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FTI Consulting Inc.’s (FCN - Analyst Report) reported second quarter 2012 adjusted earnings of 60 cents per share, which comprehensively beat the Zacks Consensus Estimate of 55 cents and the year-ago earnings of 57 cents per share.

Total revenue in the reported quarter fell 1.1% year over year to $396.2 million, due to unfavorable currency impact and also fell short of the Zacks Consensus Estimate of $399.0 million. The results were also lower due to weak performance of the Technology, Forensic and Litigation Consulting, and Strategic Communications segment, partially offset by improved performance of Economics Consulting and Corporate Finance/Restructuring segment.

Adjusted EBITDA during the quarter was up 8.3% to $66.6 million from $61.5 million in the year-ago quarter.

Segment Details

Corporate Finance/Restructuring reported improved results with revenues climbing 10.2% to $112.3 million in the second quarter, due to more bankruptcies in North America leading to increased demands for restructuring services as well as higher demand across the Asia-Pacific region.

Economic Consulting revenues climbed 5.3% to $99.5 million in the quarter. The upside was aided by strong demand for antitrust and M&A practice, and growth in financial and security related litigation, particularly in North America.

Forensic and Litigation Consulting revenue declined 3.5% to $90.1 million as a result of sluggish demand in North America and EMEA, partially offset by greater demand for global investigation as well as data analytics practice in Latin America.  

Technology segment revenues fell 16.5% year over year to $47.7 million, due to weaker demand for processing of electronically stored information and lesser pricing for on-demand hosting and consulting services.

Strategic Communications revenues dipped 12.9% year over year to $46.6 million in the quarter, due to lower M&A-related projects in Asia-Pacific and continued softness in EMEA and North America, partially offset by increased activity in Latin America.

Outlook

For 2012, the company expects revenues to be in the range of $1.56 billion and $1.58 billion and adjusted EPS to be between $2.15 and $2.35.

Liquidity

As of June 30 2012, FTI Consulting’s cash and cash equivalents (excluding restricted cash) totaled $166.0 million, compared with $264.4 million as of December 31, 2011. Shareholders’ equity totaled $1,150.3 million as of June 30, 2012, compared with $1,106.2 million as of December 31, 2011.

Our Take

Over the last 7 days, estimates have not budged, implying the lack of near-term catalysts. However, management’s earnings guidance for 2012 is below the Zacks Consensus Estimates, indicating a fall in estimates in the coming days, despite better-than-expected results and the company’s cost saving efforts through restructuring. The Zacks Consensus Estimates for 2012 and 2013 are pegged at $2.28 and $2.77, respectively.

FTI Consulting competes mainly with CRA International Inc. (CRAI - Analyst Report) and Navigant Consulting Inc. (NCI - Analyst Report). FTI Consulting currently retains a Zacks #3 Rank, which translates into a short-term HOLD rating. We are also maintaining our long-term Underperform recommendation on the stock.

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