Good day everyone, welcome to the FTI Consulting third quarter 2017 earnings conference call. As a reminder, today's call is being recorded. Now for opening remarks and introductions, I'll turn the call over to Mollie Hawkes, Managing Director of Investor Relations at FTI Consulting. Please go ahead, ma'am.
Thank you and good morning. Welcome to the FTI Consulting conference call to discuss the company's third quarter of 2017 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 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 for 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 & Forward-Looking Information in our Form 10-Q for the third quarter ended September 30, 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, adjusted segment EBITDA margin, and free cash flow. For a 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 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 third quarter of 2017 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've said, are available on the investor relations section of our website. With these formalities out of the way, I'm joined today by Steve Gunby, our President and Chief Executive Officer, and Ajay Sabherwal, our Chief Financial Officer. At this time, I'll turn the call over to our President and Chief Executive Officer, Steve Gunby.
Thank you, Mollie, and thank you all for joining us this morning. Let me say a few words up front about the quarter, then turn it over to Ajay, who will take you through the details of the quarter and the outlook for the remainder of the year. Then, as usual, the two of us look forward to answering your questions. As I'm sure many of you saw in this morning's press release, this was a terrific quarter. We reported GAAP and adjusted earnings per share of $0.85 and $0.83 respectively for this quarter, which in turn respectively were up 64% and 60% year-over-year. Compared to the second quarter, adjusted earnings per share more than doubled. Another way to say that is that this quarter ties for the best quarter we've ever had in adjusted EPS.
As most of you know, this quarter follows two very weak quarters. In fact, this quarter's earnings exceeded the prior two quarters' adjusted EPS combined. Given the situation of a very strong quarter following a couple of poor quarters, we thought rather than me review the quarter, we'll let Ajay do that, it might be useful for me to share a perspective, a perspective on how we look at quarters like this. In particular, what parts of these quarters feel to us like noise or anomalies, versus what parts feel like salient indicators of underlying strength of the company. It's a topic that I think a lot about, and the thought here was that some of you might find engaging those topics worthwhile.
One way to get into the topic is to reflect on how we are thinking about the results today versus how we were thinking about the results six quarters ago, which was the quarter that was essentially equivalent, or what we were thinking five quarters ago after the outstanding first half of the year. Talk about how we view the results today similarly to then, but also how we look at it differently from then. In the early part of 2016, as mentioned, we had a great quarter and a record first half. As many of you recall, we then underscored substantial caution in extrapolating from those strong results, and we forecasted a substantial slowdown for the ensuing quarters. Why was that? Importantly, how similar is that to today? Importantly, how might that be different?
Part of the basis for the caution, in my view, part of the basis is similar. In this industry, in this company, there's a huge amount of volatility quarter to quarter generated by what at least I tend to call noise. It can be the timing of success fees, a surge or lull in bad debt tax adjustments, foreign exchange, whether you won or lost the random big job, there's all those factors. Over any extended period of time, the factors tend to even out. In bad quarters like we had at the beginning of the year, we often have a confluence of bad noise. Conversely, in good quarters, the opposite, we have a confluence of good noise.
As we talked about earlier in the year, in bad quarters, we see it as critical not to overreact to the noise, not to take actions that will hurt the business. Similarly, in good quarters, we feel it's important to isolate that out and not get overly exuberant. This noise observation was part of the caution we talked about in the early part of 2016, and it is caution we would reiterate today. Just as in our view, no one should have taken the first half of this year and multiplied it by 2, we urged in early 2016 not to take the great first half and multiply that by 2, or take the great first quarter of 2016 and multiply it by 4. We urge a consistent theme today. You just can't take a great quarter and simply multiply it by 4.
I believe you shouldn't take a bad one and do that either. That's similar today in the way we were thinking back in the early part of 2016. In the early part of 2016, we stressed cautions for some other reasons as well, reasons which related to concerns about the underlying strength of the business, and that is where I think we might differ in interpretation today. In the early part of 2016, you may recall we noted we had 2 businesses, Econ and Corp Fin, that were in the middle of mini-booms that suggested they might be outperforming their near-term potential. Econ, as you'll recall, was due to spike in M&A-related revenues that we thought was fabulous, but probably not sustainable.
In Corp Fin, the outperformance was because of the mini-boom driven in part by the huge drop in oil and mineral prices, which we didn't think could last forever. Part of the caution then was not just from adjusting for noise, but also because we perceived 2 businesses were being supported by mini-booms that were not sustainable. At the same time, we had 2 businesses, Tech and FLC, that you'll recall were in the midst of longer-term declines. We talked about major efforts underway to turn them around, but at that point, we didn't have full pathways mapped out for either of those turnarounds. In particular, as you recall, Tech was working on, but not yet launched fundamentally new strategies to halt the multi-quarter set of double-digit top-line and bottom-line declines.
Though parts of FLC had taken steps to improve a number of key elements of the business, FLC as a whole had exited 2015 with a 29% year-over-year decline in adjusted segment EBITDA, and was ultimately in the middle of another down year. In 2016, in the early part of 2016, our caution was a combination of caution due to the beneficial noise, also caution due to what we believed were some salient indicators that the underlying strength of these businesses was not yet as strong as those quarter and half-year results, even adjusted for the noise, would have suggested. We had multiple bases for that caution, and we transmitted that. Today, what I see as similar is the first part, the noise part. Important, not so much the second part.
There's always noise in this business, Ajay will tell you some of the results are due to some positive events in this quarter. We made up some of the success fees that didn't quite manifest themselves early in the year. There's some positive adjustments in our effective tax rates, et cetera. Those are the sorts of random events that in this quarter, unlike the last two, cut in our favor on average. In that sense, this quarter is similar to six quarters ago. To me, more significant, particularly in terms of my conviction about where this company is heading, is the rest of the caution from early 2016 doesn't apply anywhere near the level we talked about then. Once one normalizes for success fees and tax benefits, at this point, we have no segments that we believe are fundamentally outperforming what we believe are their core potential. None.
In fact, in this quarter, one of our great businesses, Econ, substantially underperformed what we believe is its potential because of some weaker market conditions. This absence of substantial overperformance or mini-booms benefiting the business, to me, is a pretty salient difference of where we were in early in 2016. The other salient difference is that we've made real progress in FLC and Tech. Competitive realities, changing markets mean you can't rest on laurels. We have to continue to challenge ourselves in every business every year. At this point, we have completed initial fundamental relooks at every segment. Importantly, we see no segment at this point that can't be a contributor to growth going forward. Said more positively, we see every segment as a potential major contributor to growth going forward.
Tying these thoughts and observations back to the quarter briefly, I've already talked briefly about Econ, Ajay will talk a little bit more about that. Corp Fin, as you know, started the quarter slowly. Started the year slowly, not the quarter. Sorry, the year slowly. Not only because of the delays in success fees and some conflicts, also because we swung and missed at a couple of key jobs. There, the team has continued a winning streak that we started last quarter. We've had broad-based wins in restructuring and in business transformation. The results were benefited by the catch-up in success fees, underlying that is a business that is back on track, delivering on its substantial potential. The market is not booming, we believe it will not boom until loose money comes to an end.
We have a great business here with fabulous professionals around the globe, a business that has shown it can be a major contributor even in slow markets, and it showed that this quarter. I'm also pleased to say Strat Comm is back on track with a solid third quarter and a solid expected second half of the year. Any business, no matter how good, can have a weak couple of quarters, but the team here has shown over the last several years that they have created a fundamentally stronger Strat Comm business. In this quarter, that underlying reality reasserted itself. Perhaps as interesting are the two businesses that had underperformed for a while, FLC and Tech. The teams there have done enormous work to get those ships headed in the right direction. FLC, you may have noted this morning, reported the highest adjusted segment EBITDA since mid-2014.
That was due in part to the cost actions we talked about earlier in the year, but at least as important, also due to some real success and growth, whether that was in construction solutions, in our data analytics business, in our cybersecurity business, or elsewhere. Though we haven't yet turned Tech back into a growth business, the team has stabilized the earnings, while at the same time continuing to invest behind its new strategy. Significant steps forward. Let me conclude these musings and let Ajay go through the details of the quarter. Both this quarter and six quarters ago benefited from the impact of positive noise. This quarter feels fundamentally stronger to us. This quarter's results were driven without any business outperforming our perception of its medium-term potential, without any discernible market booms temporarily benefiting any business.
Though we always have improvements to make in every segment, without any business in the position akin to where Tech and FLC were six quarters ago. Those distinctions, to me, are incredibly important. They underscore a core belief of mine, which is that for this company as a whole and its many parts, the best days are ahead of us. This is a conversation I'm happy to start now, but I look forward even more to continuing it with you, with the entire management team at Investor Day a few weeks from now on November 13th in New York City. I'm very much hoping most of you can make it. With that, Ajay, let me turn it over to you to give more details of the quarter, and then you and I will come back and answer some questions.
Thank you, Steve. Good morning, everybody. I will begin by summarizing our quarterly results. I will review quarter-over-quarter and certain sequential quarter results at the segment level and key cash flow and balance sheet items. Before my concluding remarks, I will provide financial guidance for the remainder of the year. At a high level, we had a very strong quarter. Results in our Corporate Finance & Restructuring segment were especially strong. Collectively, we benefited from our second quarter actions to reduce costs. Our adjusted EBITDA increased both year-over-year and sequentially by $10.2 million and $16.6 million, respectively. Our reduction in share count from buybacks further boosted EPS.
Our strong free cash flow enabled us to buy back $52.7 million of stock and complete the tuck-in acquisition of the CDG Group while reducing debt by $20 million and increasing cash on hand by $19.5 million on a sequential basis. I am very pleased with these results. Starting with earnings per share or EPS for the third quarter of 2017, GAAP EPS of $0.85 and adjusted EPS of $0.83 compared to GAAP EPS and adjusted EPS of $0.52 in the prior year quarter. Revenues of $449 million were up $10.9 million or 2.5% compared to revenues of $438 million in the prior year quarter. Of note, FX was not a significant factor this quarter. Gross profit increased $9.8 million as gross margin improved to 34.3% due to higher revenues and improved utilization.
You will notice that our year-over-year billable headcount is relatively unchanged because during the third quarter, we onboarded 152 entry-level professionals from university campuses. These hires were almost entirely offset by the reductions in billable headcount announced in the second quarter and normal course attrition. SG&A decreased $2.3 million versus the third quarter of 2016, primarily from lower staff-related and overhead expenses, which was partially offset by higher bad debt expenses. As you may have noticed, we had a 10 percentage point reduction in our effective income tax rate this quarter, from 32.2% in the prior year quarter to 22.2% this quarter. As you know, we operate in many countries around the world with different tax rates. The effective tax rate is based on our forecast of full-year earnings from all the countries in which we operate.
Based on the year-to-date results and our Q4 forecast, the percentage of our full year's profits coming from lower tax jurisdictions has increased. This had a significant positive impact on our Q3 effective tax rate as we are required to catch up the impact of earnings mix for the first three quarters. In addition, our Q3 rate also significantly benefited from favorable adjustments related to foreign valuation allowances and other discrete items as further described in our 10-Q. We expect our Q4 effective tax rate will normalize to low to mid 30%. Third quarter net income of $32.2 million increased 48.5% compared to $21.7 million in the prior year quarter. I will share more insights at the segment level. In Corporate Finance & Restructuring, revenues increased $17.5 million or 15.8% to $128.1 million in the quarter, compared to $110.6 million in the prior year quarter.
The increase in revenue was primarily due to increased demand globally for our core restructuring services and an $8.5 million increase in success fees compared to the prior year quarter. The growth in restructuring included the impact of our July 1st acquisition of the CDG Group. Adjusted segment EBITDA was $26.7 million, or 20.9% of revenues, compared to $17.8 million or 16.1% of revenues in the prior year quarter. The year-over-year increase in adjusted segment EBITDA was primarily due to higher revenues with improved utilization. Sequentially, this business delivered-
Hold on for a second. Hello, operator? Are we back in the conference? We just heard music for a moment.
Yes, I heard that music as well. I apologize for that. You are back in the conference now.
Was the conference interrupted just for the music, or was the conference interrupted in any other way? Did they miss any of Ajay's remarks?
No, they shouldn't have missed any of Ajay's remarks. It looks like that was just a momentary interruption. I apologize for that. Your lines are normalized now.
Okay, thank you very much.
You're welcome.
I was on the sequential improvement in corporate finance.
You weren't going to sing along with the music?
No.
Okay. Thank you, Ajay.
Sequentially, this business delivered meaningful top and bottom-line improvements compared to the second quarter of 2017 as we saw continued strength for our restructuring services globally and recognized higher success fees. As we said on our second quarter earnings call, we won significant and broad-based engagements in our Corporate Finance & Restructuring business in the second quarter of 2017. These assignments included company-side work for Sears Canada and Adeptus Health, among others in our restructuring practice. We also had large transactions and business transformation engagements that included carve-out and merger integration work for Entercom, CBS Radio and performance improvement and interim management support for Aritzia. In the third quarter, that momentum continued with some wins that have been publicly disclosed, such as being engaged by the unsecured creditors committee for both Toys "R" Us and Seadrill, among others.
Turning to FLC, revenues increased $3.6 million or 3.1% to $118.6 million in the quarter, compared to $115 million in the prior year quarter. The increase in revenues was primarily due to higher demand for our forensic accounting and advisory services and our construction solutions offerings. These results were partially offset by a $4.5 million decline in success fees in our health solutions practice compared to the prior year quarter. Adjusted segment EBITDA was $22.5 million or 19% of revenues, compared to $16.6 million or 14.4% of revenues in the prior year quarter. The increase in adjusted segment EBITDA was primarily due to higher revenues with improved utilization. On a sequential basis, our revenues increased $7.2 million and our adjusted segment EBITDA improved $9.5 million, reflecting the cost actions taken earlier this year.
Looking forward, by having more of the right people in the right places, we believe we are positioning ourselves for sustainable long-term growth. Our Economic Consulting business reported revenues of $111.8 million in the quarter, down $10.7 million or 8.8% compared to $122.5 million in the prior year quarter. The decrease in revenues year-over-year was primarily due to lower demand for antitrust and financial economic services in North America. Adjusted segment EBITDA was $12.1 million or 10.8% of revenues, compared to $18.4 million or 15% of revenues in the prior year quarter. The decrease in adjusted segment EBITDA was primarily due to lower revenues with lower utilization, which was partially offset by lower compensation costs. On our Q2 call, I talked about how our M&A related antitrust revenues declined sequentially.
That trend continued into the third quarter, perhaps as there continues to be uncertainty created by a lack of clarity around antitrust enforcement in the U.S. The results this quarter are clearly not the steady state of business that we expect from Economic Consulting. As the preeminent leader in antitrust globally, we believe the step down in revenues is market and timing driven. In Technology, revenues decreased $1.8 million, or 4.1%, to $42.3 million in the quarter, compared to $44.1 million in the prior year quarter. The decrease in revenues was primarily driven by lower demand for managed review and lower pricing for hosting services, which was partially offset by higher demand for consulting services. This shift was largely related to the wind-down of large cross-border investigations, which was partially offset by increased M&A second request activity.
Adjusted segment EBITDA was $6 million, or 14.1% of revenues, compared to $7.4 million, or 16.8% of revenues in the prior year quarter. The decrease in adjusted segment EBITDA was due to a decline in higher margin hosting related revenues. Sequentially, although revenues declined 7.2%, adjusted segment EBITDA improved slightly. As I mentioned in the Q2 call, we are enhancing our product offerings in this segment. For example, recently we announced our partnership to license the Relativity eDiscovery software, which opens us up to a broader market. Last quarter, I mentioned our information governance services. While these initiatives require upfront investment in people, processes and systems, we believe this is the right path forward to renewed growth. After a weaker than expected first half in Strategic Communications, which was largely due to the timing of projects, our Strategic Communications business reported much improved results.
Strategic Communications revenues increased $2.3 million, or 5.1%, to $48.2 million in the quarter, compared to $45.8 million in the prior year quarter. The increase in revenues was primarily driven by higher retained revenues, which was partially offset by lower pass-through revenues. We also continue to generate meaningful project-based revenues driven by higher demand for our financial communications and corporate reputation services. For the quarter, these contributions came not only from the U.K., but also from outside the U.K. in key geographies like Germany and Brussels, where we are poised to service our global relationships. Adjusted segment EBITDA was $8.1 million, or 16.8% of segment revenues, compared to $7.5 million, or 16.4% of segment revenues in the prior year quarter. The increase in adjusted segment EBITDA was due to the increase in revenues.
Sequentially, revenues increased $2 million and adjusted segment EBITDA increased $3.2 million, as we benefited from the cost actions taken during the second quarter of 2017. Let me now discuss key cash flow and balance sheet items. Net cash provided by operating activities of $106.2 million for the quarter, compared to $70.9 million for the prior year quarter. The improvement in operating cash flow was due to higher cash collections, lower income tax payments, and the timing of payment of certain operating expenses. During the quarter, we spent $52.7 million to repurchase 1.6 million shares of our common stock at an average price of $32.98 per share. As of September 30, 2017, approximately $26.1 million remained available under our $200 million share repurchase authorization. We also had a cash outflow of $8.9 million related to our purchase of the CDG Group. Turning to our guidance.
We are revising our full year 2017 revenue guidance. We now expect revenues to be between $1.775 billion and $1.8 billion. This compares to the previous range of between $1.775 billion and $1.875 billion. Guiding to the lower end of the previously provided range is primarily a reflection of the passage of three quarters with year-to-date revenues of $1.34 billion. In addition, as a reminder, Q4 revenues can be affected by seasonality from the holidays. We are reaffirming our adjusted EPS guidance provided in April and GAAP EPS guidance provided in July. To reiterate, we expect 2017 adjusted EPS will range between $1.90 and $2.20, and GAAP EPS for 2017 to range between $1.37 and $1.67. Before I open the call for your questions, I would like to reiterate several key themes.
First, we believe our Q3 results demonstrate that we have leading businesses and practitioners that are well-positioned to win in the market. Second, our commitment is to improve performance by driving organic growth with higher utilization while remaining focused on disciplined cost controls. Third, where we believe we have the right to win, including in adjacent sub-practices, we have not shied away from adding talented practitioners, as reflected by the acquisition of CDG Group and the hires we have made to enhance our cybersecurity practice, among others. Fourth, organic growth with higher utilization, cost management, and selective tuck-in acquisitions are not mutually exclusive with share repurchases, given the magnitude of the free cash flow we generate. We delivered terrific results, acquired CDG, bought back $52.7 million of stock, and reduced net debt by $39.5 million in the quarter.
Finally, we delivered solid results this quarter, even though the key macro drivers of our business, restructuring, M&A, and disputes are nowhere near their peaks. For those reasons and more, I truly believe the best is yet to come for FTI. I look forward to discussing these core themes at our Investor Day next month. With that, I will open the call for your questions.
Thank you. If you'd like to ask a question on today's call, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Tobey Sommer with SunTrust. Please go ahead.
Thank you. Steve, you expressed a kind of, I think, a distinct optimistic viewpoint on the trajectory of, frankly, all the businesses. I wanted to get a sense for, at the top line, what that translates to in terms of revenue growth rate, because the revenue increased about 2.5% in the quarter, yet the optimism kind of seemed like it might describe something that's better than that. Could you frame that for me? Thanks.
Yeah. Good question. Thanks, Tobey. Nice to hear your voice. Look, we'll probably give you more detail segment by segment at the Investor Day on how we're viewing each of those segments going forward. Let me maybe frame something differently. Organic growth at this point within our company is still the combination of focusing on places where we see great opportunities to grow and invest, and then opportunities where we are pruning because they aren't performing to what we think or because we don't see the future of those. Therefore, if you do that right you have substantial top-line growth in the places where you bet right, but you can have flat or declining revenue in some of the other places that you've been cutting back. Clearly, we've been doing that over the past couple of years.
You see this quarter a lot bigger growth in EBITDA than you do in top-line growth. That's not long-term sustainable, but there's some of that that is still going on in the company as we examine sub-position by sub-position around the globe and make decisions to triple the bets some one place or another and prune others. The other thing is some places where you're tripling the bets, you don't actually get an immediate kick in revenue. You're hiring a bunch of people, and they have non-competes or they have to get integrated into the team, so the revenue defers. Long term, obviously, you'd expect a pretty close correlation, and I think we would expect those things to get closer over time. But I think this year, we've been still working through some of that rotation process. Does that make sense, Tobey?
Yeah, it does. I wanted to ask a question on the Technology segment kind of business evolution or transition. How do you feel that that is going, and when might financial performance, either revenue growth or margins, begin to kind of reflect those changes in the implementation of the strategy? Thanks.
Yeah, thanks. Look, I think the teams there have done a fabulous job. If you look at this we were probably slow to do a fundamental relook at that business. The profits, you know better than I, Tobey, they typically were in the $65 million range for a number of years, right? Over a relatively brief period of time, they went from $65 million to $25 million, thereabout. Ajay, you can correct me if it's a little bit off, but that's roughly where it was last year. We put new management in there. We have a new set of strategies
This year is essentially the same EBITDA year-to-date, pretty plus or minus a teeny bit, I would guess, as last year. To me, that's a huge step forward in terms of stabilizing the business, particularly because they've been able to do that while spending serious money on things that are avenues for growth, whether that's salespeople in information governance or other adjacencies, whether that's licensing Relativity or others. Would I like it to turn to growth yesterday? Absolutely. I think we only actually announced the license of Relativity. When was that? A month or two months ago?
August.
August. I'm impatient, probably not as impatient as you, Tobey, but actually probably pretty close. I just think they're doing a great job. They've done a fabulous job of stabilizing it, and obviously, we look forward over time for that to go back up.
Thanks. Last question from me. Ajay, does the guidance for EPS assume the remainder of the share repurchase gets executed in the fourth quarter? Thanks.
We're not giving specific timing of when we would repurchase shares. As you can do the math, even if we complete the additional $25 odd million that is left, it doesn't make that much of a difference to EPS in one quarter.
Hey, thanks, Tobey. Are you still there? We had a glitch on the system. Operator, are we still on?
Yes, we are still connected. We can take our next question over the lines from Tim McHugh with William Blair. Please go ahead, sir.
Hello.
Morning, Tim. At some point, I need to talk to you about the Cubs beating the Nationals, we can defer that to another time, all right?
Yeah. It didn't work out so well for them anyway. Just a question first maybe on the Corporate Finance & Restructuring business, I apologize if you said this because I joined late, but can you talk about the, I guess, one, kind of the breadth of improvement there? I know you called out a few large cases and success fees, I guess, but how much is it driven? I guess, how broad was it on the restructuring side? Secondly, I guess, how was the non-distressed kind of performance relative to what you've been seeing?
You want to take that or Sure. Tobey, we did really, really well on the Corporate Finance & Restructuring side. Virtually every area did better sequentially and year-over-year. Certainly, the success fees helped, but it is broad-based. It is global. Really delighted by that uptick. What's key for me is that it's happening when there is no boom in restructuring. I mean, this is at low interest rates. Imagine what this platform will achieve when interest rates go up.
Okay. Fair enough. The success fees, I think you had talked in the past about a range. Is it still within that range or-
Yes
I don't know what the base was.
There was an aggregate for the company. There was a big increase in Corporate Finance success fee, but conversely, there was a very large decrease in health solutions within FLC because they had a great success fee in Q3 last year. Overall, though, if the average is around $7 million to $8 million, and lows are around three and highs are around 14, right now, this quarter was at the highs, and Q1 was at the lows. I'm not begrudging ourselves the success fee. I'm delighted to take it, but you can normalize it over the three quarters.
Okay. The Econ business, I imagine your response is you've retained kind of the top-end professionals, but just how do you get comfort, I guess, that the recent weakness is market-driven and not anything kind of about market share, if you will, or company-specific kind of performance?
Let me answer that. We have retained our-- there's no loss of key people. That's not the base. We haven't lost any key people in that organization. I think, Ajay, you polled them. I think the belief from the organization is that we haven't lost market share. We don't have any hard data on that. Sometimes this stuff can be one or two big cases and timing of big cases that can affect things. At this point, we have no basis to believe it was loss of market share. I think we're generally recognized as the leaders in this industry. Now, leaders in the industry could have missed something, and we could have missed a case or two that we don't know about. Our current belief is that this is not a-- certainly there's no belief that there's anything systematic or systemic here going on.
We would expect over time this to come back to a more historical range.
Okay. One last one, I guess maybe a little higher level, I guess. You talked about you've seen these kind of ups and downs in the business. I mean, a strong first half, weaker other half of the year, and obviously this one's a little better. Can you talk about what type of visibility or what factors, I guess, give you more confidence in predicting that this is now sustainable versus is this just an up versus now will we see another down kind of in the future?
Yeah, Tim, this is a great question. I'm just trying to understand when you intersected this call. Did you intersect it during Ajay's remarks?
Yeah. I heard your comments earlier. I understand you recognize the volatility in your answers, and kind of is the way I interpreted it.
I think there's more than that. I think there's more than that. Look, let me be clear. I don't think this business is that volatile over an extended period of time. If you look out two years, I look at the history of the company every two years where the company was up, it was due to real fundamentals. Any two years the company was down, it was due to real fundamentals that were negative. When you get down to a month, there's a huge amount of volatility. You get to a quarter, there's a lot of volatility. Where I spend a lot of time is when we get to quarters that are down, looking through the volatility and trying to see what is underlying that we need to fix or celebrate and grow further because if in a good quarter versus what is just the random noise.
I'm really insistent that we not react to the random noise, either get over-exuberant about it on the positive ones or take bad actions that hurt the business on the negative ones. That's what we spend a lot of time doing. I don't know if you heard this part of the call. I think there's a huge distinction, for example, between where we are now and where we were in the early part of 2016. Early part of 2016, we had positive noise. Here we had positive noise. You normalize for the noise in the early part of the 2016, we were guiding down for the rest of the year. Why were we guiding down for the rest of the year? Because we said that two businesses had little mini-booms supporting them, which is not something we believe today.
We believe that a couple of our businesses were in the midst of trying to confront fundamental, more long-term declines, whether that was FLC or Tech at that point in early 2016. We don't believe that now. To Tobey's question, we don't yet have Tech on a growth trajectory, but we're not in the midst of plummeting from $65 million to $25 million. I think there's a pretty fundamental distinction of that. Does that mean a quarter can't be bad? This company always is going to have quarterly volatility. I believe, actually, the management team has been working hard. We have the collective businesses in a quality position that I haven't seen during my tenure here, and I'm pretty optimistic about the underlying businesses going forward. Does that help?
Yeah, no, that's fair. I appreciate the comment.
It appears there are no further questions at this time. I'd like to turn the conference back over to our speakers for any additional or closing remarks.
Maybe just echo what I just said here, unless you want to say anything. Look, this is a great quarter. It was after a couple of tough quarters, but I think we don't get that excited just by the quarterly numbers because of the variability stuff we say. What we are most excited about is the actions our people have taken to put our businesses into stronger positions going forward, positions that can create value for our shareholders and real opportunity for our people. We're excited about where all of our businesses have been put over the last quarters and couple years. We hope that came across today, and we look forward to sharing more of that with you in Investor Day in a couple of weeks. Thanks very much for the call.
This concludes today's conference. Thank you for your participation. You may now disconnect.