Welcome to the FTI Consulting First Quarter 2020 Earnings Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you will press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mollie Hawkes, Vice President of Investor Relations. Please go ahead, ma'am.
Good morning. Welcome to the FTI Consulting conference call to discuss the company's first quarter of 2020 earnings results, as reported this morning. Management will begin with formal remarks, after which they will take your questions. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 of the Securities Exchange Act of 1934 that involve risks and uncertainties.
Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions related 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 matters 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 annual report on Form 10-K for the year ended December 31st, 2019, and updated in our quarterly report for the first quarter of 2020, filed this morning.
As well as 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 a discussion of these and other non-GAAP financial measures, as well as our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures, investors should review the press release and accompanying financial tables that we issued this morning, which include the 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 have been updated to include our first quarter of 2020 results.
Of note, during today's prepared remarks, management will not speak directly to the quarterly earnings presentation posted to the Investor Relations section of our website. To ensure our disclosures are consistent, these slides provide the same details as they have historically, and as I've said, are available on the Investor Relations section of our website. With these formalities out of the way, I am joined today by Steven Gunby, our President and Chief Executive Officer, and Ajay Sabherwal, our Chief Financial Officer. At this time, I will turn the call over to President and Chief Executive Officer, Steve Gunby.
Thank you, Mollie. Mollie, can you hear me? Good. Thanks.
Yeah.
Good morning, thanks to all of you for joining us. Let me say, I hope everything is well with each of you, and that you and your families are healthy and safe. Obviously, we all know this is an incredibly difficult time for many of us individually, the economy, and in fact, for the world as a whole, and it's an emotional time for many people, too. Unfortunately, this sort of call is not the sort of back-and-forth conversation that allows me to check in with each of you personally.
Let me just say again, I do hope everything is well with each of you and the people you care deeply about. In a minute, Ajay will share with you the specifics of our first quarter. Let me make a point that I think may be of interest to you.
The first one is to let you know that I believe our team globally is doing a fabulous job. Not a perfect job, because in this environment, nobody does a perfect job, but a fabulous job of juggling, of adjusting, of modifying in ways so that we can weather this storm and help our clients weather this storm. The second that I'd like to emphasize that there are both puts and takes with respect to the impact of COVID on different parts of our business.
There are some places where clients have desperate, urgent needs for immediate help from us. At the same time, there are places that have been negatively affected, have slowed down, and probably will be slow for a while.
The third point I believe is the most important, which is that even though there will be puts and takes, none of the puts or takes, in my view, takes away from the underlying strength of this firm, the terrific long-term trajectory we've been on, and the incredible trajectory I believe over any extended period of time we can stay on. Let me take those three points in turn. In terms of the first point, our teams, like I'm sure many of you, have had to and are working through a whole lot of issues during this period. 95% of our people around the world right now are working from home.
In some places around the world, people were working from offices. The offices closed. They worked from home. They went back to the offices. Now they're back working from home. For the people working from home, like I'm sure for many of you, it's a challenge. We have to try to collaborate with clients, with each other, and our teams to drive critical work product, sometimes with tight deadlines, with a level and duration of separation that probably none of us have ever had to before.
In many places, people are doing that while juggling kids who are home from school or taking care of sick relatives that live with them or nearby. Of course, everyone is dealing with stress and worries. Worries about themselves, their families, their loved ones.
I want to communicate that in the face of all that challenge and disruption, I believe our people are doing a fabulous job of supporting our clients, supporting each other, and keeping our business moving ahead. I can give you multiple examples, but a few. On one assignment, our real estate group worked 23 consecutive days to meet an aggressive deadline that helped key players in the mortgage REIT industry avoid liquidation.
In tech, our teams over the last few weeks worked, in many cases, around the clock with clients to find a way to do secure review of legal documents, not in our review centers, but at home. Our teams have implemented new processes for digital forensics to collect and analyze data remotely versus having to go into a company, for example, to crack hard drives and other devices.
Many in our firm have figured out ways to collaborate across FTI as well as with external parties like law firms through podcasts, webinars, and other thought leadership to engage our clients on the wide array of challenges now and in the future that are being created by COVID-19. In many places, our people have accelerated training, whether it's educating our teams or clients on new legislation like CARES across training, to equip folks with the capacity to support areas in which demand is surging.
Finally, like many of you, we've had people I just think incredibly creative, way more fun than I am, and it just is a delight to see on internal connection activities. Maintaining morale, promoting the spirit and level of collaboration necessary to succeed. Lots of people leaning in. That's resulting in us maintaining effectiveness and connection during this trying period.
I hope that gives you a sense at least of what our teams are doing to keep this company vibrant, to make us most effective at helping clients who in many cases have deep needs right now, weather their storm, while also making sure we're engaged with clients who don't currently have work but are going to have needs down the road and position ourselves to best meet those needs. As a result of those activities, I believe our company is weathering this storm about as well as anybody possibly can.
Having said that, the second point I want to underscore is that not all parts of our firm are currently firing on all cylinders. Now some are. Some parts of our business, for example, are advising clients who are facing near-term financial crises or liquidity issues or reputational issues.
Around that sort of work, there's enormous sense of urgency, as you might expect, and that is creating the need, in some cases, for our people to work incredibly long hours to deliver for our clients. We are getting called on for a substantial amount of important work like that. On the other hand, one only has to talk to a few law firms to know that there has been recently a significant slowdown on a fair amount of litigation.
For our professionals who are experts who testify in court or provide courtroom graphics, the fact that the courts are closed in many jurisdictions or litigation is being postponed has a very real effect. It's not just litigation that's being affected by COVID-19 right now. All of our businesses, Corp Fin, FLC, Econ, Tech, Stratcoms, have service offerings that are focused on supporting major transactions.
With M&A activity plummeting this quarter and continued economic and political uncertainty out there, those parts of our business have been affected and will likely be affected for some time. Though we have businesses that are incredibly busy, we clearly have seen negative effects of COVID-19 as well. We saw significant slowdowns in some of our businesses tied to litigation and transactions toward the end of the first quarter. Not so much throughout the quarter, but toward the end.
We expect those slowdowns to extend into the second quarter at least, and maybe beyond. I do want to stress what I believe is a key point, however, and maybe the most important point, which is even if we have slowdowns in parts of our business, it does not make those parts of our businesses bad businesses or unattractive when one thinks about any medium-term timeframe.
To give an example, I think most of you on this call know we have an incredible international arbitration practice. I think it's the strongest international arbitration practice in the world. That business has had a very slow first quarter, which is reflected in some of the economic results, which Ajay will talk about, and we're expecting quite a slow quarter in the second quarter as well.
That pause in activity doesn't mean that the need for international arbitration services is going away permanently, nor does it mean that the leading positions we have around the globe or the caliber of our people has changed because of COVID-19. Our people didn't get stupid overnight. It just means we are currently having weaker results than we would normally expect from that business, and may for a while.
The same is true for a number of our other litigation and transaction-oriented businesses. It's important, longer term, we do not expect litigation or M&A or capital markets activity to be permanently depressed. Our experience with respect to litigation, in fact, is to the contrary, which is that this sort of crisis ultimately triggers a huge amount of incremental litigation. Though we expect some of these businesses to be affected, impacted in the near- term, we have no less confidence in the strength of our positions in those businesses or the ultimate demand for our services in the medium and long- term.
That leads me to the third point, the final point, which is that though there are puts and takes, I do not believe that this pandemic takes away, in any way, from the underlying strength of this firm, the power of the trajectory that we have been on, and our ability to stay on that trajectory over any long- term. As we've talked about a lot on these calls and elsewhere, one never can build a great professional services firm by focusing on quarters anyway. In fact, an individual quarter's results is often not a good indication of the long-term trajectory a company is on.
A great professional services firm is created by having teams of great people who develop and deliver on key propositions on topics of critical importance to clients. None of that's created over a quarter, nor does it get lost over a quarter.
We have been, over the last several years, building those capabilities in good quarters and bad quarters. It is that focus that has allowed the last five years of this company's history to be by far the best five years ever. Whether this year we have great quarters or not great quarters, we will continue to build this enterprise. We will not sacrifice building this business in any way just to make individual quarters look better.
In fact, as we have in the past, if great talent becomes available this year, even in businesses that happen to be slow in that quarter, we believe it will help us build the business for future, we will take advantage of those opportunities, the potential disruptions in talent markets, even if it further dampens a potentially slow quarter.
The reason we do this, we intend to do this, is not only because it's the right way to build a great professional services firm for our people and to create value for shareholders over any extended period of time. It's also because we can. This company has never been as strong as we are today in terms of our client relationships, the breadth of our offerings, the capabilities of our people, the relevance of our brand when companies are challenged, or in terms of financial strength and balance sheet. Yes, we may this year have some puts and takes.
I do want to underscore the depth of my belief in the power of this company, the terrific job our people have been doing and are doing, and the confidence that leaves me with about our ability not only to weather this storm, but to emerge from COVID-19 on at least as good a trajectory as we entered this period. With that, let me turn this over to Ajay to give you more details on the quarter.
Thank you, Steve. Good morning, everybody. In my prepared remarks this morning, I will provide an overview of our quarterly results, segment financial results, and discuss guidance. As part of the guidance discussion, I will share our current expectations on how the global COVID-19 pandemic may impact our business. Beginning with the first quarter results. Revenues of $604.6 million were up $53.3 million or 9.7% compared to revenues of $551.3 million in the prior year quarter.
Worth noting, while revenues in EMEA and North America increased 22.8% and 8.1%, respectively, in the quarter, revenues in Asia Pacific, which represented 6.6% of our overall revenues in 2019, declined 14.8%. The decline in Asia Pacific was primarily due to COVID-19 related disruptions and associated restrictions, which resulted in delayed or postponed client engagements. I will speak more to the impact of COVID-19 on our business later in my prepared remarks.
GAAP EPS of $1.49 compared to $1.64 in the prior year quarter. GAAP EPS included $2.2 million of non-cash interest expense related to our convertible notes, which decreased EPS by $0.04. First quarter adjusted EPS of $1.53, which excludes the non-cash interest expense compared to $1.63 in the prior year quarter.
Our convertible notes had a potential dilutive impact on EPS of approximately 433,000 shares in weighted average shares outstanding for the quarter, as our share price on average of $117.71 this past quarter was above the $101.38 conversion threshold. Worth noting, the trigger for conversion of our convertible notes prior to maturity was not met during the quarter. Net income of $56.7 million compared to $62.6 million in the prior year quarter.
The year-over-year decrease in net income was primarily because the 9.7% growth in revenues did not adequately offset increased compensation expense related to the 18.5% increase in headcount, higher variable compensation, and an increase in SG&A expenses. SG&A of $127 million was 21% of revenues. This compares to SG&A of $113.2 million or 20.5% of revenues in the first quarter of 2019. The increase in SG&A year-over-year was primarily related to non-billable headcount growth with salary and benefits increases, as well as higher real estate and IT expenses.
First quarter of 2020 adjusted EBITDA of $83.2 million compared to $96.1 million in the prior quarter. Our adjusted EBITDA margin of 13.8% compared to 17.4% in the quarter of 2019. Our first quarter 2020 effective tax rate of 22.5% compared to 24.1% in the first quarter of 2019.
The 1.6 percentage point decline was due to a favorable discrete tax adjustment related to share-based compensation, lower amounts of non-deductible U.S. expenses, and a favorable adjustment to the valuation allowance on certain deferred tax assets. For the balance of 2020, we now expect our effective tax rate to range between 25% and 27%. Worth noting, Q1 of 2020 GAAP and adjusted EPS were positively impacted by FX remeasurement gains, primarily due to the strengthening of the U.S. dollar and the euro in the quarter as compared to the British pound.
This benefited our first quarter of 2020 adjusted EPS by $0.07. Billable headcount at the end of the quarter increased by 716 professionals, or 18.5% compared to the prior year quarter. The increase is due to growth across all business segments. Sequentially, billable headcount increased by 156 professionals or 3.5%. Again, with every business segment growing.
Now I will share some insights at the segment level. In Corporate Finance & Restructuring, revenues increased 29.1% to $277 million compared to the prior year quarter. The increase in revenues was due to higher demand for restructuring services in North America and full revenue contributions from our August 2019 acquisition in Germany, and increased demand for our business transformation and transaction services in North America. From an industry perspective, during the quarter, we experienced particularly strong demand in the TMT and energy verticals.
Adjusted segment EBITDA of 48.9% or 23.6% of segment revenues, compared to $37.4 million or 23.2% of segment revenue in the prior quarter. Sequentially, revenues increased 14.7%, driven by higher demand for both our business transformation and transactions and restructuring services in North America and EMEA. Turning to Forensic and Litigation Consulting. Revenues increased 6.2% to $147.6 million compared to the prior year quarter.
The increase in revenues was driven by high demand for our data and analytics services, as well as increased demand for our disputes and corruption solution services in EMEA and North America. Adjusted segment EBITDA of $21.2 million or 44% of segment revenues, compared to $31.8 million or 22.9% of segment revenues in the prior year quarter. Sequentially, revenues decreased 1.8%, primarily due to engagements being delayed by both court closures and travel restrictions resulting from the COVID-19 outbreak, particularly in Asia.
Our Economic Consulting segment reported revenues of $132.1 million, which declined 7.1% compared to the prior year quarter. The decrease in revenues was largely due to lower demand for financial economics and non-M&A related antitrust services, as well as lower realized rates for international arbitration services, which was partially offset by higher demand for M&A related antitrust services.
Adjusted segment EBITDA of $12.7 million or 9.6% of segment revenues, compared to $24 million or 16.9% of segment revenues in the prior year quarter. Sequentially, revenues decreased 13.7%, primarily driven by lower demand and realization for our international arbitration services due to arbitration hearings being postponed in light of the COVID-19 pandemic and lower demand for our financial economics services, driven by large engagements that were rolling off. In technology, revenues increased 14.4% to $58.7 million compared to the prior quarter.
The increase in revenues was primarily due to higher demand for M&A-related cross-border investigation services. Adjusted segment EBITDA of $14.5 million or 24.7% of segment revenues, compared to $12.7 million or 24.8% of segment revenues in the prior year quarter. Sequentially, revenues increased 14%. The increase in revenues was driven by a higher demand for M&A-related and litigation services in EMEA and North America.
Strategic Communications revenues increased 1.2% to $58.4 million compared to the prior year quarter. The increase in revenues was due to higher demand for public affairs services. Adjusted segment EBITDA of $8.8 million or 15% of segment revenues compared to $11.5 million or 20% of segment revenues in the prior year quarter. Sequentially, revenues decreased 12%, primarily due to a $4.4 million decline in pass-through revenues and lower project-based revenues in EMEA and Asia.
Let me now discuss a few key cash flow and balance sheet items. As is typical, we pay the bulk of our bonuses in the first quarter. Net cash used in operating activities of $123.6 million this quarter compared to $102.1 million used in operating activities in the prior year quarter.
The year-over-year increase in use of cash was primarily due to annual bonus payments reflecting our record 2019 financial performance and higher salaries related to the increase in headcount, which was partially offset by an increase in cash collected resulting from higher revenues. During the quarter, we spent approximately $50.3 million to repurchase 450,198 shares of our common stock at an average price of $111.73 per share. As of the end of the quarter, approximately $116 million remained available for stock repurchases under our $500 million stock repurchase authorization.
Total debt net of cash of $143.2 million at March 31st, 2020, compared to $137 million at March 31, 2019, and a - $53.1 million at December 31st, 2019. The sequential increase in total debt net of cash was primarily due to cash used in operating activities resulting from bonus payments, as well as an increase in share repurchases.
I am sure you are all more interested in what impact the global pandemic may have on our ensuing quarters and resulting guidance for 2020 than in our Q1 results. The pandemic is certainly affecting our business segments, though in different ways. For our restructuring practice and to a lesser degree currently for crisis-driven disputes and communication services, it is resulting in a significant tailwind. For other parts of our business, there is at least a deferral of work, if not a reduction in demand.
It is uncertain how long we will have to proceed with shelter in place and similar orders, and how deep the impact will be on the overall business environment. We have run several scenarios shaped by our current expectations. I will now take you through these expectations.
We expect M&A transactions to be deferred and possibly canceled, and litigation to be postponed or possibly settled, causing revenues from some of our service offerings in our FLC, economic and technology segments to decrease in the near- term. As Steve mentioned, our practitioners are doing a remarkable job serving our clients from home offices.
However, certain essential aspects of what we do are difficult to do from home, which may impact revenue adversely. Some examples of the delays or pauses that we are experiencing include in court expert witness testimony has been delayed due to court closures in many countries.
Monitorships in certain jurisdictions where our teams must be physically on-site to perform their analyses are unable to continue, and there are moratoriums on certain regulatory or other proceedings, such as a six-month moratorium on certain insolvent trading rules for directors in Australia, which means that many companies that would otherwise have filed for insolvency have stayed in business. We also expect travel restrictions to hinder in-person business development. Conversely, also worth noting, business travel all but stopped.
There is an associated drop in billable and non-billable travel and entertainment expenditures. Resulting from these expectations, our outlook in Q2 and perhaps even into Q3 is that the increased demand for our restructuring services may not adequately offset the negative impact on several of our other businesses. Our second quarter EPS could be well below the level we reported in Q1.
Though we are currently expecting some weakness in the second quarter, we are not currently expecting that weakness to persist for the entire year for four reasons. First, the wave of distress and ensuing default continues to grow and will likely continue even beyond the timeframe when work paused or deferred resumes. Already, we are seeing increased demand for our restructuring services in several verticals, including retail, energy, mortgage REITs, healthcare, airlines, gymnasiums, restaurants, entertainment, and entertainment venues, which may further accelerate.
Second, our restructuring practice is also able to draw on resources from other areas within our Corporate Finance segment, and possibly to a lesser extent, from other segments to service these engagements. Third, though courts may not get fully back to normal, we are anticipating that the current constraints and travel restrictions will not persist at this level.
Fourth, our expertise is needed as distressed transactions, crisis communications, litigation related to material adverse effect clauses, disputes related to business interruption, and investigations arising from improprieties in the face of this pandemic grow. After running several scenarios based on the above expectations, while there is an increased range of uncertainty and outcomes, for the full year 2020, we do not see a basis for changing our guidance range at this time.
We will evaluate our guidance again after the second quarter when we will have better information regarding how adversely our business as a whole may be impacted and how much of such decline is offset by the increased demand for restructuring and other services. Before I close, I want to reiterate a few key themes that underscore the strength and potential of our business.
We have significantly diversified our offerings over the last several years with investments in M&A-related antitrust, international arbitration, business transformation, cybersecurity, and public affairs. While some of these adjacencies may be depressed in the short- term, we believe that these areas will come out strong as we emerge on the other side of this pandemic. Our balance sheet strength gives us the flexibility to allocate capital and create shareholder value in numerous ways.
Particularly, we are able to attract and retain the world's leading experts in their respective fields. At our core, we help our clients, especially in times of dislocation, as they navigate their most complex business challenges. As Steve mentioned, this pandemic will undoubtedly result in a new genre of disputes, investigations, and conflicts that our experts are well-positioned to assist with and support. Lastly, we have a world-renowned restructuring practice, and now, even more than in the recent past, our restructuring services are in great demand. With that, let's open the call up for your questions.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on a telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Tobey Sommer with SunTrust. Please go ahead.
Thanks. Could you start out by maybe giving us a framework for the proportion of revenue across the segments that is propelled by mergers and acquisitions? Thank you.
Tobey, we don't provide that detail and I'm not going to at this juncture. What I will tell you, our key drivers for our business are the traditional key drivers for our business, are restructuring, M&A, disputes, including fraud. Those have been the traditional. We've done a ton of diversification into non-M&A antitrust, for example, and economics. What I will tell you is there have been quarters that antitrust is catching right up to M&A-related antitrust services. That diversification is sizable in our technology area, for example.
Yes, second request activities drive technology, we have done a fabulous job in getting into investigations, core investigations, as opposed to just second request activities. In StratComm, we do all kinds of communication as opposed to simply related to M&A. M&A is a very significant part, is a key driver, boy, have we diversified.
Sure. I guess investors just struggle with understanding the relative size of bankruptcy versus those kind of more classic procyclical elements such as M&A. Trying to understand that is essential to understanding how the business is going to perform.
I respect that sentiment.
Okay. Moving on. How much of the business relies on court throughput in sort of timely hearings or rulings to sustain high utilization rates?
I'll take a crack at that. In FLC and in Economic Consulting, very much so, Tobey. You can do a fair bit of work, but you do have to give testimony in court. I mean, that's what you're preparing for. If the testimony is delayed, the preparation for the testimony is also delayed. You can see that in our FLC segment, even though it was in the second half of March in North America and Europe and in Asia throughout the quarter.
There is a decrease in utilization in FLC. Some of it is because we've increased a lot of headcount in the second half of last year. I would say 2-3 percentage points in utilization comes from COVID-related impacts related primarily to litigation stops.
Yeah, maybe I can add to that. Can I answer that, Ajay? I think the courts were permanently shut down. It could have a major impact on econ. A lot of our businesses are dependent. The world needs courts. We don't believe the courts are going to be shut down for multiple years, but we're seeing are significant shutdowns and consequent delays in litigation, Tobey. We think that those gears will get unstuck at some point, even if they get unstuck in a bit slower way for a while.
I think that's the right way to say it. If there were no litigation in the world, it would be huge effect on FLC and econ because we support crisis stuff that often has courts involved. I don't think anybody in the world believes that. It's an issue of a temporary phenomenon here, Tobey. Does that make sense?
It does. I'll ask two questions, and I'll get back in the queue. Could you describe the arc of bankruptcy activity that you expect and compare that arc to the prior recession? Also if you could address what your hiring plans are this year. Thanks. I'll get back in the queue.
Look, I'll take a crack at this. Let me just make one thing. I just want to make sure one thing. I think, Tobey, you get this, but I want to make sure for everybody on the call. Our CF business is not synonymous with restructuring. Ajay, I don't know if we've separated that out and disclosed, but because of the diversification we've done, a major portion of our CF business is more pro-cyclical activities.
That's been one of the reasons we've been able to grow CF over the last years, even while the restructuring business has not been booming. Back in the last crisis, I think 90% of our CF business may have been restructuring. Today, it's much more balanced with non-restructuring activities.
That's why even though we started to see restructuring pick up a significant way in the first quarter, if you look at the year-on-year utilization rates for CF globally, they're that different this year versus one year earlier. Mollie or Ajay, you can double-check that. I think that okay. That's sort of context, remind me of your question, Tobey.
Describe the arc of bankruptcy activity that you expect compared to the prior recession.
What Mike would say. Mike and Carlyn run that practice, but Mike spends more time on the restructuring and Carlyn on all the other CF services. I can say that the phone's been ringing off the hook faster than it did in the last crisis. With a little bit of a caveat, even though it's ringing off the hook and we're winning a lot of jobs, some of them can't get started right away because of court issues, and issues related to requiring some in-person meetings and so forth.
I would say that this is a huge, at least the initial readout. It's a huge amount of demand right out there. It's going to take a while before it fully translates into utilization, even so, it really started to show up in the first quarter. Does that make sense? Ajay, do you disagree with that, or is that your sense as well?
No, I agree, sir.
Tobey, does that help?
It does. If you could comment on your hiring plans for the year, that'd be great.
Look, our hiring plans are we drive our hiring plans off of need, yes, but also really long-term need. Obviously we have some businesses that are slow. You say, "Would you ever hire into those things?" Actually, we would. Like I talked about our international arbitration business. If this causes dislocations in competitors and a lot of terrific talent wants to come over to us, we'll hire even in the face of slowdown because great people will over any extended period of time build your business and be profitable and shareholder-friendly over an extended period of time.
We had a hiring plan at the beginning of the year. We're not obviously driving that up in businesses that are very slow. We're not abandoning hiring, and we're certainly not abandoning any offers we've given in the past.
We'll be prudent in the areas that are slow, but great talent becomes available, we're going to jump on it. That's frankly, Tobey, as you know, we did that in a lot of our businesses when they were slow a few years ago. We did that. Some of the best adds to our CF business we're doing after four really slow quarters in CF a few years ago, and same thing for FLC. Our cyber business was added, when FLC's profits weren't very good. We're going to continue to monitor the world.
I think we're in better shape than many players out there, and if that causes a lot of talent to want to defect to us, we'll take advantage of that even if it hurts a quarter. Behind that, we'll obviously be prudent. Does that help?
Absolutely. Thank you.
Our next question today comes from Andrew Nicholas with William Blair. Please go ahead.
Hi, good morning.
Morning, Andrew.
If we look back to 2008 and 2009, you mentioned that CF Restructuring was a much bigger piece or the vast majority of the business mix, in CFR in 2008, 2009 versus today. If I look back at that, it looks like margins were in the 30s and as high as 34% in 2009.
With that as context, I mean, is there any reason from a structural perspective that the Restructuring business on a standalone basis couldn't get back up to those levels in today's environment? That's the first question. As a corollary to that, if you could provide any color on the profitability trade-off between Restructuring and business transformation, that'd be helpful.
I saw those numbers in 2008 and 2009. I'm not sure I would want people to be thinking that we're going to get to those levels. A lot falls to the bottom line as utilization goes up. 2008 and 2009, we're still affected by the original deals that were done in 2003 and 2004 with earn-outs and so forth, which I think always make it complicated to do comparisons. It's always complicated to do comparisons depending how deals are structured for years after a deal is done versus on a steady state going forward.
Clearly, restructuring is one of our most profitable businesses, if not most profitable. The busier it gets, like on all our businesses, profitability goes up. I'm not sure people should be thinking in terms of the numbers that were seen in 2008 and 2009. Do you disagree with that, Ajay?
No, I don't disagree. I will just add one or two more points of texture. There's no structural, there's no mathematical reason for margins is an outcome. There's no mathematical reason that if revenues absolutely surge, that margins won't expand. I mean, there's no say we have a cap on margins. That's not the case. You see it this quarter. You see the Corporate Finance & Restructuring margins. We have a record quarter in terms of revenues in that area, and you see the margins associated with that. Where goes revenue over time, there goes margin.
Look, in 2008, 2009, 65% of revenues roughly were in North America, or 95%. Now it's 65. We have a large EMEA practice. We have a large Australia practice. I mentioned on my call in Australia, there are certain moratoriums that are delaying restructurings there.
There are court processes around the world that are gummed up. Clearly that is an area where there is a surge, absolute surge in demand. We are borrowing from the business transformation area for people to accommodate that extremely high utilization. We're borrowing even from other segments within the company. We're going to do all the things that any business person is going to do to increase capitalization and therefore margins. There are also differences, so one can't just say that will equate to what it is now.
Makes sense. That's helpful. Just one follow-up. Obviously, the first quarter was weak in APAC, as you had kind of outlined on the previous call. I was hoping, one, you could just refresh us on the mix of businesses in that region, and then if there's any commentary you could provide on how that business more specifically has looked in April, to see if that could be an indication of some sort of rebound in North America and EMEA as we get through some of these coronavirus specific delays. Thanks.
Green shoots, some encouragement there. In fact, when we used to talk to them in January, we used to express sympathy, et cetera. I don't think it really hit home till it came here. Now they call and reassure me to say, "Don't worry, it'll all get better. Don't panic," et cetera. On a personal level, that is, not on a business side. China is certainly open for business.
In Hong Kong, in Singapore, Indonesia, Cayman Islands, British Virgin Islands, some of those places are related in terms of the courts. Things are still closed. There are green shoots there. I'd also say that, you asked about the mix. That area, we have a significant Corporate Finance business, but it's more the liquidation side of things as opposed to the traditional Chapter 11. We have a significant FLC business that is cross-border in nature, and that is what got impacted.
Got it. Thanks a lot.
Thank you. Stay safe.
Third question from [Marc][inaudible] .
Good morning, everyone. I wanted to touch on something you had mentioned about the potential for new business that clients may have taking place now, whether it's different types of transactions related to tax or whatnot. Can you expand on that and maybe touch on whether or not that you have the current expertise in those areas that you think might be added now?
Sure. I'll take a crack at that. A lot of different needs. Look, we're spending a lot of time on both stuff. The client's also often going with law firms that we work with a lot to sort of do a lot of the advisory of these. There's stuff that, for example, raw materials are forward based related to having a track record of saying, "This is fine. What's the damage associated?" That's from some of our international arbitration. We all have experience in those areas.
There's a lot of structure that's come out of this with insurance, the targets of the legal action and the damages. It's a set of issues that a lot of, particularly in these environments, there are a lot of issues that come up with an entrepreneurship or a set of things, which is what we are.
Because the rest of the price lead off was tied to [inaudible] . We spent a number of years, actually, in fact, I don't know if you remember, there was somebody else who was overseeing this to help figure out the raw materials, if we could help them get it back. Because all we knew was that there was a need for expertise that is very much aligning with what is likely, unfortunately, the outcome of an event like this. We're not concerned about ours at this point, [Marc].
No, it's good. For the closing, I was wondering if getting the leveling of expertise and maybe lead time for one of these with that communication level, I'm not sure if there's been a similar division where courts were closed over time, be it in one jurisdiction or another or something that might give you a little bit of insight as to how these things might emerge.
No, it's a good question. As you know, I've only been in this business for six years. I've talked with a lot of people who have been in this business for 20 years. I've had a lot of conversations with law firms. I got to tell you, a number of things that we're figuring this along. I think these closures tends to speak to something that both courts are having a massively high load, there's a lot of stress on courts being a critical role in society. You may need time to get all the courts to start to open.
For us, really believe this will... How we could loosen [inaudible] calls twice a week where somebody says we feel a sense of loosening non-in-person hearings over here, closeness, loose. I don't think we have a good trajectory to predict. If we did, this would be something for us to note at this point. We don't think years from now how things will actually work. Does that give you a sense at least?
Yes.
Well, glad we did.
Thank you very much.
Our next question from [Charlie][inaudible ].
Within bankruptcy related, how would you describe your market share on that versus company side? I mean, maybe you had some success increasing your company's market share.
I mean, look. This is something I think about incredibly a lot. We already from the standpoint we were known as a great creditor side company in the U.S. stated actually the company side positions we had, but that's how we were known. We've overlapped creditor side, especially in the U.S., and we've spread pretty broad incredibly, whether it's in London, whether it's Germany, whether it's Hong Kong, whether it's Australia that's trying to do a strong thing in America.
Not as long as it is today on the case by case. You can look at it. Look at the leading cases that we're a principal participant in and how many cases you have mentioned along the way, whether it's closer to be a third- party or a look at it as a whole. When you think about the new businesses under your tent organically, presumably lend itself being more fertile to make investment than normal economic times. What is your take on that?
Two reasons. Two things are hard to do business in the profession. One is the client need. In our case, it's not a client need for a service. If your client needs a product or service, people really want, willing to pay for it. That's the first one. The second one is lifestyle issue, right? Can you get one that you need a leading player in that, in photography and then ultimately in the dark room. Any sort of stress situation like that, it creates both of those.
On the client side, stresses and strains, what I talked a little bit earlier, some of which relate to workflow processes, talking to law firm services that are very suddenly due so that we'll be going into it. The reality is the strain over the last while has just been fourfold in magnitude in a way from [inaudible] talent.
We have worked out, we have done a little bit of what we [inaudible] , that we have close to and we can invest in people. We have shown our willingness to people has been a good way about it so many times. I think our guess is as good a shot as anybody's. This position as it were. It's why I said earlier, if we have tremendous opportunities to help in that, just given the trajectory of this business, and we will be here, and we think it's a good shot, especially short. Does that make sense, [inaudible] ?
With that, this question- and- answer session ends for today's conference. We thank you all for attending. Have a great day. That is our time and that'll work.