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FTI Consulting, Inc. (FCN - Free Report) delivered impressive fourth-quarter 2020 results, with both earnings and revenues beating the Zacks Consensus Estimate.
The better-than-expected results, however, failed to impress the market as there has not been any major price change since the earnings release on Feb 25. Notably, FTI Consulting’s shares have declined 1.5% in the past six months against 6.8% growth of the industry it belongs to.
Adjusted earnings per share of $1.61 (excluding 4 cents from non-recurring item) surpassed the Zacks Consensus Estimate by 43.8% and increased more than 100% on a year-over-year basis. The bottom line was positively impacted by decline in selling, general and administrative expenses, and higher revenues and lower effective tax rate.
Total revenues of $626.6 million beat the consensus mark by 3.5% and increased 4% on a year-over-year basis. This increase was driven by higher demand in the Corporate Finance & Restructuring, and Economic Consulting and Technology segments, partially offset by lower demand in the Forensic and Litigation Consulting, and Strategic Communications segments.
Revenues by Segment
Corporate Finance & Restructuring’s revenues jumped 21.4% year over year to $219.8 million. The upside was driven by solid demand for restructuring services and rise in success fees. The segment contributed 35% to total revenues.
Forensic and Litigation Consulting’s revenues declined 15.4% year over year to $127.2 million. The decrease in revenues was primarily due to lower demand for disputes and investigations services. The segment contributed 20% to total revenues.
Strategic Communications’ revenues declined 8.8% year over year to $60.5 million. This downtick was due to a $4.8-million decline in pass-through revenues. The segment contributed 10% to total revenues.
Technology’s revenues increased 13.8% year over year to $58.6 million. The upside resulted from higher demand for mergers and acquisitions (M&A)-related second request and litigation services. The segment contributed 9% to total revenues.
Economic Consulting’s revenues were up 4.9% year over year to $160.5 million. The growth was due to higher demand and realized bill rates for M&A and non-M&A-related antitrust services, partially offset by lower demand for financial economics services. The segment contributed 26% to total revenues.
Operating Results
Adjusted EBITDA was $82.3 million, up 41.2% on a year-over-year basis. Adjusted EBITDA margin expanded 340 basis points year over year to 13.1%.
FTI Consulting, Inc. Price, Consensus and EPS Surprise
FTI Consulting exited the quarter with cash and cash equivalents of $295 million compared with the prior quarter’s $304.7 million. Long-term debt was $286.1 million compared with $308.5 million witnessed at the end of the previous quarter. The company generated $186.1 million of net cash from operating activities and CapEx was $9.2 million. It spent $169.2 million to repurchase 1,598,540 shares during this period.
2021 Guidance
The company expects 2021 revenues to be between $2.575 billion and $2.7 billion, higher than the current Zacks Consensus Estimate of $2.52 billion. Adjusted EPS is expected between $5.80 and $6.50, the midpoint ($6.15) of which is higher than the current Zacks Consensus Estimate of $5.82.
FTI Consulting currently carries a Zacks Rank #3 (Hold).
Rollins’ (ROL - Free Report) fourth-quarter 2020 adjusted earnings of 13 cents per share came ahead of the consensus estimate as well as the year-ago quarter’s figure by 18.2%. Revenues of $536.3 million beat the consensus mark by 1.7% and rose 6% year over year.
IHS Markit’s fourth-quarter fiscal 2020 adjusted earnings per share of 72 cents beat the Zacks Consensus Estimate by 7.5% and increased 11% on a year-over-year basis. Total revenues came in at $1.11 billion, marginally missing the consensus mark and declining 1% from the year-ago quarter’s on a reported basis.
Automatic Data Processing’s (ADP - Free Report) second-quarter fiscal 2021 adjusted earnings per share of $1.52 beat the consensus mark by 17.8% and were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and moved up 0.7% year over year.
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FTI Consulting (FCN) Q4 Earnings Beat Estimates, Increase Y/Y
FTI Consulting, Inc. (FCN - Free Report) delivered impressive fourth-quarter 2020 results, with both earnings and revenues beating the Zacks Consensus Estimate.
The better-than-expected results, however, failed to impress the market as there has not been any major price change since the earnings release on Feb 25. Notably, FTI Consulting’s shares have declined 1.5% in the past six months against 6.8% growth of the industry it belongs to.
Adjusted earnings per share of $1.61 (excluding 4 cents from non-recurring item) surpassed the Zacks Consensus Estimate by 43.8% and increased more than 100% on a year-over-year basis. The bottom line was positively impacted by decline in selling, general and administrative expenses, and higher revenues and lower effective tax rate.
Total revenues of $626.6 million beat the consensus mark by 3.5% and increased 4% on a year-over-year basis. This increase was driven by higher demand in the Corporate Finance & Restructuring, and Economic Consulting and Technology segments, partially offset by lower demand in the Forensic and Litigation Consulting, and Strategic Communications segments.
Revenues by Segment
Corporate Finance & Restructuring’s revenues jumped 21.4% year over year to $219.8 million. The upside was driven by solid demand for restructuring services and rise in success fees. The segment contributed 35% to total revenues.
Forensic and Litigation Consulting’s revenues declined 15.4% year over year to $127.2 million. The decrease in revenues was primarily due to lower demand for disputes and investigations services. The segment contributed 20% to total revenues.
Strategic Communications’ revenues declined 8.8% year over year to $60.5 million. This downtick was due to a $4.8-million decline in pass-through revenues. The segment contributed 10% to total revenues.
Technology’s revenues increased 13.8% year over year to $58.6 million. The upside resulted from higher demand for mergers and acquisitions (M&A)-related second request and litigation services. The segment contributed 9% to total revenues.
Economic Consulting’s revenues were up 4.9% year over year to $160.5 million. The growth was due to higher demand and realized bill rates for M&A and non-M&A-related antitrust services, partially offset by lower demand for financial economics services. The segment contributed 26% to total revenues.
Operating Results
Adjusted EBITDA was $82.3 million, up 41.2% on a year-over-year basis. Adjusted EBITDA margin expanded 340 basis points year over year to 13.1%.
FTI Consulting, Inc. Price, Consensus and EPS Surprise
FTI Consulting, Inc. price-consensus-eps-surprise-chart | FTI Consulting, Inc. Quote
Balance Sheet and Cash Flow
FTI Consulting exited the quarter with cash and cash equivalents of $295 million compared with the prior quarter’s $304.7 million. Long-term debt was $286.1 million compared with $308.5 million witnessed at the end of the previous quarter. The company generated $186.1 million of net cash from operating activities and CapEx was $9.2 million. It spent $169.2 million to repurchase 1,598,540 shares during this period.
2021 Guidance
The company expects 2021 revenues to be between $2.575 billion and $2.7 billion, higher than the current Zacks Consensus Estimate of $2.52 billion. Adjusted EPS is expected between $5.80 and $6.50, the midpoint ($6.15) of which is higher than the current Zacks Consensus Estimate of $5.82.
FTI Consulting currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
Rollins’ (ROL - Free Report) fourth-quarter 2020 adjusted earnings of 13 cents per share came ahead of the consensus estimate as well as the year-ago quarter’s figure by 18.2%. Revenues of $536.3 million beat the consensus mark by 1.7% and rose 6% year over year.
IHS Markit’s fourth-quarter fiscal 2020 adjusted earnings per share of 72 cents beat the Zacks Consensus Estimate by 7.5% and increased 11% on a year-over-year basis. Total revenues came in at $1.11 billion, marginally missing the consensus mark and declining 1% from the year-ago quarter’s on a reported basis.
Automatic Data Processing’s (ADP - Free Report) second-quarter fiscal 2021 adjusted earnings per share of $1.52 beat the consensus mark by 17.8% and were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and moved up 0.7% year over year.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>