Good morning everyone and welcome to the FTI Consulting Fourth Quarter and Full Year 2023 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Mollie Hawkes, Head of Investor Relations. Ma’am, please go ahead.

Good morning. Welcome to the FTI Consulting conference call to discuss the company's fourth quarter and full year 2023 earnings results, as reported this morning. Management will begin with formal remarks, after which they will take your questions. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements within the meaning of section 27A, 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, initiatives, projected prospects, policies, processes and practices, objectives, goals, commitments, strategies, future events, future revenues, future results and performance, future capital allocations and expenditures, expectations, plans or intentions relating to acquisitions, share repurchases, and other matters, business trends, ESG-related matters, new or changes to laws and regulations, scientific or technological developments and other information or other matters that are not historical, including statements regarding estimates of our future financial results and other matters. 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 as well as other disclosures under the headings of risk factors and forward-looking information in our quarterly report on our annual report on Form 10-K for the year ended December 31, 2023, and in our other filings with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this earnings call and will not be updated. During the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin and free cash flow. For discussion of these and other non-GAAP financial measures, as well as our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures. Investors should review the press release and the accompanying financial tables that we issued this morning, which includes the reconciliation. Lastly, there are two items that have been posted to the investor relations section of our website for your reference. These include a quarterly earnings presentation, and an Excel and PDF of our historical financial and operating data, which have been updated to include our fourth quarter and full year 2023 results. Of note, during today's prepared remarks, management will not speak directly to the quarterly earnings presentation posted to the investor relations section of our website. To ensure our disclosures are consistent, these slides provide similar details as they have historically, and as I have said, are available on the investor relations section of our website. But with these formalities out of the way, I'm joined today by Steven Gunby, our President and Chief Executive Officer and Ajay Sabherwal, our Chief Financial Officer. At this time, I'll turn the call over for President and Chief Executive Officer, Steven Gunby.

Thank you, Mollie. Welcome, everyone, and thank you for being here this morning. I hope you all saw in our press release that we achieved excellent results in the fourth quarter and for the second half of the year overall. These results made this year truly exceptional. The results exceeded our expectations and likely yours as well. Before I hand it over to Ajay for a more detailed overview of the quarter, I want to take a moment to reflect on the entire year, particularly on the variations in our performance metrics across the quarters. It's important to discuss how we approached the actions we needed to take throughout the year. I hope this reflection informs our ongoing discussions about balancing our responsibility to shareholders while remembering our core objective, which is to build a more powerful and welcoming organization that benefits our clients, attracts great talent, and supports their development, thus creating something enduring for our clients, our people, and you, our shareholders. Looking back, many of you may recall that our first quarter’s earnings fell short of our internal expectations, were below market expectations, and declined compared to the prior year. Even halfway through the year, earnings were only flat relative to the first half. As responsible management, we had to examine the reasons behind the earnings challenges and hold ourselves accountable. If earnings dip because of losing client traction, mass departures of professionals, or failure to attract new talent, those could indicate serious underlying issues requiring significant response. Our ongoing performance evaluations after every quarter—especially during challenging ones—force us to pose these critical questions. During the first half of the year, many competitors were discussing tough market conditions and making substantial changes, which caused us to reflect as well. Despite lower EPS, we felt good about our efforts for clients in that period. We were actively supporting brand-building projects that fetched positive qualitative feedback, such as awards and client reviews, which reflected in our revenue growth of 13% in the first half of the year. Importantly, we found ourselves with a larger pool of talented individuals than anticipated, thanks to our consistent investment in remarkable talent regardless of quarterly performance. Attrition in 2023 also turned out to be significantly lower than expected, which contributed to our strong revenue figures in the first half, despite profits not matching. We noticed some increases in SG&A expenses that we had not anticipated. After a thorough review, we found that most of these were due to one-off factors or key investments we deemed worthwhile. Following this analysis, we needed to determine a course of action, especially during a period when others were making substantial layoffs and withdrawing offers. Upon reflection, we concluded that we didn’t need to pursue such drastic measures. Importantly, we felt that such actions wouldn’t benefit our long-term growth trajectory. Instead, we focused on sensible and modest adjustments, continuing with our performance management practices while maintaining aggressive investment in talent across all segments of the firm. We did make a notable change, which was to scale back our hiring in the second half of the year, particularly in areas with low attrition and sustained low utilization. This was a shift from our usual practice, as we generally prefer to welcome new talent. Moreover, we reassessed our SG&A, but these were moderate measures, not radical ones. We did not expect such remarkable results as reported this morning, mainly due to the modest adjustments we made, and we were surprised by the extent of revenue growth in the second half. Crucially, rather than a slowdown in sales, we observed a strengthening of our restructuring business, which has been gaining global strength year after year. There were also stronger-than-expected performances in our technology consulting sector and many areas across Europe. Thus, we can’t claim that today's results stemmed from major strategic shifts since we didn’t undertake actions aimed explicitly at generating these results. Our intention has always been focused on long-term development rather than wrestling with short-term quarterly performance. If I had anticipated how robust the revenue growth in the fourth quarter would be, I might have approached hiring differently, as I would have wanted to strengthen those previously low-utilization areas even if it meant sacrificing some quarter performance for longer-term benefits. Overall, our objective remains on the long-term trajectory rather than quarterly fluctuations. For instance, despite hitting the mid-point of our guidance this year—which was significantly weaker—we still achieved an adjusted EPS over three times greater than what we reported just six years ago. Our focus is on cultivating a more powerful institution capable of achieving multi-year earnings growth rather than just striving for favorable quarterly results. We prioritize nurturing people who can help build valuable relationships, stimulate growth, and inspire the next generation. By supporting these passionate individuals, we create an environment where top talent wants to join, stay, and thrive, ultimately benefiting themselves, each other, and our clients. This is the strategic choice we made this year, and it’s a choice we aim to uphold in every quarter moving forward, ensuring that our company is just at the beginning of its potential. Now, I’ll turn it over to Ajay for a more detailed breakdown of the quarter. Thank you.

Thank you, Steve. Good morning, everybody. In my prepared remarks, I will take you through our company-wide and segment results and guidance for 2024. Beginning with our full year 2023 results, we reported record revenues of $3.49 billion, up $468.3 million, or 15.2% compared to revenues of $3.03 billion in 2022. We also reported record earnings per share of $7.71, up $1.13 or 17.2% compared to EPS of $6.58 in 2022. As a reminder, in the fourth quarter of 2022, there was an $8.3 million special charge related to severance and other employee-related costs, which reduced earnings per share last year by $0.19. Adjusted earnings per share of $7.71 in 2023 increased $0.94, or 13.9% from $6.77 in 2022. Net income of $274.9 million compared to $235.5 million in 2022. Adjusted EBITDA of $424.8 million was also a record that was up $67.2 million, or 18.8% from $357.6 million in 2022. The sharp increase in adjusted EBITDA is primarily a result of our superb revenue growth of 15%. Noteworthy, in the first half of the year, revenues grew 13% year-over-year, and in the second half of the year, revenue growth accelerated to 17.3% compared to the prior year period. This revenue growth occurred in a year where total headcount grew 4.6%, which is lower than we have seen or targeted in recent years. Revenue growth exceeded the growth in direct costs and SG&A excluding depreciation and amortization, resulting in record adjusted EBITDA. All segments delivered record revenues and our corporate finance and restructuring segment also delivered record adjusted segment EBITDA. Overall, growth was particularly strong for restructuring, investigations, litigation, non-merger and acquisition-related antitrust, and corporate reputation services. Now I will turn to fourth quarter results. For the quarter, record revenues of $924.7 million increased 19.4%, or 18% excluding effects driven by higher demand across all business segments. This quarter was truly exceptional. Three of our segments, corporate finance and restructuring, economic consulting, and technology delivered record quarterly revenues in what is typically our slowest quarter of the year, as professionals and clients tend to take time off during the holidays. Net income of $81.6 million, compared to $47.5 million in the fourth quarter of 2022. GAAP EPS of $2.28, compared to $1.33 in the prior year quarter. Adjusted EPS of $2.28, compared to $1.52 in the prior year quarter. Adjusted EPS excludes special charges, of which we had $8.3 million, or $0.19 per share in Q4 of 2022. SG&A of $194.6 million was 21% of revenues. This compares to SG&A of $165 million, or 21.3% of revenues in the fourth quarter of 2022. The year-over-year increase was primarily due to higher compensation and bad debt. Fourth-quarter 2023 adjusted EBITDA of $127.4 million, or 13.8% of revenues, compared to $92 million, or 11.9% of revenues in the fourth quarter of 2022. Our fourth-quarter effective tax rate of 20.8%, compared to 25.3% in the fourth quarter of 2022. The lower effective tax rate was primarily due to an increase in tax credits. We expect our effective tax rate for 2024 to be between 24% and 26%. Weighted Average Shares Outstanding or WASO for Q4 of 35.8 million shares, compared to 35.7 million shares in the prior year quarter. Now, turning to our performance at the segment level for the fourth quarter. In corporate finance and restructuring, record revenues of $365.6 million increased 19.7% compared to Q4 of 2022. The increase in revenues was primarily due to higher demand for business transformation and strategy and restructuring services. In the fourth quarter, restructuring represented 45% of segment revenues. Business transformation and strategy represented 34% of segment revenues and transactions represented 21% of segment revenues. Business transformation and strategy revenues grew 35% year-over-year. Restructuring revenues grew 20% year-over-year, and transactions revenues were essentially flat. Adjusted segment EBITDA of $65.4 million or 17.9% of segment revenues, compared to $49.1 million, or 16.1% of segment revenues in the prior year quarter. This increase was primarily due to higher revenues, which was partially offset by higher compensation, which includes the impact of a 5.5% increase in billable headcount and higher contractor costs, as well as an increase in SG&A expenses compared to the prior year quarter. Sequentially, corporate finance and restructuring revenues increased $18 million or 5.2%. Adjusted segment EBITDA decreased $2.7 million, as the increase in revenues was more than offset by higher variable compensation, an increase in contractor costs, and higher SG&A expenses. Business transformation and strategy revenues increased 9% sequentially. Transaction revenues increased 4%, and restructuring revenues grew 2% compared to the third quarter of 2023. Increased volume of work on existing business transformation matters in the public sector, technology and telecom industries, share performance and business transformation and strategy. Higher volumes of restructuring activity in the United States, Germany, and the UK. Higher success fees on the completion of transactions engagements also contributed to the growth in corporate finance and restructuring sequentially. In Forensic and Litigation Consulting or FLC, fourth quarter revenues of $165.5 million increased 11.9% compared to Q4 of 2022. The increase in revenues was primarily due to higher demand for investigations and construction solutions services. Adjusted segment EBITDA of $19.2 million, or 11.6% of segment revenues, compared to $17.1 million, or 11.6% of segment revenues in the prior quarter. This increase was primarily due to higher revenues, which was partially offset by an increase in compensation and higher SG&A expenses. Sequentially, revenues were flat and adjusted segment EBITDA decreased by $2.2 million, primarily due to higher SG&A expenses, largely related to an increase in travel and entertainment expenses, compensation, and bad debt. Economic consulting record revenues of $206.1 million increased 19.8% compared to Q4 of 2022. The increase in revenues was primarily due to higher financial economics, non-M&A related antitrust, and international arbitration matters, which was partially offset by a decline in M&A related antitrust matters. Adjusted segment EBITDA of $38.3 million or 18.6% of segment revenues, compared to $27.3 million or 15.9% of segment revenues in the prior year quarter. The increase in adjusted segment EBITDA was primarily due to higher revenues, which was partially offset by an increase in compensation, which includes the impact of an 8.1% increase in billable headcount and higher SG&A expenses compared to the prior year quarter. Sequentially, economic consulting revenues increased $12.2 million or 6.3%, primarily due to higher financial economics and M&A related antitrust revenues, which were partially offset by a decline in non-M&A related antitrust revenues. Adjusted segment EBITDA increased $10.6 million primarily due to higher revenues. In technology, record revenues of $100.9 million increased 31.4% compared to Q4 of 2022. The increase in revenues was primarily due to higher demand for M&A related second request and litigation services. Adjusted segment EBITDA of $12.4 million or 12.3% of segment revenues, compared to $11.8 million, or 15.3% of segment revenues in the prior year quarter. The increase was primarily due to higher revenues, which were largely offset by higher as-needed consultant costs and an increase in compensation, which includes the impact of a 12.9% increase in billable headcount and higher SG&A expenses compared to the prior year quarter. Sequentially, technology revenues increased $2.1 million or 2.1%, primarily due to higher demand for M&A related second requests and litigation services, which were partially offset by a decline in demand for investigation services. Adjusted segment EBITDA decreased $2.5 million, primarily due to higher SG&A expenses. Lastly, in strategic communications, revenues of $86.6 million increased 19.6% compared to Q4 of 2022. The increase in revenues was primarily due to higher demand for corporate reputation and public affairs services. Adjusted segment EBITDA of $15.6 million or 18% of segment revenues, compared to $10.5 million, or 14.5% of segment revenues in the prior year quarter. This increase was primarily due to higher revenues, which were partially offset by an increase in compensation and higher SG&A expenses. Sequentially, strategic communications revenues were flat, and adjusted segment EBITDA increased $2.2 million. I will now discuss certain cash flow and balance sheet items. Net cash provided by operating activities of $224.5 million for the year ended December 31, 2023, compared to $188.8 million for the year ended December 31, 2022. The year-over-year increase in net cash provided by operating activities was primarily due to higher cash collections resulting from increased billings. This increase was partially offset by higher compensation expenses primarily related to headcount growth, and an increase in other operating expenses and higher use of working capital required for growth. Cash and cash equivalents and short-term investments of $328.7 million at December 31, 2023, compared to $491.7 million at December 31, 2022. This decline in cash and cash equivalents and short-term investments was primarily because our convertible debt matured in Q3, and related borrowings under the credit facility were paid off in full in the fourth quarter of 2023. Total debt, net of cash and short-term investments, was a negative debt position of $328.7 million at December 31, 2023, which compares to a negative debt position of $175.5 million at December 31, 2022, and a positive debt position of $59.4 million at September 30, 2023. Earlier in the year, our cash collections were not keeping pace with revenues because of slower billings from a transition to a new enterprise resource planning or ERP system. In the fourth quarter, billings improved and cash collections were significantly stronger. Fourth quarter free cash flow was $376.7 million, primarily because of such strong collections. There were no share repurchases during the quarter. In 2023, we repurchased 112,139 shares at an average price per share of $158.70 for a total cost of $17.8 million. As of December 31, 2023, approximately $416.7 million remained available under our stock repurchase authorization. Turning to our 2024 guidance. We are, as usual, providing guidance for revenues and EPS. We estimate that revenues will range between $3.65 billion and $3.79 billion. We expect our EPS to range between $7.75 and $8.50. Our 2024 guidance range is shaped by several considerations. First, let me acknowledge that in 2023, restructuring grew even more than our expectations, increasing 32% compared to 2022. In 2024, we expect restructuring to remain strong but steady at levels similar to Q4 of 2023. However, with financial liquidity now increasing for challenged companies, we could see a slowdown later in the year. Second, we expect improvement in M&A to drive increased demand for services in our economic consulting and technology segments, as well as our transactions business and corporate finance. However, there are economic uncertainties, such as the phase of interest rate reductions that could impact M&A. Third, we expect margins in economic consulting to decline compared to 2023, primarily due to higher compensation from a combination of increased headcount, merit increases and competitive pressures. Additionally, because of the anticipated roll-off of certain large engagements, we expect revenue will not offset this increased cost. Further, similar to last year, we expect significant deferrals of revenue from early in the year to be recognized later in 2024. Fourth, as we have discussed, we slowed down hiring in 2023, particularly in the second half of the year. In 2024, we are assuming headcount growth will exceed the level achieved in 2023. As Steve mentioned, we continue to see opportunities to invest in great professionals in more places around the world, as well as to expand the scope of our services to meet the evolving needs of our clients. We have both the appetite and the opportunity for investments; such investments could, at least initially, have a downward impact on earnings. Fifth, we expect increased compensation costs through our company due to competitive pressures, which may not be offset by pricing increases. Sixth, though we expect SG&A to grow at a more moderate pace than in 2023, we may invest more, as we expect to remain at the forefront of changing technologies, such as in AI. Lastly, we expect to revert to our normal seasonal pattern of lower utilization in Q4 because of vacations. I must point out that our assumptions define a midpoint, and we provide a range of guidance around such midpoint, which I characterize as our current best judgment. Often, we find actual results are outside of such range because ours is largely a fixed-cost business in the short term, and small variations in revenue may have an outsized impact on earnings. As Steve has said, due to such variations, one should not take the earnings in a single quarter and multiply them by four. A comparison of earnings for the first half versus the second half of 2023 is an excellent illustration of how sharply results can vary during the course of the year without any underlying substantive change in our business. And now, I will close my remarks by emphasizing a few key themes. First, we are a unique company in terms of the scope of our services and the scale of our capabilities. We help our clients navigate through their most complex opportunities and challenges, such as data breaches, restructuring, mergers, antitrust proceedings, enterprise transformations, fraud investigations, crisis management, and more. Second, we continue to deliver excellent revenue growth and attract great professionals while over time remaining focused on utilization. Third, our diverse portfolio of businesses can grow and thrive, regardless of the business cycle. Finally, we have an enviable balance sheet that provides us the flexibility to boost shareholder value through organic growth, share buybacks and acquisitions when we see the right one. With that, let's open the call up for your questions.

Ladies and gentlemen, we'll now begin the question-and-answer session. Our first question today comes from James Yaro from Goldman Sachs. Please go ahead with your question.

Good morning. Thank you for taking my questions. Perhaps starting with a bigger picture one. I think at the midpoint, your guidance for 2024 implies a 7% revenue growth year-on-year. This would be the lowest year-on-year revenue growth since 2020, a year in which you faced significant headwinds, especially from courts being shut. Is there anything we should take away from this lower growth rate guidance in terms of the demand equation for your business next, in 2024 beyond lapping the strong 2023 restructuring results that Ajay touched upon, or is there something else?

I'll give you a high-level answer that Ajay may disagree with me or add to it however he chooses. Look, there is nothing that has me concerned about the long-term demand structure of our company. Actually, one of the concerns I have is to be under-hired in the second half of the year, which you can't see aggregate utilization of things because we have so many little sub-businesses that even if the aggregate is x, a subpart of that business can be at 30 points above x. So when you under-hire, you sometimes end up in different places around having to turn down work. So that worries me. There's always variation. As Ajay says, we don't know the revenue in July at this point in time. I mean, there's always variation, but there is no underlying concern about the overall growth potential of our company. I will say that the two-year growth here is pretty consistent with where we've been over the multiple years. I think '19 was extraordinary and '20, as you pointed out, was less and so forth. So this is in line with our two-year numbers, but I think that's more coincidence than anything else. But I hope I answered. I am not worried about long-term growth if we do the right things and continue to do the right things about getting the talent and supporting them, James. Did I answer your question?

Yes, that was excellent. Thank you. Maybe just one on restructuring. I appreciate your comments, Ajay, on the guide for 2024. But I just wanted to take a step back and get your perspective on two different scenarios, which is one is a soft landing. And then the second one is higher rates for longer. Presumably, of course, higher rates for longer would be stronger, but just how you're thinking about the two of those and what that means for the restructuring longer-term outlook?

James, that is correct, those would shape a whole variety of scenarios around our midpoint and those transcend into next year as well. Clearly, higher rates for longer would extend the restructuring cycle. But we are beginning to see the yields, the yield spread has really tightened. So the most challenged companies are beginning to get financing. We have seen that in the marketplace today. So the general theme for us at this juncture is we are proceeding carefully in the way we think and the way we are presenting to you; we are proceeding carefully.

Okay. That's very clear. Just one on Compass Lexecon. I know there have been some senior leadership changes there. I just wanted to get your thoughts on the senior leadership changes there. And if that represents a different direction for the firm and whether it changes the growth for Compass specifically and whether that changes the growth profile for that business?

Yes. I want to express my excitement about the team at Compass Lexecon. I spent time in Europe earlier this year with Jorge and his team, including Lorenzo, Neil, and Kirsten. Anyone on this call would appreciate the chance to work with them. Jorge established Compass Europe for us and has been a key driver of its growth, forming a strong team around him. I also visited Spain and cities like Brussels, Paris, and London, and I was impressed by the diverse talent there. In the US, Ampere is led by an incredibly respected individual in professional services. He is somewhat like the founding figure of Compass Lexecon. While Mark Israel may be less known, he brings a different perspective and is also an impressive leader. Our leadership team is exceptional and dedicated to the firm's growth. Recently, we experienced the departure of a senior leader, which is always unfortunate, and the circumstances were particularly regrettable. However, I remain confident in our business's positioning and the leadership team's capability to move forward effectively, along with the support from their teams. Does that address your question, James?

That's very clear, Steve. Thank you so much. Just one last one. Just on the longer-term ramifications of AI on your business. Maybe you could talk about the puts and takes there. How do they benefit your business? What are the potential risks? An investor question I've gotten is; just are there any risks that certain parts of your business could be replaced by AI tools? On the other hand, of course, that could make you more efficient and increase margins. So just the puts and takes there over the longer term?

Yes. Every company has strong opinions on new technology, and while some of those opinions are accurate, others are not, and we learn over time. This is an area we are concentrating on, and I believe our team sees that it will impact our businesses. We have already observed this effect. For instance, our tech and e-discovery sectors have utilized machine learning for years and are at the forefront of innovation. They understand that failing to keep pace with changes could jeopardize our future success. In fact, their innovative spirit has allowed them to surpass industry performance in recent years, particularly with emerging data. We are examining this from a segment perspective, analyzing the threats and potential reduction in value. You may not recall, but there was a time when spreadsheets were done by hand. We can't operate with that outdated technology anymore, just like Excel revolutionized the process. We consider whether tasks will require more or less time than before. Currently, we believe there are more opportunities than threats, but we are vigilant about both. It's worth noting that universal changes driven by new technology can be daunting. Our firm specializes in services rather than commodities; clients in the midst of significant litigation rely on experts with specific skills. AI may enhance efficiency in preparation, but it's unlikely we will see computers testifying in court anytime soon, particularly in crisis situations. As long as we remain proactive and challenge ourselves, I believe we will succeed; if we become complacent, we will face difficulties. My role is to ensure we stay focused. Does that address your question?

That's really helpful, Steve. Thank you so much for answering my questions.

Our next question comes from Tobey Sommer from Truist Securities. Please go ahead with your question.

Thank you. Could you expand a little detail that peaked my interest at the end of your prepared remarks talking about the guidance, about the deferred revenue and competitive pressures in the guidance commentary?

Let me talk about the competitive pressures and I'll let him talk about deferred revenue. Look, I think you've noticed, Tobey, and we appreciate the comments you write about the success we've had. Unfortunately, competitors also noticed that too. We are routinely attacked. The reality is we are hiring many more people than we lose. It remains we have to be on our toes on competitive compensation, and that's across the board in our company. That is a reality of life. That is at a high level, the answer to that. I'll let Ajay talk to the other point.

Thanks, Steve. Tobey, you might recollect in the last two years in Economic Consulting, we've been saying in the first quarter and also in the second quarter, I think, in 2020, 2021 and 2022, sorry, in 2022, even in the second quarter, we said that look, there's a whole bunch of utilization that didn't translate into revenue because the conditions for revenue recognition were not met. We've had that happen in '22 and '23. Now I'm saying we're going to have that happen in 2024 as well. That's what we just communicated.

Okay. That makes sense. What's the right way to think about headcount growth in '24, given sort of the lower starting point in the fourth quarter? I was hoping you could also speak to whatever metrics you care to reveal about what drove the sequential headcount decline in the fourth quarter, maybe commenting on employee attrition trends or the inputs into that? Thank you.

Sure. Let me clarify. We didn't see a large wave of departures. Our attrition levels last year were significantly below what we anticipated and lower than in previous years. The main challenge was my decision to slow down hiring after receiving recommendations, which I agreed to albeit reluctantly. I'm typically optimistic about our headcount, whereas Ajay focuses more on quarterly metrics. My priority is to ensure we build the business towards our goals for the next two to three years, rather than fixate on this quarter's utilization rates. I agreed to reduce headcount because of the circumstances we faced in the middle of the year. Looking back, I believe we ended the year with fewer employees than we should have, particularly given how strong the year turned out to be. We'll need to address this shortfall, as our aim is not just to maximize profits in 2024 but to establish a business that can achieve significant growth in earnings. While most of our team may not focus on this growth, they do want to see our team succeed and attract top talent, which aligns with our long-term goals. We will need to compensate for the hiring shortfall this year, and I would be surprised if our numbers don’t exceed last year’s and align more closely with our historical performance. Ajay, I don’t think we need to provide more specifics than that, do we?

No, you’re right. So we’ve specifically said we expect headcount growth in 2024, Tobey, to be higher than what we achieved in 2023. So we have explicitly said that. We’ve also said, on top of that, we have an appetite to make investments, and we're seeing opportunities. One of the reasons we don't give a specific percentage is these things are easy to accomplish. There is also a certain amount of attrition that takes place in the business, and you got to offset that and then grow. So there's a lot of work that comes in all of this. But that clearly is our ambition, and that is factored into the guidance.

What are your thoughts on how restructuring demand in 2024 might vary between domestic and international markets? Additionally, how do you feel the company's performance impacts market share trends within that business?

I’ll provide a high-level overview, and then Ajay can offer more details. The global dynamics vary due to different economic conditions and the impact of government policies, reminiscent of the COVID period. The restructuring landscape also depends on our position; in the US, we're involved on both the company and creditor sides, while internationally, we're mainly focused on the creditor side, which leads to timing differences. Companies often engage our services months before deciding to file, whereas creditors typically do not act as quickly. These timing factors differ globally, resulting in the US being busier earlier than many other regions. These dynamics will continue to evolve over time. Ajay, would you like to add anything?

Just some slicing a little bit more. Germany has been really strong recently. The UK also kind of caught up to some of the trends we were seeing in the United States. So our international pieces were part of the surprise growth or growth more than we thought has come from EMEA, Germany, in particular. So that for whatever it's worth, that's additional color there.

Yes, yes. Thank you very much. I'll get back in the queue.

Our next question comes from Andrew Nicholas from William Blair. Please go ahead with your question.

Hi, good morning. Appreciate you taking my questions. Maybe I'll follow-up there on your last comment, Ajay, and take a step higher. In terms of the biggest areas of sequential improvement or areas that surprised you positively in the fourth quarter. Could you just provide a little bit more color or thoughts there? It’s the first time I can remember with this type of fourth quarter step-up, and obviously better than your guide from last quarter. If you could just isolate the main areas that surprised you positively, that would be helpful?

I am incredibly proud of our team. When we review the statistics, I often find myself examining them closely. Last year, our utilization in corporate finance and restructuring was 61% but dropped to 56% in Q4, which is a 5% decline. FLC remained stable at 53%, while economic consulting saw a decrease from 67% to 64%, a 4% decline. It's expected that people will take some time off. However, when looking at this year from Q3 to Q4, corporate finance and restructuring increased from 60% to 61%, while it decreased from 57% to 56%, which is still better than last year. FLC is flat, and economic consulting held steady at 65%. This is impressive and reflects our commitment to our clients, being there for them no matter the time of year. That 5 percentage point change in utilization significantly impacts our revenues. Additionally, we monitor bill rates closely; in economic consulting, the rate rose from $5.59 to $5.86. We tackle the complex challenges, especially in tough M&A situations, which draws us in. This indicates that our top performers are actively engaged. The utilization rates we achieve contribute significantly to our results. I want to highlight our success in business transformation as well, as we handled some of the largest projects worldwide, especially in technology, achieving over $100 million in revenue this quarter in that segment. This has been an excellent achievement.

You made a valid point. Regarding utilization, you mentioned the sequential trend, but if we consider the annual trend line in FLC, we're seeing another year of improvement, even though it remains below pre-COVID levels. I'm curious about how we should view the potential for that business to return to those levels in the next couple of years and what gives you confidence in that business trajectory.

Look, I've got a lot of confidence in that business trajectory. I will say that I hope I've said this in the past, but I always hate it when somebody looks at 2019 as a benchmark for our company or our business because that was a place where we got caught short on headcount, and we had to make it up a couple of years later. I can't remember what the utilization was for FLC. But I know we were sold out in Europe, and we weren't answering the phones on new leads for some places because of the business we had. It's a weird thing because you say 60% or 65% utilization and you say, how can we be sold out? Part of it is I can tell you how we account for it differently than other people, but part of it is just the sub-parts of our business. You can have people who are just 100% utilized or 90% utilized, and when you have that. I think we're on the right trajectory in FLC. It's one of our growth engines, and it is making progress on it. I think the upside is enormous. If you're asking me, is just as good as it gets? No, and do I have impatience for us? Of course, I do. But so do the team leading it, and I feel pretty good about it. Does that at least talk to the point, Andrew?

Absolutely. And then maybe if I could just wrap-up with one last one on M&A-related businesses. A really good quarter seemingly on that front. But if you could talk to the momentum in M&A and maybe the M&A environment broadly to start 2024. You talked, Ajay, about narrowing spreads and its impact on the restructuring environment. But are you seeing kind of an offset there in M&A to this point? Or is the potential for some sort of air pocket between those two dynamics to persist for a little bit here as everyone finds their footing? Thank you.

So the key words again are proceeding carefully. This is not the time to be definitive. There are folks out there. I think maybe interest rates will not come down as much. There's also an election cycle this year. To say we are now definitively on an M&A growth curve would be premature. We are seeing transactions up a little bit. That, as you know, on the technology side, the second request piece was up. In our economic consulting, we do the real hard stuff. That can happen in either cycle. This is not based on any major trend one way or the other.

Andrew, let me conclude. I think we are out of time. I want to express my sympathy for all the analysts on this call, whether on the buy-side or sell-side. You are all trying to predict where we will be in the upcoming quarter, which is challenging. As Ajay mentioned, it's difficult to be certain about each of the next quarters. However, one thing we can be certain about, as demonstrated over the last decade, is that if we focus on hiring the right people with the right attitudes and capabilities and provide them with support, we may not know what individual quarters will look like, but we can set the company on a multi-year growth trajectory. That is something we can predict. We have made such predictions and have delivered on them, and we will continue to do so. I apologize that we cannot provide more clarity on the quarterly outlook, but I want to emphasize our strong belief in the multi-year trajectory.

Absolutely. Thanks, Steve, thanks, Ajay.

All right. Thank you all for joining the call. We really appreciate your attention and support.

Ladies and gentlemen, that will conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.