FTI Consulting, Inc. (FCN) Earnings Call Transcript

Welcome to the FTI Consulting Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Mollie Hawkes, Head of Investor Relations. Please go ahead.

Good morning. Welcome to the FTI Consulting conference call to discuss the company's second quarter 2026 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 the Private Securities Litigation Reform Act, including the company's outlook and expectations for the full year 2026 based on management's current beliefs and expectations. These forward-looking statements involve many risks and uncertainties, assumptions and estimates and other factors that could cause actual results to differ materially from such statements. 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 headings of Risk Factors and Forward-Looking Information in our annual report on Form 10-K for the year ended December 31, 2025, our quarterly report on Form 10-Q and 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. FTI assumes no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. During the call, we will discuss certain non-GAAP financial measures. A discussion of any non-GAAP financial measures addressed on this call and reconciliations to the most directly comparable GAAP measures are included in the press release and the accompanying financial tables that we issued this morning and were also posted to the Investor Relations section of our website. Lastly, there are 2 additional items that have been posted to the Investor Relations section of our website 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 second quarter 2026 results. With these formalities out of the way, I'm joined today by Steven Gunby, CEO and Chairman; Angela Nam, our Chief Financial Officer; and Paul Linton, our Chief Strategy and Transformation Officer. At this time, I will turn the call over to our CEO and Chairman, Steve Gunby.

Thank you, Mollie. Good morning, everyone, and thank you all for joining us. As you may have seen this morning, we reported revenues for the second quarter that were once again a record. At the same time, our bottom line performance was somewhat below our expectations for reasons that I'd like to go into in a bit more detail. And specifically, we thought it might be useful if we highlight which of those reasons we believe are temporary in nature and which may be more durable and therefore, highlight what we think all of this might mean for the rest of the year. So with that, let me dive in. One major reason for the bottom line performance was that our SG&A ran higher than expected this quarter. Angela will talk about the SG&A in more detail. And importantly, she will talk about why we do not expect that to recur going forward. So let me leave that discussion to you, Angela. Let me spend a bit more time perhaps on the other reasons, which have to do with the fact that despite record revenues, we actually expected revenues to be even stronger, particularly in a number of the international markets where we've been able to add terrific senior talent and great numbers of that senior talent over the last while. And most notably, let me highlight that phenomenon in EMEA. As I will mention a couple of times in this talk, EMEA did continue to grow. And some businesses in EMEA, for example, our Spain and German businesses had terrific quarters. They exceeded our expectations. But we did have challenges in the quarter, both in the Middle East and in the U.K., challenges which appear to have different bases and therefore, different potential durability. With respect to the U.K., our sense is the issues here are short term in nature. The normal sorts of zigs and zags that affect different businesses at different points in time. As I hope everyone on this call knows, we have great businesses in the U.K., almost across the board. But as we all know, even sometimes even with the greatest businesses, we have businesses like our restructuring business or our e-com business in the U.K., they can happen to have some cases end at a particular point in time and some delays in new major cases beginning. And when you have those sorts of gaps in those quarters, of course, it flows through to the bottom line. In this case, the timing of that gap between cases ending and starting was far from ideal because given the timing of client vacations in EMEA in the summer, it's typically hard to have a rebound start immediately in the middle of the summer over there. But important, I wanted to underscore, we do not believe the revenue shortfall in the U.K. versus expectations is more than a short-term issue. With respect to the Middle East, however, it's obviously a more complicated question. As I'm sure everyone on this call knows, the Middle East has serious geopolitical disruption. And I think the world as a whole is having trouble predicting just how long that geopolitical disruption is going to last. We do have a great team there. And typically, over any extended period of time, my experience is the quality of the team that determines success, not market forces or even geopolitical disruptions. But in the Middle East, we clearly do not yet have any definitive sense of when that business will turn. Let me step back from a minute from specific markets. I do want to underscore that even with revenue below some of our aspirations in some of these markets, our overseas markets in general and EMEA, in particular, are growing on the top line in Q2. They're just growing on the top line slower than our aspirations. And let me see if I can explain that a little bit more. As I hope many people on this call know, we have been the beneficiary of a terrific set of hires over the last while. Yes, in the U.S., but particularly overseas as well as some terrific promotions there. And with those aspirations and with those additions has come conviction, belief and associated aspiration for revenue growth that is considerably higher than mid-digit single digit. And important, we still have that conviction in those aspirations and those expectations. I am, we are powerfully excited about the people we've added and the people we are continuing to add and the people we're promoting. But unfortunately, when the revenue in a given quarter happens to not quite meet those aspirations and is up only mid- to high single digits, the shortfall versus expectations ends up flowing through to the bottom line. Given that we continue to see strong underlying demand in many places and believe most of the Q2 pressures were timing related, we are not changing our revenue guidance for the year nor our internal forecast for the bottom line for the second half of the year. But as Angela will talk about, given the fact that the bottom line year-to-date is below our expectations, we are adjusting our EPS guidance. If I turn to look at the world by segment, the story is much the same as we've seen in many quarters, which we've had some businesses and some businesses that have performed terrifically well and a few businesses that have either had more challenging markets or have had to run off of some big jobs. In Corp Fin, as I hope you will look at the data and see the results overall are terrific, which I find once again powerful and heartening given that the restructuring market is not universally hot right now. And the broader M&A environment remains somewhat uneven. Our sense is that we continue to benefit from the strength of our platform and the fact that now for years, talented people have continued to join us across each of the 3 service lines. In FLC, our sense is that our experts continue to be called into the most complex high-stakes matters in the market in areas like cybersecurity, international trade sanctions issues or complex anti-money laundering investigations. We believe we continue to gain share. Having said that, the amount of regulatory scrutiny going on globally is feeling less intense than in the past. So even though we are strong this year, we are not expecting to replicate the sort of the bottom line growth that we've seen so vividly over the last few years. In Econ, the quarter actually came in above our expectations. Now as we've talked about, it will take multiple years to get Econ back to anywhere near historical levels of profitability. But as we've also discussed, we continue to have the leading experts, and they continue to be involved in some of the most important antitrust, international arbitration, securities, litigation matters. And one can see the results of those capabilities in the strong sequential improvement in ECO this quarter. Although we have a long way to go, we do expect that in the second half of this year, the business will no longer be a year-on-year drag on revenue or on adjusted segment EBITDA. Tech and Stratcom both had solid quarters, particularly Stratcom when you look at the year-to-date. Both of these businesses face competitive environments with tech in particular, facing a very intense environment. But both businesses continue to make good progress and both see strong opportunities going forward. So what does that mean for us overall? Look, we always have -- as we see frequently the chance for short-term air pockets like we've had the last few months in the U.K. And of course, the world is a complicated place. And so geopolitical issues do happen like they've happened in the Middle East. And so you can have high aspirations in a given quarter based on the addition of terrific talent, which don't quite get met in that quarter. And you can have results that are affected by SG&A that happens to hit in that quarter. Those things can happen in any given quarter. But our experience is that over any multi-quarter period, the relevancy, the power of one 's offering is what tends to win out. In that connection, I would note that even in the face of what I've talked about today, year-to-date, we were up 7% on the top line and up 10% if you normalize for the econ issues we're working through, which may raise in your mind the question that we were talking about, which is how did we actually hit 10% growth even with certain places not meeting the full breadth of our aspirations. Let me highlight 2 reasons because they're important in themselves, but because both of them undergird why I -- why we are so confident in this business going forward and over the medium term. One is that we continue to win in the traditional markets that we have won in for a long time, markets that continue to show themselves powerfully relevant today. And the second is that, if anything, AI is further feeding that growth. So let me take a minute on each of those. In terms of our traditional markets, the world of bankruptcy hasn't gone away, nor is the world of antitrust of transactions, of investigations, of disputes, of litigation of reputational issues. And what we are seeing ever more is when the stakes are high, clients want the best experts, a phenomenon that we believe has been benefiting us for 7 or 8 years now, and we believe will continue for a while. And our current view is that AI, if anything, is reinforcing those phenomena. At one level, we're finding that the companies involved in AI are facing and calling us for their own set of high stakes challenges, whether it's litigation, regulatory concerns, transactions or disputes. More generally, AI itself is this type of disruptive force that tends to lead to the sorts of things that we are the lead experts at, whether it's bankruptcies, investigations, disputes or crisis. You can talk about that conceptually. You can see some of that in headlines. You can also start to see that vividly in our client engagements. For example, in Econ, as you may have seen, one of our new affiliates recently served as the lead expert in supporting in that high-profile OpenAI bus case, which, as you may know, was a victory for our client, OpenAI. More generally, we're being asked to advise on AI-related matters involving intellectual property issues or disputes around misinformation or antitrust claims involving major companies. And in tech, we're finding that the leadership position that they are creating in AI is allowing them to do types of work that I don't think even they could fathom doing a few months ago, let alone a few years ago. Sophie talks about a case recently where we had to look not at 45,000 e-mails in a day or 2 days, but 45,000 images and videos and mobile data in an incredibly short period of time to help our clients decide its litigation strategy. That wasn't possible just a few months or years ago. and the leadership position we have established in those sorts of work is helping us extend and reinforce our position as the leaders for the most complicated expert-driven work. Those are just a couple of examples. So would I have preferred that the bottom line this quarter fully meet my expectations? Of course, I would. for the reasons that you all know, but also because I'm so excited about the talent we've added around the world. We believe in the best we're making and the power of that talent. And it's frustrating anytime you have short-term factors that you feel are obscuring the success that those people are driving. And of course, more generally, I am concerned about the Middle East, not just for our business, but for our people and, of course, for the world. Important, none of what we've talked about today leaves me any fundamentally less optimistic about the fabulous teams of experts we have assembled and are continuing to assemble. The leading positions we have created, the resulting ability we now have so many places to deliver the most critical work for our clients. The effect of that work on building our brands in the market, which in turn continues to augment our position in the virtuous group of professional services, where you deliver great work for your clients and because great people are motivated to participate in that and do that, leads to you being able to attract and develop great people, which in turn reinforce and builds the business and show over time, build a better platform for our people, makes a difference for our clients and ultimately creates a business that is ever more powerful for you, our shareholders. With that, I want to turn this over to Angela. But before I actually let her talk, let me reiterate Angela, just how happy I am that you are here. me tell to all of you just how impressed I am how quickly she's gotten up to speed and how impressed I am on the credibility she's established so quickly within our leadership team. Angela, over to you.

Thank you for the welcome, Steve. Good morning, everyone. I am pleased to be here. I want to thank the entire FTI team for the warm welcome and support I've experienced during my transition. Although I've only been with FTI for 3 months, I've had the opportunity to spend time getting to know our experts around the world. What has stood out the most to me is our collaborative culture, the exceptional quality of my colleagues and the impactful work they deliver for our clients. As a former client of FTI, I experienced the talent and expertise that our teams bring to clients firsthand, which was a big part of what attracted me to this company. It's been especially rewarding to see the business from a different perspective and gain a deeper appreciation for the value FTI delivers and just how broad and deep our platform is, which is what makes FTI so distinctive in the market. And with that, I'll review our second quarter financial performance before discussing our balance sheet, cash flow and guidance. Turning to our results. We delivered record second quarter revenues, up 5.3% year-over-year, led by growth in our Corp Fin, Tech and SLC segments. Excluding pass-through revenues, revenues increased 6.5%. Notably, as Steve said, we also saw strong sequential improvement in e-com. Despite the revenue growth, adjusted EBITDA declined year-over-year because of higher direct costs and SG&A expenses. Higher direct costs primarily reflected investments in our Corp Fin, FLC and Stratcom businesses as we continue to add senior talent and build out teams behind them. SG&A of $230.7 million compared to $202.2 million in the prior year quarter. The increase in SG&A expenses reflects higher compensation, T&E and legal expenses. The increase in compensation was driven primarily by higher salaries and benefits, which included some onetime compensation expenses in the quarter that will not recur. The increase in T&E was primarily due to our all-SMD meeting held in April as we did not hold a meeting last year. Higher legal expenses were primarily driven by higher litigation costs. This increase included $6.6 million of extraordinary litigation-related expenses recorded in unallocated corporate SG&A. The second quarter marked an inflection point in the company's litigation against a former employee originally filed in 2023, which fundamentally changed the scope of the litigation. In May, the court allowed a third amended complaint, which expanded the case to include additional defendants, including a competing firm and new claims. Because of the magnitude, complexity and expansion of this litigation, we believe our shareholders will benefit from visibility into the true underlying operating performance of our business and transparency into the costs associated with protecting the company. Adjusted EBITDA of $104.5 million or 10.5% of revenues compared to $111.6 million or 11.8% of revenues in the prior year quarter. Adjusted EBITDA, which excludes the extraordinary litigation-related expenses, declined year-over-year as the increase in revenues was more than offset by higher direct costs and SG&A expenses. Billable headcount increased 3.2% year-over-year. As Steve mentioned, we continue to find and invest in great senior talent, reflecting billable headcount growth of 5% at the SMD and MD levels as our expert model is increasingly relevant in the market. Our Q2 effective tax rate of 20.8% compared to 22% in the prior year quarter. The decrease was primarily due to tax benefits related to a tax equity investment in renewable energy. This benefit was partially offset by an unfavorable tax adjustment for share-based compensation compared to the prior year quarter. Weighted average shares outstanding or WASO of 29 million shares compared to 33.6 million shares in the prior year quarter. Q2 GAAP EPS was $1.99 and adjusted EPS was $2.16. The variance between GAAP and adjusted EPS was due to the extraordinary litigation-related expenses, which reduced GAAP EPS by $0.17. Now turning to the segment level performance. Corp Fin had another strong quarter, delivering 8.5% revenue growth year-over-year. Corpin's top line performance was driven by higher realized flow rates across the business and higher success fees. In the second quarter, turnaround and restructuring represented 44%, transactions represented 26% and transformation represented 30% of segment revenues. The transformation practice exceeded our expectations this quarter, growing 26% year-over-year as we support end-to-end cost takeout, supply chain and operational efficiency mandates. Key industries supported in the quarter included telecommunications, technology and health care. In transactions, revenues grew 10% year-over-year as we supported marquee deals such as Skyworks acquisition of Qorvo and Hogan Mobile's merger with CadWuditer. Of note, the turnaround and restructuring saw a 2% revenue decline year-over-year. We continue to support some of the largest bankruptcies globally, including DISH Network, Spirit Airlines, First Brands and Marelli in the U.S., Pratt Lindsay Oil Refinery in the U.K.; Hazen, the largest out-of-court restructuring in Brazilian history. And in Asia, we're supporting the lenders in the restructuring of a number of well-known Chinese property developers. Importantly, we continue to make investments in Corp Fin. In fact, almost 50% of our year-over-year headcount growth can be tied back to investments, such as building out our transactions and transformation businesses in EMEA and our health care and mining businesses in Australia as we've added junior headcount to support investments we've made over the last 2 years. In FLC, our North America business continues to perform well, primarily driven by our financial services and cybersecurity businesses, where demand is being driven by shifting regulations and a more complex threat environment. As Steve said, AI is the type of disruptive force that tends to lead to demand for expert services. Our clients turn to us when AI gets complicated, risky or broken. In financial services, clients are being challenged with how to deploy AI responsibly and are questioning whether AI tools are being used appropriately or if AI processes are creating regulatory, legal or operational risk. In cybersecurity, the adoption of AI introduces new risks, including exposing their data and AI-generated content or automation contributing to fraud or misconduct among other challenges. Clients are equally concerned about the AI risk introduced by third parties and the ability of AI to enable cyber attacks. While demand for our expertise is being driven in part by AI in these areas, the business overall saw lower volume due to continued pullback in regulatory enforcement. Nonetheless, our ability to meet the firm our clients call on for the most complex cases means our higher realized bill rates allowed us to deliver year-over-year top line growth. Our market positioning is strongest where clients need independent judgment, credibility and deep expertise. And in the Spain, we also continue to make investments in senior headcount in FLC with more than 40% of our year-over-year headcount growth being at the SMB and M&D levels. As Steve mentioned, this quarter's e-com performance exceeded our expectations. E-com revenues increased $13.2 million and adjusted EBITDA increased $14.7 million sequentially due to strength in Compass Lexicon in both EMEA and North America. In EMEA, growth was led by our M&A-related antitrust business, supported by mergers such as Anglo American sale of its Brazilian nickel assets to Hong Kong-listed MMG and Amadeus' plan to acquire French biometrics company, ADMA Public Security, among others. In North America, growth was driven by Compassexicon's financial economics and antitrust businesses, supported by headline cases such as the Open AI engagement Steve mentioned. The sequential increase in adjusted segment EBITDA was due to higher revenues and lower compensation as we had some 1Q compensation items that did not recur. Tech's 18.4% revenue growth year-over-year was driven by increased demand for M&A-related second request services. As you might remember, Q2 of 2025 was an unusually slow quarter for M&A-related second request with a number of paused or canceled engagements resulting from the change in the U.S. administration. Stratcom also delivered a solid quarter. Excluding pass-through revenues, Stratcom's revenues increased 5.4%, primarily due to higher demand for corporate reputation services. Worth noting, Stratcom's results reflect the strength of our multiyear investments to build out our higher-margin event-driven offering such areas as prices, cyber, M&A and activism, including working with Corp Fin on restructurings for Wolfspeed and Spirit Airlines and the mega mergers of McCormick and Unilever and Skyworks and Qorvo as well as high-profile activism work such as Lululemon. Now turning to key cash flow and balance sheet items. Net cash provided by operating activities of $152.3 million compared to $55.7 million in Q2 of 2025. The increase was primarily due to higher cash collections and lower forgivable loan issuances and income tax payments, which was partially offset by higher operating expenses and compensation payments. During the quarter, we repurchased 2.6 million shares at an average price per share of $150.84 for a total cost of $390.9 million. We made those purchases based on our assessment of long-term value and available balance sheet capacity while continuing to fund investments in talent. As of June 30, 2026, approximately $344 million remained available for share repurchases under our share repurchases program. Turning to our full year 2026 guidance. Year-to-date, our revenues are up 7% year-over-year or 10% if you exclude e-com. As such, we are reaffirming our guidance for revenues of between $3.94 billion and $4.1 billion. While we're maintaining our revenue guidance, we are lowering our GAAP EPS guidance to between $8.70 and $9.30, which compares to the prior range of between $8.90 and $9.60. We expect adjusted EPS to be between $9.10 and $9.70. While the first quarter also included litigation-related expenses, the $0.40 difference between GAAP and adjusted EPS reflects our second quarter extraordinary litigation-related expenses of $0.17 and our current estimate for these expenses in the second half of the year. Our updated guidance incorporates the following key assumptions. First, e-com exceeded our expectations in Q2. The sequential improvement demonstrated by our Compass Lexicon business was meaningful and broad-based. As discussed last quarter, the cost structure is already in the P&L. And while we don't expect another sequential step-up, we do expect year-over-year growth in revenue and adjusted segment EBITDA in the second half of 2026. Second, we are an event-driven business, and therefore, our results can be lumpy due to factors such as jobs rolling off and new jobs rolling on, which can be exacerbated by seasonality as well as market activity in key areas such as restructuring, M&A and regulatory activity. Although there are geographical differences around the world, the restructuring market has been softer year-to-date. Despite the weaker market backdrop, our global restructuring revenues increased 8% compared to the first half of 2025 as we continue to increase our market share, especially in large company side matters. This is once again evidenced by our leading positions in league tables as we remain well positioned to win the most complex matters globally. For M&A, the current U.S. administration's more deal-friendly posture has boosted mega deal volume, driving higher demand for our second request services and tech and M&A-related antitrust services and e-com. However, faster clearances, more negotiated remedies and fewer litigated challenges may reduce the duration and intensity of our engagement. In Corp Fin and Straton, we believe we are taking share as we continue to bring more of our services to our clients across the deal life cycle. For FLC, which also benefits from high levels of regulatory scrutiny, we have seen slower markets under the current U.S. administration. However, we have won our share of engagements or more on the largest, most complex cases, and our teams have been quick to pivot to support areas of evolving client needs. Third, we're differentiated by our low leverage expert-based model, and we continue to see strong opportunities to invest in great talent. We've announced 45 SMB and affiliate hires year-to-date in key businesses such as transactions, transformation, corporate reputation, disputes, cybersecurity and risk and investigations. Additionally, we're poised to welcome more than 270 graduates in the third quarter as part of our annual class of hires. Fourth, we expect SG&A expenses for 2026 to be approximately $70 million higher than 2025, which compares to our previous expectation of $60 million higher. The increase is primarily due to an expectation for higher legal expenses, which include extraordinary litigation-related expenses. Sequentially, we expect SG&A in Q3 to be approximately $12 million lower than Q2. Lastly, we now expect our full year effective tax rate to be between 21% and 23%, which compares to the prior range of between 22% and 24%. Our record revenues this quarter reflect the powerful platform, the unique set of offerings that we have as well as how relevant our people are in an increasingly complex evolving landscape. While this business experiences its share volatility or zigs and zags as Steve said, I am energized by the strong fundamentals supporting our long-term growth trajectory. That confidence is reinforced by a very strong balance sheet, a differentiator that's uncommon in our industry. I am excited about our opportunities ahead with the continued focus on transparent engagement with our shareholders and creating sustainable value over time. And with that, we'll open the call up for your questions.

[Operator Instructions] And today's first question comes from James Yaro at Goldman Sachs.

Steve, I was hoping you might be able to expand a bit more on your comments around the Middle East impacts on the business. And specifically, what I think would be helpful might just be a little bit more granularity on how the geopolitical disruptions are weighing on the business in the region. And then I guess, as we look ahead, could that at some point flip to a tailwind for your businesses and why?

Yes. Look, it's a good question. Look, eventually, could it be a tailwind in our business? Of course. We believe our business is currently functioning well below the capacity of the team we have there, and it's a terrific team. The real question is when the heck does that happen? And I think it's really, really difficult to foresee. I mean, first of all, and the manifestations of the geopolitical conflicts are different, right? For some period of time, you have people exiting for fear of safety, then they came back. You have -- sometimes some of the buyers are suspending purchases at this point in time, and then they authorize the purchases, but then they suspend the start of assignments. And this thing -- you get reports that change weekly on a weekly basis. And of course, we get reports from our political leaders that suggest that different weekly forecasts of the end of a geopolitical conflict. So I think it's incredibly hard to forecast this. And it's not that we don't believe that there would be a long-term tailwind. My general experience over 1 million years now in professional services over an extended period of time, if you have the best team, you win because there is a need in those markets. But forecasting when is hard. And so I think we are being very cautious about saying we don't see a turn anytime near term. I hope we're wrong, James, for the world, not just for...

That's really helpful. Just turning quickly to restructuring, obviously, robust in the quarter again. We are seeing a growing list of macro and geopolitical considerations that I would expect could impact restructuring, whether it's private credit, the global conflict as well as software issues. Could you just give us the mark-to-market on what that means for the restructuring outlook from here and whether this has started to improve?

Yes. Look, let me -- I'm going to let -- since my crystal ball always fails, I'm going to let Angela try out her crystal ball. But let me just agree with your more macro points. We believe the macro forces out there are incredibly favorable towards this business over the next while. We believe that there are the macro forces out there have been favorable to this business for the last while, and there's been a lot of liability management exercises that have postponed potential restructurings, but not always solved the problem. So we believe the position we've created is obviously generating good results, but there's real upside. The question of when is where the crystal ball comes in, and I've never been that good. is your crystal ball better as well?

I hope that we'll see. I mean, to echo what Steve is saying, while we wouldn't characterize the environment as a broad-based restructuring boom currently, we are seeing deep pockets of activity, and we're encouraged by the quality and the size of opportunities in the market. As we've covered, even though the overall restructuring activity remains uneven and it's a little softer year-to-date, our global restructuring revenues grew 8% in the first year versus the prior year, and we do continue to win some of the largest and the most complex matters. So that gives us confidence in our market position to continue to win those larger cases.

That's very clear. Just one last one for me. Just wanted to touch a little bit on the repurchase activity. You once again had strong repurchase activity in the quarter. Could you just update us on your capital deployment priorities from here if the stock price stays at this level, let's say? And maybe you could weigh that up against your appetite to add leverage from here?

Yes, sure. As we've been in the past, we've always been opportunistic with our share buybacks, and we don't have a specific purchase target short term or long term. In 2025 and the first quarter -- second quarter of this year, we saw opportunities to purchase -- and as we've said in the past, when we believe the market has misunderstood or misunderstanding or mispricing the potential of our business, we'll invest pretty heavily. So as we've seen with our buybacks in 2017 and in 2020, we've had a pretty good outcome so far. Asking about our capital allocation strategy, I think it has not changed. We'll continue -- we are committed to our current disciplined capital allocation strategy, which goes in the order of cash to fund operations and investments for organic growth and then looking at M&A opportunities when available. We'll continue to repurchase shares on an opportunistic basis or we always have the option of paying down our debt. From a leverage perspective, we did upsize our revolver this quarter, as you've seen from $900 million to $1.5 billion. We view that as a position of strength, and it wasn't a necessity. Just to remind you, our revolver was due to become current later this year. And when I joined, it was a priority for me to get that refinanced. So when we had an opportunity to extend the maturity by 5 years, increase the size, all at improved economics, we thought it was a positive outcome to improve our financial position and increase flexibility. And given that we generate substantial EBITDA and free cash flow, we see that as prudent financial management as we can control the timing of our debt repayment as well.

And our next question today comes from Andrew Nicholas with William Blair.

I wanted to first touch on some of the prepared remarks around kind of legislative changes within merger reviews. I think the DOJ recently announced some changes there to accelerate the reviews and potentially reduce information requests. So I'm wondering if you could speak a little bit more to the puts and takes on that development to economic consulting and maybe any additional color you could provide on what impact you've seen from that to date?

Yes. Look, as of now, we haven't seen any major impact of that on our business to date. And we'll be monitoring this as we always monitor legislative changes. These sorts of changes happen with some frequency, and there are lots of other phenomenon going on as well that can affect the business. But as of now, we're not seeing any major impact.

Understood. And then for my follow-up, just on guidance. I think in past years, when you've made adjustments after the second quarter, you've narrowed the revenue range a little bit. It doesn't -- obviously, with reaffirming the outlook this quarter, you're not doing that in '26. So can you just kind of speak to why it's a little bit wider range of second half outcomes than is typical. I suspect some of that's Middle East. And Steve, you talked about just the fact that it's an event-driven business having some variability. But wondering if there's any anything else you could add there or make any comments on kind of segment level variability or where maybe the range of outcomes is especially wide at that level?