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FTI Consulting (FCN) Q4 Earnings Lag Estimates, Revenues Beat

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FTI Consulting, Inc. (FCN - Free Report) delivered mixed fourth-quarter 2019 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same.

The stock declined 6.8% in the after-hours trading in response to the earnings miss.

Quarterly adjusted EPS of 80 cents missed the Zacks Consensus Estimate by 13% and decreased 3.6% on a year-over-year basis. The bottom line was negatively impacted by FX remeasurement losses, resulting from the strengthening of the British Pound and Euro against the US dollar.

Total revenues of $602.2 million beat the consensus mark by 13.6% and increased 19.3% year over year. The increase was driven by higher demand across all business segments.

Notably, FTI Consulting’s shares have gained 46.6% over the past year, significantly outperforming 19.8% growth of the industry it belongs to.

 

 

Let’s check the numbers in detail.

Revenues by Segment

Corporate Finance & Restructuring’srevenues increased 25.1% year over year to $181.1 million. The upside was driven by higher demand for restructuring, and business transformation and transaction services, and higher success fees. The segment contributed 32% to total revenues.

Forensic and Litigation Consulting’srevenues increased 13.8% year over year to $150.3 million. The improvement came on the back of higher demand for disputes and investigations services. The segment contributed 24% to total revenues.

Strategic Communications’ revenues increased 14.3% year over year to $66.3 million. The upside was driven by an increase in pass-through revenues and higher project-based revenues in North America and EMEA, primarily associated with corporate reputation services. The segment contributed 10% to total revenues.

Economic Consulting’s revenues increased 19.2% year over year to $153.1 million. The increase was supported by higher demand for merger and acquisition-related antitrust, and financial economics services. Higher realization for international arbitration services also drove the segment’s revenues. The segment contributed 24% to total revenues.

Technology’s revenues rose 23.5% year over year to $51.5 million. The increase was driven by higher demand for global cross-border and merger, and acquisition-related “second request” services.

FTI Consulting, Inc. Revenue (TTM)

 

Operating Results

Adjusted EBITDA was $58.3 million, up 8.6% on a year-over-year basis. The increase was driven by higher revenues across all business segments, partially offset by higher compensation associated with an increase in variable compensation, a 17.8% increase in billable headcount, and higher SG&A expenses. Adjusted EBITDA margin declined 90 basis points (bps) year over year to 9.7%.

Balance Sheet and Cash Flow

FTI Consulting exited the quarter with cash and cash equivalents of $369.4 million compared with $258.5 million in the prior quarter. Long-term debt was $275.6 million compared with $273.1 million at the end of the prior quarter.

The company generated $141 million of net cash from operating activities and CapEx was $15 million in the quarter. It spent $28 million to repurchase 259,823 shares in the quarter.

2020 Guidance

Management expects adjusted EPS of $5.5-$6, mid-point ($5.75) of which is higher than the Zacks Consensus Estimate of $5.72.

The company expects revenues of $2.45-$2.55 billion, higher than the Zacks Consensus Estimate of $2.37 billion.

Zacks Rank & Stocks to Consider

FTI Consulting currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are S&P Global (SPGI - Free Report) , NV5 Global (NVEE - Free Report) and TransUnion (TRU - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings (three to five years) growth rate for S&P Global, NV5 Global and TransUnion is estimated at 10%, 20% and 12.9%, respectively.

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