Mollie Hawkes - Managing Director, IR and Communications Steve Gunby - President and CEO Ajay Sabherwal - CFO.

Tim McHugh - William Blair & Company Tobey Sommer - Sun Trust.

Good day, everyone, and welcome to the FTI Consulting Second Quarter 2017 Earnings Conference Call. As a reminder, today's call is being recorded. And now for opening remarks and introductions, I'll turn the call over to Mollie Hawkes, Managing Director of Investor Relations at FTI Consulting. Please go ahead..

Good morning. Welcome to the FTI Consulting conference call to discuss the Company's second quarter of 2017 earnings results, as reported this morning. Management will begin with formal remarks, after which we'll take your questions.

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

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

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

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

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

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

Lastly there are two items that have been posted to the Investor Relations section of our website this morning for your reference. These include a quarterly earnings presentation and an Excel and PDF of our historical financial and operating data, which has been updated to include our first quarter of 2017 results.

Of note, during today's prepared remarks, management will speak directly to - will not speak directly to the quarterly earnings presentation posted on our Investor Relations website.

To ensure our disclosures are consistent, these slides provide the same details as they have historically, and as I have said, are available on the Investor Relations section of our website.

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

Thank you, Molly. And welcome to all of you who are joining us on the phone. As most of you know, we had a tough start to this year. It was slow start one that persisted through the first quarter and well into the second. It is of course not fun to have such a slow period.

As we discussed during the first quarter call however, we were confident at that point the factors that drove that slowness will not persist throughout the whole of the year. Importantly I'm pleased to say, by the end of the second quarter we were back on track.

And as we are projecting a much more solid second half of the year, and a much more solid foundation going into 2018. We would like to do on this call is give you a flavor for those changes that happened during the course of the first half of the year and our sense of our expectations going forward.

The main but not only driver of the improved performance was in Corp Fin. As we discussed in the first quarter call, there are some real market headwinds and restructuring market that we believe at that time and still believe will be with us for a while.

Having said that, as we also discussed much of the shortfalls and performance early in the year had to do not with the market but with some painful idiosyncratic factors, most of which we thought we could reverse as the year went on.

For example, we had delayed in success fees, we’re conflicted out of two of the largest jobs in the restructuring market, we had some anomalous performance in some businesses that are almost always strong such as our TMT business and some others.

We had confidence then that at some point at least some of those factors would right themselves and essentially that is what happened by the middle and the end of the second quarter. For example, our success fees are significantly better, much more in track with our expectations versus where they were in the first quarter.

Our TMT and what many of you on the call are nondescripts businesses, our client some called on that they call on business transformation services. They’re delivering sharply improved performance. Instead of being conflicted out of the biggest assignments this quarter we won a lot of them.

In fact, our restructuring wins in North America during the quarter nearly doubled. It’s of course true that Corp Fin particularly of the restructuring part of the Cor Fin can have volatility at any point it’s the nature of the business.

But in the beginning of this year, we were confident that the slow start we saw there was well beyond the norm of what would be sustained, that one couldn’t take the first quarter and simply multiply it by four and essentially what has transpired is validation of that sense.

So, after a very weak start, we feel like Corp Fin is getting back on track, it’s still facing a non-booming market, but is getting back on track in the way that a firm that is the leader in this business can and should be able to deliver even in the slow restructuring market.

Corp Fin has the biggest change in performance over the course of the first half of the year, but there are also good signs in a number of the other businesses.

Our text segment for example, it faces a challenging market, it’s a tough fast-moving market, but our people there are making progress on virtually on every one of the initiatives we launched last year, initiatives focused on ensuring in the face of the tough market, a strong 2017 and beyond.

I recently had a very enjoyable meeting, meeting with a group of midlevel professionals in this business, I was asked to talk about what is going on in the company as a whole, but I also had a chance to listen to them and what their experiencing, what they’re feeling about what’s going on in their business.

It was incredibly motivating conversation, they know that they are in a business that requires really tight delivery, constant focus on cost, innovation, it’s a challenging business, but that group felt like we are moving at a pace than we haven’t ever been moving at before and they’re seeing tangible progress.

I couldn’t help but walk away from that meeting convinced that this is a business that’s moving in the good direction. And as you'll see, as you know, we have a lot of businesses a number of sub businesses including our health and solutions practice.

We took substantial actions last year and in the first half of the year on both the cost side and the revenue side in a number of those businesses ensure that these businesses start to perform more in line with their potential, their substantial potential.

And we have a lot of confidence that those efforts will bear fruit, beginning with expectations where substantial year-over-year EBITDA improvement in the second half of the year.

We did have one business that reported a notable sequential decline compared to the first quarter of 2017, which was Econ, with a sequential decline is not a year-over-year decline.

That segment as you might remember delivered record revenues in the first quarter and we anticipated the sequential decline in the second quarter both given the strength of the first quarter performance but also due to the uncertainty about how the new US administration will enforce anti-trust Laws.

That uncertainty in the market we believe will persist into the second half of the year, but we believe in the face of those forces, given the strength of our positions in the marketplace and the breadth of our platform, we should still be able to deliver a solid second half just as we delivered a solid second quarter.

And finally, though our scrap comp segment also started the year slowly, it has been improving sequentially. And we believe at this point that business has built itself into a much more enhanced position in the various marketplaces in which it serves, one that will position that will allow us to gradually return to higher performance levels.

So that is a high-level view of how each of these businesses are positioned going into the second half of the year, and Ajay will add some comments in a minute. You want to think about in aggregate, in aggregate we had a January through the beginning of May that was or less robust that I or any of us hoped it would be.

From that we have moved to a place where we have a company that is still not firing on all cylinders to probably never will be firing on all cylinders at once. But inspiring on a number of cylinders. In that though not perfect is good enough for us to expect to deliver substantially strengthened results for the second half of this year.

Let me also make a couple of comments on the special charge we took this quarter, mostly what I like to underscore is that those actions are consistent with our long-term growth agenda. That growth agenda as I think most of you know is based on identifying key areas where we have a right to win in the marketplace.

Areas where we have great professionals, where we have professional for propositions that client needs and investing heavily behind those positions. It also encompasses radically improving or addressing position that don't fit those criteria.

But in the past, we have simultaneously invested in some parts of key businesses, while at the same time, pruning other parts of those same businesses, the other parts which don't offer us the right to win. And so far, this year we have continued that course.

During the quarter, we assessed positions that were challenged, we took actions to ensure those investments are best aligned with market and demand and we also reduced overhead costs. At the same time, we also engaged in sustained investments in many of those same businesses and other parts of those same businesses.

In first six months of this year I believe we attracted more senior experts laterally to this company than perhaps ever certainly than we have in the long-term certainly since when I've been here. And as you know, we've aggressively promoted strong junior people into the businesses we are growing.

I think there have been announcements on many of these lateral hires but they include strong additions to our retail team additions to our FTI Capital Advisors team. The recent strong addition to our already strong company side position through the acquisition of the CDG Group, additions to our cyber security group.

And those are some subset of the additions in the U.S. If you look abroad, we just attracted a terrific team into South Africa, we added to an already strong construction solutions team in Hong Kong. There are a lot of different announcements that you can see. So, we proved [ph] aggressively where we needed to. And I'm glad we did that.

At the same time, we continue to invest where we can grow the business. And that is probably the most important for us for the long-term.

It is adjusted to the position of those two, and the fact that we now have a management team that is more and more comfortable with doing both of aggressively looking to prune where we don't have a right to win but at least as aggressively making the bold bets where we do.

It gives us confidence about where we can go not just for the rest of this year, but over the next 12 months, 24 months, 36 months and beyond. So, with that, let me turn the call over to Ajay, to give you some more details on the quarter.

Ajay?.

Thanks, Steve. As I have in the past, first, I will summarize our quarterly results. Then I will review significant segment level quarter-over-quarter and sequential quarter comparisons. After that, I will discuss guidance for the remainder of the year. In summary, we had a slow start to the year.

Despite this, we are entering the second half of the year with positive momentum especially in our corporate finance and restructuring segment.

This, coupled with the cost actions we have taken and the successful deployment of cash to both buyback stock and acquire a complementary business gives me confidence about our prospects for the second half of this year.

For the second quarter of 2017, net loss of $5.2 million included a special charge of $30.1 million and compares to net income of $26.5 million in the prior year quarter. The special charge is comprised of three items.

First, we took headcount actions that accounted for $16.1 million of the charges, these actions impacted approximately 4% of our employees split approximately 60% and 40% between billable and non-billable staff respectively. Second, the disposal or closure of several small international locations resulted in $1.6 million of the special charge.

Thirdly, we exited our Washington D.C. office and moves to a new location in Washington D.C., the remaining $12.4 million of the special charge is for estimated lease curtailment cost, losses from subleasing space at lower rates than what we are obligated to pay in our prior building to 2021.

Our D.C office is our third largest office globally with over 270 professionals from all five business segments plus corporate employees. This relocation was design to provide economic, employee and business development benefit.

From an economic standpoint, we were able to take advantage of lower rent in a building with lower operating expenses which extends our lease through 2028. All these second quarter actions were important and the cost savings are material. We expect these actions to result in second half savings of $23 million.

On an annual basis in 2018 these actions should result in $42 million in savings. All win the headcount actions, we ended the quarter with a total of 4,629 employees, a net reduction of 113 employees from the end of the first quarter of 2017.

It is worth noting that approximately a quarter of the employees effected as part of the actions related to the charge will depart subsequent to the end of the second quarter. Our effective tax rate for the three months ended June 30, 2017, was not meaningful due to the fact that we recorded a net loss in the quarter after the special charge.

Our adjusted tax rate which excludes the special charge was 37.9% compared to 36.9% in the prior year period. On a GAAP basis loss per share in the second quarter was $0.13. In total, the special charge resulted in a $0.52 decline in GAAP EPS.

Adjusted EPS for the second quarter which exclude the special charge was $0.40 compared to $0.66 in the second quarter of 2016 and up from $0.34 in the first quarter of 2017. Revenues for the second quarter of 2017 were $444.7 million, down 3.4% compared to revenues of $460.1 million in the prior year quarter.

Excluding the estimated impact of FX revenues decreased $7.4 million or 1.6% compared to the prior year quarter. The decrease in year-over-year revenues was primarily driven by lower demand within our corporate finance and restructuring segment.

This is largely due to tough year-over-year comparisons as this business reported record revenues in the same period in the same prior year quarter. Second quarter adjusted EBITDA was $40.8 million or 9.2% of revenues, compared to $56.6 million or 12.3% of revenues in the prior year quarter.

The year-over-year decline in adjusted EBITDA was primarily due to lower revenues. As Steve said, despite this slow start to the year we are on track for a stronger second half.

This conviction is not only due to the cost reductions I just spoke to but also and importantly the sequential momentum in our corporate finance and restructuring segments where revenues improved 10.9% and adjusted segment EBITDA doubled compared to the first quarter of 2017 and our expectations for the rest of our business.

Now I will share more insights at the segment level. In corporate finance and restructuring, revenues decreased $14.7 million or 11.1% to $117.5 million in the quarter compared to $132.1 million in the prior year quarter.

The decrease in revenues was primarily due to lower demand for our distressed or core restructuring services globally, which was partially offset by higher success fees. Adjusted segment EBITDA was $20 million, compared to $32 million in the prior year quarter.

The year-over-year decline in adjusted segment EBITDA was largely due to lower revenues, particularly for our higher margin, restructuring and bankruptcy services. Sequentially as I mentioned, this business delivered meaningful top and bottom line improvements compared to the first quarter of 2017 as we saw an improvement in U.S.

restructuring, higher success fees and improve results in our non-distress or business transformation practices. It is noteworthy that we have significant new wins in our corporate finance and restructuring business in Q2.

These wins are in a broad array of industry leveraging our global platform and including both restructuring and business transformation work. Many of these wins occur later in the quarter and provide us with momentum going into the second half of 2017.

Turning to FOC, revenues decreased $6.8 million or 5.7% to $111.4 million in the quarter compared to $118.2 million in the prior year quarter. The decrease in revenues was primarily due to lower demand for our global investigations and health solutions services.

These results were partially offset by a higher demand for our construction solutions practice and area in which we continue to invest.

Adjusted segment EBITDA was $13 million compared to $15.2 million in the prior year quarter, the decline in adjusted segment EBITDA was primarily due to lower revenues which was partially offset by lower compensation resulting from headcount reductions taken in the health solutions practice in 2016.

Our focus on this segment is to grow revenue, while taking hard look at where our investment is working and where they are not as demonstrated by the fast actions taken during the quarter.

Looking towards the second half of 2017, the unpredictability of timing of large investigation matters continues to impact our global risk and investigations and forensic accounting and advisory practices. At the same time, we expect sustain strength in our construction solutions and data and analytics practices.

Our economic consulting business reported revenues of $124 million in the quarter, up $6 million or 5.1% compared to $118 million in the prior year quarter. The increase in revenues year-over-year was primarily due to higher demand for our antitrust services in North America.

Adjusted segment EBITDA was $15.5 million compared to $15.4 million in the prior year quarter. Adjusted segment EBITDA was consistent with the prior year quarter as the increase in revenues was offset by increased compensation cost related to an increase in billable headcount.

Revenues in this business did however decline sequentially primarily due to lower demand for M&A related antitrust services compared to the first quarter of 2017. As we said at the end of 2016, we are up against tough comparisons after a record year for M&A related antitrust services.

In particular in the first quarter and fourth quarters of 2016 as Steve mentioned, there is uncertainty in the M&A created by a lack of clarity around antitrust enforcement in the US. Despite this, we continue to have the best experts in this business, which is supported by the numerous awards we were recognized for during the quarter.

Our leading position gives us confidence that despite the uncertainty in the market, we will win our share of the opportunities that arise. In technology, revenues increased $3.7 million or 8.8% to $45.6 million in the quarter compared to $41.9 million in the prior year quarter.

The increase in revenues was primarily driven by higher consulting demand associated with M&A related second request services which was partially offset by reduced hosting revenue. Adjusted segment EBITDA was $5.4 million compared to $5 million in the prior year quarter.

The increase in adjusted segment EBITDA was the result of higher revenues offset by higher cost of service and investment in future revenue generating initiatives.

We continue to believe we are on the right trajectory in technology, we expect our revenue generating initiatives such as providing managed review services on Microsoft Office 365 and our information governance services to contribute to the top-line in the second half of 2017.

Strategic communications revenues decreased $3.7 million or 7.4% to $46.2 million in the quarter compared to $49.9 million in the prior year quarter. The decrease in revenues was primarily due to a decline in project based revenues in North America particularly for our financial communications and corporate reputation services.

Adjusted segment EBITDA was $4.9 million, compared to $8.4 million in the prior year quarter. The decrease in adjusted segment EBITDA was due to lower revenues in North America. Sequentially we saw improvement in strategic communications compared to the slow start we had at the beginning of the year.

Revenues improved 5.8% and adjusted segment EBITDA improved 14.6% in the second quarter as compared to the first quarter of 2017. Given the sequential improvements in the business and the momentum we are seeing for the remainder of the year, we continue to believe that strategic communications is on track for an improved second half.

Turning to our guidance, we continue to expect a stronger second half of the year. Our confidence reflects improved momentum in certain businesses, especially in corporate finance and restructuring and from our cost and cash deployment actions. To that end, we are reaffirming the 2017 revenue and adjusted EPS guidance that we provided in April.

To reiterate, we expect 2017 revenues will range between $1.775 billion and $1.875 billion, and adjusted EPS will range between a $1.90 and $2.20. Due to the second quarter special charge, we are revising our GAAP EPS guidance to reflect the impact of that charge. We now expect GAAP EPS for 2017 to range between a $1.37 and $1.67.

This compares to the previous EPS range of between $1.75 and $2.10. Before I open the call for your questions, I would like to reiterate several key themes that drive our continued confidence in the business in 2017 and beyond.

First, despite the slow start of the year, we are on track and continue to expect the stronger second half driven particularly but not solely by improvement in our corporate finance and restructuring segments.

Second, all our commitment to improving performance in teams driving revenue initiatives while also taking a hard look at costs are demonstrated by actions in the second quarter.

Third, we have leading businesses and practitioners that are well positioned to win in the market and where we believe we have the right to win we will not shy away from adding talented practitioners like we did with the CDG Group acquisition that closed in early July.

And finally, we will continue to use our strong cash flows to enhance shareholder return as we are demonstrated by our repurchase of $65.6 million of our common stock in Q2 of 2017. These key themes will continue to propel us forward and give us confidence that we can deliver sustainable earnings growth over time.

With that, I will open the call for your questions..

Thank you [Operator Instructions] Our first question today comes from Tim McHugh of William Blair & Company..

Hi. Good morning. Just want to kind of follow up on the commentary about the second half.

From the comment about the corporate financing restructuring, the new wins I guess you described and I apologize if I missed this, but can you elaborate just more on which is that more of restructuring, is that more of the non-distressed side of the business, I guess what is that you competing better or you’re seeing more opportunities emerge in that sector?.

Yes, so, let me give a high-level answer and then I don’t know whether we’re giving details of the specific wins or not Ajay, but it's on both sides Tim, I mean and it was a confluence of things.

Yes, on the restructuring side, I think they are little more -- if there are more opportunities perhaps we also just one more couple of -- and obviously we’re affected by big wins, we’re winning all through it, but if you remember during the first quarter, we conflicted out of two of the largest assignments and we looked like we’re positioned to win and we got conflicted out, half of that happened in the second quarter, and we just won a lot on that side, which is more in line with what we expect candidly, and we have very good business there and we thought the performance in the first quarter was somewhat anomalous.

But also on our we’re calling it business transformation services, none of our clients call it non-distress Tim, I’ve gotten re-educated, I going to have to see if I can get you re-educated on that to.

We also won more there, there I think we actually in second on a couple of things late in the last year and the beginning of this year for example merger integration stuff that we do in there and then we just rebounded and won some stuff there as well as a variety of other things.

I think we just had a stronger sometimes things go one way in the quarter and sometimes they rebound the next quarter.

So, I think it's both sides, Ajay anything to add?.

I’ll just add, I’m really, really excited by what I’ve seen in the corporate finance group coming out of this quarter.

Obviously, we cannot give you names of the clients, but it’s all of the above, it’s in restructuring, it’s in retail, it’s in energy, it is globally, it is leveraging the full strength in terms of the practitioners, the people, the bench strength, the global platform, it is terrific for me to see how we are winning and where we’re winning in both restructuring and on the business transformation side..

Does that help Tim?.

Yes, the sequential improvement there, how much -- you talk about Q1 being very low from a success fee standpoint.

And then you talked about an improvement in 2Q I guess how much of this sequential improvement or any way you want to describe it I guess it I guess was the high success fees in the quarter?.

Certainly Tim. In the first quarter, our success fee was closer to the lower end of what we typically get. In the second quarter, it was well above average but certainly not at that top end. So, success fee was a contributor, we expect it to continue to be, but also, we expect to win from these wins that we got towards the later part of the quarter..

And I guess what's that normal range for success fees again. So, if you're saying low high end in range.

What are you thinking about there?.

I'll be more of the more than I usually have. As low as $3 million as high as 15 with an average around 7 aggregate for the comp. And that that is a quarterly number..

Right, okay. And then lastly just the higher-level question. I know is there any way you can I guess give us more comfort other than obviously we see the math on the expense cuts, but the improvement needed in the second half to get to the guidance range is pretty meaningful.

So, is there anything I guess in more granularity other than I guess the size or just the fact you feel better towards the end of the quarter and you're seeing new wins that you would point to your -- has given you confidence and visibility to the people?.

Absolutely. So, you should see our second -- we are reaffirming guidance. I mean that and itself is something we take seriously. So that's number one. Number two, you should see our second quarter as a threshold. We set and we expect to do better than in the second quarter. And then the second quarter we haven't yet benefited from the cost actions.

So mathematically add the cost actions to what we have delivered in the second quarter and you got the first half of $0.74 take second quarter as a benchmark or a threshold add the cost actions on a EPS basis and there isn't that much improvement in performance required to get at least to the lower end.

Now on top of that telling you, the momentum we are seeing in corporate finance and the expectations for the rest that math is not too difficult..

The other thing I would say Tim, is our business on a short-term basis is extraordinarily fixed cost. There is some businesses that have very variable comp structures our is below the executive committee reasonably effects coming from our accounting background and so forth.

So, it doesn't actually take that much revenue movement to actually drop a fair amount of money to the bottom line and that's cut both ways, it can take that much shortfall in the early part of the year to actually have EPS drop. But that's part of the volatility.

We have volatility in the business but there is a lot of month-to-month and quarterly quarter movement just by reasonably modest levels of revenue. And right now, we're projecting better revenue going forward. Because we have wins inhouse that we were seeing on horizon in the first quarter, but they were not yet in the bank.

Does that help Tim?.

[Operator Instructions]. We'll go next to Tobey Sommer of Sun Trust..

I was wondering if you could comment about regulatory driven work. We've seen news reports about slow to fill, spend it considerable jobs by the Trump administration. Wondering if that is impacting the pace of regulatory driven work versus prior to the change in the administration. Thanks..

We have a lot of discussion in that about our company. That plus uncertainty around antitrust how much is that effecting M&A which can affect a number of our businesses. So, we have a lot of discussion around that, just as we add around Brexit and how much can that effect our London business, undoubtedly some of that is having an effect.

The truth is what we find is that we can -- if we do the right things and we win more than our share, we can overcome that.

And so, the focus and since we can’t change any of that, our focus has been really around okay, so what do we need to do, clearly there is enough market out there for us to continue to grow, if we do the right things, it’s obviously easier if there is a regulatory boom or there is an M&A boom.

But I think our focus here is to say, let’s assume there isn’t what can we do and I think we’re focused around that. But yes, I suspect there could be some better regulatory environments to make it easier, Tobey.

Does that help?.

Okay.

Could you provide a little bit more color about the senior headcount additions that you cited I think in the first half, just so we can understand the magnitude of those? And then on a go forward basis, after the headcount reduction actions in 2Q, what is the outlook for billable headcount growth which is kind of integral to the organic growth strategy [indiscernible].

Thanks..

Yeah.

Look in terms of the senior hires, this is been something that we’ve been doing all along, I don’t want to make it sound like this is an anomaly, but I also wanted to make sure that we underscore that just because we took some headcount reduction actions doesn’t mean we abandon that commitment and we have some terrific practices which are growing and we believe can continue to grow fast and we supported them because we’ve encoding [ph] terrific people around the world and then eventually they come.

And so that’s what I was underscoring, in terms of the areas, Mollie can give, I think we’ve done a lot of announcements Mollie will send you all those in a bundle, but I mean included substantial support for our retail practice in the US all the way to Australia, they included a great group that came from a competitor in our capital advisors group.

They included the CEG acquisition, those were just in Corp Fin, and I’m sure I’m missing in some other additions of talent in Europe.

That’s just in our Corp Fin group, and it goes across and FLC we were able to attract the great group of people in South Africa which so much that was priority but we came across a great group people and when you come across a great group of people, we take them on similarly we had -- I mean these are small groups, but they mount up and they create a platform for growth, we had a small group that wanted to join us our strong construction solutions business in Hong Kong.

And so, we added them, I think this is all within the first six months or plus or minus a month. Mollie can correct me if I’m a little bit off in the timing.

And so forth throughout the rents, it’s not hundreds of people, but its meaningful for and I just gave you a couple of snapshots, there are some others across the rest of the business, it’s meaningful, our business going forward example we also attracted a very talented guy who ran cyber security for the National Security Council in the Whitehouse.

The cyber security is an important business for us, which is growing and the ability to attract the talent like that is something you do and my point was not so much this radical or it obviously lateral hires like that can cost you money in the first six months as they’re getting their business and we factor that into our forecast.

The point is that we are continuing to do that even while we right size other things and that’s an important part of our strategy going forward. Does that help Tobey? And answer the second part of the question, Ajay can answer it.

Does that address the first part of the question?.

Sure. And just about like hiring plans on a go forward basis, thanks..

Yeah, let me help. Whilst we have characterized 4% of the workforce, 60% of billable and non-billable. I want to emphasize, billable customer, we didn't take all the junior people and laid them off, we did not do that. This was across the bench strength. We looked at every area that we needed to look at, that will go as far as that.

And there was no just take the most recent hires aspect of it. In terms of hiring plans, clearly, we have commitments that we have made to hiring for example from university campuses that we will certainly honor. But we believe we have the bench strength now to produce higher revenue overtime.

We will certainly grow, but for this year I'm not going to characterize with a percentage growth target from where we are from the beginning of the year or longer-term aspirations remain a mid-single digits headcount growth. But for this year that will be well muted from that number..

Okay. And then wanted to ask you a question about EBITDA, in EBITDA growth. Do you feel like the company is positioned now to grow EBITDA, EBITDA in recent years is kind of inched down a little bit, and kind of flattish to down rather than focusing on adjusted EBITDA, it feels like investors kind of pay more attention to the EBITDA? Thank you..

Hey I was thinking you're asking about adjusted EBITDA, but I think the answer kind of is the same. Let me give an answer Ajay, if you have different one feel free. Yeah, I think the answer is yes. I think look the truth is, that EBITDA for a long time in this company was dropping.

We've slowed that decline but we haven't and we've talked about this we didn’t believe this year, we didn't believe we have yet had it on a growth trajectory. We believe we have in addition to EBITDA growth terrific cash flow that allows us to build returns to shareholders through acquisitions or through other means.

But in terms of the goal of getting organic EBITDA growth, we are in a process here. But I think we are well into that process. I think from -- there is always variability quarter-to-quarter, but I think we have expectations from where we are here to be growing EBITDA. And it can vary quarter-to-quarter.

This is a business where you can always have a year where just everything goes wrong, just like we had first quarter where lots of things went wrong. But that is the goal, and I don't think we're far from that goal at this point Tobey..

And at this time, we have no further questions. I'd like to turn the conference back over for any additional or closing remarks..

Well thanks everybody for the time. And hopefully everybody gotten some time to get some time off for the summer. We are looking forward to having that first half of the year behind us and looking forward to the second half of the year and beyond. Thanks very much..

And this does conclude today's conference long-term. We appreciate everyone's participation today..