Good day, everyone, and welcome to the FTI Consulting First Quarter of 2018 Earnings Conference Call. As a reminder, today's call is being recorded. And now for opening remarks and introductions, I'll turn the call over to Molly Hawk, Managing Director, Investor Relations at FTI Consulting. Please go ahead.
Good morning. Welcome to the FTI Consulting conference call to discuss the company's first quarter of 2018 earnings results as reported this morning. Management will begin with formal remarks, after which we'll take your questions. Before we begin, I would like to remind everyone that this conference call may include forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 of the Securities Exchange Act of 1934 that involve risks and uncertainties. Forward looking statements include statements concerning plans, objectives, goals, strategies, future events, future revenues, future results and performance expectations, plans or intentions related to financial performance, acquisitions, share repurchases, business events, and other information or other matters that are not historical, including statements regarding estimates of our future financial results and other matters.
For discussion of risks and other factors that may cause actual results or events to differ from those contemplated by forward looking statements, Investors should review the Safe Harbor statement in the earnings press release issued this morning. A copy of which is available on our website at www dotfticonsulting.com, as well as other disclosures under the heading of risk factors and forward looking information in our Form 10 K for the year ended December 31, 2017, and in our other filings filed with the SEC. Investors are cautioned not to place undue reliance on any forward looking statements, which speak only as of the date of this earnings call and will not be updated. During the call, we will discuss certain non GAAP financial measures such as total segment operating income, adjusted EBITDA total adjusted segment EBITDA adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin and free cash flow. For discussion of these and other non GAAP financial measures, as well as our reconciliation 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 these reconciliations.
Lastly, There are two items that have been posted to the Investor Relations section of our website this morning for your reference. These include a quarterly earnings presentation, and an Excel and PDF of our historical financial and operating data, which have been updated to include our first quarter of 2018 financial results. Of note, during today's prepared remarks, management will not speak directly to the quarterly earnings presentation posted to the Investor Relations website. To ensure our disclosures are consistent, these slides provide the same details as they have historically, and as I said, are available on the Investor Relations section of our website. With these formalities out of the way, I am joined today by Steve Gunby, our President and Chief Executive Officer and Ajay 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, and good morning, and thank you all for joining us. I'm guessing many of you have had a chance to look at the results for the quarter this morning. If you haven't, the word I use for them is spectacular. We delivered record revenues with revenues increasing 11.5% year over year. With almost all of that growth being organic.
That level of organic growth is the highest the company has seen recently by far And I think the highest growth we've ever seen in a quarter where we didn't have a market boom driving results. That revenue result that revenue growth translated not surprisingly into record EPS, both GAAP EPS and adjusted EPS. Each of which totaled $1.04 per share in this quarter. To put that into context, that's roughly triple our GAAP and adjusted EPS of the admittedly weak first quarter of a year ago. So the numbers this quarter are terrific.
And I'm going to let Ajay spend a fair amount of time taking you through them in a little bit more detail. But before that, Ajay thought, and I agree that it might be useful for me to share a few perspectives on what we take away from quarters like this. Beyond terrific results. So I'd like to spend a few minutes doing that and turn it over to Ajay, and then as usual, plenty of time for questions. The first point I'd like to make is the obvious one.
One that we've talked about in some weak quarters, but is also, I think important to reiterate during a terrific quarter. And that is, I am not sure you can take any quarter for this company and multiply it by 4. Importantly, I think the company's results are much more predictable than at times it might seem. Over any extended period, our results tend not to be driven by things like short term market fluctuations or the ending or starting our jobs or the timing of success fees, rather they're driven by fundamentals that are solid and persistent, like competitive positions and our ability to position ourselves against the right markets and forces. And so over any extended period of time, it feels like we have a fair amount of visibility into where we are heading as well as a fair amount of control over our destiny But quarter to quarter, this company's financial performance is inherently variable.
And in part, that's due to the very fixed cost structure we have, which means a slightness in revenue or slight beaten revenue can result in a much larger beat or missed in EPS. But beyond the fixed cost structure, we're very much a big assignment job. And that is something that we're extraordinarily proud of. We are involved in some of the biggest jobs out there, assignments that are on the front page of the Wall Street Journal. But those are assignments that can come along extremely fast, creating neuromus surges of work, but also go away very quickly.
And that means, inherently, we can have significant month to month variability in our revenue. And then on top of that, there are other factors like fees or foreign exchange that are difficult to predict quarter to quarter, among other items. So we have a business that to me is reasonably predictable over the medium term, and importantly, over which we have a reasonable out of control in the medium term that nevertheless faces extraordinary quarterly volatility. So for me in great quarters like this and in not so great quarters, I tend to think a lot about what's going on below the quarterly volatility. And ask where are we as a company?
Are we improving our competitive positions? We have terrific people. Are we developing those people? Additional great people, are we positioning ourselves against the primary market forces out there is when I do that examination, that I get most energized about where we are today and where we're heading, even more so than reciting terrific numbers for a quarter. The quarter's numbers are fabulous, but when you burrow down below, you see what's driving it.
The progress we're making as a company on a fundamental level in competitive positions in the jobs we're winning and the client relationships we're forging and the strength of our terrific people. So though I'd like you not to take this quarter and multiply it by 4, I do hope you take away from these results as well as the results of several of the last quarters in the last few years that this company is making progress, a lot of progress. Progress that's important in positioning ourselves to create sustained shareholder value over time, but progress importantly that is grounded on something real which is creating stronger value propositions for our clients. And critical and professional services progress that is exciting creating growth opportunities and rewards an exciting excitement for our best professionals. So I am extraordinarily gratified by this quarter because it together with the progress for this last several years confirms that this company is building a sustained growth engine.
For you, to shareholders, but also for our clients and for our people. Essentially, what we are doing and trying to do every day is to get ourselves into the virtuous loop that you can see at the best professional services firms. If you have the right propositions for your clients and the right people, you disproportionately win the most important jobs in the market. Winning the most important jobs in the market in turn, leads to profitability, visibility, brand growth, it leads to excitement for your people, professional satisfaction, it energizes and attracts the best people So you get into this virtuous loop. We're having the best people, people eager, leaning forward with energy, thinking about the future innovating, therefore winning the most important work involving the proposition serving the client's best, therefore, having the money to fuel that engine.
That's the virtuous loop we've been working to get ourselves into the last few years. And it's the one I believe we are in. I said working to get into it because it requires actually some work to get there and to stay there. In part, it requires a management team, but actually broader than a management team. In professional services, it requires all of our professionals being relentless about challenging ourselves.
Our competitive position getting better? What do we need to do? What are the issues we face? What tough decisions do we need to make? How do we fix the issues?
You have to be tough on yourself. But it also requires leaning forward positively and aggressively having the confidence and willingness to We don't spend a lot of capital. They're EBITDA bets and they're bets on people. They're investing behind senior people. They're promoting people.
They're hiring junior people. It's about vetting EBITDA behind the positions that you believe are your most powerful positions today and the positions that are going to win in the future. Importantly, that willingness to bet over any short term can actually exacerbate the quarterly volatility that we talked about earlier. Why? The reason is because you have to bet when the right talent is available, whether you happen to be making a lot of money in that quarter or not, means you promote people when they're ready as opposed to you're making a lot of money that quarter.
You attract and hire great people when they're available rather than based on the quarterly results. And that 16 in the first half of twenty seventeen, we continued to hire a lot of people. We did our acquisition of CDG last year, not because We had a great quarter as well during that time and the market was booming, but because CDG was a great firm, is a great firm with a group of people we thought were to be terrific as our company. And similarly, in those quarters, we promoted people. If I got the number right, we promoted 765 professionals during that period.
Because those people are key parts of the future, part of where we can take this place. So we made promotions and hired people a lot of places. In business transformation, transaction advisory, public affairs, construction, cyber security, information governance, international arbitration, retail, healthcare, multiple places in Europe and I could go on. We bet in all those places, even while we were taking cost actions in some places, other places, because we had confidence that those bets along with many others would allow us to grow our share in corporate finance in a time when the markets are slow. Would allow us to strengthen our competitive position in cyber security in public affairs and other places.
We see the results of those actions in our financials, You can see him in the awards and accolades our teams are receiving. Perhaps most important, we see it in the client list we have today. So to go back up a level, I don't think you can ever take a quarter in this company and multiply it by 4. What I hope you do take away from these quarters, collectively, is that we are making progress and sustainable because it's based on something real and sustainable, which is delivering for our clients and attracting retaining and motivating the best professionals If you want to look at that in financial terms instead of using a quarter, I think a metric to consider is 2 year adjusted EPS growth. Talked about that metric at our Investor Day.
Now 2 years is obviously a long period, which of course, therefore, has some disadvantages, but important, it eliminates the quarterly noise. If you look at that metric after many years of decline, we've been moving that metric up steadily now and for a while. We moved our adjusted EPS up from $1.64 in 2014 up to $2.32 last year. And if you look at the 2 year averages, you see a substantial and steady rise, one that will continue, if you believe, the guidance for this year. To me, that is the best financial measure of sustained progress, not the quarterly numbers and it, along with measures that are probably harder to judge from the outside, the quality of the people we're adding and promoting, the clients we've attracted are to be the most powerful measures of where this company is, and most important where we can go.
So for me, if you're going to be excited about this company, It's great to be thrilled about the quarter, but I'm even more thrilled about the sustained progress that I believe we've been making over the last while, and I believe we can continue to drive going forward. Now having said that, our CFO, of course, is still excited about this quarter's financials. So let me turn it over to Ajay to give you more details on the first quarter. Ajay?
Thank you, Steve. Good morning, everybody. I will begin by summarizing at the segment level and key cash flow and balance sheet items at a high level, as Steve said, we had another very strong quarter compared to the prior year quarter we delivered double digit revenue growth that by strength in our copper finance and restructuring, forensic and litigation consulting and in our strategic communication segments, which was only partially offset by declines In Corporate Finance And Restructuring And Strategic Communications, adjusted segment EBITDA more than doubled and FLC delivered adjusted segment EBITDA growth of over 90% compared to the first quarter of 2017. As we benefited from revenue Although economic consulting revenue and adjusted segment EBITDA declined year over year, we saw a sequential pickup delivering revenue and adjusted segment EBITDA growth of 10 34%, respectively, compared to the fourth quarter of 2017. First quarter of 2018 revenues of $497,800,000 were up $51,400,000 or 11.5% compared to revenues of $446,300,000 in the prior year quarter.
GAAP EPS and adjusted EPS were $1.04 compared to GAAP EPS and adjusted EPS of $0.34 in the prior year quarter. Was down 3,600,000 shares or 8.8% compared to Q1 of 2017 primarily driven by share buybacks. After $0.70 year over year increase in EPS $5.1 were from operating performance. $0.10 were from lower effective tax rate and $0.09 were from having fewer shares outstanding. Net income of $38,900,000 increased by almost $25,000,000 and a reduction in our effective income tax rate generated primarily by the 2017 U.
S. Tax Act. First quarter 2018 adjusted EBITDA of $72,300,000 or 14.5 percent of revenues compared to $38,300,000 or 8.6 percent of revenues in the prior year quarter. Sequentially, adjusted EBITDA increased 30.2%. SG and A of $112,100,000 was 22.5 percent of revenues.
This compares to SG and A of $107,700,000 or 24.1 percent of revenues in the first quarter of 2017. The increase was largely due to higher corporate and allocated expenses and an increase in bad debt. Partially offset by the impact of 28.2% compared to 36% in the first quarter of 2017. For the balance of 2018, we continue to expect Total headcount at the end of the 34 were billable professionals and 79 were non billable as we focused on maximizing efficiencies across our corporate functions. Sequentially, total headcount was up 20, of which 16 were billable professionals and 4 were non billable.
Now I will share some insights at the segment level. In corporate finance and restructuring, revenues increased $37,000,000 or 35 percent to $142,900,000 in the quarter compared to $105,900,000 in the prior year quarter. The increase in revenues was due to for our business transformation and transaction services. Adjusted segment EBITDA was $34,800,000 or 24.4 percent of revenues compared to $10,300,000 or 9.7 percent of revenues in the prior year quarter. The year over year increase in adjusted segment EBITDA was primarily due to higher revenues which drove higher utilization Sequentially, revenues increased $12,400,000 or 9.5 percent as we continue to win significant engagements in the first quarter of 2018.
These assignments included major retail, industrial and financial services engagements in both our restructuring and business transformations businesses, which included carve out and merger integration work. Turning to FLC, revenues increased $16,600,000 or 14.9 percent to $128,000,000 in the quarter compared to $111,400,000 in the prior year quarter. The increase in revenues was primarily driven by increased demand for our construction solutions, investigations and health solution services. Adjusted segment EBITDA was $25,800,000 or 20.1 percent of revenues compared to $13,500,000 or 12.1 percent of revenues in the prior year quarter. The increase in adjusted segment EBITDA was primarily due to higher revenues driving higher utilization.
Segment EBITDA improved $2,100,000 or 9.1%, reflecting continued momentum and significant revenue contributions from our construction solutions, disputes and health solutions practices. Our economic consulting segment reported revenues of $133,100,000 in the quarter. Down $6,100,000 or 4.4 percent compared to $139,200,000 in the prior year quarter. The decrease in revenues was primarily due to lower demand for antitrust services in North America. As a reminder, the first quarter of 2017 was a record revenue quarter for this segment, primarily due to large M and A related antitrust engagements.
The year over year decline was partially offset by higher demand for our financial economic services in North America. Adjusted segment EBITDA was $19,100,000 or 14.4 percent of revenues, compared to $20,100,000 or 14.4 percent of revenues in the prior year quarter. The decrease in adjusted segment EBITDA was primarily due to Sequentially, revenues increased $12,100,000 or 10 percent as we saw a pickup in demand for our services since the end of last year. Adjusted segment EBITDA also increased sequentially, up 4.9000000 dollars or 34% due to higher revenues. In technology, revenue decreased $5,200,000 or 11.2 percent to $40,900,000 in the quarter compared The decrease in revenues was primarily due to lower demand for managed review services primarily related to a decline in demand for M and A related second request services.
Noteworthy, we are beginning to grow in newer areas of our business like information governance and privacy and security services as well as growth in our ringtail software licensing business. Adjusted segment EBITDA was $5,700,000 or 14 percent of revenues compared to $7,800,000 or 16.9 percent of revenues in the prior year quarter. The decrease in adjusted segment EBITDA was primarily due to lower revenues. Strategic communications revenues increased $9,100,000 or 20.7 percent to $52,800,000 in the quarter, compared to $43,700,000 in the prior year quarter. The increase in revenues was primarily driven by an increase in both and retainer based revenues.
Project based revenue growth was driven by our financial communications and public affairs practices where we continue to be engaged on large global high profile mandates. Adjusted segment EBITDA was $9,900,000 or 18.7 percent of segment revenues compared to $4,300,000 or 9.7 percent of segment revenues in the prior year quarter. The increase in adjusted segment EBITDA was primarily due to higher revenues. From a geographic perspective, each of our regions delivered strong with the largest absolute dollar improvements coming from North America. We also benefited from year over year double digit percentage revenue growth in EMEA, Asia Pacific and Latin America.
Adjusted EBITDA in Asia Pacific and Latin America also benefited from targeted cost actions taken in certain Now, let me discuss key cash flow and balance sheet items. Net cash used in operating activity at the end of the first quarter was $69,200,000 compared to $93,100,000 in the same prior year quarter. As is typical, we pay the bulk of our accrued annual bonuses in the first quarter the improvement in operating cash flow was primarily due to improved cash collections which resulted in a reduction of DSO by 3 days. During 337,075 shares of our common stock at an average price of $42.17 per share. As of the end of the quarter approximately $99,100,000 remained available for stock repurchases under our $300,000,000 share repurchase authorization.
Total debt net of cash increased by $7,000,000 from Q1 2017 as free cash flow was more than offset primarily by $145,300,000 in share buybacks in the last 12 months Turning to our guidance. To remind you, we expect revenues for 2018 to be between $1,825,000,000 $1,875,000,000. And we expect our GAAP EPS to be between $2.35 $2.65. We do not expect adjusted EPS to differ from GAAP EPS. As Steve said and as our history has shown us we can have volatility in any given quarter.
Which means a slight miss in revenue or a slight beat in revenue can result in a much larger miss or beat in EPS So we don't suggest you take a great quarter like this 1 and multiply it by 4. What we are excited about is that these results show, we are realizing benefits from both our investments and our operational disciplines. Before I close I want to reiterate a few key themes. Our business is strong not only in North America, but also globally. Our capacity to serve our clients in multiple jurisdictions during their most impactful matters is one of our distinctive competitive advantages.
Our leadership is focused on and success with both has resulted in sharply higher revenue and EBITDA While we continue to be disciplined with costs, we are and have the ability to continue to invest behind our strong positions. Our business generates excellent free cash flow and we have demonstrated our ability to boost shareholder value through share buybacks, debt reduction, and acquisitions. Finally, while early in the year, Results for the With that,
And we'll take our first question from Tobey Sommer with SunTrust. Thanks.
Good morning, Tobey. Good morning.
I was hoping you could speak to the sustainability of revenue, which is something you've certainly addressed on your, in your prepared remarks, I was hoping you could expand upon it sort of comparing and contrasting the cyclical elements of your business that sometimes either benefit or are negatively impacted by cycles within those end markets versus sort of the mix of new areas that you've entered that may have more sustainable tailwinds to them? Thanks.
Yes, Tobey, it's a complicated question to answer. Let me give it a crack and then, you can probe it further if useful. So, I think the first point is, These revenues are not driven by a particular market boom. And sometimes in the past, this company has been very much a function of market booms for example, in restructuring, we don't see that there is a market boom going on right now in restructuring. We're doing terrifically well in Corp Bend, but we're not we don't believe we're riding a wave unlike some other points in the history.
And so that's a pretty encouraging sign. And I think it's something that we've tried to work on over the last few years, which is what can we do beyond riding the wave. And I think we've made the teams have made lots of investments and a lot of things are working. Now having said that, I don't think we take the revenue for this quarter and multiply it by 4 either. I mean, we have won some of the biggest jobs in a whole lot of our segments out there.
And you'd like to say we permanently changed our share position. It's a little early to use the word permanently on that. I mean, we're doing a terrific job in the marketplace. And we've won some huge assignments, powerful assignments. And there are good things that happen because if you do those assignments, right?
They further build your brand. And so in some sense, we have hopes of many of these things turning into sustained elements of our business. But right now, I think we are winning way too many of the big jobs for us to just say, oh, that's where we are today. And then on top of that, there's a couple of other things in our results you just have to normalize for. Sometimes we've had bad FX issues where we've had organic growth.
And I've had to try to plead to the market to understand we're having organic growth. It's just swamped by FX. This quarter, it went the other way. I think FX actually contributed considerably to organic growth. So I think we are feeling this is further validation of the fact that we, our teams are doing the right things to drive sustained organic growth over time.
We're not taking the 1st quarter's revenue and multiplying it by 4. Does that help Toby?
It does. It also prompts another question. Could you talk about the, large projects and how would you characterize them versus versus history in that large project risk in the income statement currently? Thanks.
I think we always have large project risk. I think the issue we have right now is we've got more of them. So our income is higher. It's not like we have one job that is twenty five times the size we ever had in the past. We just have more big jobs that we're winning.
I think I'll let Ajay correct me think I'm wrong, but that's my sense. It's not one big job. Just have more good ones. And therefore, the results are better, which doesn't mean they can't all end at once, Tobey, and that's what you have to think about. But, but that's all we mean there.
It's not like we know there's a specific cliff coming, which not like we have one job that's dominating our business. Does that answer your question?
It does, do a good job. Thank you. And then switching to other kind of internal drivers of growth and margin. I was wondering if you could speak to utilization and where you see it as sort of optimal for a growing business. And what's your plans are for billable headcount growth this year after the cost cuts in some slight decline year over year, I'm wondering how we should think about that as a driver in the model.
Yes. So look, on utilization, what I would like to have is a situation where I know exactly where all the business is going to be over the next 3 years and therefore have exactly the right number of people there that vacations come at exactly the right amount of time And, and therefore, you can run utilization at fabulous rates on a sustained basis. And just not the reality that I've ever faced in professional services. You have a number of utilization, whatever you see out there, buried under that is a set of decisions and bets you made a while ago about where you thought the business was going to grow and where you didn't and decisions you've made. I feel like most of the decisions we've made about where we were kidding ourselves were right and most of the decisions we've made about where we're betting headcount were right this quarter says we probably under bet on some of the best places.
And we've been betting on construction solutions now for several years. But some places around the world, we're burning our staff out right now and construction solutions. I mean, utilization is not just a fabulous thing. Because they're humans on the other side of that. And you don't want great people that you've been training to say, gosh, I just love this job, but I can't do this job anymore because I just never see my family.
And so and it's a complicated thing because you have sub practices with distinct expertise in different parts of the world. Sometimes you can fly people from one place to the other, but there are there are language barriers and so forth. So look, obviously, we thought the utilization level we had 12 months ago was not the level we should be at, although parts of the business then were running at the right utilization level, but parts were really running at the wrong one. And we took action particularly we thought where you thought that was permanent because we weren't competitive. But we also are not trying to just drive utilization to sky.
And if you do that, you not only burn people out, but you shortchange your growth going forward. In terms of headcount growth, we've been saying for a while that you can't just grow company without sustained headcount growth. And we've been doing that. You point out that the numbers are roughly flat year over year. That's true, but it's a mix between places that we've been betting heavily on and places where we decided to that we needed to take some corrective action.
I think we are through the first, like, fundamental fix look over of all of our businesses. It doesn't mean you won't have corrective action at different points in the future, you always do in professional services. But I think the amount of corrective action we've seen in the last several years is higher than I expect going forward. And so you more naturally see the growth areas, places where we've been betting on headcount growth show up in the overall numbers going forward. Does that help?
It does. Thanks. I'll get back in the queue.
And we'll go next to Tim McHugh with William Blair.
Hi, thanks. Just want to follow-up on the comments and I apologize I joined somewhat late. So if you said this, it's my fault, but Can you elaborate on why you feel like you're winning some of the bigger jobs? I know there's kind of investing in longer term kind of positioning in that sort. But is there anything about the nature of the jobs that are coming in the sense of in a particular vertical or area where that winds up well with what you have.
Any conclusions, I guess, you can draw from why you seem to be winning more now than you did, as you said, in prior periods?
Thanks, Tim. Look, I would say again, Ajay, if you have a different view chime in, but I would say it's not because the market lines up with our historic capabilities just happens to line up. I think, I think there's 2 things going on. 1, it could be just some luck right? I mean, we swung and missed 12 months ago on some big jobs.
And then later in the year, we swung and hit now we're hitting again, right? I mean, you know, Bryce Harper hits lots of home runs, but he sometimes misses the ball too. And so some of it could be luck But I think what is the case, and I sometimes feel like, this sounds like mom and apple pie, but it's not, is what we have been doing when we've been taking business by business disaggregating and attracting and investing in talent in the right parts and then pruning other ones is we've just made this company fundamentally stronger. And stronger in more areas. So our Corp Fin business, at one point, was terrific creditor rights.
We're winning Lots of big company side jobs at this point. We're winning we've grown in transaction advisory services. At one point, we were a U. S. Business, We have leading positions in markets abroad right now.
It positions us to win some of the biggest global deals. Is that big retail deal, global deals public? The biggest REIT, yes, Steinhof, the biggest global deal. I mean, it's a South African company with operations in Germany, UK, the U. S, I mean, we have capability in every one of those geographies at this point.
So I think this this daily work our people are doing on figuring out where we're kidding ourselves, but also where we are, have a right to win is working. And when it works, we also are having many places, the phone ring off the hook for people who want to join us. And so the capability is broader. Now what I would like to know and you would like to know is how much of it is a lot versus how much of it is what we're doing. And you never know in any given quarter.
You'd like to believe it's all you and that history would say that's a little arrogant to believe, but it's not I don't think it's because all of a sudden the market lined up against where we're good. Does that help, Tim?
Sure. And if the business is being driven by bigger jobs, I guess you have a little bit more visibility into those in terms of the continuation at this point. So I guess, shouldn't if you have more bigger adoption, you have some line of sight to whether or not at least for the next couple of quarters, whether the revenue contribution from those will stay at an elevated pace?
Actually, I think the data would suggest the opposite that the number of small jobs we have in our company just stays relatively constant over time. That swing factor is a big job. Now you're right. We have a team running and we have on some of those on a job X and we have visibility that says it's expected to go for a while. The issue you never know is does it settle?
Does something else happen? Does somebody call off a merger? Does the government decide to throw in the towel on the merger? It is, it is, I've tried really hard to say well, can't we know? What we do know, except until the day we, it changes completely.
And this thing that we thought were going for 3 months stops immediately. And by the way, I've been surprised at how fast big jobs line up. A board finds out something about a company that is a significant issue, we can have 25 people out and near the company a week later scaling to this better, Tim. I've been trying. Just to
add to what Steve said, please don't take our, you know, our telling you that don't multiply a quarter by 4 are telling you that large jobs can end and cannot end up properly did not take that in any way as taking anything away from the strength of the quarter. These are beyond our expectations. It's early. It's only 1 quarter in the year. So we're maintaining our guidance.
But I mean, the strength has come from a variety of places. Business transformation, we've added people there and we are winning great jobs there. And those companies are not all distressed companies. Every company wants to improve its profitability. And they find us a very good value proposition.
In construction solutions, I mean, our business has grown handily in those areas whilst it's not a booming market, but we have expanded the markets. Look at how much we're getting from Europe, from EMEA, from Middle East, from Latin America, in strategic communications, not only have we grown in Continental Europe, but also in North America. So growth in adjacencies, growth in services. I mean, cyber security, we didn't have a practice a few years back. And it's a large a significant component for what we do today.
So growth in adjacencies, growth in markets, taking share away and tremendous operational discipline is what resulted in these quarters with a leadership team that is focused on growth and staff utilization.
Okay. And one last question. I guess just to follow-up on Toby's question because just simplistically, if you just look at headcount growth and revenue per head, the revenue per consultant was very high. So your comments earlier sounded like you're going to continue to, as you say, invest in, as you have been, and we'll start to see headcount growth pick up because there will be kind of fewer offsets in terms of areas you're cutting back. But I guess to follow-up on that, are you coming off a quarter like this does this accelerate your hiring plan?
Does it change it at all as you look forward for the rest of the year? Or is it does not really change how you view how quickly you want to add heads in this environment?
So look, this quarter is obviously a a blip above the trend, but I think actually it is really to me, this is also a continuation of what I've been seeing about potential of this business. So I think we have been committed to growing our headcount with a couple of years ago. We talked mid single digits on a sustained basis going forward, that got clouded by some of the correction activity we took in some underperforming businesses year and it looked like we weren't. But the truth is on some of these other businesses, we were growing headcount double digit. And so you just have to look at that.
Now I think, look, over time, I suspect we can grow faster and faster. I came from a business before this where we were able to grow headcount double digit year in, year out. We didn't have for a couple of years before I got here, we had negative organic growth. So we're on a process progress towards increasing the sustained organic growth rate that we think is possible here. You don't that's a steady process we're on.
Now you have to address places where you got it wrong in the past. We bet on growth in construction solutions. We didn't get it right exactly how much it is, and we got some people who are overworked. So we've got to address that and so forth. But we haven't changed our fundamental underlying strategy here.
Which is that we can deliver sustained organic growth. And then on top of that, we've got really terrific cash flow. And between that, we can deliver good results for our shareholders while investing enough in the business and behind our best professionals that we have motivated teams. And I think that's that's still our core strategy there, Tim.
Okay. That's helpful.
And we'll go next to Mark Riddick with Sidoti.
Morning. How are you?
I was wondering if you could touch a little bit on or maybe just sort of give maybe a broader color around the geographic strength that we saw in the quarter. Certainly some of the things you're talking about makes sense. But with the over 20% in the EMEA region, over nearly 30% in Asia Pac wondering if you could sort of get maybe a broad based sort of view as sort of what you're seeing there, whether from a macro standpoint or any specific things that you could give a little greater color on that, that geographic strength? Thank you.
Mark, let me be just careful about. So Europe, I think is just a continuation of the same story. That has been a place where we invested For growth, we had the right leadership. We invested for growth several years ago, and we've had a pretty sustained growth engine, which doesn't mean you can have quarters that are we've had a pretty sustained growth engine. The thing that sometimes happens in Europe and some of these overseas markets is the some of the results get affected by FX.
So I think in other quarters, we were saying it was growing and you look at the numbers, it doesn't look like it. This one, we had the opposite effect I think probably I think we show like 20% growth in Europe. I think at least half of that is FX this quarter. So you just have I think this is more of a it's a terrific we're excited about what's going on in Europe across a whole range of businesses we've been investing and it's been working And the people are driving, and we've got a big group of people involved in figuring out where we can take it. And that energy is spilled over to the market the phone's ringing off the hook.
So I feel really good about that, but it's not, but the results this thing are a little bit affected by the FX. Does that that help on Europe?
Yes, yes, it does. And then, I guess touching on the in a way, touching on sort of the headcount questions. I was wondering if you could maybe give a sense of how you feel about the general labor market of the folks that you look at and scarcity or changes that you may see now versus maybe a few months ago? Thanks.
Look, I think when you're looking for the best talent in the market, you always have a scarcity issue. It's why it's a pretty important, it's not just in our people's interest that our people believe that we're willing to invest in them, that we're going to stick with them even in bad quarters. It's actually pretty important to the shareholders. Because it's only by having that commitment to grow a professional services firm, that commitment to help build a business that you can attract and retain the best professionals. And so that is a big change.
Look, the best professionals are always you always have to, they're always expensive, and you always have to be willing to spend the money for them. That's that was true years ago too. I think what we're trying what we're doing is we're relentless about making sure we go after those people in good quarters and bad and we're willing to take the hits to their earnings. If we find the right people in a bad quarter, we're still going to hire them even though it doesn't help the quarter because I think that's how you build the business.
And that concludes our question and answer session. I'd like to turn the conference back to our speakers for any closing remarks.
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