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FTI Consulting (FCN) Q4 Earnings and Revenues Top Estimates

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FTI Consulting, Inc. (FCN - Free Report) delivered strong fourth-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate.

Adjusted earnings per share of $83 cents beat the Zacks Consensus Estimate by 32 cents and increased 6.4% on a year-over-year basis. The bottom line benefited from strong operating performance.

Total revenues of $505 million beat the consensus mark by $45 million and increased 8% year over year. The top line benefited from strength across all business segments.

Notably, shares of the company have surged 57% in the past year compared with 5.3% rise of the industry it belongs to.

Let’s check the numbers in detail.

Revenues by Segment

Corporate Finance & Restructuringsegment revenues increased 10.9% year over year to $144.8 million. The upside was driven by higher demand for business transformation and transactions services. The segment contributed 29% to total revenues.

Forensic and Litigation Consulting segment revenues increased 9.3% year over year to $132.1 million. The figure improved on the back of higher demand for construction solutions and dispute services. The segment contributed 26% to total revenues.

Strategic Communications segment revenues increased 6.7% year over year to $58 million. The uptick can be attributed to increase in retainer- and project-based revenues, primarily associated with public affairs as well as merger and acquisition-related services. The segment contributed 12% to total revenues.

Economic Consulting segment revenues increased 6.1% year over year to $128.4 million. The figure improved on the back of higher demand for antitrust and financial economics services.  The segment contributed 25% to total revenues.

Technology segment revenues increased 2% year over year to $41.7 million. The increase was driven by higher demand for consulting services, primarily associated with information governance, privacy and security services. However, the upside was partially offset by $2.8-million decline in licensing revenues related to the Ringtail divestiture. The segment contributed 8% to total revenues.

Operating Results

Adjusted EBITDA came in at $53.7 million, down 3.2% on a year-over-year basis. The downside was due to increase in higher compensation and other selling, general and administrative expenses (SG&A) expenses.  Adjusted EBITDA margin declined to 10.6% from 11.9% in the prior-year quarter.

Segment-wise, adjusted EBITDA margin for Corporate Finance & Restructuring declined to 16.8% from 19.7% in the year-ago quarter. Forensic and Litigation Consulting adjusted EBITDA margin decreased to 16.3% from 19.5% in the prior-year quarter. The same for Strategic Communications was 19.5% compared with 19.4% in the year-ago quarter. Economic Consulting adjusted EBITDA margin fell to 9.4% from 11.8% in the prior-year quarter. The same for Technology declined to 6.4% from 7.3% in the year-ago quarter.

Operating income came in at $44.8 million, up 29.8% from the prior-year quarter. Operating margin rose to 8.9% from 7.4% in the year-ago quarter. 

Balance Sheet and Cash Flow

FTI Consulting exited fourth-quarter 2018 with cash and cash equivalents of $312.1 million compared with $505.9 million in the prior quarter. Long-term debt was $265.6 million compared with $263.3 million at the end of the prior quarter.

The company generated $144.4 million of net cash from operating activities and spent $4.4 million in capex in the quarter. It spent $26.5 million to repurchase 418,728 shares in the quarter.

2019 Guidance

Management expects revenues in the range of $2.00-$2.10 billion, the mid-point ($2.05 billion) of which is higher than the Zacks Consensus Estimate of $2.01 billion.

Adjusted EPS is anticipated in the range of $3.50-$4.00, the mid-point ($3.75) of which is lower than the Zacks Consensus Estimate of $3.77.

Zacks Rank & Upcoming Releases

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

Investors interested in the broader Zacks Business Services sector are keenly awaiting reports of key players like Charles River Associates (CRAI - Free Report) , Stericycle (SRCL - Free Report) and FactSet (FDS - Free Report) . While Charles River Associates and Stericycle will release fourth-quarter 2018 results on Feb 28, FactSet will post second-quarter fiscal 2019 results on Mar 26.

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