Mollie Hawkes - IR Steven Gunby - CEO David Johnson - CFO.

Tobey Sommer - SunTrust Paul Ginocchio - Deutsche Bank Kevin McVeigh - Macquarie Robert Simmons - Janney Randle Reece - Avondale Partners Tim McHugh - William Blair & Company Jerry Herman - Stifel.

Good day, everyone, and welcome to the FTI Consulting Fourth Quarter and Full Year 2014 Earnings Conference Call. As a reminder, today's call is being recorded. And now for opening remarks and introductions, I'd like to turn the call over to Mollie Hawkes, Director of Investor Relations at FTI Consulting. Please go ahead..

Good morning. Welcome to the FTI Consulting conference call to discuss the company's fourth quarter and full year 2014 results as reported this morning. Management will begin with formal remarks, after which, we'll take your questions.

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

Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, future revenues, future results and performance expectations, plans or intentions relating to financial performance, acquisitions, business trends and other information or other matters that are not historical, including statements regarding estimates of our future financial results and other matters.

For discussion of risks and other factors that may cause actual results or events to differ from those contemplated by forward-looking statements, investors should review the safe harbor statement in the earnings press release issued this morning, a copy of which is available on our website at www.fticonsulting.com as well as other disclosures under the heading of Risk Factors and Forward-Looking Information in our most recent Form 10-K and in our other filings filed with the SEC.

Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this conference call and will not be updated.

During the call, we will discuss certain non-GAAP financial measures, such as adjusted EBITDA, adjusted segment EBITDA, total adjusted segment EBITDA, adjusted earnings per share and adjusted net income.

For a discussion of these and other non-GAAP financial measures as well as our reconciliation of non-GAAP financial measures to the most recently comparable GAAP measures, investors should review the press release and the accompanying financial tables that we issued this morning.

Lastly, there are two items that have been posted to our Investor Relations website this morning for your reference this includes quarterly earnings call presentation that will refer to during this morning call and an Excel and PDF of our historical financial and operating data, which has been updated to include our fourth quarter and full year results.

With these formalities out of the way, I am joined today by Steven Gunby, our President and Chief Executive Officer; and David Johnson our Chief Financial Officer. At this time, I will turn the call over to our President and Chief Executive Officer, Steven Gunby..

Thank you, Mollie. Let me join Mollie and welcome everyone to today's call. As many of you know on the call that I recently had my one year anniversary as CEO of FTI. But I like to start by just thanking many of you on this call for the input and thoughts you've given over the last year.

It’s obvious that a great number of you have involved with this company for a long time, many of care deeply about this company and number of you have been good enough to share thoughts and observations with me.

So thank you very much for that and for those you who I haven’t had the chance to meet this past year I very much look forward to changing that. We had a pre-announcement this quarter that pre-announcement of course did not give the full texture and the opportunity for Q&A that normally companies are earning releases.

I suspect therefore that many of you are eager for me to get off this stage and here David give more details regarding the fourth quarter and the earnings outlook. So I will do that, I will be brief here and just a brief introduction.

Which I really to make only one point and that is that I -- management team and I continue to have total commitment and conviction in the aspirational targets we have for 2016 and our guidance for 2015. Doesn’t mean we don’t have work to do of course in any professional services firm you have work to do.

But the fourth quarter changes not in any way -- in any material way in my mind change the amount of work, the nature of the work, and the type of work. We're very much on track with the process that we outlined on Investor Day.

So let me maybe take a minute or two -- I'm sure that’s a question on your mind to flush out that logic as a preamble to David's description and then I'll come back after the more detailed preview by David.

Now the way I like to do that is maybe take you back to Investor Day which I know many of you were at, which is when we first set our aspiration for 2015 and '16. If you remember back then our projected EPS that we shared with you for 2014 at that point was 155 to 170, i.e. essentially where we came out for this year.

So the question becomes how did we get to the end of the year and you'd get to the end of the year in a root that actually strengthens your confidence and the underlying business or weakens it. But let me tell you why it leaves me at least as bullish as it did during Investor Day.

If you recall over the course of fall what happen was our sales continued stronger as some of the big jobs we were involved in continued longer, we got some other jobs and so by the end of October we felt force to raise our guidance for the quarter.

And that was despite the fact that we thought to as a chance there was going to be a whole lot of investment in the fourth quarter, we always know there is a chance of volatility of sales and so forth and so we raised our guidance at the end of October.

Then late in the fourth quarter couple of things happen, first of all we actually did invest a lot in the fourth quarter, second of all we finally had the sale slowdown that we’ve being thinking about during the course of the year. And then far more significantly we also in December and during the close and covered a series of cost items.

So a bunch of tax items which David will go through with some [freverance] that ended up cumulative returning our forecast back to the earlier range.

So may be let me pull that a part, revenue weakness is obviously something you take seriously in monitor and fact that David will say some of that revenue weakness in a few of our businesses extended into January and so we’re monitoring that and we're looking at the plans that people have to get it on track and so forth.

But the important point is that the revenue weakness in the business was by far the smallest portion of the short fall in the fourth quarter. Largest part of the fourth quarter mix was not business driven, not the revenue, was not business driven, in fact had nothing to do with the initiative to drive growth.

The actions we have underway to liberate the underlying value of this company with a bunch of tax issue severance issues and so forth. So at least when I look at it, it did not change my -- neither our plans for 2015 or ’16 nor lessening the confidence that we have for 2015 and 2016.

We have work to do in this company, as many of you said and when I took the job the changes to liberate the value of this company is not a one year job and we know that, I know that, David knows that, the management team knows that.

But as we will talk about it during David's talk and it has come back and we're making progress on that journey, people are making progress, we have initiatives that are working.

So I end the year little silvered by some of the things we've learned in the fourth quarter, but with tremendous conviction that we're on track to liberate the underlying value on this company and with tremendous conviction in our plans for '15 and '16.

So with that as a preamble let me turn the call over to David and I will share some other thoughts with you a little later.

David?.

Thanks, Steve. Before I turn to the results I would like to also briefly talk about our decision to preannounce results. This wasn't an easy decision when the information came together in the last week of January our results were still preliminary and we were not completely done closing the books, we certainly weren't with the audit.

Nonetheless we felt it was important to share what we knew quickly. There are two things we value really highly in our communications with our investors, communicating promptly and communicating in depth. In this case we're faced with a conflict between the two and we choose prompt.

We understood and we regretted that being early left us unable to make phone calls, answer your questions, offer more details and explanation and I hope they won't be put in that situation again. Turning to the Slide 4 on the deck, I am going to speak in the reverse of our normal order.

I talk about some of the mundane but in this case small details and then speak about our business results. So let me start by being clear as Steve said a portion of our mix was driven by the business we ha d some revenue softness later in the quarter. But the business shortfall would have led us to disappoint not preannounce.

So let's first walk through some of the unexpected items. For your convenience I have laid those out on Slide 4 with reference to the middle of our previous guidance range $1.93 and compared that to our reported adjusted of EPS of a $1.64. There were a number of tax adjustments in the fourth quarter.

The largest item by far was the Australian tax reserve which impacted EPS by $0.11. Over the last few years FTI has made a significant commitment to Australia notably with the acquisitions of Taylor Woodings in 2013 and KordaMentha in 2012. Our commitment to Australia is unchanged but in 2014 our results were disappointing.

Continuing weakness in the Australian restructuring markets hurt us and the fourth quarter was well below our forecast in fact it put us in a three year cumulative tax loss position in the relevant entity.

Under U.S GAAP that calls for us to set up a reserve offsetting the future benefits of the units NOLs, and that reserve is required even if you project future profitability in the ultimate use of the NOLs which we do. With some good fortune we might even see some of that valuation allowance come back in 2015, but it was a big number, $0.11.

Other changes in our annual income tax rate excluding the Australian valuation allowance contributed about $0.03 to the variance from our expectations for fourth quarter results and included amounts related to deductibility of certain international tax items outside of Australia.

We off set just $0.02 for severance for a senior professional in our corporate finance business, just to clarify that's on top of the $0.02 special charge we previously disclosed in connection with departure of our GT.

Additionally, our results in the economic consulting segment were impacted by a true-up of our obligation to equalize practitioners for state income tax paid when they travel for business outside of their home state. That adjustment impacted our adjusted EPS by about $0.03.

The tax equalization program that caused us to have that liability has been capped going forward; we will address this volatility and significantly lower cost going forward. Other items of similar nature but much smaller, aggregated to $0.03.

In operations revenues were weaker and particularly in a couple of segments in the latter part of the fourth quarter and that contributed to segment operating performance reductions that netted out to about $0.07. So I will now turn to talk about the business results.

So turning to Slide 5, revenues for Q5 were 425.2 million that's up 2.2% from the prior year quarter and down 5.8% from 451 million in Q3. FX contributed 1.4% of the sequential revenue decline; excluding FX revenues were down 4.4% for the third quarter.

Fully diluted GAAP EPS not adjusted were $0.02 compared to a loss of $0.18 in the prior year quarter and $0.55 in Q3.

Q4 fully diluted EPS included many items we discussed above plus the previously disclosed special charge and as some of you probably know we exclude special charges from adjusted EPS of 1.6 million which was also $0.02 and that was related to the departure of the GT.

Excluding those special charges, adjusted EPS for Q4 were $0.04, as compares to $0.63 in Q3 and $0.39 in the prior quarter. Adjusted EBITDA for the quarter was 36 million or 8.55 of revenues compared to 63.4 million or 14.1% of revenues in Q3 and 47.7 million or 11.5% or revenues prior year quarter.

Full year revenues were 1.76 billion, up 6.3% year-over-year.

2014 fully diluted EPS was at $1.44 compared to a loss of $0.27 prior year and as a reminder the prior year included a goodwill impairment charge for strategic communication, special charge related executive terminations and a reduction of a liability related to contingent acquisition or net all, which net decrease fully diluted EPS by 2.43.

For fiscal 2014 our adjusted EPS were $1.64, which compares to 2.09 in 2013. Adjusted EBITDA for the year was 210.6 million or 12% of revenues which compares to 245.6 million or 14.9% of revenues in 2013. Turning to our segments on Slide 6.

In corporate financing restructuring revenues in the quarter increased 0.3% and 93.1 million compared to 92.8 million, last year revenues were down 7% from a 100 million in Q3.

Adjusted segment EBITDA for the quarter was 9.9 million, 10.6% margin as compared to 10.9 million or 11.7% margin prior year quarter and 15.5 million or 15.5% of revenues in Q3.

Adjusted segment EBITDA margin was impacted unfavorably by a decline in higher margin, bankruptcy and restructuring activity, lower performance in Asia, lower bill rates in North America and EMEA and severance cost related to the departure of the senior professional that I spoke about before.

The business continues to benefit from investments in the EMEA region.

In Q4 Europe Middle, East Africa resulted in organic growth of 60% in that region, compared to the prior year quarter led by our transaction advisory and tax practices, both of those businesses are expected to be EBITDA contributors in the second half of 2015 and that gives us increasing confidence that [bad debt] will begin to pave up for as meaningfully in 2015.

In North America we continue to benefit from strengthening non-distressed business. In Q4 non-distressed revenues were approximately 45% of the core North America business, up from approximately 35% in Q4 ’13 and about 40% Q3.

Growth in our transaction advisory and tax practices in EMEA and the non-distressed business in North America was partly offset by decline in North America and Asia Pacific bankruptcy and restructuring practices where that was noted several times already, with particular weakening in Australia.

That weakness in Australia has been led by a decline in the Australian dollar, lowering of interest rates by the Australian Central Bank and that led to a significant decline in insolvencies in that market.

And lastly we remain committed to Australian and our team is working hard to reposition resources, they are adding staff to support M&A work, agro business, advisory funds, mining while making offsetting cuts in those areas. Looking forward to 2015, our corporate finance segment as a whole is off to a solid start particularly driven by North America.

Restructuring activity appears to be increasing particularly in interim management assignment and in selected industries, notably retail, industry we actively invested in 2014 adding headcount changing how we go to market.

We have recently won a number of headline engagements including RadioShack, Wet Seal, [ASH] and Caesars Entertainment among others. We’re also holding cache -- we also pulled a continuing momentum form our investments in the tax and advisory business in Europe, we’ll add another layer of increase to the bottom-line in the second half for the year.

Consistent with last year we see the first quarter contributing less than a quarter of the full year’s results with the mid-teens EBITDA margin in the segment for first quarter.

Both the EBITDA margin and the share of annual contribution from [indiscernible] will hope to move up in the latter half of the year comparable with last year’s seasonal pattern. Forensic and litigation consulting or FLC revenues increased 5.6% to 121.1 million in the quarter, compared to 114.7 million in the prior year quarter.

Revenues decreased 0.5% from record revenues of 121.7 million in Q3. Compared to Q3, fourth quarter ended up roughly where we expected in FLC, the utilization is slowing down due to the holidays and some major matters winding down and we had some offset from improvement in our health solution practice.

FLC adjusted segment EBITDA was 19.4 million or 16.1% of segment revenues compared to 17.6 million or 15.3% of segment revenues in the prior year quarter. On a sequentially basis, adjusted EBITDA fell 12.7% compared to 22.3 million of 18.3% taken revenue margin in Q3.

The sequential decline in adjusted segment EBITA was due to lower utilization higher bad debt expense compare to prior year quarter third quarter benefited from me recovery on a previous right off and that was partially again offset by improved margin and [indiscernible].

I have to mention FLC experienced the segments best full year results ever in 2014, a strong performance across the globe. For the full year revenues increased 11.5% 483.4 million that compares to 433.6 last year and adjustments segment EBITA was 90.5 million that compares to 74.5 million in 2013.

A tremendous year but it leaves FLC with a tough comparison for 2015. This year FLC will have to run hard to stay even as a very large engagements from last year continue to roll off emerging recovery in our health solutions work should help deliver moderate positive comparison for this reported segment in revenue and EBITA in 2015.

In addition we expect to continue to benefit from our investments in our global construction solutions practice. Practice that grew revenues by 30% and nearly doubled EBITA in 2014. Looking forward in FLC we're hoping for moderate growth with margins in the high teens consistent with most of last year.

FLC did have somewhat slow start in January which will likely put some pressure on first quarter volumes and margin. In economic consulting revenues decreased 1.5% to 106.5 million in the quarter compared to 108.1 million in the prior year. Revenues were down even more sequentially from 120.5 million in Q3.

Revenue increased 1.0 million year over year due to the acquisition of [PlatSparx], a small group of Houston based petroleum engineers with evaluation expertise who joined us in November.

Ex-acquisitions revenues declined organically by 2.5% that include in negative impact of 1% from FX on a sequential basis declines in the Antitrust litigation explain in the fourth quarter decline.

Largest driver was a significant drop off in large Antitrust deal activities as a number of significant matters wound upper pause in last two months in 2014. Adjusted segment EBITA was 9.8 million or 9.2% of revenues compare to 22 million or 2.03% of revenues in the prior year quarter an 18.4 million or 15.3% of revenues in Q3.

Adjusted segment EBITA margin dropped significantly below our run rate due to a significant increase in the state income tax equalization obligation that I spoke about before and an increase in bad debt expense. As I noted before the equalization program was changed in capital last year which was significantly reduced as going forward.

In Q1 and economic consulting we hope to see margins comparable to last year's first quarter and a contribution to the total year results comparable to last year's first quarter contribution.

The rest of the year we expect econ to be up year over year based both on core business and continued success in some of the areas and investment we pay, like international arbitration. Margin should recover to the mid teen levels we saw in the second and third quarter last year.

We have high single digit revenue growth year over year in the out quarter. In the fourth quarter technology revenues increased 8.6% to 58.2 million in the quarter compare to 53.6 million in the prior year quarter and down 4.2 million from 62.4 in Q3.

We had expected pressure on revenues in tax due to the roll of large projects that we discussed during our last call.

But December revenues were a little below that expectations mostly as a result of lower headcount and a slightly smaller part due to a combination of higher vacation and lower utilization that was by far the smallest contributor to the revenue and profits shortfall in the fourth quarter.

Adjusted segment EBITA for the quarter was 13.3 million or 22.8% of segment revenue compared to 14.7 million or 27.4% of segment revenue in the prior year quarter and 17.8 million in 3Q, 28.6% margin.

The decrease in adjusted segment EBITA margin was due to a higher mix of lower margin services compellable and coupled with increased investments in business development, marketing research and development.

As discussed in our Q3 earnings call investments in this business for 2014 were heavily weighted to the second half with more than half of the annualized 2014 investment occurring in the fourth quarter. Our expectations for 2015 continue to reflect significant investments in the technology business.

We believe this is essential to continue to advance our strategic position in this business. Again I'd like to note that 2014 was tax strongest revenue generating year ever. Revenues increased almost 20% to 241.3 million for the full year compared to 202.7 million in the prior year. Adjusted segment EBITDA was 63.6.

Looking forward to 2015 we acknowledge that this segment can and will produce volatile results. This lumpiness has a number of causes for one we excel at executing large event driven matters than can produce major spikes in revenue and profit and these are great while they last will roll off.

Also as we’ve expanded and managed to review our margins in shift quarter-to-quarter as our revenue mix shifts unpredictably between higher and lower margin business. First quarter in the technology segment will likely be down in revenue and profit versus last year with margin in the high teens.

We're looking for a return to positive revenue comparisons in margin similar to last year's levels which reflected higher investment spends in the balance of the year. We're very pleased to announce the reseller arrangement we inked with IBM earlier this month.

This announcement is in line with our current go-to-market strategy and it further validates the strength of our Ringtail product which we continue to invest in. This arrangement also aligned with our focus on enterprise clients as corporates continue to take on more of the purchasing decision in this business.

Our initial focus is on collaborating with IBM sales force on Ringtail as part of delivering this capability to the corporate market we're not counting on this deal to materially impact 2015 result.

Strategic Communications, revenues decreased 1.2% to 46.3 million in the quarter, compared to 46.9 million in the prior year quarter which included a 2.9% unfavorable impact from FX and was slightly lower compared to 46.6 million in Q3.

Excluding FX revenues versus the third quarter of last year were up 2.7% due to the project related success-fee that we got in EMEA. Adjusted segment EBITDA was 7.4 million or 16% of segment revenues, compared to 5.9 million or 12.6% of segment revenues in the prior year quarter, and 6.6 million or 14.2% of segment revenues in Q3.

EBITDA benefited from our continuing cost reduction activities and in particular efforts to improving the mix of junior versus senior staff. Looking forward Stratcom is off to a very good start in 2015, segment is executing well on their plan of focusing on profitable revenue and controlling cost.

Accordingly we expect first quarter revenue to be down single-digits year-over-year but profits should be up slightly in the first quarter. Remember Stratcom's first quarter contribution to its total year results has always been small and we expect 2015 to be consistent with the 2014 contribution percentage.

First quarter EBITDA margin will likely be high single-digit as it was last year and return to mid-teens in second quarter and beyond. We're also looking for revenue comparisons to turn positive in Stratcom in the last half of the year.

Before I go to the geographic results and I wanted to remind you that our first quarter in all of our segments typically has increased employee benefits cost for higher FICA and 401(K) expenses as a result of our annual bonus payment that’s one of the reasons why this is historically our weakest quarter with lower margins.

Equity compensation expense is also higher in the first quarter due to some of the equity awards that are expensed up front if the recipient is retirement eligible or has met certain service requirements. Turning to our geographies on Slide 7, 28% of our revenues were from outside North America in the quarter. That’s consistent with Q4 '13.

For the year 27.7% of the revenues were from outside North America. I would like to highlight in particular the growth in EMEA where Q4 revenues increased 16.3% year-over-year.

This increase was led by a 60% year-over-year revenue increase in our corporate finance restructuring business which was the result of strong organic growth in our transaction, advisory and tax practices in the region. FLC also saw a 45.3% year-over-year revenue increase mainly due to accounting, advisory and dispute.

For the year revenues in EMEA increased to 18.7% with revenue increases across all five of our business segments. EMEA strength is particularly important given the contribution and improvement in that region to our 2015 outlook.

Counter to the growth at EMEA Asia-Pacific Q4 revenues declined 26.4% year-over-year primarily due to the softness discussed previously in this call related to our bankruptcy and restructuring business in Australia.

The year revenues in Asia-Pac declined 2.7% with year-over-year revenue decline in corporate finance restructuring being partially offset by increases in FLC, economic consulting and strategic communications. Latin America fourth quarter revenues were largely flat compared to last -- to the prior year quarter.

As this was due to an increase of 27.4% in FLC driven by investments we made last year in construction solutions, but that was offset by revenue declines in corporate finance, economic consulting and strategic communications.

For the year Latin American revenues increased almost 10% with particularly strong year-over-year revenue constitutions in this case from corporate finance restructuring.

As our overseas results become increasingly important to us, it will continue to impact the volatility of our outcome some of which will come from the impact of foreign exchange and some of it will come from the mix of earnings by jurisdiction. Lower tax rate of our key foreign countries versus the higher rate in U.S.

that means that we can hold a constant EBITDA on operations and yet still see some volatility at the bottom-line if our earnings mix shift significantly between the U.S. and overseas.

One last modeling doubt, in our budgeting we use 35% for our overall model tax rate and that’s what I suggest you use for your models, but there of course will be volatility up or down around that. Turning to Slide 8.

Our cash and cash equivalents where 284 million at quarter end, net cash provided by operating activities was 115 million compared to 90 million in the prior year quarter. In 2014 company spent almost 24 million on acquisition, but the majority of that was connected to earn out payments from prior year deals.

DSOs were 97 at the end of December in line with 97 days, the prior year quarter and down 10 days from September 2014. Turning to Slide 9 in our outlook.

As you saw in our press release we held the pre-announced 2015 adjusted EPS range of between a $1.95 and 2.20 and our revenue expectation range for 2015 full year is between 1.8 billion and 1.9 billion.

We will work very hard to achieve these results, but to reiterate our overwriting goals and they are in order of priority, by 2016 we will move the company to a management, business and financial models that incorporate ongoing investments delivered sustainable and organic growth.

2016 we will achieve EPS of $2.50 per share or more, in 2015, we will achieve our guidance range. We’re highly focused and all of those three goals, but in that order. I’ve been asked about capital management plans for 2015 and beyond; first and foremost, if capital investment is needed to support our investment agenda that’s where our money will go.

However given the nature of our business as Steve says most of our investment is in EBITDA on the balance sheet. In 2015, we will also consider reducing indebtedness but our plans are not cast in stone. 2015 and beyond we will likely return to share repurchase in the absent to investment needs for compelling strategic opportunities.

Our business plans does not call for acquisitions though of course that we’ll not as big great opportunity should have present itself, our focus is on organic growth. With that, I’ll turn the call back to Steve for closing remarks before questions..

Thank you, David. Before we open for questions, I want to say a few more comments which have the risk of some redundancy given David’s through remarks, but I think there are some points that are worth underscoring.

First of all obviously Dave and I both share disappointment in some of the adjustments we need to make in the fourth quarter, but just like David I just want to underscore the point it started with which is, that shortfall in no way shakes our confidence and where we can get this company over the medium-term and in fact has not shaken our confidence and where we think we can get in 2015.

It was clear when we -- when I came here a year ago and as many of you said to me, when I first came into the role, the said of activities required to realize the full potential of this great company and other small list of activities and not a one-year activity. We haven’t thought of it that way.

We’ve gotten enormous amount done in 2014, but that does not mean there is not a lot to do in 2015 and ’16 in each of our businesses and at the corporate level and not just to realize the targets we talked about at our Investor Day or today but it's more important to realize the fundamental underline potential of this company.

To realize the aspirations of incredibly dedicated people who work here, what I feel good about is the fact that we are making progress and real progress.

And David highlighted some of those examples and let me highlight a few more here, Investor Day last year, a number of you noted that one of the keys going forward was to have corporate finance and restructuring start to contribute positively as opposed to being a drag on earnings, some of you noted there has been a drag on EPS of 20 times to 30 times a share year-after-year.

And some of you said, a little bit -- expect a little skepticism, can you actually pull that off? We have a long way to go, there is still lot of work to do, but as David talked about we are making real progress. Our non-distressed services in the U.S. have shown enormous progress, their percentage of revenue is up substantially.

The bold debts we made in Europe and transaction advisory and tax services it's too early to declare victory, but as David mentioned those are growing substantially, solid trajectory entering this year.

Our creditors rights group is something we don’t to talk about and typically the retail business also because that’s in our traditional old business, but we’ve also been making investments in those businesses and the retail business those investments to focus has been key to all these great recent wins that you guys have talked about, RadioShack, Wet Seal, yes it's Cache, David.

But also in our creditor right business, we’ve been continuing to focus in that area during the down turn at three great wins a number of great wins, but three of the largest better rights awards in this past year have gone to all our group including Energy Future Holdings, Teasers and [indiscernible].

So we clearly still have work to do everybody in the segment knows we have work to do, but we are making progress. In the same story could be said for all the business, I'm not going go to the same level of detail.

But FLC which had a great year -- it's best year ever the team is not sitting still they're making further reinvestment in key areas including the construction solutions business that David talked about and other places where believe we can win.

The same is true for technology as those of who you are at legal Tech and saw and it's true in Econ in our industries and other segment. Let me call out Stratcom because that was another business where a number of you who were candid with me expressed some concern when I joined the business.

We are seeing intangible real results from the change efforts led my management and the team there.

The stuff that most of you have noticed is the tangible cost reduction efforts which have shown up in the second half of the year, but equally important that team is been putting together and is operating on tangible granular growth strategy that is focused on bets where believe we have the right to win.

And that is also joined beginning of results and have even a more powerful foundation for confidence going forward. Look I don’t want to understate the work we have ahead, this not a place where -- and I'm not sure ever in professional services firm you can put your feet up on the desk and play a victory.

There is no machine here that chunk out widgets and profits; there is a lot of work to be done, a lot of change that we have to drive ahead. But the bets we are making now, the bets we are talking about every quarter in our strategy meeting.

Our bets that I’m excited about, they are bets that build on the best of this company that build on the course strengths of the company. The places where this company has a right to win where our client say we are excited to be working with you on.

I believe that focusing on those bets and making them boldly investing where we need to investing behind our professionals.

We are building a sustainable franchise with an underlying growth trend one that will support the earnings aspiration you all have for us and I have for us, but also one that will support FTI's talented professionals make FTI -- continues to make FTI a firm that attracts a very best people and client. With that let me open the call for questions. .

[Operator Instructions] And we'll take our first question from Tobey Sommer, SunTrust..

I was wondering -- just a couple questions on the economic consulting segment.

How do you feel like your market share is in the economic consulting area, how do you feeling like that’s trending?.

I think our sense -- it can be very volatile quarter by quarter in the sense that you have a big thing that rolls often, somebody else has want a big thing. I think if you look over any extended period of time we have been gaining shares substantially in that business. Originally, primarily in the U.S but now both in the U.S.

and in Europe, so I think that’s a long term trend that we have seen. I couldn’t tell you what happened in the fourth quarter. .

What is the backlog kind of retainer look like related to Anitrust work because you did cite some large project that I guess have either slowed or ended in the fourth quarter? But given all the transactions out in the news, it would appear to me that you probably have some kind of backlog, could you comment on that?.

Yes well given the sensitivity in some of that work we have to be fairly discrete about our backlog. But I think the folks are feeling pretty optimistic about some of the activities that you're seeing out there and our ability to play meaningful role.

So again I would say that -- again we don’t necessarily have like committed set of hours that you're expecting through the balance of the year. But in terms of the number of matters that have emerged or are emerging and the role that we expect to have them I think we're optimistic about the backlog in Antitrust.

We have actually wanted some very exciting things there, the question is not only the -- of course the point about total commitment of ours is a real one. But the other issues the timing in and the starts of those some of them have been laid up of into February-January so that none of those have really benefited Econ's early start to this year.

But I think as per the talk still in that group, they're pretty bullish on what they're winning out there Tobey, that’s the core question. .

Just one follow up and then I'll get back in the queue. When you're involved in a matter and you get kind of brought in because of your positioning in the economic consulting space, do you often also capture much second request work as a result of that -- in the technology segment? Thanks. .

So both as a result of that and independently. We have a strong second request work in our technology booth independently because technology has done a lot of second request work and is seen as extremely capable and fast and moving on that but also sometimes joint with our economic consulting group..

And we will take our next question from Paul Ginocchio of Deutsche Bank..

Just beginning with economics, I know that this was previous to your tenure but obviously you signed a new deal and the margins were a little bit lower.

How do you feel about that, I mean how do you feel about the sort of fairness of that deal now and where can economic margins go overtime based on those new contracts that were signed a year ago? Thanks..

Paul anytime I can find people of the caliber that we have here are willing to work for a dollar a year I am signing them up. So I haven't found that many folks like that but if you have folks to bring to my attention I am open to it.

I think it was obviously an expensive deal the people are very talented in that space, I haven’t gone back and micro looked at that deal to say oh I would have changed this I would have changed that there is no use of that.

Truth is we're excited about the people we have there and that deal will be economically very attractive for this company, so as long as we continue to grow that business in the way we have historically -- it looks a lot less attractive in a month were the revenue was down but that is not our long-term forecast for that business.

So I think our commitment is to grow that business behind those contracts and return to what has been historically a substantial contributor shareholders value and return that business to that overtime.

Does that help Paul?.

It does.

And I think you talked about high teens or David talked about high teens margins is that sort of the upper limit or it could?.

I think I said getting back to the margins that it was in for the latter of last year and the latter part of this year, so I said that’s with mid-teens in the [indiscernible]. .

Just maybe let me speak one more on strategic, how are you trying to reposition that, what are areas are you investing in strategic communications?.

So look, I think the strategy side of that we haven't been disclosed because it obviously has effects on hiring's and investments in certain areas. But so I have to be at high level on that, I mean we have obviously been a little more granular on some of the cost side.

But I think Paul I guess it's just in line with what you might expect which is that if you disaggregate our business we have places around the world where we're seen and sub-segments of that business where are seen as the leading folks or have a real credible shot at being the leading folks.

And the question we ask there is please can we grow that? For example energy, public affairs in the U.S and globally what can we do to grow that, so we ask those sorts of questions.

And then we have some places where we're weaker than we would like, so we ask the questions, do we see a credible way to strength that position, where we do what do we need do.

And so it's that systematic process of asking questions that lead to quite specific sets of plans that are by sub-segment by geography which we put in place and then monitor quarterly -- in fact I am having a -- after this call while David is talking to all of you, I am having four hour meeting with Stratcom to review some specific plans against that.

So I think I have to leave it at that high level, but does that give you a feel?.

It does, thank you. .

And we will take our next question from Kevin McVeigh at Macquarie. .

Hey, can you give us a sense of how big Australia is today and what the FLC business restructured business grew without the Australian headwinds?.

I think David is looking up some answers. I would say my answer is Australia right now is less big than I had hoped it would be -- quite in time Kevin but I think David will give you more granularities on that. .

I had one other one just in terms of the items that caught us by surprise in Q4, is there any way to just frame that we have gotten it all at this point, was it just a function of the year-end close kind of going through the first closure, just any confidence that there is no other items that may kind of come out if you would?.

I am going to let David answer that, go into the details of that but he is looking it up. .

We will have to get back to you on the exact number on Australia, what was the other question?.

David, confidence that there aren't any other kind of unanticipated items if you would, was it a function of just the year-end close or that we have all the tax adjustments and so on so forth, it's in like there were a couple of items that maybe came in unexpected that we have captured them all and no other surprises after, if you would..

Yes, on Australia, I think it's likely we’re talking about 3% to 5% of the whole company including all segments, but we’ll get back to as more granular number.

So every quarter we do feel confidently that all the items in the fourth quarter absolutely, some of those items were driven by unique events in the fourth quarter and could -- can and will there be unique events that give this continuous result in the future, yes.

The question is can we do a better job of anticipating them and making sure that they are perfectly communicated.

So for example, the largest one increase the evaluation allowance that, we were not -- we were expecting a profitable fourth quarter in Australia that would have dealt with that issue and not put us in this position where we needed evaluation allowance.

So could we have a similar valuation allowance emerging some other taxable -- tax [penalty] or tax jurisdiction in the future, absolutely; are we worried about one as we sit here today, no; should we do a better job of forecasting and preparing for that in a sort of eventuality, yes and we’ll be working on that.

The unexpected -- [equan] has its own story, so then expected equalization expense we cap that program to eliminate that problem going forward.

Questions about severance, that was a decision made that was good for the business and if that -- I think one of the things that we are committed to is to make decisions like that that are good for the business and will put us in the correct position going forward and if that causes us to miss or be at variance by a few pennies we will take those decisions, obviously that was a small part of the $0.29, but that sort of volatility we will embrace if we have to keep positive our long-term future.

So, I -- bottom-line is to the extent of volatility with us making decisions and not managing quarter-to-quarter or putting off important decisions in order to protect the quarter, we will have that volatility, but that can be managed and that will be small in scheme of thing, but we have things like tax event yes and I frankly expect more tax volatility, not valuation allowances, but changes in the effect of tax rate as we get more of our income and profitability overseas which is certainly has not been a problem for FTI i.e.

growing profit, but we see that going forward. A long winded answer, but the answer is yes and no, I’ve certainly feel confident we captured everything we needed to. The volatility had number of stories, some we’ll do better with forecasting, some we will do better with managing with business, but some we will actually embrace it..

And then just real quick, in terms of absolute dollars did FX impact to ’15 guidance from a revenue perspective?.

More than it has historically actually; again this is new for us. Our team is actually quite surprised, I think all things being equal the guidance could have been $0.5 to $0.10 higher if FX at all had been around back where it was six months ago..

We’ll take our next question from Robert Simmons with Janney..

Sitting in for Joe Foresi.

How do you think that the shifts in oil prices is going to impact these readings?.

Okay, the subject that we’re talking about substantially here.

It has different effects on different businesses, but I would say in general our business is benefitted from substantial market volatility, we’ve substantial market volatility unfortunately it mean some companies who are in financial difficulty when then benefits our restructuring practices some of that sometimes will required need for prices communications or for advice on communication which benefits the communications business and we can also lead to mergers and acquisition sometimes which then effects some of our other businesses.

So, we are obviously working on that pretty aggressively, I mean all of our groups have reached out to contacts in those industries and are talking and we’ve had some too -- the oil volatility and we expect more going forward..

Besides just volatility that was higher -- is the oil prices generally going to be good thing or is that just the volatility going in that matters?.

Well, I am not sure, I haven’t really thought that through and I am not sure we have left, we’re don’t have [communications] that have sat down and look through the correct order effects of lower oil prices through higher consumers and whether that means in other segments fewer people go bankrupt and stuff like that.

But I would say the volatility clearly creates changes in marketplace that drive demand for our services and I would say the drop to $50 in the near-term is a beneficial effect overall on our company..

Up next we got to Randle Reece, Avondale Partners..

First of all if you look at your segment breakdown the unallocated corporate this quarter was 23.7 million. And that was up from about 17 million in the previous quarter.

What was the change their?.

That was investments the biggest of which was our all SMD partners meeting which we held in November and that was expected. .

Speaking of the partners meeting, does that have any effect it all in your operating results this quarter?.

This is something you could torture the data either way. You can obviously make the arguments that people taking a week of people’s time out of the market which in some cases it was a week and something those to three days has an effect and you say, how can you not have an effect.

So I think you could say that what I think the interesting this is this is not your question we got 268 responses from our survey after it one person out of 268 thought it wasn’t work his time to go to the all SMD meeting.

I don’t know if you've been in professional services a long time Randy, they're very few times you can get a professional services organization to that degree of unanimity. .

They’re really scared of you?.

No, that was an anonymous reply to the survey they were allow saying whatever they wanted. But that still could be consistent with what we did here, which people found the connections across the organization very powerful.

They thought it was both motivating but also very helpful for selling business going forward and finding linkage to the cost things. So could be still consistent with a view that it had some effectiveness this quarter and we'll have a beneficial effect down the road.

But I don’t think either David or I want to say, if it wasn’t for the SMD meeting the fourth quarter would have come in where we originally forecasted. I don’t think we think it's the dominant cost does that helps Randy..

I understand that I know you anticipated the meeting beforehand. Finally, just looking across the business having been in for a year. I was wondering if you have formulated any kind of view about what the most important driving trends in your end markets are right now.

The things that either presents your greatest growth opportunity or maybe increase risk. .

Yes so we spend a lot time thinking about that, I mean Paul Linton is in the room with me. He is the head of Strategy and Transformation. He kind of like to talk about it -- we do talk about that every quarter with the businesses.

Let me take you to the question slightly differently, I think -- the issue here is I don’t see some market forces out there that are going to cause any of our businesses to implode nor do I see the market forces that we can sort of sit back and just say, the tide will make us rise. But what I do feel like we have in the every business.

In sub segments in every business and in parts in every geography not in every geography but in parts in every geography. We have powerful positions that are under exploited that if we just focus on them and deepen our client relationships or extend our brand to people who don’t know what we did for X, Y or Z case but should we find results.

And that’s a large amount of what we're doing. I mean in Econ we are the leader in international arbitration. Somebody in London realize we had only talk to I think 23% of the leading international arbitration attorneys in London. Now we probably have talk more than any of our competitors but 23% leaves you a lot of room to grow.

Now there is an opportunity that international arbitration as a market will grow which we believe it will but actually by far the biggest opportunity is not waiting around for the market to grow but us to make sure that our message about why our core client see that they get better results hiring us is out there to more people.

And so that’s where we're driving it.

My goal for this company is to not have to stand up year after year and sort of blame bad results often on market conditions or you know [crow] that market conditions are good our goal and it doesn’t mean we won't be effected quarter by quarter is to actually make a company that can grow successfully over any extended period of time independent of market conditions and I think the conditions are right for that does that touch on your question?.

And we go next to Tim McHugh of William Blair & Company..

On economics I guess just a come back to that I guess, what gives you the confidence that the demand trends are going to rebound? I guess you talked about your monitoring the revenue trends from late Q4 and early Q1 but I think people have asked about the backlog but just given there is a not a ton of visibility I think you had talked about your guidance expecting them to get back to high single-digit growth by kind of after Q1.

What gives you the confidence around that I guess?.

I will give you two answers David can chime in if he has anything different. One of them is just the fundamental capability and we're clearly the leaders in that practice and around the world.

Now that doesn't necessarily mean that if the markets go south in a hurry then you don't get affected but my experience of professional services is the leaders in businesses tend to gain share when markets go south. And so even if it did I would suspect we would do better than the market.

The other issue is just actually the collection of anecdotes I have had, as I’ve talked with John and some of the folks like Donald and Michelle in the business we are winning some of the major jobs that are you reading around in the world on the Wall Street Journal and have been in the last two months. It's just some of them haven't started.

So I think we have more than just a general view that supports the sense that business has kind of rebounded. It's taking a little longer than would you have liked this year.

And again to not to make reference to history to support, but the Ecom gave us a little scare at the beginning of last year and also and came back quite nicely in the second and the third quarter, so that combined with what we're hearing about their backlog give us -- we are not panicked.

This kind of December, January effect seems to have been and that thing is becoming a yearly pattern but we've seen weakness in the beginning before.

Answering the question that we heard earlier I apologize for the delays we're segment oriented so we had to add up Australia in each of the different parts of the company and it's about 45 million in revenue last year. .

Okay.

And maybe as long as you mentioned how much of that is restructuring I think that’s the key kind of piece?.

It's the Lion’s share of it. .

And then on the corporate finance and restructuring, how do we think about maybe not even --..

It’s not like we don't defend our colleagues down there, we also have a growing and very nice -- small but growing and very nice Stratcom business down there. .

On corporate finance and restructuring, what's the goal for the margin as you start to get a rebound there I guess I am sure that the big piece as we think about your business covering.

It's a bit different mix than the past so if we're trying to understand what that can get back to?.

Yes let me give you a little bit of a high level thing while David's looking up some numbers which is I do think that as we have gotten more into adjacent businesses which I think we've been slower than we could have been, but we're now moving forcefully into them like performance improvement.

We will not have the peak margins that we did back when we were purely a restructuring house in the middle of a restructuring boom.

I think those days are behind us but obviously we beat the margins in this business both by growing performance improvement to a more profitable business and by rebound and restructuring can go up and quite considerably from where they are. That's a conceptual answer, David I don't know if you want to give more specifics on that. .

I think we were looking at that being around in the high teens this year consistent with and a little bit better than last year. .

I guess and is the high teens where you would -- is that optimal for that business than given the mix or that is still --?.

If went to a heavy overweight distressed obviously that could go higher. What's optimal is a really good question. I mean we sometimes debate about wouldn't it be wonderful if -- with all bankruptcy all the time and the margins look like they did four or five years ago or five or six years ago.

But then you would be giving up the non-distressed franchises that we have worked so hard to build which are lower margin but nonetheless generate good profit and keep the segment engaged in good times as well as bad but of course that's reversed in that segment.

So I am not that very well couldn't prove to be optimal if we really achieve everything we want in terms of growing the non-distress business and that becomes a permanent and large portion of that business, I don't think we planned it. .

Let me maybe answer this in a different way. I don’t think we lack ambition for that business.

If you remember at Investor Day if I get more questions on the aspirational targets for that business which if I recall correctly was a $100 million in EBITDA in 2016 and the reason was that lot of people were pointing to the fact that although we hadn't been north of that at one point in time we were down in the 60s in 2013 and predicting in 50s in 2014, which is where we came out.

So we clearly are committed to turning that around. I just don’t like the focus on EBITDA dollars more than EBITDA percent because you get them by both growing top-line and bottom-line and because I do think we have to invest in adjacent spaces than we have to be willing to hit EBITDA dollars -- invest.

And so if you had only been focused on EBITDA percent we never have made these bets that we’re making in Europe and I think these bets in Europe are key to the turnaround, we need to come up with other bets.

So hence you hear the squeamishness without sort of committing to EBITDA percent target but there is not a lot of squeamishness about the aggressiveness that we have to having that business player 2014 at the bottom in terms of EBITDA dollars and going up substantially from there, does that help?.

We turn next to Jerry Herman of Stifel..

I know it's getting late, just want to ask maybe one compound question if I can.

David I am wondering if you could give a little bit or would be willing to give a little bit more color around the first quarter you referenced Steven and David that there is some weakness in January and then some of the businesses you cited in expectation that they would strengthening as the year progresses.

But are you willing to maybe share some greater guidance on the first quarter? And then secondly I just want to be clear that your full year guidance and EPS does include the impact of that FX and I think you referenced that at whatever $0.05 to $0.10 per share?.

Yes, sort of answered that backward, the guidance does include the effects of FX and we recalculated that as recently as the end of January. And though then the impact of that is kind of spread across there, but probably was couple of pennies for first quarter.

The impact on the balance of the year, again which combination of revenues and profit, in which jurisdictions, in which currencies, but that would be depending on how you flex it while measuring it relative to -- I think our guidance would have been higher by $0.05 to $0.10 if we had particular configuration of revenues and currencies that was placed in mid fourth quarter.

with regards to quarterly guidance, we’re not -- we’ve made decision we’re not doing quarterly guidance at this point, but I think it's fair to say that first quarter is always generally been our weakest quarter, seasonally that’s been our pattern and that’s what we’re expecting this year.

We are definitely monitoring -- I think we’ve called out the segments that we’re monitoring that had a flow out of the box January economics and technology and -- so we were definitely focused on them, but they are working very hard and in economic especially very encouraging backlog developing.

And we did give the specific guidance segment-by-segment which I am happy to go over with you again in terms of margin and contribution in each segment for first quarter, so happy to reiterate that for you..

And we’ll take our final question from Tobey Sommer of SunTrust..

Just one question, what are your plans to grow the billable consultant headcount in 2015?.

Yes, there are substantial plans to continue to grow those. As I think I’ve mentioned earlier a key to organic growth is to actually best kind key positions and some of that is around -- a lot of that is around hiring into the right place.

We did have some success on that in 2014 in a number of areas; I mean if we look at FLC particularly, even though we probably didn’t fully hit the targets that we had for FLC, I think the headcount year-on-year is probably up close to 10% or maybe over 10%.

And we’re excited about that and that’s net obviously of people who you treat and some of the other segments had fair amount of success in the -- later in the year.

We have ongoing plans, I mean that is just part of our business going forward and we -- what we have to do is the budget bringing in people ahead of demand, not just waiting and reacting to demand because what the scoop is in professional services, you react to the demand and then you're just pulling people off the street who you can get and you need to be proactive about that and that’s probably not a muscle that has had as much working here as it has been in other professional services firms of muscle or developing, but it's a muscle we’re committed to develop.

So every year we are committed to budgeting in the budgets the additional span segment-by-segment and region-by-region to support the growth not only for that year because usually it's a cost of that year it's essential for the growth for the next year.

So that’s the qualitative answer, do we have any specific numbers you want to share on that or not? We don’t share those numbers, but the key part of our budgeting process that will be a backhaul..

So, if you're not going to get specific numbers, would it be fair to say that the growth in billable headcount will likely at least slightly exceed growth in revenue?.

Well, I would say over on an extended period of time we would expect revenue to grow faster than billable headcount because we will overtime improve price realization and so forth. Now in any short period of time as we’re doing catch-up headcount will grow faster than revenue in certain segments that will clearly be the case this year.

I haven’t done the calculation to look at that overall. .

Yes for improving leverage obviously with lower price people it should keep up --..

Some segments we're really focusing on increasing the leverage. So I would think on average this year the headcount probably goes up faster than revenue, but that’s a guess I suppose -- I'm not looking at a sheet of paper to give that answer.

Does that give you a conceptual picture of what we're --?.

Yes it does, thank you for your help..

Thanks to all of you guys for the support you've given over this past year and I really appreciate it. Anything else Mollie..

Thank you everyone for joining and we'll talk to you next quarter..

And this does conclude today's presentation. Thank you all for your participation..