Welcome to the FTI Consulting Second Quarter 2019 Earnings Conference Call. All participants will be in After today's Please note this event is being recorded. I would now like to turn the conference over to Molly Hawkes, Vice President of Investor Relations. Please go ahead.
Good morning. Welcome to the FTI Consulting Conference Call to discuss the company's second quarter of 2019 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 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 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 31, 2018, and in our other filings with the 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 the accompanying financial tables that we issued this morning, which include 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 in Excel and PDF of our historical financial and operating data, which have been updated to include our second quarter of 2019 results. Of note, during today's prepared remarks, management will not speak directly to sites. To ensure our disclosures are consistent, these slides provide the same details as they have historically and, as I've said, are available on our Investor Relations section of our website. With these formalities out of the way, I'm joined today by Stephen Gumby, our President and Chief Executive Officer and Ajay Sabrawal, 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. Good morning to everyone, and thank you all for joining us. As I'm sure many of you saw in our press release this morning, this quarter's financial results were extraordinary. Once again, combined with the exceptional first quarter, we have a record breaking already a strong second quarter performance last year with all of that 18% growth organic. That revenue growth translated not surprisingly into an unprecedented level of earnings for the company.
With GAAP EPS of $1.69 and adjusted EPS of 1.7 pause a second to let those numbers sink in because I still find them remarkable. But let me also underscore as I due almost every time I'm on the call, that quarterly results in our industry and for our company are imperfect measures. Any quarter results can be substantially affected either negatively or positively by short term factors. And in this quarter, we benefited substantially from some short term factors. Such as a near record level of success fees, a lower level of tax rate, and among some other items that Ajay will go through in more detail short So let me stress here, as always, one can never take one of our quarters and multiple it by 4.
But it is possible to get a true sense of the strength of this company by looking beyond quarters. First, one can look at the longer term financial trends and second, more important one can dive below the financial trends to see what's actually happening at the company. The assignments we're winning, the investments we're making, the number of promotions of great people that were able to do, the level of lateral hires made, etcetera. To me, what's more powerful, more powerful than even these extraordinary quarterly results is that when I do either of these things, either look at the longer term financial trends, or look at what's going on in this company qualitatively, I get at least as excited and impressed as financial types do when they see the financial results. If you look at the last 4 to 5 years, you see a lot of zigs and zags as we talk about in quarterly results.
And I believe that is how it will always be. But through the zigzagzags, you see a powerful underlying trend, a long term trend that is solidly up As I think most of you know, 2018 was the 1st year ever in the history of this company that we delivered 4 consecutive years of adjusted EPS growth. And if you get anywhere if we get anywhere in the guidance range for 2019, this will be yet another year. We can and I believe should ignore the zigs and Zags of quarterly earnings, but the long term trajectory does in fact reflect the strength the power, the durability of the moves our people are making in creating a more robust, relevant and durable institution. And as powerful as looking at the long term financial trends is, even more powerful to me is to look at why to dive below the financials to say what's driving this?
Where are we building this enterprise? How are we building this enterprise? So let me take a couple of passes at that question. In the U S restructuring business, for example, we're not growing because the market is lifting all boats. But because we've been able to support great professionals as they develop into better versions of themselves and support those professionals with talented junior staff they can mentor.
And use those successes and the winning field that it creates in our business to attract from the outside leading professionals into that already great team. Similarly in London, we are growing not because the market is moving, but because we've invested actually over many years behind a great initial team, used that team to track and develop talent who've allowed us to take what was once a number 5 position in restructuring to a number 4 and number 3 and now perhaps the leading position in London. More recently, we've been able to attract Anders AG, the leading restructuring firm in all of Germany, in part because they were attracted to the terrific teams that we've assembled. New York and London and elsewhere as well as the culture those teams have created and to the powerful global positions that they've created that we have in each of those markets. And that's just in restructuring.
If you look at business transformation, we've gone aggressively after a natural adjacency, leveraging our restructuring oriented heritage, to roll up your sleeves, get the job done heritage, to go after the key parts of the healthy company market that want results oriented tality want the type of capabilities we have and we are having enormous success. In antitrust, for a long time, we've had the leading position in the U. S. Rather than sit with that position, our teams have leveraged it to attract further talent domestically and talent abroad. So now we have a leading team not just in the U.
S, but also in London on the continent and many places in Australia and Asia. Disputes and investigations, we've continued to grow great businesses that we've had for a long period of time like Construction Solutions. But the the of our leading structures, communication with regulators and regulators and boards, all of those things get surfaced during the course of a cyber assignment. Cyber is a natural place for us, a natural place of strength for us, and a place that as we've dived in, we've almost immediately started to hit home runs. That's just a smattering of examples.
You could also speak out as we have in previous calls, investments that have allowed strat comms to soar. Or tech to do the major turnarounds that that team there has driven. There are lots of different stories, lots of powerful different stories. The results of all of those efforts by our teams is that our company is winning more big job than ever. We're creating more value for our clients and more brand value for us in more places around the world and in more segments.
We are increasingly becoming the firm
I know we're dealing with
a financial audience here, but I want to stress a second market we cater to that is to me equally as important. And second market that we're having also extraordinary success in, which is our people. We serve our clients, but people businesses like ours also serve our people. We're not a company of machines. This company only thrives off the energy and drive of talented individuals.
If anyone in professional services wants to create a Vibengen institution, an institution that lasts, doesn't create short term profits and goes away, but less and creates lasting shareholder value, You have to do that by building an institution that invests behind great people. So I think equally as powerful as the wins in the market. Has been the progress we've made in winning the war for talent. The market for talent is starting to view as FTI has the place to be. And because of that, And we've been able to do that while creating more growth and development opportunities for our people, record levels of promotion internally.
It is those measures of success, winning in the marketplace of the client, but also winning in the marketplace of the hearts and minds of dedicated committed professionals that has me most excited. That success, all this success, of course, doesn't mean we're not going to have a bad quarter at some point. I believe this industry and we inevitably, inevitably, are going to have some zigs and zacks. But we today have leaders who are committed to building our firm, who are encouraging leadership at multiple levels of our organization, leaders that are supporting the ambition, the drive of lots and people within our organization. We have leaders who are listening to the market and our clients.
We have leaders who are willing to make bets in disciplined ways. Leaders are making sure we are doubling down when the bets are working and pulling the plug when they are not. We are leaders who are committed to providing growth and mentorship opportunities for their teams. We have leaders who are willing to invest and even suffer bad quarters if they have to, if it builds the company and the institution and the future. That is the mindset we have across FTI today.
To me it is the culture and the mindset of a great professional services firm. And that is more years to come. I'm excited. I look forward to it and I very much hope to see all of you on that journey as well. So with that let me turn this over to Ajay to give you more details on the extraordinary quarter.
Ajay?
Thank you, Steve. Good morning, everybody. I will start by summarizing our quarterly results Then I will review results at the segment level as well as key cash flow and balance sheet items. After that, I will discuss guidance for the year. In summary, as Steve said, the second quarter was once again another record quarter.
This quarter's year over year revenue growth was the Furthermore, it was broad based with growth by 10.6% year over year and have promoted a record number of professionals so far in 2019. Even with this level of headcount growth, utilization remains strong and our adjusted EBITDA surged increasing 34.3% year over year. As Steve mentioned, we did benefit from some significant items such as our outsized success I will discuss guidance for versus our exceptional first half of the year performance. Which are a testimonial of Moving on to the details for the quarter. 2nd quarter 2019 revenues of $606,100,000 were up $94,000,000 or 18.4% compared to revenues of $512,100,000 in the prior year quarter.
Excluding the estimated negative impact from FX, revenues increased $102,400,000 or 20 percent compared to the prior year quarter. Adjusted EPS for the quarter were $1.73, which compared to $1.14 in the prior year quarter. The difference between our GAAP and adjusted EPS reflects $2,100,000 of noncash interest expense related to the company's 2% convertible notes, which decreased GAAP EPS by $0.04. 2nd quarter 2019 net income of $64,600,000 compared to net income of $43,600,000 in the prior year quarter. The year over year increase was primarily due to higher operating profits in our corporate finance and restructuring economic consulting and technology segments.
SG and A for 2Q 2019 of $129,900,000 was 21.4 percent of revenues. This compares to SG and A of $117,900,000 or 23 percent of revenues in the second quarter of 2018. The dollar increase in SG and A was primarily due to Second quarter 2019 adjusted EBITDA of $97,200,000 or 16 percent of revenues compared to $72,400,000 or 14.1 percent of revenues in the prior year quarter. Our effective
tax
18. Our effective tax rate during the 2nd quarter benefited from $1,900,000 in favorable discrete tax items of which $1,300,000 was related to share based compensation with the remaining $600,000, reflecting discrete items related to U. S. Tax reform. In the second quarter of 2018, our effective tax rate was favorably impacted by a 2.4% discrete tax adjustment related to changes in certain state tax laws.
Relative to Q1 of 2019, while revenues increased $54,800,000, adjusted EBITDA increased only $1,100,000. This is largely due to increased compensation resulting from higher variable compensation reflecting our record first half and will pay increases and headcount growth as well as an In corporate finance and restructuring, record revenues of $190,000,000 increased 34.4% compared to the prior year quarter. The increase in revenues was primarily driven by double digit revenue growth in both our business transformation and transactions and restructuring businesses and higher success fees, which increased $15,400,000 compared to the prior year quarter. Adjusted segment EBITDA was $50,500,000 or 26.6 percent of segment revenues, compared to $35,800,000 or 25.3 percent of segment revenues in the prior year quarter. The year over year increase in adjusted segment EBITDA was primarily due to higher revenues, which was partially offset by an increase in compensation resulting from higher variable compensation and a 16.1% increase in billable headcount as well as higher SG and A expenses.
Turning to FLC, record revenues of $145,900,000 increased 9.2% compared to the prior year quarter. The increase in revenues was primarily driven by higher demand for our health solutions, construction solutions, and dispute services. Adjusted segment EBITDA was $28,200,000 or 19.4 percent of segment revenues compared to $27,600,000 or 20.7 percent of segment revenues in the prior year quarter. The year over year increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by higher compensation principally related to a 13.8% increase in billable headcount and higher SG And A expenses. Our economic consulting segments record revenues of $155,500,000 increased 16.6% compared to the prior year quarter.
The increase in revenues was largely due Adjusted segment EBITDA was $23,300,000 or 15 percent of segment revenues compared to $15,500,000 or 11 point percent of segment revenues in the prior year quarter. The year over year increase in adjusted segment EBITDA was due to higher revenues coupled with a 10 percentage point improvement in utilization, which was partially offset by an increase in compensation primarily from higher variable compensation. In technology revenues of $55,600,000 increased 19.8% compared to the prior year quarter. The increase in revenues was primarily due to higher demand for cross border investigation services. As well as Adjusted segment EBITDA was $12,900,000 or 23.1 percent of segment revenues compared to $7,500,000 or 16.2 percent of segment revenues in the prior year quarter.
The increase in adjusted segment EBITDA was due to higher revenues, and lower SG and A expenses, primarily from a decline in R and D expense resulting from the September 2018 sale of our ringtail software and related businesses, which was partially offset by an increase in compensation related to as needed contractors and a 10.2% increase in billable headcount. Revenues in strategic communication segment of $59,100,000 increased 2.8% compared to the prior year quarter. The increase in revenues was primarily due to higher demand for project based corporate Reputation Services in North America and EMEA. Adjusted segment EBITDA of $10,500,000 or 17.7 percent segment revenues compared to $11,000,000 or 19.1 percent of segment revenues in the prior year quarter. The decrease in adjusted segment EBITDA was due to slightly higher SG and A expenses.
Let me now discuss key cash flow and balance sheet items. We generated net cash from operating activities of $47,600,000 and free cash flow During the quarter, we repurchased 579,771 shares of our common stock at an average of $48,300,000. As of June 30, 2019, approximately $102,400,000 remained available for stock repurchases under the company's $400,000,000 stock repurchase authorization. Total debt net of cash of $147,100,000 at June 30, 2019 compared to $137,000,000 at March 31 $258,400,000 at June 30, 2018. Turning to our guidance for
$2,175,000,000
$2,250,000,000, up from our prior guidance of at least $2,100,000,000. 2019 GAAP EPS is now expected to range between $4.88 and $5.38 up from our prior guidance of at least $3.88. We now expect 2019 adjusted EPS to range between $5 $5.50 up from our prior guidance of at least for full year 2019 includes estimated non cash interest expense of approximately $0.17 per share related to the company's 2023 convertible notes and the first quarter of $2,019.05 per share gain related to the ringtail divestiture. Our updated guidance for strong performance for the We expect reversion of success Success fees were $24,300,000 across our businesses in Q2 This compares to our 5 year historical quarterly average of $7,500,000 Our 1st and second quarter of 2019 effective tax rates of 24.1% and 24.8%, respectively, were lower than expected due to favorable discrete tax adjustments. For the balance of 20.19, we expect our effective tax rate to be between 26% 28%.
We are investing in infrastructure including both improvements to We have thus far this year maintained strong utilization. This is atypical and may not continue. A slower expected pace of work in the summer and in fourth quarter as our colleagues may take time off for summer vacations and the year end holidays. Particularly after such a busy first half. And finally, our intake of and success rate in winning business may moderate.
Before I close, let me reiterate 5 e themes. 1st, growing dislocation globally creates a large market opportunity for gives us the flexibility we are focused on organic growth and will add capacity in the right places by attracting top quality talent Also, when we see potential acquisitions that enhance our capabilities or expand our geographic reach, we are able to pursue them in a disciplined manner third, organic growth and acquisitions do not preclude our ability to return on June 2 2016, we have returned approximately $297,600,000 to shareholders through repurchases of 6,790,000 shares of common stock at an average price per share of $43.81 4th, our leadership team remains focused on growth with strong staff utilization and success with both has resulted in sharply higher revenues And finally, this performance has been achieved without a boom in restructuring. With that, we
session.
Our first question comes from Tobey Sommer with SunTrust.
Thank you. I wanted to ask a question about your hiring trends. I think it's about 10% up year over year and up a couple points sequentially. What is the pace of inbound inquiries, particularly among senior people and and how does that compare to your experience in tenure over the last handful of years?
Thanks, Tobey, and good morning. Let me take that Ajay. Look, I guess the colloquial way to say this, Tobey, is the phone is ringing off the hook a way that I think is probably unprecedented in the company's history. I think we're benefiting from a couple of things. I think Part of it is what we're doing right.
I think as we have been starting to clearly win in the marketplace, that's that's a very attractive phenomenon. And you end up with a lot of people wanting to join the winning team. I think the other thing that's happening is some dislocation in different parts around the world and some of our leading competitors. And the combination of those two are formidable. I think over the last 12 months roughly I think it might be 50 3 lateral higher SMDs.
On a base of something like 500. I mean, it's over 10% hires in SMDs laterally. I mean, that's never happened in the history of this company before. And it's not just because we turned on the spigot. You can't just turn on the spigot.
You got to turn on the spigot when great people are available. And the combination of some issues with some competitors and just the strength that of what's going on in our company has meant to deluge your phone calls. And it's pretty exciting. Did I talk to your question, Tobey?
Yes, absolutely. Thank you. I did have a question about the profit impact of success fees. I guess it's 16,000,000 dollars, $17,000,000 above your average quarterly rate as you described, Ajay. What sort of flow through an impact on EBITDA, does that kind of a surplus of success fees trigger in the quarter?
So Toby, I'm not going to tell you, we don't disclose margins on success fees. But even if you apply the average gross margin, you would get a sense for it. Okay.
And when you think of the business geographically, you do have some data in your slide deck describing growth rates. Could you describe or give a little color about the European growth in market there, which is seems very rapid on a decent base. And then conversely, describe if there are any market related headwinds in Asia? Thank you.
Yes, thanks. Tobey, look, I think one of the most powerful things that are going on today is the fact that we have no businesses that are really drags on our company One of the things I mean, we've had now businesses growing for the last few years as we made investments that start to come to fruition, but sometimes that can get mass by businesses that are still needing fixes. And we had fixes in different parts of the world and we had different fixes in different parts of different businesses that were clouding the success. The truth is today, we I'm excited about what's going on in every region of this company and every every segment. And as I say internally, if you could advise your grandmother and there were stock availability for each segment in each region, you could look at your grandmother and suggest that she invests in each part of that.
I truly believe that. So we have real strength different places. Think one of the biggest things you didn't mention was that for a while our North American business wasn't growing and our North American business is is growing a lot right now. But to the two points, Asia is growing. I think it probably grew high single digits year over year.
And we got a lot of growth opportunities in Asia. The issue there is like it is every place is is the ability to continue to grow and find talent. And we just have to do that. We had some pretty serious fixes in a couple of parts of Asia Pacific in few years back. I think you remember us talking about Australia.
I think that's behind us, but now you have to grow people and in order to and find additional talent. But we have a good business over there and I think it grew, year on year pretty, pretty pretty sizable. EMEA is a fabulous story. And by the way, Latin America, we don't talk about it. It's small, but we had some fixes down there.
And it's we have I just was visiting down a number of our offices in Latin America. The team we have down there is, I think, unprecedented in quality in our history. And it's a terrific team and I'm excited about it. We're subscale in many markets. We've got to change that over time, but we have a team that's worth investing in EMEA, the story is extraordinary.
That was a move, really 4 or 5 years ago to it to growth there. We had talented positions there. We just hadn't fully committed to growth. And we made some leadership changes. We got the local leaders of various segments together and they put together ambitious plans.
And this has been going on now for a number of years. Sometimes it gets obscured because currency can obscure it. And there are zigs and Zags, but the growth trend in Europe has been a powerful one for a while. Now it's becoming more material as Europe gets bigger. Europe is a $500,000,000 business today.
A 20% growth on that is a lot bigger than when it was a $250,000,000 business. But it's exciting. And I think the ambition for our teams over there is that to drive that on a continued way. The other point I'd make about Europe is Europe we have we used to think of it as only a U. K.
Business. We now have a powerful set of businesses on the continent as well, but man, the ability to grow the continent is extraordinary as well as continuing to grow the markets we're in. So I'm excited about Europe. Did I answer your question, Tobey?
You did. And my final question is with respect to M And A And antitrust being a driver, Do you have any visibility into sort of a pipeline of future deals? I can recall historically periodically it being referenced that that the company's economists could get brought in ahead of deals to evaluate them and kind of assess what what trade offs might need to be given to regulators to push them through. So I'm wondering what sort of forward sense you have for that business?
Look, I think we do have a bit of a forward sense that happens sometimes. That doesn't actually I mean, it's a complicated translation that into whether a deal actually gets consummated. And then whether there's a second request and the government challenges it So there's no natural. I've never seen a formula that you could rely on that says initial conversations translate as a in the following mathematical way to revenue. I think it's hard to predict.
And that world is different in different parts around the world. I mean, the second quarter are the U. S. M and A business continued to boom. It was extraordinary.
Whereas some places overseas, it was much slower. I think you're right that we have more of an early warning system than many people, but I'm not sure it's a perfect word early warning system, Tobey. Did you have something to add to that?
Yes. Let me just give you a little bit more color. Our guidance is all encompassing. But I will give you more color. Look, antitrust includes M and A and non M and A.
And in fact, our both have grown, and non M and A a little bit faster than M and A. So it's not only related to deals. And clearly, yes, of course, related prior to the deal being consummated or announced. And of course, this is why we don't talk about, deals per se, but we're doing incredibly well in both North America and EMEA in M And A, in non M And A with growth in both areas.
Thank you very much.
Our next question comes from Mark Riddick with Sidoti And Company. Please go ahead.
Good morning, Mark.
Good morning. Good morning. I wanted to touch a little bit on economic consulting, if we could, because this is another quarter where utilization has continued to from a strong level has continued to grow sequentially wonder if you could touch a little bit about that and sort of maybe how you see that playing out because of all the segments, that's the one area where the maybe the year over year hiring growth isn't as much as the other segments and yet, e comms, as we're doing very well, particularly with very strong utilization. I was wondering if touch a little bit on that, what you're seeing there and maybe we should how we should be thinking about that?
Mark, a little bit, I'm going to be repeating what I just said to Toby. It's a great outcome. Last year, we had a very major deal that we were working on and we were worried about the year over year comparisons. This year, we have a multitude of deals plus it's a non M and A portion of it and in multiple geographies. And look, our growth ambitions are great there.
Our hiring admissions are great there. And utilization is a is a derivation, with excellent, excellent business, creating such utilization. So I'm very, very excited about what we're doing.
Okay, great. And then wondering if you could touch a little bit on moving over to corporate finance for a moment. The if you could touch a little bit about the billing rate growth that seem, because given the strength in the business, but also the pickup in headcount, usually, you would think that maybe billing rate would stabilize a bit when you're bringing on new heads, but I just wanted to sort of get some thoughts around that and maybe what you're seeing, whether that's a business mix issue or if there's something else that we should be thinking about? Thanks.
You are actually asking a question based on how I was doing my forecast and my guidance as well. When you hire lots and lots of people who you initially expect utilization to fall. And we haven't been seeing that. Now clearly, high utilization bodes well for billing rates. There's more to it though.
There is also the mix of people hiring our growth rate is 10.6% year over year, but SMD growth rate is 15% year over year. And they're busy too. And their rates are higher, as you can imagine. So it's a mix of who's doing the work, who's busy, the kinds of jobs that you do, it's a combination of all of those things that results in this bill rate, which exceeds our expectations as well.
Okay, great. And then one last thing, I'm not sure and forgive me if I missed this, in your prepared remarks, Ajay, but I was wondering if you could touch a little bit about what you're expecting from a CapEx perspective, what we should be thinking about, whether or not the the recent acquisition adds to that or not and if there were any changes there? Thank you.
No, CapEx wouldn't be affected by the acquisition. And we've given CapEx guidance, I think, specific in the 10 Q, but it's roughly $30,000,000 to $40,000,000 a year. Okay, great. Thank you very much. Thank you, Mark.
Our next question comes from Tim McHugh with William Blair. Please go ahead.
Good morning, Tim.
Hi, good morning. It's actually Trevor Romeo on for Tim. You for taking the call. And yeah, hi, and great results obviously. Just wanted to ask, overall across the company, or maybe even down to the segment level if you have any examples.
So how would you describe the size of projects right now? Are you seeing project size increase across the board or is it sort of a greater number of smaller projects? Maybe it's a little bit of both, but just wondering if that's a factor in the growth at all.
Look, Trevor, I don't think of you a qualitative sense of that. I do think that one business is up. You probably have more of all sorts of projects, but I think what does drive our business is a lot of a number of large projects. And I think what's going on is that we're winning more of the largest assignments across multiple segments. It's not one job.
Let me be clear. It's not like one job and one segment is doing this. It's a multiple jobs, but it's not a lot of $1500 assignments that are adding up here. These are us winning the stuff that is on the front page of the Wall Street Journal, even if our name isn't identified, in it. And these are major assignments where there's a lot at stake for the company.
And they're interested in the leading professionals and are willing to pay for it. And so I think we're just this business is driven by the number of large jobs that we win. And we're winning them. And we're not only winning them in a couple of segments or in one region. Now we're winning in multiple places around the world.
So I would think that's my view qualitatively. It's probably primarily the number of large job across all the segments and world. You disagree, Ajay, or you agree? Does that help Trevor?
Yes. No, that makes sense. Definitely helpful. Thank you. Then just I guess the second question, so on the restructuring, the corporate finance and restructuring segment, I guess, just with the growth being so strong there again, despite, as you, I think both pointed out, not really seeing a boom in the overall restructuring market, I guess, is there just any sort of common thread across your the conversations you're having with clients at all?
Is there any specific thing that they're looking for or is it kind of just a wide variety of needs that you're able to serve for them?
Look, I
think there is a common thread, but it's actually a more internal common thread. Let me just let me maybe give you a sense of that. Look, I think Look, in great professional services firms, there's a chance to become a little complacent. I found this when I was at BCG, the hardest place to reinvigorate for growth was the Boston Office of the Boston Consulting Group. This business had very little effects, right?
I mean, we're the leading firm and creditor rights. We had a decent company side position. We have other businesses. What's changed over the last few years is we've got now people with ambition to build those businesses who are willing to say, yeah, we're great, but boy, we could be better here or yeah, we're great, but this capability can be extended elsewhere And so with great and creditor rights, but Mike and Carlin attracted a couple of people from health care creditor rights where we weren't strong and they've hit the ground running. We're great in company side, but we weren't winning as many of the biggest jobs as we should have because we didn't have relationship a couple law firms and they named that issue and they went after that and changed those relationships.
We were good in non restructuring businesses, but we didn't have an aggressive growth plan. We weren't I think at one point, we weren't willing to take the risk of hiring laterals and hiring people ahead of demand. And Carlin has said we can put a plan together. You just have to back backing you, Steve. And she put a plan together and we backed her and she's having an enormous amount of success.
And then there are leaders below that level. We now have a whole generation of 40 something who are eager to build businesses who have been given leadership positions in transaction advisory services and other businesses who were willing to invest behind. And there are occasionally mistakes and you lose some money on the investments. There's most investments you lose money for the 1st year, even if it's right. But occasionally mistakes, but mostly we have such a great set of positions that we could bet behind.
And that was most of that description was the U. S, but we had a great position in London and they just needed support to grow it further. And then that, that in turn, attracts interest on the continent. So we ended up with this Anders Group wanting to join us and so forth. And so I think that's it.
The breadth of stuff we're doing for clients is the broadest we've ever done. I think we're the only firm that really has a strong company side and creditor side and we have now grown transaction advisory services, our OCFO services, our performance improvement services, and da da da da da, and we've grown our strength around the world. So the breadth of our client engagements is growing. I think the fundamental change is the drive and ambition of our leaders and the number of ambitious leaders who are in place. And that's why that's I attribute that at least as much internally as to any market forces.
Trevor, does that help?
Yes, definitely. That's all I had for now. Thank you guys. Appreciate it.
Our next question is a follow-up from Tobey Sommer with SunTrust. Please go ahead.
Just a numbers question. Ajay, could you give us a sense for what the long term tax rate outlook should be just for modeling purposes? Thanks.
I think this 26%, 28% is a good one. That's a good one. A good number. I mean, no, I can't predict what the tax rates around the world are going to do with the various governments, etcetera. But assuming all that remaining constant, then that's a good number.
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