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FTI Consulting (FCN) Q1 Earnings Top Estimates, View Intact

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FTI Consulting, Inc. (FCN - Free Report) reported strong first-quarter 2018 results with revenues and earnings surpassing the Zacks Consensus Estimate.

FTI Consulting reported earnings per share of $1.04 in first-quarter 2018 compared with 34 cents in the year-ago quarter. Moreover, the company’s bottom line also surpassed the Zacks Consensus Estimate of 65 cents. The bottom-line growth can be attributed to higher revenue growth, operational efficiency and the U.S. tax reform that decreased the company’s effective tax rate to 28.2% from 36% in the year-ago quarter.

Total first-quarter 2018 revenues of $497.77 million beat the Zacks Consensus Estimate of $456 million. The figure was up 11.5% year over year. The top line benefited from strength across Corporate Finance and Restructuring, Forensic and Litigation Consulting and Strategic Communications segments.

Revenues by Segment

Corporate Finance & Restructuring segment revenues increased 35.0% year over year to $142.9 million. Higher demand for restructuring, business transformation and transaction services drove segment revenues. It accounted for 28.7% of total revenues.

Forensic and Litigation Consulting segment revenues increased 14.9% year over year to $128.0 million. Segment revenues grew on the back of higher demand for construction solutions, global investigations and health solutions services. It contributed 25.7% of total revenues.

Strategic Communications segment revenues 20.7% year over year to $52.8 million. Higher retained revenues from public affairs and corporate reputation services in Europe, the Middle East and Africa boosted segment revenues. It accounted for 10.6% of total revenues.

Economic Consulting segment revenues decreased 4.4% year over year to $133.1 million. The decrease in revenues was due to lower demand for antitrust services in North America. It contributed 26.7% of total revenues.

Technology segment revenues decreased 11.2% year over year to $40.9 million. The decline was due to lower demand for managed review services. It accounted for 8.2% of total revenues.

Operating Results

Adjusted EBITDA & Margins

Adjusted EBITDA in first-quarter 2018 came in at $72.3 million compared with $38.3 million in the prior-year quarter. Adjusted EBITDA margin was 14.5% in the first quarter of 2018 compared with 8.6% in the year-ago quarter.

Adjusted EBITDA margin for Corporate Finance & Restructuring was 24.4% in first-quarter 2018 compared with 9.7% in the year-ago quarter. Adjusted EBITDA margin for Forensic and Litigation Consulting was 20.1% in first-quarter 2018 compared with 12.1% in the year-ago quarter. Adjusted EBITDA margin for Strategic Communications was 18.7% in first-quarter 2018 compared with 9.7% in the year-ago quarter. Adjusted EBITDA margin for Economic Consulting in first-quarter 2018 was 14.4%, flat with the year-ago quarter. Adjusted EBITDA margin for Technology was 14% in first-quarter 2018 compared with 16.9% in the year-ago quarter.

Operating Income

Operating income in first-quarter 2018 was $62.3 million compared with $27.1 million in the year-ago quarter. Operating margin was 12.5% compared with 6.1% in the year-ago quarter.

FTI Consulting, Inc. Price, Consensus and EPS Surprise

 

FTI Consulting, Inc. Price, Consensus and EPS Surprise | FTI Consulting, Inc. Quote

Balance Sheet and Cash Flow

FTI Consulting exited first-quarter 2018 with cash and cash equivalents of $152.04 million compared with $120.96 million in the year-ago quarter. As of Mar 31, 2018, long-term debt was $441.47 million compared with $396.28 million at the end of 2017.

The company used $69.2 million of cash in operating activities in the reported quarter compared with $93.1 million in the year-ago quarter. The year-over-year reduction in cash usage in operating activities resulted from the increase in cash collections.

During the reported quarter, FTI Consulting repurchased 337,075 shares for $14.2 million. As of Mar 31, 2018, the company had almost $99.1 million available for share buyback under its $300 million share repurchase authorization.

2018 Outlook

FTI Consulting reaffirmed its target for 2018. The company expects revenues to be in the range of $1.825-$1.875 billion. The Zacks Consensus Estimate stands at $1.85 billion, well within the guided range.

The company expects current year earnings to be between $2.35 and $2.65. The Zacks Consensus Estimate of $2.62 falls within the guided range.

Further, the company expects effective tax rate to be between 28% and 31% for the remainder of 2018.

Zacks Rank & Other Releases

FTI Consulting currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Business Services sector are keenly awaiting first-quarter earnings reports from key players like Fiserv, Inc. , Verisk Analytics, Inc. (VRSK - Free Report) and Automatic Data Processing (ADP - Free Report) . While Fiserv and Verisk Analytics are slated to report quarterly numbers on May 1, Automatic Data Processing will release its results on May 2.

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