Welcome to the FTI Consulting first quarter of 2019 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 may 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.
Good morning. Welcome to the FTI Consulting conference call to discuss the company's first 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 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to financial performance, acquisitions, share repurchases, business trends, and other information or other matters that are not historical, including statements regarding estimates of our future financial results and other matters.
For a discussion of risks and other factors that may cause actual results or events to differ from those contemplated by forward-looking statements, investors should review the safe harbor statement in the earnings press release issued this morning, a copy of which is available on our website at www.fticonsulting.com, as well as other disclosures under the heading of Risk Factors and Forward-Looking Information in our annual report on Form 10-K for the year ended December 31st, 2018, 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 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 the 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 2019 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'm 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 our President and Chief Executive Officer, Steven Gunby.
Thank you, Mollie. Good morning, and thank you all for joining us today. I'm sure many of you saw in our press release this morning, this quarter was another record quarter. In fact, I think I have to call it a spectacular quarter. Our revenues increased 10.7% year-over-year, with all of that growth being organic. That revenue growth translated into an unprecedented level of earnings for the company with GAAP earnings per share of $1.64 and adjusted earnings per share of $1.63. Those are numbers. Maybe let me try to put those numbers in perspective. Our adjusted EPS of $1.63 for this quarter is essentially the same as the adjusted EPS we had for the full year of 2014, which of course is only less than five years ago.
There are a lot of adjectives that one could say about this quarter, Mollie drafted a bunch of them. I will spare you those. I'll let Ajay take you through the quarterly details shortly. Let me instead try to share a few perspectives on the quarter. Let me start by doing something I always do, which is underscore that in any quarter, results can benefit from or be negatively impacted by short-term factors. In this quarter, that was true as well. We benefited from higher success fees, a particularly large surge in cross-border investigations and second request jobs, and a lower than expected tax rate. As I think most of you know, there are always short-term factors in this business. Short-term factors that can cut one way or the other. In this quarter, we have some benefits.
Let me stress as always, but let me stress especially this quarter, that one can never take one of our quarters and multiply it by four. Having said that, I think it's also time for me to underscore that is, of course, not just those short-term factors that have been driving our performance. Driving our performance for the now extended period of time that we've been demonstrating extraordinary performance. As you will recall, in 2018, it marked the fourth consecutive year of growth for adjusted EPS. The sixth consecutive growth of GAAP EPS. That's the level of consistency that was historically unprecedented in this company's history. Though I think you know I hate to talk about quarters, given how influenced they can be by short-term factors, I believe it's worth noting now that we've now had seven quarters in a row of truly powerful results.
Seven quarters, something that appears also to have never happened in this company's history. Some of the success is short-term driven, but I do believe that underneath those short-term factors, this company is beginning to show the incredible power and strength and potential of the company. One can see that for the company as a whole, and you can see that in every segment and every region. For example, let's talk about Strat Comm. We've now been talking about the power and strength of Strat Comm for four years. Within those four years, you can find a couple of quarters where we didn't perform as strongly. There have been and will always be eclipses in trajectory. When you have four years of powerful growth, it adds up to a team having put a business in a fundamentally more powerful and different position.
You can see those results in terms of the Strat Comm's EBITDA. Adjusted EBITDA in this quarter is, I believe, more than double it was in the first quarter just four years ago. Of course, the EBITDA is simply the result. It's a manifestation. It's a reflection of the fact that our team has built a fundamentally more powerful, stronger business. It's a consequence of the investments our teams have made behind our people in public affairs and corporate reputation, in crisis management businesses. Bets and investments that have fundamentally changed our position in the marketplace, both in the size and profile of the jobs we're winning, but also importantly, in terms of the talent we've been able to promote and attract in that business.
Similarly, if you look at CorpFin, we've now been talking for a while that FTI has been growing despite no apparent boom in restructuring. We've talked about some of the reasons why. We've been able to support and attract great people, whether it's via the acquisition, like the CDG acquisition, or great lateral hires in key industries like healthcare, retail, automotive, energy, or importantly, via promotions of terrific people who have been with us for a while, people who are growing and developing into more powerful versions of themselves. Our CF teams are proving that we can build businesses around great people, whether there's a market boom or not. Not that a market boom doesn't matter, but that through the volatility induced by key market booms and busts, we can drive our business. Our CF teams have been proving that not just in restructuring.
The strength and growth in our business transformation and transaction businesses has been spectacular, mostly because our teams have been focusing their energy in key areas where we have a right to win, attracting great people, supporting and promoting people, and building businesses behind those great people, and doing that in multiple places around the world. Similarly, if you look at FLC, we have now delivered year-over-year top-line growth for seven consecutive quarters. A while back, the team there took some hard-nosed actions in places where we probably shouldn't have been playing. More important than those hard-nosed actions, at the same time, those teams were making aggressive investments behind businesses and behind people where we firmly believe in the future.
Places like core areas of historical strength, such as FAS, data and analytics, and construction solutions, as well as significant bets in emerging spaces like export controls and sanctions and cyber. Those bets have broadened and deepened our capabilities, and they've driven marketplace success. That success is continuing in the marketplace for big assignments and the marketplace for talent. Our econ teams have driven initiatives that have allowed us to extend our leadership position across the world. Investments in senior professionals in London, on the continent, in Asia and Australia, all of which are bearing fruit. We continue to invest aggressively. For example, I suspect many of you have seen the recent notice where we added a team of eight great experts in South Africa.
Last but not least, in tech, you see the results of the major change efforts that our tech folks launched a couple of years ago, which halted a serious decline in that business and allowed this business to deliver a level of new wins this quarter that I believe is unprecedented in the tech's business history. Yes, I need to underscore today and always that there are short-term factors that will affect our results, and there were some this quarter that benefited us. I need to warn you that at some point I am sure I'll be standing in front of you saying, "The short-term factors this quarter all cut against us and we're down." I am sure that will happen at some point.
To me, far more powerful than any short-term factors is that the last four years or so are proving the power of this organization and our people. The incredible opportunity we have in the marketplace, the incredible demand for our leading professionals, and showing that when you have great people, when you're creating a winning enterprise, both demands and allows you to support those people, build businesses. By doing that, it creates incredible interest on the part of others to join that winning team. It is that business opportunity and the terrific set of human elements that go along with it, the ability to attract people, support them, see them grow and develop, and build businesses behind them, that has me not only incredibly excited, but incredibly motivated about where this company is and where we are going.
With that, let me turn this over to Ajay to give you some details on the quarter. Ajay?
Thank you, Steve. Good morning, everybody. I will begin by summarizing our quarterly results. I will review quarter-over-quarter results at the segment level and key cash flow and balance sheet items. The strong momentum we saw in 2018 continued into the first quarter. I am delighted to report double-digit revenue growth year-over-year that resulted in another record quarter for earnings. Our first quarter performance reflects broad-based trend, with every one of our business segments delivering year-over-year revenue and adjusted segment EBITDA growth. We are delighted with these results, which exceeded our expectations. First quarter of 2019 revenues of $551.3 million were up $53.5 million or 10.7% compared to revenues of $497.8 million in the prior year quarter. GAAP EPS of $1.64 compared to $1.04 in the prior year quarter.
GAAP EPS included $2.1 million of non-cash interest expense related to our convertible notes, which decreased EPS by $0.04, and a $2.1 million tax gain related to the September 2018 sale of our Ringtail software and related businesses, which increased EPS by $0.05. First quarter adjusted EPS of $1.63, which excludes the non-cash interest expense and tax gain, was up compared to $1.04 in the prior year quarter. Net income of $62.6 million compared to $38.9 million in the prior year quarter. The year-over-year increase was due to higher operating profits across all business segments, lower interest expense, and a lower effective tax rate. SG&A of $113.2 million was 20.5% of revenues. This compares to SG&A of $112.1 million, or 22.5% of revenues, in the first quarter of 2018.
Double-digit revenue growth, gross margin expansion, and relatively flat SG&A resulted in first quarter 2019 adjusted EBITDA of $96.1 million, an increase of 32.9% compared to $72.3 million in the prior year quarter. An adjusted EBITDA margin of 17.4% increased 290 basis points compared to 14.5% in the first quarter of 2018. Our first quarter 2019 effective tax rate of 24.1% was 4.1% lower than our tax rate of 28.2% in the first quarter of 2018. Our tax rate for the quarter was lower than expected due to the discrete tax benefit related to the sale of our Ringtail business, which reduced our tax rate by 2.5%. During the first quarter, we identified a more favorable tax position for the Ringtail transaction, which allowed us to release a $2.1 million valuation allowance that was recorded in 2018.
We also had favorable discrete tax adjustments related to share-based compensation during the quarter, which reduced our tax rate by 1.3%. For the balance of 2019, we continue to expect our effective tax rate to be between 27% and 29%. Billable headcount at the end of the quarter increased by 275 professionals or 7.7% compared to the prior year quarter. The increase is due to growth across all business segments, led by Forensic and Litigation Consulting and Corporate Finance & Restructuring. Sequentially, billable headcount increased by 108 professionals. Again, with every business segment growing headcount. Worth noting, even with the significant increase in headcount year-over-year, we maintained our utilization levels. Sequentially, utilization was up significantly, primarily because of seasonality in the fourth quarter. I will share some insights at the segment level.
In Corporate Finance & Restructuring, revenues increased 12.6% to $161 million compared to the prior year quarter. The increase in revenues was driven by double-digit revenue growth in both our business transformation and transactions and restructuring businesses, as well as higher success fees. Adjusted segment EBITDA of $37.4 million or 23.2% of segment revenues, compared to $34.8 million or 24.4% 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, primarily related to a 7.9% increase in billable headcount and higher SG&A expenses. Turning to Forensic and Litigation Consulting, revenues increased 8.6% to $139 million compared to the prior year quarter. The increase in revenues was primarily driven by higher demand for investigations and construction solution services, which was partially offset by lower demand for our health solution services.
Adjusted segment EBITDA of $31.8 million or 22.9% of segment revenues, compared to $25.8 million or 20.1% of segment revenues in the prior year quarter. The increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by higher compensation, primarily related to an 11.4% increase in billable headcount. Our Economic Consulting segment reported revenues of $142.3 million, which was up 6.9% compared to the prior year quarter. The increase in revenues was primarily due to higher demand for antitrust services in EMEA, which was partially offset by lower demand for financial economic services in North America. Adjusted segment EBITDA of $24 million or 16.9% of segment revenues, compared to $19.1 million or 14.4% of segment revenues in the prior year quarter.
The increase in adjusted segment EBITDA was due to higher revenues, coupled with a 6% improvement in utilization, which was partially offset by higher variable compensation costs. In technology, revenues increased 25.5% to $51.3 million compared to the prior year quarter. The increase in revenues was primarily due to higher demand for cross-border investigations and M&A-related second request services in North America and Asia Pacific. Worth noting, this growth was achieved even with the loss of licensing revenue following our Ringtail divestiture in September of 2018. While our revenue in this business can be volatile, depending on the timing of large investigations and second request engagements, our success this quarter is, in part, because we have increased our addressable market by becoming more client-centric versus relying exclusively on one software platform, while concurrently expanding into new adjacencies and geographies.
Adjusted segment EBITDA of $12.7 million or 24.8% of segment revenues compared to $5.7 million or 14% of segment revenues in the prior year quarter. The increase in adjusted segment EBITDA reflects higher revenues and lower SG&A expenses, primarily due to a decline in R&D expense related to our Ringtail divestiture, which was partially offset by an increase in costs from as-needed contractors. Strategic Communications revenues increased 9.3% to $57.7 million compared to the prior year quarter. The increase in revenues was primarily due to an increase in project-based revenues in North America and EMEA, mostly related to corporate reputation services and a $2 million increase in pass-through revenues. Adjusted segment EBITDA of $11.5 million or 20% of segment revenues compared to $9.9 million or 18.7% of segment revenues in the prior year quarter.
The increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation and pass-through expenses. Let me now discuss a few cash flow and balance sheet items. Net cash used in operating activities at the end of the first quarter of $102.1 million was up compared to $69.2 million in the prior year quarter. The year-over-year increase in cash used in operating activities was due to higher annual bonus payments for our record year in 2018 and an increase in salaries related to headcount growth, which was partially offset by an increase in cash collected resulting from higher revenues. During the quarter, we spent approximately $21.9 million to repurchase 327,978 shares of our common stock at an average price of $66.70 per share.
As of the end of the quarter, approximately $150.7 million remained available for stock repurchases under our $400 million stock repurchase authorization. Total debt net of cash of $137 million at March 31, 2019, compared to $293 million at March 31, 2018, and $4.2 million at December 31, 2018. The year-over-year decline in total debt net of cash of $156 million was mostly from using the free cash flow generated by our business. Turning to our guidance. We are raising our previous full year 2019 EPS guidance range of between $3.33 and $3.83 by $0.05 per share to between $3.38 and $3.88 to reflect the first quarter of 2019 tax gain related to the Ringtail divestiture.
After a strong first quarter, we are confident in our 2019 guidance ranges for revenues of between $2 billion and $2.1 billion, EPS of between $3.38 and $3.88, and adjusted EPS of between $3.50 and $4.00. In fact, we now expect to be at or above the high end of our revenue, EPS, and adjusted EPS guidance ranges for full year 2019. The $0.12 per share variance between EPS and adjusted EPS guidance 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 $0.05 per share first quarter 2019 tax gain from our Ringtail divestiture. With a few more months of results in the year behind us, we will consider providing range-bound guidance at our next earnings call. Our guidance is informed by the following factors.
As history has shown us, we can have volatility in any given quarter. That's in part because we have a very fixed cost structure, which means that small shifts in revenues have a much larger impact, positively or negatively, on EPS. An expectation that our intake of and success rate in winning business may moderate. We are a big job firm, and given the event-driven nature of our business, the ebbs and flows from the end of current large engagements and the start of new large engagements may result in large engagements not being immediately replaced. A slower expected pace of work in the summer and in the fourth quarter, particularly after a strong start to 2019 as our colleagues take time off for summer vacations and the year-end holidays. Before I close, I want to reiterate a few key themes that underscore the earnings potential of our business.
We are seen by our clients as a stable, robust platform to do large international work, and our practitioners are winning new work globally. We are constantly creating new capacity in the right places by attracting top-quality talent. Our leadership team is focused on growth with strong staff utilization, and success with both has resulted in sharply higher revenues and adjusted EBITDA. Our business generates excellent free cash flow, and we have demonstrated our ability to boost shareholder value through share buybacks, debt reduction, organic growth, and acquisitions. 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 your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Timothy McHugh of William Blair.
Thanks. Just want to start with, you're talking about within the Corporate Finance & Restructuring business, the strength isn't just restructuring. I guess, I think periodically you've given us some numbers. Can you help us sink our teeth into how much of the growth there is coming from kind of the operational transformation or operational improvement part of the business versus traditional restructuring at this point?
Let me just say qualitatively, and then I'll let Ajay share whatever numbers we can. Look, I think we are excited about what our teams are driving in both sides of that business and not just in the United States, around the world. We have terrific things going on lots of places in that business. It's not just one thing that has us excited. It's a breadth of initiatives. I don't know if we share numbers.
I will. We are now roughly, Tim, half and half, and it's really exciting to see in some quarters, one is ahead and some other quarters the other is the restructuring, but it's great to see. We've achieved half and half.
Okay. You also mentioned, I think success fees were higher than normal this quarter. Was it, I guess, any sense of the magnitude, how far outside the norm?
Absolutely. Yeah. Typically, I've seen as low as two a quarter. I've seen as high as 15 a quarter. The average is somewhere between around the $7 million range. This quarter, we were around nine. It's a little bit higher, but not egregiously so.
Right. Okay. You touched on EMEA. I know you talked about Economic Consulting was strong in EMEA. Just broadly, if I'm running my numbers right, it looks like EMEA was up like 25% for you and probably even higher on a constant currency basis. Can you elaborate or talk a little more about the strength you're seeing there? I know it's also been a big source of hiring. Just what businesses, besides maybe Economic Consulting antitrust work, are you seeing the biggest success with in EMEA?
Yeah. Look, Tim, I think this is a multi-year change effort that is now persisting. At one point, I think our EMEA business, maybe a decade ago, was essentially a Strat Comm business. At this point, we have multiple strong businesses, all of which that are succeeding and growing, whether it's CF, which we were probably a decade ago, number four in London, and I think we now consider ourselves the leading practitioners in London, and our FLC business, which at one point wasn't very strong, has strengthened dramatically. Our Econ business is strong and our Strat Comm business. The strength particularly grew in the U.K., but we've now managed to extend a fair amount of strength to the continent. We have a terrific Brussels office with our Strat Comm business. Our Econ business is not just a U.K. business.
I think we now have just a leadership team across those businesses that are Sorry, I missed the Tech and Data Analytics business, which is also growing. I think we have leadership teams across those businesses and then coordinated by Kevin Hewitt, who leads our European business. You just have a set of leaders in each of those businesses who are leaning forward and finding opportunity. I think you're right. One thing that has changed over the last three, four, five years is with the success. At one point, we didn't have a brand in Europe. At this point, we have a brand in Europe, and we're becoming, I think, the default place for really talented people at other companies who are finding dislocations in their companies or are unhappy.
We've been able to not only grow terrific talent, but we're attracting talent laterally at an unprecedented pace. I think there's a broad swath of set of things that are going and have been going on now for several years, but continued for sure in this quarter. Does that help?
Yes, that's helpful. I guess one follow-up or somewhat different question is, it seems like obviously you've increased your hiring activity here. It's broadly a tight labor market, not just in EMEA, but more broadly. What are you seeing in terms of cost to acquire talent, in terms of the wage inflation and signing bonuses? I guess the overall kind of picture for your workforce here.
Look, I don't know if we comment on specific levels of timing of bonuses. I'll let Ajay decide what we do there. Let me confirm. Look, as always in professional services, once you have some strategy elements in place, the biggest thing you think about is supporting great talent and acquiring great talent and developing great talent. That is the thing we focus a huge amount of time on. We have been benefited by some dislocations in competitors in different places around the world. Where that happens, you get fabulous senior people, which is often hard to do. We've been actually having real success in that, which I don't think is a denial of your point about tight labor markets. I think it's just circumstances in certain markets like South Africa and other places that have created the ability to attract fabulous talent.
I will say we are behind in recruiting at the junior levels below that talent. If you look at the headcount, our SMD count is up even higher than our junior staff. That's not a sustainable thing. You got to keep your leverage ratios up. Whether that's because of the phenomenon that you're describing or whether it's simply that when people are so busy on large jobs, they delay recruiting and stuff like that, I'm not sure, but we're really focused on that and closing that gap. Does that help, Tim?
Yes, that's helpful. Thank you.
Again, if you'd like to ask a question, please press star then one at this time. Our next question will come from Marc Riddick of Sidoti.
Morning, Marc.
Hey, good morning. I wanted to touch a little bit on the SG&A, because I think one of the things that was sort of interesting to me is the leverage that you were able to achieve during the quarter, and I just wanted to see if you could sort of delve into a little bit on that, given the fact that it pretty much matched last year's level and maybe some of the efforts that went into just keeping the SG&A level down at a time where you're increasing headcount and you have so much going on. I was wondering if you could just maybe delve into a little bit as far as cost control efforts or some of the things that are benefiting you there.
Will do, Marc. First, there's a specific item. We sold our Ringtail R&D business in September of last year. You're comparing Q1 of 2018 to Q1 of 2019. In Q1 of 2018, you had the staff that were involved in R&D, which a lot of that went into SG&A. There's not a like-for-like comparison. That is SG&A is relatively flat. We have increased non-billable headcount, but net non-billable headcount is down because of the R&D staff. That's a specific item. That being said, there's no question the business should lend itself to scale economies. I don't want to overdo the cost control bit, but revenue growth should outpace SG&A growth. I mean, that is one of those homilies that we will try and follow.
Right. It certainly seems as though from a global regional standpoint, things are performing well. I just wanted to see if there was any commentary that you might have from what you're seeing over in the U.K., and if not a business disruption concern from Brexit, wondering if that also could be creating some opportunities for you, either in gaining new business or maybe future acquisition opportunities there.
Marc, look, in terms of the impact on our business, I got to tell you, there's been more time wasted on that question within my firm without a definitive result than perhaps anything other than the amount of time the commentators are wasting trying to predict how Brexit will end. It's like nobody seems to know. Nobody seems to know what's going to actually happen in Brexit. When you try to figure out is it specifically helping us or hurting us on this business, you have long conversations, then you ultimately say you don't know. On that, I think we've all agreed that we're focused on life after Brexit, no matter how it's going to happen. We have great business in the U.K. We have increasingly strong business on the continent.
Post-Brexit, the U.K. will still exist, the continent will still exist, the need for our services will still exist, and we're focused on growing that. Whether Brexit has a positive or negative boom in any given quarter or two weeks before they finally decide, I don't know. I think we're just not focused on it anymore. In terms of other effects, the only other effects I'd say is there's some disruption in certain competitors in different markets, and that's a big deal for us because particularly with our strength of our brand, we now become, in many people's minds, the number one place to go. Great people generally don't jump from place to place. If you have great people, you got your team in one place, it's hard to have great people at the senior level move.
Usually when that happens, it's either personal issues or it's because there's a disruption in a firm. When there are disruptions in a firm, it creates movement of great people, and we've been benefiting from that. Does that help, Marc?
Yeah, it does. The last one from me, I was just wondering if you could give a bit of an update on, given the headcount growth, I'm wondering where you stand on maybe some real estate needs, office space, things like that we might be looking at in the coming quarters. Thanks.
That lends itself well to your prior question on SG&A. There could be discrete investments that you make, and it could be in real estate, it could be in infrastructure, IT infrastructure, et cetera. We must constantly look to upgrade and take advantage without just worrying about one quarter. We have been doing that. We have been doing that consistent with the revenue growth and the building of the company.
I will say that as our SG&A has gone down, I don't know. I haven't done the math for this quarter, but when you look at the SG&A having gone down over the last few years, Marc, to your very perceptive question, one of the reasons has been we've filled in our real estate many places, and that helps drive down your cost. Eventually you don't have people sitting on each other's laps, and then you have to make investment. I think if that's what you're driving at, I think that's a fair point.
Okay, great. Thank you very much.
Thank you.
The next question comes from Tobey Sommer of SunTrust.
Thank you. I wanted to start by asking about the new lines of business that you've developed and nurtured over the last several years. I'm trying to get a sense for the size of those. I kind of have in mind public affairs, cyber, the non-bankruptcy CorpFin areas, et cetera. Could you size them either in revenue, headcount, profit, kind of whatever metrics you're willing to give us so that we can understand sort of the value you've created by building those businesses over the last several years?
Let me take a qualitative answer. I don't know the numbers, I'm not sure, and I think Ajay's head nodding that says that's not the sort of numbers that we release. I will say, Tobey, you're driving at the right point, which is they are material. They are material in every business. Essentially, how have we started to get this business to grow organically? It's A, behind investing behind historical growth business and not being stupid and continuing to invest. Some of that is that, which is like construction solutions and data analytics. A lot of this has been around finding extensions. Whether it's geographical extensions. We were actually quite strong in public affairs in the U.S. We've invested significantly behind that. Although we were stronger in some parts of StratCom in Europe, we weren't as strong in public affairs.
We made a conscious decision to invest in our Brussels office. I think we've tripled the Brussels office over this period, or two and a half times, and that's material. We've also extended into public affairs in the U.K. and other places around the world. Any given year, it doesn't seem like that. You go over three or four years, that becomes a material driver of the growth. The CorpFin business, some parts of our CorpFin non-restructuring businesses in some places around the world were losing us money a few years ago. They're not. More importantly, they're also growing rapidly, and we're attracting talent and so forth. It's a material part of our CorpFin business. It's not just one business.
We call it the business transformation services and transaction services, but we've got different sub-businesses in there, whether it's carve-outs or OCFO or transaction services or turnaround or performance improvement. We've got growth in all of those and leaders who have ambitions to grow. If you have leaders who are ambitious to grow, they can grow 10, 15, 20, 25% year in, year out. Then in a few years, you've doubled business. Then you redouble those businesses if you continue to do it. There's been geographical extension of businesses that have been strong. It's been extensions into adjacencies that make sense. We're not going in to build Tesla cars. Nobody's going to think about buying an electric car from us.
All of these businesses are businesses that we have a right to be in, that many of them we've been sort of playing in, but we decided to commit to once we figured out we have the talent to bet behind. Those things cumulatively are overwhelmingly the basis for the change of organic growth rates that we've seen versus five years ago. Some of it is a continuation of growth in some underlying businesses that we're growing. With Ajay kicking me and saying, "Don't give more specific numbers," does that at least give you a qualitative sense and help?
It does. Thank you. Do these areas that you've invested in and grown organically, do they have different leverage profiles or optimal utilizations than the legacy businesses?
They do. Look, a lot of our businesses have different leverage profiles. We have businesses within CorpFin itself that probably have an optimal leverage ratio. Some of them have optimal leverage ratios of three to one, and some of them have optimal leverage ratios of 24 to one. That's pretty big difference. We don't have any businesses that are optimal leverage ratios of 250 to one, which I know some defense contractor businesses look like that. From my background, the difference between three and 24 is a pretty big number. Yeah, we have to manage our businesses differently. Billing rates, realization rates, they all have the ability to drive profit, but the actual mechanisms by which you drive profit, if you have a three-to-one leverage ratio, typically the senior-most people are more highly utilized.
The revenue per professional is higher, but the profit per SMD isn't necessarily higher than the 24-to-one leverage ratio. The specific economics are slightly different. Utilization rates can vary, but not as much as the difference between a 24-to-one leverage ratio and a three-to-one leverage ratio. Does that help?
It does. Do they have higher leverage profiles than the legacy business, or are they similar? I understand they're going to be different business to business.
No, I don't know that the new ones systematically cut one way or another. Some of them-
Okay
just like our current business, some of them are higher, some of them are lower. For example, if you see in our head count over the last year, we've grown SMDs faster than junior staff. That's not because of a mix or a conscious thing. It's because we're behind on hiring our junior staff. Okay? We haven't made a fundamental shift yet. I can't tell you that they're exactly the same. Does that help a little bit?
Thanks. It does. If I could ask one last question to Ajay, and I'll get back in the queue. With respect to your guidance, what do you assume for success fees, having heard you make the comment about the one quarter performance fees being a little bit higher? When you look at the current book of business, what you're working on today, are they the sort of projects that lend themselves to perhaps higher success fees than historic norms? Thanks.
Around $30 million a year. I wouldn't say the current projects are far more or far less.
Perfect. Thanks for your help.
Thanks, Tobey.
This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Thank you again for your time and attention. We are obviously excited about the quarter. I think more fundamentally, we're just excited about what our teams are building here. Thank you for being part of this journey.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.