gunby: Year over year business transformation and strategy revenues grew 24% and transactions revenues grew 13%.

Steven H. Gunby: Our restructuring revenues declined 1%.

Steven H. Gunby: Sequentially, corporate finance and restructuring revenues decreased $18 million or four 9% as 10% growth in transactions revenues was more than offset by a 13% decline in restructuring revenues and a 3% decline in business.

Steven H. Gunby: Since formation and strategy revenues.

Operator: The sequential decline and restructuring activity occurred as several large engagements concluded. Adjusted segmented by the DA decreased $8.8 million sequentially, primarily due to the sequential decline in revenues, which was only partially offset by lower compensation and SGNA expenses. Turning to FLC, revenues of $169.5 million increased 2.9% compared to the prior year quarter. The increase in revenues was primarily due to higher demand for dispute services and higher realized bill rates for construction solution services, which was partially offset by lower demand for investigation services.

Steven H. Gunby: The sequential decline in restructuring activity occurred as several large engagements concluded.

Steven H. Gunby: Yes.

Steven H. Gunby: Adjusted segment EBITDA decreased 18, eight $8 million sequentially.

Ajay Sabherwal: This was primarily due to the sequential decline in revenues, which was only partially offset by lower compensation and SG&A expenses. Turning to FLC, revenues of $169.5 million increased 2.9% compared to the prior year quarter. The increase in revenues was primarily due to higher demand for dispute services and higher realized bill rates for construction solution services, which was partially offset by lower demand for investigation services. Adjusted Segment DBDA of $15 million, or 8.8% of segment revenues compared to $25.6 million, or 15.5% of segment revenues in the prior year quarter.

Steven H. Gunby: Primarily due to the sequential decline in revenues, which was only partially offset by lower compensation and SG&A expenses.

Steven H. Gunby: Turning to <unk> revenues of $169 5 million increased two 9% compared to the prior year quarter.

Steven H. Gunby: The increase in revenues was primarily due to higher demand for dispute services and higher realized bill rates for construction solution services, which was partially offset by lower demand for our investigation services.

Operator: Businesses. Adjusted segmented by DA of $15 million or 8.8% of segment revenues compared to $25.6 million or 15.5% of segment revenues in the prior year quarter. The decrease in adjusted segmented by DA was primarily due to an increase in compensation and SG&A expenses, which more than offset the increase in revenues.

Steven H. Gunby: Adjusted segment EBITDA of $15 million or eight 8% of segment revenues compared to $25 6 million or 15, 5% of segment revenues in the prior year quarter.

Steven H. Gunby: The decrease in adjusted segment EBITDA was primarily due to an increase in compensation and SG&A expenses, which more than offset the increase in revenues.

Ajay Sabherwal: The decrease in adjusted segment EBITDA was primarily due to an increase in compensation and SG&A expenses, which more than offset the increase in revenue. Sequentially, FLC revenues decreased $6.6 million, or 3.7%, primarily due to lower demand for investigations and dispute services.

Operator: Sequentially, FLC revenues decreased $6.6 million, or 3.7%, primarily due to lower demand for investigations and dispute services. Adjusted segmented by DA decreased by $18.7 million sequentially, primarily due to lower revenues and higher compensation.

Steven H. Gunby: Sequentially <unk> revenues decreased $6 $6 million of three 7%, primarily due to lower demand for investigations and disputes services.

Ajay Sabherwal: Adjusted segment fee to DA decreased by $18.7 million sequentially, primarily due to lower revenues and higher compensation. This quarter, we instituted a change in compensation plan for senior practitioners, where we now have more performance-based compensation. The increase in compensation in FLC this quarter is largely because of a year-to-date catch-up accrual related to this new plan. Our economic consulting segment's record revenues of $230.9 million increased 14.4% compared to the prior year quarter.

Steven H. Gunby: Adjusted segment EBITDA decreased by $18 $7 million sequentially.

Steven H. Gunby: Primarily due to lower revenues and higher compensation.

Operator: This quarter, we instituted a change in the compensation plan for senior practitioners, where we now have more performance-rated compensation. The increase in compensation in FLC this quarter is largely because of a year-to-date catch-up approval related to this new plan.

Steven H. Gunby: This quarter, we instituted a change in compensation plan for senior practitioners, where we now have more performance related compensation.

Steven H. Gunby: The increase in compensation and SLC. This quarter is largely because of a year to date catch up accrual related to this new plan.

Operator: Our economic consulting segment's record revenues of $230.9 million increased 14.4% compared to the prior year quarter. The increase in revenues was primarily due to higher demand and realized bill rates for M&A-related antitrust and financial economic services, which was partially offset by lower demand and realized bill rates for non-M&A-related antitrust services. Adjusted segmented by DA of $44.3 million, or 19.2% of segment revenues, compared to $35.5 million, or 17.6% of segment revenues in the prior year quarter. The increase in adjusted segmented by DA was primarily due to higher revenues, which was partially offset by higher compensation, which includes the impact of a 3.6% increase in billable headcount and an increase in variable compensation, as well as higher S&A expenses.

Steven H. Gunby: Our economic consulting segment record revenues of $239 million increased 14, 4% compared to the prior year quarter.

Ajay Sabherwal: The increase in revenues was primarily due to higher demand and realized bill rates for M&A-related antitrust and financial economic services, which was partially offset by lower demand and realized bill rates for non-M&A-related antitrust services. Adjusted Segment EBDA of $44.3 million or 19.2% of segment revenues compared to $35.5 million or 17.6% of segment revenues in the prior year quarter. The increase in adjusted segmented DDA was primarily due to higher revenues, which was partially offset by higher compensation, which includes the impact of a 3.6% increase in billable headcount and an increase in variable compensation, as well as higher SG&A expenses.

Steven H. Gunby: The increase in revenues was primarily due to higher demand and realized bill rates for M&A related antitrust and financial economic services, which was partially offset by lower demand and realized bill rates for non M&A related antitrust services.

Steven H. Gunby: Adjusted segment EBITDA of $44 3 million or 19, 2% per segment revenues compared to $35 5 million or 17, 6% of segment revenues in the prior year quarter.

Steven H. Gunby: The increase in adjusted segment EBITDA was primarily due to higher revenues, which was partially offset by higher compensation, which includes the impact of a three 6% increase in billable head count and an increase in variable compensation as well as higher SG&A expenses.

Operator: Sequentially, economic consulting revenues increased $26.3 million, or 12.9%. Primarily due to higher demand and realized bill rates for M&A-related antitrust services. Adjusted segmented by DA increased by $30.1 million primarily due to higher revenues and lower bad debt.

Ajay Sabherwal: sequentially, economic consulting revenues increased $26.3 million, or 12.9%, primarily due to higher demand and realized bill rates for M&A-related antitrust services. Adjusted segment EBITDA increased by $30.1 million, primarily due to higher revenues and lower bad debts.

Steven H. Gunby: Sequentially economic consulting revenues increased $26 3 million or 12, 9%, primarily due to higher demand and realized bill rates for M&A related antitrust services.

Steven H. Gunby: Adjusted segment EBITDA increased by $31 million.

Steven H. Gunby: Primarily due to higher revenues and lower bad debt.

Operator: As I mentioned on our last earnings call, in the first quarter, we experienced revenue deferrals that resulted in, and may continue to result in, variations in the timing of revenue recognized on work already performed on one large matter. This quarter, we experienced a reversal of some of that deferred revenue, which benefited adjusted segmented by approximately $8.5 million.

Ajay Sabherwal: As I mentioned on our last earnings call, in the first quarter, we experienced revenue deferrals that resulted in, and may continue to result in, variations in the timing of revenue recognized on work already performed on one large matter. This quarter, we experienced a reversal of some of that deferred revenue, which benefited adjusted segment EBITDA by approximately $8.5 million. In technology, record revenues of $115.9 million increased by 18.9% compared to the prior year quarter.

Steven H. Gunby: As I mentioned on our last earnings call in the first quarter, we experienced revenue deferrals that resulted in and May continue to result in variations in the timing of revenue recognized on work already performed on one large metal.

Steven H. Gunby: This quarter, we experienced a reversal of some of that deferred revenue, which benefited adjusted segment EBITDA by approximately $8 $5 million.

Operator: In technology, record revenues of $115.9 million increased by 18.9% compared to the prior year quarter. The increase in revenues was primarily due to higher demand for eminator-latored secondary class services, which was partially offset by lower demand for domestication services. Adjusted segmented the DA of $20.9 million or $18.1% of segmented revenues compared to $20.1 million or $20.6% of segmented revenues in the prior year quarter. The increase in adjusted segmented DA was primarily due to higher revenues, which was largely offset by an increase in compensation, which includes higher-as-needed consulting costs and the impact of a 12.4% increase in available headcount and high-res chain expenses.

Steven H. Gunby: In technology record revenues of $115 9 million.

Steven H. Gunby: Increased by 18, 9% compared to the prior year quarter.

Ajay Sabherwal: The increase in revenues was primarily due to higher demand for M&A-related second request services, which was partially offset by lower demand for investigation services. Adjusted Segment EBIT DA of $20.9 million, or 18.1% of segment revenues, compared to $20.1 million, or 20.6% of segment revenues in the prior year quarter. The increase in adjusted segment DBDA was primarily due to higher revenues, which was largely offset by an increase in compensation, which includes higher as-needed consultant costs and the impact of a 12.4% increase in billable headcount and higher SG&A expenses.

Steven H. Gunby: The increase in revenues was primarily due to higher demand for M&A related second request services, which was partially offset by lower demand for investigation services.

Steven H. Gunby: Adjusted segment EBITDA of $20 9 million.

Steven H. Gunby: Our 18, 1% of segment revenues compared to 20.

Steven H. Gunby: $1 million or 26% of segment revenues in the prior year quarter.

Steven H. Gunby: The increase in adjusted segment EBITDA was primarily due to higher revenues, which was largely offset by an increase in compensation.

Steven H. Gunby: Which include higher as needed consulting costs and the impact of a 12, 4% increase in billable headcount and higher SG&A expenses.

Ajay Sabherwal: sequentially, technology revenues increased $15.2 million, or 15.1%, primarily due to higher demand for M&A-related second-request services. Adjusted segment EBITDA increased by $6.3 million, primarily due to higher revenues, which was partially offset by an increase in compensation, which included higher as-needed consultant costs and the impact of a 2.5% increase in billable headcount. In strategic communications, revenues of $84.9 million increased 2.8% compared to the prior year quarter. The increase in revenues was primarily due to a $1.7 million increase in pass-through revenue.

Operator: Sequentially, technology revenues increased $15.2 million, or 15.1%. Primarily due to higher demand for eminator-latored secondary class services. Adjusted segmented, the DA increased by $6.3 million. Primarily due to higher revenues, which was partially offset by an increase in compensation, which included higher-as-needed consulting costs and the impact of a 2.5% increase in available headcount.

Steven H. Gunby: Sequentially technology revenues increased $15 2 million or 15, 1%, primarily due to higher demand for M&A related second request services adjusted segment EBITDA increased by $6 3 million.

Steven H. Gunby: Primarily due to higher revenues, which was partially offset by an increase in compensation, which included higher as needed consulting costs and the impact of a two 5% increase in billable headcount.

Operator: In strategic communications, revenues of $84.9 million increased 2.8% compared to the prior year quarter. The increase in revenues was primarily due to a $1.7 million increase in pass-through revenues. Excluding pass-through revenues, revenues increased 0.7% primarily due to driven by higher public affairs revenues, which was partially offset by lower corporate reputation revenues. Adjusted segmented DA of $11.6 million or $13.7% per segment revenues compared to $12.3 million or $14.8% per segment revenues in the prior year quarter.

Steven H. Gunby: In strategic communications revenues of $84 $9 million increase.

Speaker Change: <unk> increased two 8% compared to the prior year quarter. The increase in revenues was primarily due to a $1 7 million increase in pass through revenues.

Ajay Sabherwal: Excluding pass-through revenues, revenues increased 0.7%, primarily driven by higher public affairs revenues, which was partially offset by lower corporate reputation revenues. Adjusted segment EBDA of $11.6 million, or 13.7% of segment revenues compared to $12.3 million or 14.8% of segment revenues in the prior year quarter. The decrease in adjusted segment EBITDA was primarily due to higher SG&A.

Steven H. Gunby: Excluding pass through revenues revenues increased 0.7%, primarily driven by higher public affairs revenues, which was partially offset by lower corporate reputation revenues.

Steven H. Gunby: Adjusted segment EBITDA of $11 6 million or 13, 7% per segment revenues compared to $12 $3 million or 14, 8% per segment revenues in the prior year quarter. The decrease in adjusted segment EBITDA was primarily due to higher SG&A.

Operator: The decrease in adjusted segmented DA was primarily due to higher-streaming. Sequentially, strategic communications revenues increased $3.7 million, or 4.6%. Primarily due to an increase in public affairs and corporate reputation revenues, as well as an increase in pass-through revenues.

Ajay Sabherwal: sequentially, strategic communications revenues increased $3.7 million, or 4.6%, primarily due to an increase in public affairs and corporate reputation revenues, as well as an increase in pass-through revenues. However, Adjusted Segment DBDA decreased by $0.8 million primarily due to higher compensation and SG&A expenses, which more than offset the increase in revenue. Let me now discuss key cash flow and balance sheet items. Net cash provided by operating activities of $135.2 million compared to $11 million of net cash used in operating activities for the second quarter of 2023.

Steven H. Gunby: Sequentially strategic communications revenues increased $3 7 million or four 6%, primarily due to an increase in public affairs and corporate reputation revenues as well as an increase in pass through revenues.

Operator: Adjusted segmented DA decreased by 0.8 million dollars primarily due to higher compensation and strain expenses, which more than offset the increase in revenues.

Steven H. Gunby: Adjusted segment EBITDA decreased by zero point $8 million, primarily due to higher compensation and SG&A expenses, which more than offset the increase in revenues.

Operator: Let me now discuss cash flow and balance sheet items. Net cash provided by operating activities of $135.2 million compared to $11 million of net cash used in operating activities for the second quarter of 2023. The year over year increase in net cash provided by operating activities was primarily due to an increase in cash collections resulting from higher revenues, which was partially offset by higher operating expenses and an increase in compensation payments, primarily due to related to higher variable compensation and load salary increases and headcountable. Three cash flow was $125.2 million in the quarter.

Steven H. Gunby: Let me now discuss key cash flow and balance sheet items.

Steven H. Gunby: Net cash provided by operating activities of $135 2 million compared.

Steven H. Gunby: Compared to $11 million of net cash used in operating activities for the second quarter of 2023.

Ajay Sabherwal: The year-over-year increase in net cash provided by operating activities was primarily due to an increase in cash collections resulting from higher revenues, which was partially offset by higher operating expenses and an increase in compensation payments primarily related to higher variable compensation, annual salary increases, and headcount growth. Pre-cash flow was $125.2 million in the quarter.

Steven H. Gunby: The year over year increase in net cash provided by operating activities was primarily due to an increase in cash collections, resulting from higher revenues, which was partially offset by higher operating expenses and an increase in compensation payments primarily related to higher variable compensation.

Steven H. Gunby: Annual salary increases and headcount growth.

Steven H. Gunby: Free cash flow was $125 $2 million in the quarter.

Operator: Total debt net of cash of negative $166.4 million on June 30, 2024, compared to $137.2 million on June 30, 2023, and negative $39 million on March 31, 2024.

Ajay Sabherwal: Total debt, net of cash, of negative $166.4 million on June 30, 2024, compared to $137.2 million on June 30, 2023 and negative $39 million on March 31, 2024. Turning to guidance. After a record first half of 2024, we are raising our full-year 2024 guidance ranges for revenues and APS. We now estimate revenues will range between $3.7 billion and $3.79 billion, which compares to a previous range of between $3.65 billion and $3.79 billion. We now estimate EPS will range between $8.10 and $8.60, which compares to a previous range of between $7.75 and $8.50.

Steven H. Gunby: Total debt net of cash of negative $166 $4 million on June 30 of 2024 compared to $137 2 million on June 32023, and negative $39 million on March 31 2024.

Operator: Turning to guidance. After a record first half of 2024, we are raising our full-year 2024 guidance ranges for revenues and APS. We now estimate revenues will range between $3.7 billion and $3.79 billion, which compares to a previous range of between $3.65 billion and $3.79 billion. We now estimate APS will range between $8.10 and $8.60, which compares to a previous range of between $7.75 billion and $8.50.

Steven H. Gunby: Turning to guidance.

Steven H. Gunby: After a record first half of 2024th we are raising our full year 2024 guidance ranges for revenues.

Steven H. Gunby: Yes.

Steven H. Gunby: We now estimate revenues will range between $3 7 billion and $3 79 billion.

Steven H. Gunby: Which compares to our previous range of between $3 65 billion and $3 $79 billion.

Steven H. Gunby: We now estimate EPS will range between $8.10 and $8 68.

Steven H. Gunby: Which compares to our previous range of between $7 75, and $8 50.

Operator: Our updated guidance is shaped by several key factors. First, with half of the year's results accounted for, it is time to narrow our guidance range. And we are moving up the bottom end of both our revenue and EPS guidance. With EPS year-to-date above our expectations, primarily because of the lower effective tax rate, we are revising the top end of our EPS guidance upwards.

Ajay Sabherwal: Our updated guidance is shaped by several key factors. First, with half of the year's results accounted for, it is time to narrow our guidance range, and we are moving up the bottom end of both our revenue and EPS guidance. With EPS year-to-date above our expectations, primarily because of the lower effective tax rate, we are revising the top end of our EPS guidance upwards. Additionally, we typically expect both our clients and practitioners may take vacation in Q4, which has historically impacted our results.

Steven H. Gunby: Our updated guidance is shaped by several key factors first with half of the year's results accounted for it this time to narrow our guidance range.

Steven H. Gunby: And we are moving up the bottom end of both our revenue and EPS guidance.

Steven H. Gunby: With EPS year to date above our expectations, primarily because of the lower effective tax rate. We are revising the top end of our EPS guidance upwards.

Operator: Second, we typically expect both our clients and practitioners may take location in Q4, which has historically impacted our results. I want to recognize that last year was an exception in this regards, as many of our practitioners in many areas worth this year than is typical during the fourth quarter.

Speaker Change: Second we typically expect both our clients and practitioners may take vacation in Q4, which has historically impacted our results I want to recognize that last year was an exception in this regards as many of our practitioners in many areas, whereas this year than is typical during.

Ajay Sabherwal: I want to recognize that last year was an exception in this regard, as many of our practitioners in many areas were busier than is typical during the fourth quarter. Third, I am sure many of you will be interested in our views on both restructuring and M&A for the balance of the year and how one may offset the other. Let me at the outset say that predicting this reliably is difficult. Our modeling that shapes our guidance assumes that restructuring activity remains at Q2 levels through year end.

Speaker Change: The fourth quarter.

Operator: Third, I am sure many of you will be interested in our views on both restructuring and M&A for the balance of the year and how one may offset the other. Let me at the outset say that predicting this reliably is difficult. Our modeling that shapes our guidance assumes that restructuring activity remains at Q2 levels through year-end. Though we expect that M&A related work, particularly in the economic consulting and technology segments, will remain strong, we do not anticipate it will continue at the record levels we saw in Q2. Particularly as we see certain matters ending.

Steven H. Gunby: Third.

Speaker Change: Im sure. Many of you will be interested in our views on both restructuring and M&A for the balance of the year and how one may offset the other.

Speaker Change: Let me have the outset say that predicting this reliably is difficult.

Speaker Change: Our modeling that shapes, our guidance assumes that restructuring activity remains at Q2 levels through year end.

Ajay Sabherwal: Though we expect that M&A-related work, particularly in the economic consulting and technology segments, will remain strong, we do not anticipate it will continue at the record levels we saw in Q2, particularly as we see certain matters ending. As Steve shared, we are making investments in our business. Although our headcount growth this year has not been significant, we continue to have lots of conversations with senior individuals. We cannot say with certainty, though, when such investments will be made and, therefore, how much impact they may have in this calendar year. Additionally, at the junior level, we are poised to welcome more than 300 campus hires in the second half of the year.

Speaker Change: Though we expect that M&A related work, particularly in the economic consulting and technology segments will remain strong we do not anticipate it will continue at the record levels. We saw in Q2, particularly as we see certain matters ending.

Speaker Change: Yeah.

Operator: Fourth, as Steve shared, we are making investments in our business. Although our head down growth this year has not been significant, we continue to have lots of conversations with senior individuals. We cannot say with certainty, though, when such investments will be made and therefore how much impact they may have in this calendar year.

Speaker Change: Fourth as Steve shared we are making investments in our business, although our head count growth. This year has not been significant we continue to have lots of conversations with senior <unk>.

Steve: Rules, we cannot say with certainty when such investments will be made and therefore, how much impact they may have in this calendar year.

Operator: Additionally, at the junior level, we are poised to welcome more than 300 campus hires in the second half of the year.

Steve: Additionally, at the junior level, we are poised to welcome more than 300 campus hires in the second half of the year.

Operator: Before I close, I want to emphasize a few key things that I believe underscore the attractiveness of our company. First, as we continue to grow our presence globally, we have maintained our commitment to being an organization that deeply cares for its professionals. As demonstrated by our recent certification as a great place to work, in 11 countries: Australia, Brazil, Canada, France, Germany, Hong Kong, Singapore, Spain, and the U.K., and the U.S. Second, our portfolio of businesses is uniquely diversified, which can allow us to grow regardless of the business cycle. Third, as Steve said, we have the ambition, where we go, and the opportunity to invest in great talent.

Ajay Sabherwal: I want to emphasize a few key themes that I believe underscore the attractiveness of First, as we continue to grow our presence globally, we have maintained our commitment to being an organization that deeply cares for its professionals, as demonstrated by our recent certification as a great place to work in 11 countries, Australia, Brazil, Canada, France, Germany, Hong Kong, Singapore, Spain, and the UAE, the UK, and the US. Second, our portfolio of businesses is uniquely diversified, which can allow us to grow regardless of the business cycle.

Speaker Change: Before I close I want to emphasize a few key themes that I believe underscore the attractiveness of our company.

Speaker Change: As we continue to grow our presence globally.

Speaker Change: <unk> maintained our commitment to being an organization that is deeply cares for it professionals.

Speaker Change: As demonstrated by our recent certification as a great place to work in 11 countries, Australia, Brazil, Canada, France, Germany, Hong Kong, Singapore, Spain, and the U the UAE, the UK and the U S.

Speaker Change: Second our portfolio of businesses is uniquely diversified which can allow us to grow regardless of business cycle.

Speaker Change: Third as Steve said, we have the ambition wherewithal and the opportunity to invest in great talent.

Operator: Finally, the strength of our balance sheet allows us the flexibility to continue to boost shareholder value, to organic headcount growth, share buybacks, and acquisitions when we see the right ones.

Steve: Finally, the strength of our balance sheet allows us the flexibility to continue to build shareholder value through organic head count growth share buybacks and acquisitions, when we see the right ones.

Ajay Sabherwal: Third, as Steve said, we have the ambition, the wherewithal, and the opportunity to invest in great talent. Finally, the strength of our balance sheet allows us the flexibility to continue to boost shareholder value through organic headcount growth, share buybacks, and acquisitions when we see the right ones. With that, let's open the call up to your questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone.

Operator: With that, let's open the call up for your questions. Thank you. We will now begin the question and answer session.

Speaker Change: With that let's open the call up for your questions.

Speaker Change: Thank you we will now begin the question and answer session.

Operator: To ask a question, you may press star, then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys.

Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.

Operator: If you're using a speaker phone, please pick up your handset before pressing. To withdraw your question, please press star then. And at this time, we'll pause momentarily to assemble our raw. The very first question will come from Tobey Sommer with... Please go ahead. Thank you. I wanted to ask a question about hiring, Steve, since you and Ajay spoke about it at length. What are the prospects, as you see them, for group hires as opposed to individual consultants? Coming over laterally,

Speaker Change: Using a speakerphone please pick up your handset before pressing the keys.

Operator: To withdraw your question, please press star, then two, and at this time we'll pause momentarily to assemble our roster.

Speaker Change: To withdraw your question. Please press Star then to you and at this time, we'll pause momentarily to assemble our roster.

Tobey Sommer: And the first question will come from Toby Summer, with the truest. Please go ahead. Thank you. I wanted to ask a question about hiring Steve, since you and both Ajay spoke about it at length. What are the prospects, as you see them, for group hires as opposed to individual consultants coming over laterally?

Speaker Change: And the first question will come from Tobey Sommer with the Truest. Please go ahead.

Steven H. Gunby: Thanks. Yeah. A lot of that depends on the specific agreements that senior people have with their current employers. We honor people's non-competes and non-solicits. It's just part of being an ethical public company, an ethical company, period. So in many cases, senior people are not allowed to do so.

Tobey O'Brien Sommer: Thank you.

Tobey O'Brien Sommer: Wanted to ask a question about hiring Steve since you you and both RJ spoke about at length.

Tobey O'Brien Sommer: What are the prospects as you see them.

Speaker Change: For group hires.

Speaker Change: As opposed to individual consultants coming over.

Steven Gunby: Thanks. Yeah, you know, a lot of that depends on the specific agreements that senior people have with their current employers. You know, we honor people's non-peeps and non-salisants. It's just part of being an ethical public company, ethical company period. So it is, in many cases, senior people are not allowed to bring the whole group with them. On occasion, that is the case, because there's dislocations and competitors that mean that they're released from their non-peeps and so forth. And we certainly look easily at that. What does happen more typically is you hire a senior person, and then, you know, that gets the odds on a radar screen.

Speaker Change: Thanks.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: A lot of that depends on.

Speaker Change: The.

Speaker Change: Specific agreements that senior people have with their current.

Speaker Change: Employers.

Speaker Change: We honor People's non pizza non solicits, it's just part of being an ethical public company ethical company period.

Speaker Change: So it is in many cases senior people are not allowed to.

Speaker Change: To bring the whole group with them.

Speaker Change: On occasion, and Thats that is the case, because theres dislocations and competitors that mean that they are released from their non non competes and so forth and we certainly look equally at that when it does happen. We're typically as you hire senior person and then.

Steven H. Gunby: [inaudible] You know, that gets us on the radar screen. Some of the junior people reach out to us separately. And then, certainly, in most cases, a year after people have joined us, there's no restrictions on them. And then they can directly reach out to those people.

Speaker Change: That that gets us.

Tobey Sommer: Some of the junior people reach out to us separately. And then certainly, in most cases, a year after people have joined us, there's no restrictions on them. And then they can directly reach out to those people. But for us, it has not been often, like, you know, 80 people joining it once. It's just the honoring legal restrictions prevents that. Over time, some of that gets reconstructed. Does that respond, Toby? It does.

Speaker Change: That's on the radar screen some of the junior people reach out to US separately and then certainly in most cases a year. After people have joined US there is no restrictions on them and then they can directly reach out to those people, but for US. It has not been often like ADP for joining at once.

Steven H. Gunby: But for us, it has not been often like, you know, 80 people joining at once. It's just the honoring legal restrictions prevents that over time. Some of that gets reconstructed. Does that respond, Tobey?

Speaker Change: So we adjusted that.

Speaker Change: The honoring legal restrictions prevents that over time some of that gets reconstructed does that respond tobey.

Steven H. Gunby: It does, thank you. If you could, on the antitrust side... Describe the demand outlook that you see for non-M&A-related antitrust. [inaudible] Thank you. And then could you comment on the seasonal December slowdown that you say is in your forecast? Which segments feel this the most? They all do.

Operator: Thank you.

Speaker Change: It does thank you.

Operator: If you could, on the antitrust side, describe the demand outlook that you see for non-MNA-related antitrust. If you think that has legs, it's top of mind given our elections here, as well as elections globally in recent months. And Tobey, it has legs that is continuing. I'm not going to link it to the elections, because who knows with that. But the matters are continuing, and new matters emerge. The what stood out, this quarter was more than MNA-related antitrust.

Speaker Change: If you could on the.

Speaker Change: Antitrust side.

Speaker Change: Describe the demand outlook that you see.

Speaker Change: For non M&A related antitrust.

Speaker Change: Think that has legs, it's top of mind given.

Speaker Change: Our elections here as well as elections globally in recent months.

Speaker Change: And Tobey it has legs that is continuing now.

Tobey O'Brien Sommer: I'm not going to link it to the elections, because who knows with that.

Speaker Change: But the matters are the matters are are continuing a new matters emerge.

Speaker Change: What stood out this quarter was more of the M&A related antitrust.

Operator: Thank you.

Operator: And then could you comment on the seasonal December slowdown that you say is in your forecast? Which segments feel this the most? We all do because, you know, both state location, client state location. Last year, there was an exception, and I think if you look at the commentary from Steve, after our fourth quarter, you know, we were exceptionally pleased that people were serving our clients and the demand was there, and we have that higher revenue in Q4 and Q3, which almost never occurs. So that's not what you can model. I mean, basically, people take vacation unless there's a crisis.

Speaker Change: Thank you and then.

Speaker Change: Could you comment on the seasonal December slowdown that you say is in your forecast.

Speaker Change: Which segments feel.

Speaker Change: This is the most.

Speaker Change: Bill.

Speaker Change: <unk>.

Toby: Toby builder because.

Wilkes: Wilkes take vacation.

Speaker Change: Clients take vacation.

Speaker Change: Last year, there was an exception.

Speaker Change: If you look at the commentary from Steve After our fourth quarter. We were exceptionally pleased that people who are serving our clients and the demand was there and we have that higher revenue in Q4 than Q3, which almost never occurs so that's not what you can model.

Speaker Change: Just add to that I mean basically.

Speaker Change: Okay people take vacation unless the crisis and so the exceptions.

Operator: And so the exceptions, so we have the phenomenon across all our segments, except for segments that get affected by a crisis. Crisis can be a bankruptcy, can be a deal, or some other crisis. And it's when that occurs in December that clients work over the holidays, and we work over the holidays. But those people don't move for that. And it, on average, it doesn't happen. It happens sometimes.

Steven H. Gunby: [inaudible] So, we have this phenomenon across all our segments, except for segments that get affected by a crisis. A crisis can be a bankruptcy, it can be a deal, or some other crisis. And it's when that occurs in December that clients work over the holidays, and we work over the holidays.

Speaker Change: So we have the phenomenon across all of our segments, except for segments that get affected by prices prices can be a bankruptcy can be a deal or some other crisis and that's when that occurs in December.

Speaker Change: Clients work over the holidays, and we work over the holidays, but it's.

Speaker Change: Most people don't look for that.

Tobey O'Brien Sommer: On average it doesn't happen it happened, sometimes does that help tobey.

Tobey Sommer: Does that help, Toby? It does.

Operator: Last question for me, could you expand and provide some color on the change in compensation that you rolled out, how that kind of originated, how it's been received, and any contours and dimensionalize the change for us. Thank you. So let me give the answer on the dimensionizing first, and then we'll work backwards. So the way to look at the EBITDA for the segment is, you know, average the first two quarters. That's a better way than then looking at the first quarter separately and second separately. Our first quarter was terrific on margins and EBITDA and FLC.

Tobey O'Brien Sommer: It just last question for me could you.

Speaker Change: Expand and provide some color on the change in compensation that you rolled out how that kind of originated how it's been received.

Speaker Change: Any contours and Dimensionalize the change for us. Thank you.

Speaker Change: Let me, let me give the answer on the Dimensionalize in first and then we'll work backwards. So the way to look at the EBITDA for this segment.

Speaker Change: Average the first two quarters, that's a better way than looking at the first quarter separate second separately or with the first quarter was terrific on margins and EBITDA and <unk>.

Ajay Sabherwal: Our first quarter was terrific on margins and EBITDA and FLC, and we would like to get back to that, though it might take a couple of quarters to get there. So that's the first one on the EBITDA part. In terms of the compensation plan, essentially, it's a more variable-based compensation plan with, you know, if you hit a certain revenue threshold, you get a certain bonus.

Operator: And we would like to get back to that, although it might take a couple of quarters to get there. So that's the first one on the, on the, on the, on the EBITDA part. In terms of the compensation plan, essentially it's a more variable-based compensation plan with, you know, if you hit a certain revenue threshold, you get a certain bonus. And also, if you do a certain type of work, you get a percentage of the revenue generated from that type of work. So it's a more variable piece. And this is similar to what we have in CF or in corporate finance, for example, in certain geographies.

Tobey O'Brien Sommer: We'd like to get back to that though it might take a couple of quarters to get there. So that's that's the first one on the on the on the companies.

Tobey O'Brien Sommer: On the EBITDA.

Speaker Change: In terms of the compensation plan essentially some more variable based compensation plan.

Speaker Change: If you hit a certain revenue threshold you get a certain bonus and also if you do a certain type of work you get a percentage of the revenue generated from that type of work. So it's a more variable piece and this is similar to what we have in CF product in corporate Finance for example in certain geographies we will.

Operator: We, this is not a new type of a plan for us. Now, there's also some reductions in fixed compensation that comes with it that you see the impact of in subsequent quarters, but it's smaller.

Speaker Change: It is not a new type of a plan.

Speaker Change: For US now there is also some reductions in fixed compensation that comes with it that youll see the impact off in subsequent quarters, but it's smaller.

Ajay Sabherwal: And also, if you do a certain type of work, you get a percentage of the revenue generated from that type of work. So it's a more volatile piece, and this is similar to what we have in CF or in corporate finance, for example, in certain geographies. This is not a new type of plan for us. Now, there are also some reductions in fixed compensation that come with it that you see the impact of in subsequent quarters, but it's smaller. So that's the overall plan and its contours. Thank you.

Operator: So that's the, that's the overall plan and its contours.

Speaker Change: That's the that's the overall plan.

Speaker Change: And its strong pillars.

Operator: Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you.

James Yaro: Next question, we'll come from James Yaro with Goldman Sachs. Please go ahead. Good morning, and thanks for taking my questions. Maybe just starting with the updated EPS guidance. I think when I try to run some of the back of the envelope math, it appears to factor in relatively little EBITDA margin expansion, second half. Even after the bill, the bill had counted, come down in the second quarter.

James Edwin Yaro: The next question will come from James <unk> with Goldman Sachs. Please go ahead.

Ajay Sabherwal: Good morning, and thanks for taking my question. And as we head into the second half of the quarter, maybe you could speak to whether we should anticipate margin pressure in the second half of this year and perhaps whether this is driven by the robust hiring of senior staff.

James Edwin Yaro: Good morning, and thanks for taking my questions.

James Edwin Yaro: Maybe just starting with the updated EPS guidance I think when I try to run some of the back of the envelope math it.

Speaker Change: Appears to factor in relatively little EBITDA margin expansion in the second half.

Speaker Change: Even after the billable head count did come down in the second quarter, maybe you could speak to whether we should anticipate margin pressure in the second half of this year and perhaps whether this is driven by the robust hiring of senior.

Ajay Sabherwal: Maybe you could speak to whether we should anticipate margin pressure in the second half of this year and perhaps whether this is driven by the robust hiring of senior managing directors you talked about and whether this would be in SGA or a direct cost. Thank you for the question. So let me break it down. So it is hiring as a key part of it. We expect lots of the decline in second quarter versus first quarter is this small. We always expected the hiring to take place more in the third quarter. And we're going to get that in the third quarter.

Speaker Change: Managing directors, you've talked about and whether this would be.

Speaker Change: And SG&A or indirect costs.

Speaker Change: Thank you for the question James.

Speaker Change: The BW.

Speaker Change: Let me break it down.

Ajay Sabherwal: So it is, hiring is a key part of it. We expect lots of the decline in second quarter versus first quarter to be small. We always expected the hiring to take place more in the third quarter. And we're gonna get that in the third.

Speaker Change: So it is high.

Speaker Change: Hiring is a key part of it we expect lots of the decline in second quarter versus first quarter is small we always expected the hiring to take place more in the third quarter and we're going to get that in the third quarter.

Ajay Sabherwal: And we, as Steve mentioned, we have lots of folks that we are talking to. Though that one I cannot say exactly when it will occur and how long and what to hit; that is part of our thinking in terms of the direct cost piece of this class. You know, we certainly hope and expect a lot of folks will get to those thresholds that I was just talking about. So typically, you also see bonuses pick up as you get closer to the end of the year. And that too, then affects you in the direct cost site.

Ajay Sabherwal: And we, as Steve mentioned, have lots of folks that we are talking to, though that one I cannot say exactly when it will occur and how long and what it will hit, but that is part of our thinking in terms of the direct cost piece of this. Plus, you know, we certainly hope and expect a lot of folks will get to those thresholds that I was just talking about. So typically, you also see bonuses pick up as you get closer to the end of the year, and that too affects you on the direct cost side.

Speaker Change: As Steve mentioned, we have lots of folks that we are talking to Google that one I cannot say exactly when it will occur and how long and what it will hit but that is part of our thinking in terms of the direct cost piece of this plus.

Speaker Change: We certainly hope and expect a lot of folks will get to those thresholds that I was just talking about so typically you also see bonuses pick up as you get closer to the end of the year and that through then affects the direct cost side. So that stat on on SG&A I think we probably hit the high watermark in Q2.

Ajay Sabherwal: So that's that on S DNA. I think we probably hit the high watermark in Q2. In terms of where we think on S DNA called the quarter for this year. So you can have exceptional events occur. Big gatherings that can that can mix up sometimes. The key, of course, is revenue. It always is. And you know what happened last year with Q4. But that's not how you can model. And that's not what you put in your projection.

Ajay Sabherwal: So that's that. On SG&A, I think we probably hit the high watermark in Q2 in terms of where we think on SG&A for the quarter this year. So you can have exceptional events occur, big gatherings that can mix things up sometimes. The key, of course, is revenue. Thank you, Ajay.

Speaker Change: <unk>.

Speaker Change: In terms of where everything's on SG&A for the quarter for this year. So you can have exceptional events occur big gathering is that can that can things up sometimes.

Speaker Change: The key of course is revenue.

Speaker Change: It always is.

Speaker Change: And you know what happened last year with Q4, but that's not how you can model and Thats not what you put in your projections. So yes, we do expect that the midpoint a slight margin contraction.

Ajay Sabherwal: So yes, we do expect that the midpoint is like margin contraction. That's a very clear.

Steven H. Gunby: Maybe just an election-related question. If we do see a change in administration, how would you expect this to affect the economy, and then the second request that I'm embedding in my question is that there might be a more permissive antitrust backdrop. I think, first of all, most people don't have a crystal ball on actually what is going to happen in elections, and then actually what people do if they are re-elected or after elections is not always perfectly forecast.

Ajay Sabherwal: Thank you, Ajay.

Jay: That's very clear. Thank you Jay maybe just on election adjacent question.

James Yaro: Maybe just an election-adjacent question. If we do see a change in administration. How would you expect this to affect two businesses specifically? Firstly, the M&A and on M&A antitrust businesses, econ consulting. And then the second request is this in tech. And specifically, I think the assumption that I'm embedding in my question is that there might be a more permissive antitrust backdrop under a Republican administration. So it might expect these are discussed items that are heavily in discussion or a firm. And my conclusion is nobody has a perfect crystal wall. So I think I'm going to display to you on my answer here.

Speaker Change: If we do see a change in administration.

Jay: How would you expect this to affect two businesses specifically firstly.

Jay: The M&A and non M&A antitrust business Econ consulting.

Speaker Change: Then the second request business in Tech and specifically I think the assumption that I'm embedding and my question is that there might be a more permissive antitrust backdrop under a Republican administration.

Speaker Change: So.

Speaker Change: As you might expect these are discussed items that are heavily in discussion in our firm and my conclusion is nobody has a perfect crystal ball.

Speaker Change: I'm going to disappoint you on my answer here.

Operator: I think I think, first of all, most people don't have a crystal wall and actually what is going to happen in elections. And then actually what people do. If reelected or after elections is not always perfectly forecast. And then the implications of that for individual businesses are not always forecast correctly. And so I have actually tended to suggest that we can have all those discussions internally. And we should focus on it and make sure we can see something react to it. But actually, the safer course is actually to focus on building our business. And I agree, this is going to be 101.

Speaker Change: I think I think first of all most people don't have a crystal ball on actually what is going to happen in elections, and then actually what people do if reelected or after elections is not always perfectly forecast and then the implications of that for individual businesses are not always forecast correctly and so.

Steven H. Gunby: And then the implications of that for individual businesses are not always forecast correctly. And so I have actually tended to suggest that we can have all those discussions internally and we should focus on them and make sure that if we see something, we act on it. But actually, the safer course is actually to focus on building our business. When we hire great people, and this is going to be 101, but when we focus on building great people, deal flow is down, antitrust deal flow is down, there's something else going on, and the great people get involved in that, and so forth.

Speaker Change: I have actually.

Speaker Change: Tended to suggest that we can have all those discussions internally and we should focus on and make sure that if we see something we accurate, but actually the safer courses is actually to focus on building our business. When we hire Gregg. This is this is going to be.

Speaker Change: 101, but when we focus on building great people.

Operator: But when we focus on building great people, you know, if they. The little flow is down; there's something else going on, and the great people get involved in that and so forth, and I think that's our history. We've had lots of different administrations during the ten years that I've been here, with lots of different predictions and lots of different other global events. Brexit, don't know, don't know, don't know, don't know, don't know. And I think people were over-obsessed with those. They had short, sometimes had short-term effects on short-term businesses. And we've been doing the right thing, even a powerful growth engine.

Speaker Change: If the.

Steven H. Gunby: And I think that's our history. You know, we've had lots of different administrations during the 10 years that I've been here with lots of different predictions and lots of different other global events, like Brexit. Dah, dah, dah, dah, dah, dah, dah, dah, dah, dah, dah, dah, dah, dah, dah, dah, dah, dah Did I duck your question? Did I, did I duck your question, James? No, I really, I figured that, you know, as an analyst, I had to ask. I don't have a crystal ball either, but..., www.youtube.com or the link in the description below.

Speaker Change: Deal flow is antitrust deal flow was down there is something else going on in the great people get involved in that and so forth and I think thats. Our history. We've had lots of different administrations. During the 10 years that I've been here with lots of different predictions in lots of different other global events Brexit.

Speaker Change: No.

Speaker Change: And I think people were over obsessed with those they had short sometimes had short term effects on short term businesses.

Speaker Change: When we've been doing the right thing.

Speaker Change: We've been a powerful growth engine and so I try to focus us on that but I must say lots of discussion internally I just think nobody's got a perfect Crystal ball to answer you. If you have one I'll take the answer that James Thank you.

James Yaro: And so I try to focus us on that, but I must say lots of discussion internally. I just think, nobody's got a perfect crystal ball to answer you. If you have one, I'll take the answer. Don't change, thank you. Did I duck your question? Did I duck your question, James?

Speaker Change: Did I Duck. Your question did I did I Duck your question James.

James Yaro: No, I really, I figured as an analyst I had to ask. I don't have a crystal ball either, but I do appreciate your thoughts there.

James: I really I figured as analysts I had to ask I don't have a crystal ball either but I do appreciate your thoughts there maybe just one other one which and I think this is obviously a good thing your cash levels rose $23 million quarter on quarter on my math, and obviously you have less interest expense versus this time last year, you've obviously talked about.

James Yaro: Maybe just one other one, and I think this is obviously a good thing. Your cash levels rose, 23 million quarter on my math. And obviously, you have less interest expense versus this time last year. You've obviously talked about the organic growth aspirations and hiring you plan, but maybe you could just talk about, if cash continues to rise, how you might think about deploying some of that excess capital. You expect cash to continue to rise. So that's number one. Number two, there's no change. First and foremost, we'll pay down the small revolver we have. Then we will, you know, we always start in there.

Speaker Change: The organic growth aspirations in hiring you plan, but maybe you could just talk about.

Speaker Change: If cash continues to rise.

Speaker Change: You might think about deploying some of that excess capital.

Steven H. Gunby: We expect cash to continue to rise. So, that's number one. Number two, there's no change. First and foremost, we'll pay down the small revolver we have.

Speaker Change: We expect to continue to rise.

Speaker Change: So that's number one.

Speaker Change: Number two that there is no change.

Speaker Change: First and foremost.

Speaker Change: We'll pay down the small revolver we have.

Steven H. Gunby: Then, we always start with where we have more than enough capital to keep investing in the right organic growth. And we have very, very, very tough filters for acquisitions, but we look at those when the right ones come along. And we, you know, over any period of time, we have returned capital to shareholders, but we do so opportunistically. That is meant sometimes the cash accumulates until we see the right opportunity, and we're not afraid to do that, and then when we have the right opportunity, we're not afraid to use it, and I think that is the philosophy that I've had deep conversations with the board about it and our management team, and we take that responsibility of making sure that cash is used powerfully to advance the company extremely seriously.

Speaker Change: Then we will.

Speaker Change: You always start and that we have more than enough capital to keep investing in the organic growth.

Operator: We have more than enough capital to keep investing in the organic growth. And, you know, we have very, very tough centers for acquisitions, but we look at those when the right ones come along. And we, you know, over any period of time, we have returned capital to shareholders, but we do so opportunistically. Maybe just add to that is the, look, the cash is a powerful engine of growth, obviously if you use it wisely. And if you look over a long enough history, you've seen periods where we not used it wisely and it hasn't created long-term value.

Speaker Change: And.

Speaker Change: We have very very very tough centers or acquisitions that we look at those when the right ones come along.

Speaker Change: And we over any period of time, we have returned capital to.

Speaker Change: Shareholders, but we do so opportunistically.

Speaker Change: Let me, maybe just add to that is.

Speaker Change: <unk>.

Speaker Change: The cash is a powerful engine of growth of this company, but its only a powerful engine of growth obviously to use it wisely and if you look over a long enough history, you've seen periods, where we not use it wisely and it hasnt created long term value. So can we take very seriously the question of making sure we lever.

Operator: So to we take very seriously the question of making sure we lever that for the long-term interest of our shareholders in our company. And I would say that is meant sometimes to cash accumulate until we see the right opportunity. And we're not afraid to do that. And then, when we have a right enough opportunity, we're not afraid to do that. And I think that is the philosophy that I've had deep conversations with the board about in our management team. And we take that responsibility of making sure our use of cash is used powerfully to advance the company extremely seriously.

Speaker Change: That for the long term interests of our shareholders and our company and I would say.

Speaker Change: That has meant sometimes the cash accumulates until we see the right opportunity and we're not afraid to do that and then when we have a right an opportunity we're not afraid to use it and I think that is the philosophy that.

Speaker Change: I've had deep conversations with the board about and our management team and we take that responsibility of making sure. Our use of cash is used power fleet.

Speaker Change: Since the company is extremely seriously so we're monitoring it too, but we're not going to just burn it because it's in our pocket James to that makes sense.

Steven H. Gunby: And so we're monitoring it too, but we're not going to just burn it because it's in our pocket, James. Does that make sense? Absolutely. I appreciate both of you. The next question will come from Andrew Nicholas with William Blair. Please go ahead. Hi, good morning.

James Yaro: And so we're monitoring it too, but we're not going to just burn it because it's in our pocket. James, did that make sense? Absolutely. I appreciate both of your thoughts.

James: Absolutely I appreciate both of your thoughts thanks a lot.

Operator: Thanks a lot.

Andrew Necalis: The next question will come from Andrew Necalis with William Blayer. Please go ahead. Hi, good morning. Thanks for taking my questions. I'm going to ask the reception one, which I think actually kind of encouraging.

Speaker Change: The next question will come from Andrew Nicholas with William Blair. Please go ahead.

Andrew Owen Nicholas: Hi, good morning, Thanks for taking my questions.

Ajay Sabherwal: Thanks for taking my question. I'm going to ask the restructuring one, which is actually kind of encouraging. But on the whole, can you speak to the bankruptcy market? I think it was flat-ish for you guys.

Andrew Owen Nicholas: I'm going to ask the restructuring one.

Andrew Owen Nicholas: Which is as I think I actually kind of encouraging but in the whole can you speak to kind of the bankruptcy market.

Operator: But in the whole, can you speak to kind of the bankruptcy market? I think it was flat-ish for you guys. It's this quarter, but it sounds like, you know, sequentially down because some larger projects running off. Has there been any change relative to the last quarter or two in the market as a whole based on where you're sitting and maybe a little bit more context for why you expect or are baking in restructuring staying at Q2 levels through the rest of the year. So, obviously, I've often been wrong in this, so getting this done reliably is very, very difficult. Let me just say that about that.

Speaker Change: I think it was flattish for you guys.

Ajay Sabherwal: This quarter, but it sounds like. [inaudible] So firstly, I've often been wrong about this. So getting this done reliably is very, very difficult.

Speaker Change: This quarter, but it sounds like.

Speaker Change: Sequentially down because some larger projects running off has there been any change relative to the last quarter or two in.

Speaker Change: In the market as a whole based on where you are sitting.

Speaker Change: And maybe a little bit more context for why you expect or baking in.

Speaker Change: Restructuring staying at Q2 levels through the rest of the year.

Speaker Change: Okay. So firstly I have often been wrong numbers. So getting this done reliably is very very difficult. Let me just say that about right.

Ajay Sabherwal: Let me just say that about. But you look at the trends as you see them and make projections, and you put a range around them. We saw that there's nobody, you know, we've been in this time where people are with lower rates, higher rates, and whatnot, but at this juncture, I don't think there's a single rating agency that is saying that speculative debt default rates are going to go up

Operator: But you look at the trends as you see them, and you make projections, and you put a range around it. So, for starters, nobody, you know, we've been in the time where people over lower rates, higher rates and whatnot, but at this juncture, I don't think there's a single rating agency that is saying that speculative debt default rates are going to go up. So that is a change; nobody saying default rates are going to go up. There is consensus on that, so that's number one. Number two, we are seeing a lot of what is called liability management, as opposed to in cold operational restructuring.

Speaker Change: But when you look at the trends as you see them and you make projections and you put a range around it so.

Andrew Owen Nicholas: Others globally.

Andrew Owen Nicholas: We've been in this time, where people have with lower rates higher rates north pump, but at this juncture I don't think there is a single a rating agency that is saying that.

Andrew Owen Nicholas: Later that default rates are going to go up so that is a change nobody's, saying default rates are going to go up there is consensus on that so that's number one number two we are seeing a lot of what is called liability management as opposed to any cold operational restructuring.

Ajay Sabherwal: So that's a change. Nobody's saying default rates are going to go up. There is consensus on that. So that's number one.

Ajay Sabherwal: Number two, we are seeing a lot of what is called liability management as opposed to cold operational restructuring. And, you know, where in the past there was a lot of liquidity, there was a lot of government. That means we've assumed second quarter levels will continue. But that could change. We have a bunch of matters that we're working on. All, none of the really big ones.

Operator: And, you know, where in the past it was a lot in Lyndon, there's been a lot of liquidity; there was a lot of government light, you know, debt issued out there. But that government light that allows you to do is sometimes, you know, raise more on secure debt, the unrestricted subsidiaries and this, that and the others. So there's a lot of liability management taking place, which plays more to the investment banks, than it does then to us where we do the full blown restructuring and import processes.

Andrew Owen Nicholas: And where in the past there was a law and then there's been a lot of liquidity there was a lot of covenant light.

Andrew Owen Nicholas: Debt issued out there with that Covenant light debt allows you to do is sometimes raised more unsecured debt.

Andrew Owen Nicholas: Restricted subsidiaries and this that and the other so there's a lot of liability management, taking place, which plays more to the investment banks than it does then to us where we do the full blown restructuring and in core processes. So that's that's the contour of the market.

Operator: So that's the contour of the market. Now, that means we've assumed second quarter levels continue back; you know, I could change. We have a bunch of matters that we're working on. All month of really big ones, you get one of the big matters that whole projection changes upwards, but the more realistic correct midpoint assumption is at the at the, you know, at the levels and due to.

Andrew Owen Nicholas: Now.

Andrew Owen Nicholas: That means we've assumed second quarter levels continue that that could change we have a bunch of matters that we're working on all none of the really big ones you guys. One other big matters that whole projection changes upwards.

Ajay Sabherwal: You can have one or two big matters and the whole projection changes upwards. But the more realistic, correct midpoint assumption is at the levels in T. Great, thank you. And then on kind of the hiring commentary, Steve, I think you made mention of the fact that usually these hires are lateral hires. [inaudible] Respond to your question. Definitely, definitely.

Andrew Owen Nicholas: The more realistic correct midpoint.

Andrew Owen Nicholas: <unk> is at the at the at the.

Andrew Owen Nicholas: At the levels.

Operator: Great, thank you.

Andrew Owen Nicholas: Great. Thank you and then.

Operator: And then on kind of the hiring commentary, the, I think you made mention of the fact that. Usually, these hires, lateral hires, don't, you know, hit the ground running immediately, which makes perfect sense. I'm just curious if you could remind us kind of what that productivity curve looks like. Is it a couple quarters like if you if you start hiring very aggressively or some of these announcements come through and people are alive. And in July and August is that 2025, meaning they're, they're kind of at their full run rate or just any additional color there for how we should think about the lag.

Andrew Owen Nicholas: On kind of hiring commentary, Steve I think you made mention of the fact that you.

Steve: Usually these hires lateral hires don't hit.

Steve: <unk> hit the ground running immediately.

Speaker Change: Which makes perfect sense I'm just curious if you could remind us kind of what that productivity curve looks like is it a couple of quarters like if you start hiring very aggressively or some of these announcements come through and people are alive and in July and August is that 2025, meaning they're kind of at their full run rate.

Speaker Change: Just any any additional color there for how we should think about the lag.

Operator: Yeah, look, I think there's no science to this exactly, but the rule of thumb I have used now for several decades in the professional services is senior hires. It leaves you money the first year. Great, even the second year, and they start to make you money in the third year. Sometimes you beat that; sometimes you don't beat that. It's not a bad rule of thumb. And, and I use that internally to say, you know, don't hire somebody you're not willing to invest in for a while because that's what we're doing; we're trying to build businesses.

Speaker Change: Yes look I think there's no science to this exactly but the rule of thumb.

Speaker Change: He is now for several decades and professional services as senior hires losing money in the first year. They breakeven the second year and they start to make money in the third year.

Speaker Change: And sometimes you beat that sometimes you don't be that it's not a bad rule of thumb.

Speaker Change: And.

Speaker Change: And I use that internally to say.

Speaker Change: Don't hire somebody youre not willing to invest in for for a while because that's what we're doing we're trying to build businesses. So the junior hires.

Operator: So the junior hires. You know, follow that if they're on an island with those senior hires and totally tied to those senior hires. If the junior hires are re-deployable across the junior hires, can be made to create a much quicker than that. Does that respond to your question?

Speaker Change: Followed that if they are on an island with those senior hires and totally tied to those senior hires at the junior hires or redeploy a bull across things the junior hires can be made accretive much quicker than that.

Speaker Change: Is that.

Speaker Change: Respond to your question.

Ajay Sabherwal: And then maybe I could squeeze in one more on economic consulting, obviously. So, really, really strong revenue growth in dollars this quarter. I understand that there's some catch-up on the revenue deferral from last quarter, but margins stepped up pretty meaningfully sequentially. And I'm just trying to kind of put that next to your previous commentary about your expectation that margins would be down in this segment year over year. [inaudible] Thanks again

Operator: Definitely, definitely.

Speaker Change: Definitely definitely and then maybe if I could squeeze in one more on <unk>.

Operator: And then maybe if I could squeeze in one more, an economic consulting obviously really, really on revenue growth and dollars this quarter. I understand that there's some catchup on the revenue to throw from the last quarter, but you know, margins stepped up pretty meaningfully sequentially. And I'm just trying to kind of put that next to previous commentary about your expectation that margins would be down in this segment year over year. Does the strength of that kind of end-market backdrop adjust that outlook at all? Is too queuey, likely outlier, or any other kind of commentary on the economic consulting margins in the aggregate would be helpful, thanks again.

Speaker Change: <unk> consulting obviously.

Speaker Change: Really really strong revenue.

Speaker Change: Growth in dollars this quarter I understand that there is some catch up on the revenue deferral from last quarter, but margin stepped up pretty meaningfully sequentially.

Speaker Change: I'm just trying to kind of put that next to previous commentary about your expectation that margins would be down in this segment year over year does the strength of that kind of end market.

Speaker Change: Back drop.

Speaker Change: Just that outlook at all.

Speaker Change: <unk> likely outlier or any other kind of commentary around economic consulting margins in the aggregate would be helpful. Thanks again for sure of course, so no. It doesn't change my thinking on the margins so far.

Ajay Sabherwal: Of course. So, no, it doesn't change my thinking on the margins. So, first things, you should add the first and second quarters. Again, don't, like in the first quarter, we said that this is low, but you know, the deferred revenues and whatnot. So, that deferred revenue. They ate in a half million; even the revenue is around 9 or 10 million. Most of the cost has been incurred earlier. It's extremely high margin, even though. So, you should add the first two quarters and look at the margin in that context. So, that's that's number one. Number two, they remain competitive pressures.

Speaker Change: So same says you should add the first and second quarters again.

Speaker Change: Like in the first quarter, we said that this is a slow but.

Speaker Change: The deferred revenues and whatnot, so that deferred revenue the $8 5 million EBITDA and revenues around $9 or 10 million most of that cost has been incurred earlier. So it's an extremely high margin EBITDA.

Speaker Change: So you should add the first two quarters and look at the margin in that context. So that's number one.

Speaker Change: Number two they remain competitive pressures, we've talked about those across our business not just in competitive not just in economic consulting Thats M impact margins with company with compensation and third.

Ajay Sabherwal: We've talked about those across our business, not just in competitive, not just in economic consulting. That's then, in fact, margins with companies, you know, with compensation. And third, we are a large, you know, in economic consulting day, we are a large, eminent, that's a shop. And they're two, you know, large matters can come and go, and you can have high addition between. So, those are all the factors that guide that judgment.

Ajay Sabherwal: We are a large economic consulting firm there; we are a large M&A antitrust shop. And there, too, large matters can come and go, and you can have hiatuses in between. So those are all the factors that guide that. The next question is a follow-up from Tobey Sommer with... Please go ahead.

Speaker Change: We are very large in economic consulting there were no large M&A antitrust shop, and they are too large matters can come and go and you can have hiatus in between so those are all those factors that that guide that judgment.

Operator: Thank you very much.

Speaker Change: Thank you very much.

Tobey Sommer: The next question is a follow-up from Toby Summer. What's the truth? Please go ahead. Thank you. If you are able to achieve your hiring objectives in a year, you're going to have something that's far enough away to come in on. How rapidly would head count be growing? And is it possible to increase EBITDA if you achieve that head count growth? Yeah, look, let me, let me address. I don't see the growth prospects of this company as less than what we have been achieving. I think there's huge amounts of upside of this company over a lot of years to come.

Tobey O'Brien Sommer: The next question is a follow up from Tobey summer with the Truest. Please go ahead.

Steven H. Gunby: Thank you. If you are able to achieve your hiring objective, in a year, a year and a half, something that's far enough away to comment on, how rapidly would headcount be growing, and is it possible to increase EBITDA if you achieve that headcount growth? Yeah, look, let me address it.

Tobey O'Brien Sommer: Thank you.

Speaker Change: If you are able to achieve your hiring objectives.

Speaker Change: In a year year and a half from something that's far enough away to comment on.

Speaker Change: How rapidly would head count be growing and is it possible to increase EBITDA, if you achieve that head count growth.

Speaker Change: Yes look let me let me address.

Steven H. Gunby: I don't see the growth prospect of We are not, we have not reduced our aspirations for growth and, therefore, aspirations for headcount. It just happens that this year-on-year is well below that aspiration at 2% in terms of billable headcount. And then look, we are not, I am not particularly focused on growing EBITDA percentages, but when we have grown our headcount and we've maintained the EBITDA percentages, because we've grown revenue, I mean, our EBITDA has soared, right?

Speaker Change: I don't see the growth prospects of this company is less than what we.

Speaker Change: We have been achieving I think there is huge amount of upside of this company over a lot of years to come.

Ajay Sabherwal: And so, you know, we are not; we have not reduced our aspirations for growth, and therefore our aspirations for head count. It just happened that this year and me, her, as well, below that aspiration at 2% in terms of available head count. And then look, we are not; I am not particularly focused on growing EBITDA percentages. But when we have grown our head count, and we've maintained EBITDA percentages because we've grown the revenue, I mean, our EBITDA has soared, right? And so I would envision that; that is certainly our goal. I've never had a goal of getting a particular quarter to anything.

Speaker Change: And so.

Speaker Change: <unk>.

Speaker Change: We are not we have not reduced our aspirations for growth and therefore aspiration spread count.

Speaker Change: It just happens that this year insurance well below that aspiration at 2% in terms of available head count.

Speaker Change: And then look.

Speaker Change: We are not I am not particularly focused on growing EBITDA percentages, but when we have grown.

Speaker Change: Our head count and we've maintained EBITDA percentages, because we've grown the revenue I mean, our EBITDA is.

Steven H. Gunby: And so I would imagine that is certainly our goal. I've never had a goal of getting a particular quarter to anything, but we have enormous goals to grow this bloody company substantially. And as a consequence of that, we would expect over an extended period of time, as we have shown, that we will grow top line, headcount, and bottom line in a substantial way. Does that respond? It does. It's just going from, you know, 1-2% headcount growth to some aspirational kind of longer-term trend of mid-to-high single digits. If those people are productive, that can weigh on even dollar growth. I'm not asking for a marginal.

Speaker Change: George right and so I would envision that that is certainly our goal ive never had a goal of getting a particular quarter to anything but normal we have enormous goals to grow this bloody companies substantially and as a consequence with that we would expect over an extended period of time.

Ajay Sabherwal: But we have enormous goals to grow this bloody company substantially. And as a consequence, with that, we would expect over an extended period of time, as we have shown, that we will grow top line head count and bottom line in a substantial way. Does that respond? It does. It's just going from, you know, one 2% head count growth to some aspirational kind of longer term trend of mid to high single digits. If those people are productive, that can weigh on even dollar growth. I'm not asking a margin question. Well, yeah. Now look, I think we don't expect, over any extended period of time, that people who are added to be less productive than our current people.

Speaker Change: As we have shown that we will grow topline head counts and bottom line.

Speaker Change: In a substantial way does that response.

Speaker Change: Okay.

Speaker Change: It does it's just going from 102% head count growth to some.

Speaker Change: Aspirational kind of longer term trend.

Speaker Change: Mid to high single digits.

Speaker Change: Those people are productive that can weigh on EBITDA dollar growth I'm not asking a margin question.

Steven H. Gunby: Well, yeah, no, look, I think we don't expect over any extended period of time that people are adding will be less productive than our current people. So if they, if you're going to have temporary issues because you're catching up from a low, a low growth period to a higher growth period. But over time, that should normalize, and you should be able to grow revenue and not decrease for an extended period of time EBITDA percentages. So we don't see this as a long-term degradation of EBITDA percentages. It's just a matter of if you have a surge of hires in a couple quarters, it can have a short-term effect.

Speaker Change: Well.

Speaker Change: Yes look I think I think we don't expect over any extended period of time that people were adding to be less productive than our current people. So if they are.

Tobey Sommer: So if they, you know, temporary issues because you're catching up from a low growth period to a higher growth period. But over time, that should normalize, and you should be able to grow revenue and not decrease on the extended period of time, even dot percentages. So we don't see this as a long-term degradation of EBITDAL percent. It's just a matter of if you have a surge of higher than a couple quarters; it can have a short term effect. So that, and so am I responding more clearly this time? All right. Good. Thank you.

Speaker Change: Temporary issues, because you are catching up from a low.

Speaker Change: The low growth period to have higher growth period, but over time that should normalize then you should be able to.

Speaker Change: Ro.

Speaker Change: You grow revenue and not decrease on the extended period of time EBITDA percentages. So we don't see this as a long term degradation of EBITDA percent. It's just a matter of if you have a surge of hires in a couple of quarters that can have a short term effect does that and so.

Steven H. Gunby: And so am I responding more clearly this time? All right. Good. Thank you. Any other questions?

Speaker Change #100: I mean, I responding or clearly the timing of them.

Speaker Change: Alright.

Speaker Change: Good thank you.

Operator: Any other questions? Well, look, let me say thank you very much for your continued attention and support. I mean, we're excited about the quarter. We're excited about the half year more fundamentally. We're excited about the trajectory of this business over, and we're in two different markets. We're in client markets. We're also in the market for talent. And notwithstanding this conversation, of course, short-term talent ads have short-term effects. The fact that we are a destination for great talent that people are picking up the phone and calling us is a great sign about the future of this company.

Speaker Change: Any other questions.

Steven H. Gunby: Well, look, let me say thank you very much for your continued attention and support. I mean, we're excited about the half year. More fundamentally, we're excited about the trajectory of this business. And we're in two different markets. We're in client markets. We're also in the market for talent. And notwithstanding this conversation, of course, should short-term talent ads have short-term effects?

Speaker Change #101: Well look let me say thank you very much for your continued attention and support I mean, we're excited about.

Speaker Change: The quarter, we're excited about the half year more fundamentally we're excited about the trajectory of this business over and we are in two different markets. We're in client markets. We're also in the market for talent.

Speaker Change: And notwithstanding this conversation of course should short term talent adds have short term effects the.

Operator: The fact that we are a destination for great talent, that people are picking up the phone and calling us, is a great sign about the future of this company, and I'm excited. I hope this was helpful to you. Thanks for your support. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The fact that we are a destination for great talent that people are picking up the phone and calling US is a great sign about the future of this company and I'm excited.

Operator: And I'm excited. I hope this is helpful for you.

Speaker Change: I Hope this is helpful to you thanks for your support.

Operator: Thanks for your support.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change #102: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: You may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

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Speaker Change: Yeah.

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Speaker Change: Yes.

Speaker Change: Okay.

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