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FTI Consulting (FCN) Q2 Earnings Beats Estimates, Down Y/Y
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FTI Consulting, Inc. (FCN - Free Report) delivered better-than-expected second quarter 2020 results, with both earnings and revenue beating the Zacks Consensus Estimate.
Quarterly adjusted earnings per share (EPS) of $1.32 (excluding 5 cents from non-recurring item) surpassed the Zacks Consensus Estimate by 30.7% but declined 23.7% on a year-over-year basis. The bottom line was negatively impacted by an 18.2% increase in billable headcount, higher variable compensation partially offset by decline in selling, general and administrative expenses as well as lower effective tax rate.
Total revenues of $607.9 million beat the consensus mark by 7.9% and increased marginally on a year-over-year basis. This increase was driven by higher demand in the Corporate Finance & Restructuring segment, nearly muted by lower demand in the Forensic and Litigation Consulting and Technology business segments
Notably, FTI Consulting’s shares have rallied 17.8% in the past year compared with 18.4% growth of the industry it belongs to.
Let’s check the numbers in detail.
Revenues by Segment
Corporate Finance & Restructuring’s revenues jumped 29.5% year over year to $246 million. The upside was driven by solid demand for restructuring services. The segment contributed 40.5% to total revenues.
Forensic and LitigationConsulting’s revenues declined 27.1% year over year to $106.4 million. The decrease in revenues was primarily due to lower demand for investigations and disputes services. The segment contributed 17.5% to total revenues.
Strategic Communications’ revenues declined 3.8% year over year to $56.9 million. This downtick was due to a $1.9-million decline in pass-through revenues. The segment contributed 9.4% to total revenues.
FTI Consulting, Inc. Price, Consensus and EPS Surprise
Technology’s revenues dropped 15.4% year over year to $47.1 million. The downside resulted from lower demand for litigation and global cross-border investigation services as well as lower revenue from completion of transition services. The segment contributed 7.7% to total revenues.
Economic Consulting’s revenues fell 2.6% year over year to $151.1 million. The decline was due to lower demand for non-merger and acquisition-related antitrust, and financial economics services as well as lower realized rates for international arbitration services. The segment contributed 24.9% to total revenues.
Operating Results
Adjusted EBITDA was $75.8 million, down 22% on a year-over-year basis. Adjusted EBITDA margin contracted 350 basis points year over year to 12.5%.
Balance Sheet and Cash Flow
FTI Consulting exited the second quarter with cash and cash equivalents of $304.2 million compared with the prior quarter’s $223.1 million. Long-term debt was $315.8 million compared with $328.2 million witnessed at the end of the previous quarter. The company generated $153 million of net cash from operating activities and CapEx was $5.2 million. It spent $51 million to repurchase 470,853 shares during this period.
FTI Consulting anticipates its full year 2020 Adjusted EPS in the range of $5.50-$6.00. The midpoint of the guidance ($5.75 per share) is above the Zacks Consensus Estimate, which is pegged at $5.61 per share. Revenues for 2020 is expected between $2.45 billion and $2.55 billion. The midpoint of the range ($2.5 billion) stands above the Zacks Consensus Estimate of $2.46 billion.
Performance of Other Business Services Companies
Equifax (EFX - Free Report) reported better-than-expected second-quarter 2020 adjusted earnings of $1.60 per share, which beat the Zacks Consensus Estimate by 22.1% and improved 14.3% on a year-over-year basis.
IQVIA Holdings (IQV - Free Report) reported second-quarter 2020 adjusted earnings per share of $1.18, which beat the consensus mark by 12.4% but fell 22.9% on a year-over-year basis.
Robert Half (RHI - Free Report) reported second-quarter 2020 earnings of 41 cents per share beat the consensus mark by 17% but were down 58% year over year.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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FTI Consulting (FCN) Q2 Earnings Beats Estimates, Down Y/Y
FTI Consulting, Inc. (FCN - Free Report) delivered better-than-expected second quarter 2020 results, with both earnings and revenue beating the Zacks Consensus Estimate.
Quarterly adjusted earnings per share (EPS) of $1.32 (excluding 5 cents from non-recurring item) surpassed the Zacks Consensus Estimate by 30.7% but declined 23.7% on a year-over-year basis. The bottom line was negatively impacted by an 18.2% increase in billable headcount, higher variable compensation partially offset by decline in selling, general and administrative expenses as well as lower effective tax rate.
Total revenues of $607.9 million beat the consensus mark by 7.9% and increased marginally on a year-over-year basis. This increase was driven by higher demand in the Corporate Finance & Restructuring segment, nearly muted by lower demand in the Forensic and Litigation Consulting and Technology business segments
Notably, FTI Consulting’s shares have rallied 17.8% in the past year compared with 18.4% growth of the industry it belongs to.
Let’s check the numbers in detail.
Revenues by Segment
Corporate Finance & Restructuring’s revenues jumped 29.5% year over year to $246 million. The upside was driven by solid demand for restructuring services. The segment contributed 40.5% to total revenues.
Forensic and LitigationConsulting’s revenues declined 27.1% year over year to $106.4 million. The decrease in revenues was primarily due to lower demand for investigations and disputes services. The segment contributed 17.5% to total revenues.
Strategic Communications’ revenues declined 3.8% year over year to $56.9 million. This downtick was due to a $1.9-million decline in pass-through revenues. The segment contributed 9.4% to total revenues.
FTI Consulting, Inc. Price, Consensus and EPS Surprise
FTI Consulting, Inc. price-consensus-eps-surprise-chart | FTI Consulting, Inc. Quote
Technology’s revenues dropped 15.4% year over year to $47.1 million. The downside resulted from lower demand for litigation and global cross-border investigation services as well as lower revenue from completion of transition services. The segment contributed 7.7% to total revenues.
Economic Consulting’s revenues fell 2.6% year over year to $151.1 million. The decline was due to lower demand for non-merger and acquisition-related antitrust, and financial economics services as well as lower realized rates for international arbitration services. The segment contributed 24.9% to total revenues.
Operating Results
Adjusted EBITDA was $75.8 million, down 22% on a year-over-year basis. Adjusted EBITDA margin contracted 350 basis points year over year to 12.5%.
Balance Sheet and Cash Flow
FTI Consulting exited the second quarter with cash and cash equivalents of $304.2 million compared with the prior quarter’s $223.1 million. Long-term debt was $315.8 million compared with $328.2 million witnessed at the end of the previous quarter. The company generated $153 million of net cash from operating activities and CapEx was $5.2 million. It spent $51 million to repurchase 470,853 shares during this period.
FTI Consulting currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2020 Guidance Restored
FTI Consulting anticipates its full year 2020 Adjusted EPS in the range of $5.50-$6.00. The midpoint of the guidance ($5.75 per share) is above the Zacks Consensus Estimate, which is pegged at $5.61 per share. Revenues for 2020 is expected between $2.45 billion and $2.55 billion. The midpoint of the range ($2.5 billion) stands above the Zacks Consensus Estimate of $2.46 billion.
Performance of Other Business Services Companies
Equifax (EFX - Free Report) reported better-than-expected second-quarter 2020 adjusted earnings of $1.60 per share, which beat the Zacks Consensus Estimate by 22.1% and improved 14.3% on a year-over-year basis.
IQVIA Holdings (IQV - Free Report) reported second-quarter 2020 adjusted earnings per share of $1.18, which beat the consensus mark by 12.4% but fell 22.9% on a year-over-year basis.
Robert Half (RHI - Free Report) reported second-quarter 2020 earnings of 41 cents per share beat the consensus mark by 17% but were down 58% year over year.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>