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FTI Consulting (FCN) Q1 Earnings Miss Estimates, Decline Y/Y

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FTI Consulting, Inc. (FCN - Free Report) delivered lower-than-expected first-quarter 2020 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same.

Quarterly adjusted EPS of $1.53 missed the Zacks Consensus Estimate by 4.4% and decreased 6.1% on a year-over-year basis. The bottom line was negatively impacted by an 18.5% increase in billable headcount, higher variable compensation, and elevated selling, general and administrative expenses, partially offset by increase in revenues, foreign-currency translation ("FX") remeasurement gains and a lower effective tax rate.

Total revenues of $604.6 million missed the consensus mark by 1.4%. However, the revenue figure increased 9.7% year over year. This increase was driven by higher demand in the Corporate Finance & Restructuring, Forensic and Litigation Consulting, and Technology business segments, partially muted by a demand decline in the Economic Consulting business segment.

Notably, FTI Consulting’s shares have rallied 47.9%, over the past year, significantly outperforming 1.7% growth of the industry it belongs to.

 Let’s check the numbers in detail.

Revenues by Segment

Corporate Finance & Restructuring’s revenues jumped 29.1% year over year to $207.7 million. The upside was driven by solid demand for restructuring, and business transformation and transaction services. The segment contributed 34% to total revenues.

Forensic and Litigation Consulting’s revenues increased 6.2% year over year to $147.6 million. The improvement came on the back of higher demand for data & analytics, disputes and investigations services. The segment contributed 24% to total revenues.

Strategic Communications’ revenues inched up 1.2% year over year to $58.4 million. This upside was fueld by an increase in demand for public affairs services. The segment contributed 10% to total revenues.

Technology’s revenues were up 14.4% year over year to $58.7 million. The upswing resulted from strong demand for global cross-border investigation, and merger and acquisition-related services. The segment contributed 10% to total revenues.

Economic Consulting’s revenues decreased 7.1% year over year to $132.1 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 22% to total revenues.

Operating Results

Adjusted EBITDA was $83.2 million, down 13.4% on a year-over-year basis. Adjusted EBITDA margin contracted 360 basis points (bps) year over year to 13.8%.

Balance Sheet and Cash Flow

FTI Consulting exited the first quarter with cash and cash equivalents of $223.1 million compared with the prior quarter’s $369.4 million. Long-term debt was $328.2 million compared with $275.6 million witnessed at the end of the previous quarter. The company used $123.6 million of net cash in operating activities and CapEx was $8.2 million in the March-end quarter. It spent $50.3 million to repurchase 450,198 shares during this period.

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

The Interpublic Group (IPG - Free Report) reported first-quarter 2020 adjusted earnings of 11 cents per share, which beat the consensus mark by 22.2% but remained flat year over year.

Equifax (EFX - Free Report) delivered first-quarter 2020 adjusted earnings of $1.40 per share, which outpaced the consensus mark by 8.5% and improved 16% on a year-over-year basis.

ManpowerGroup (MAN - Free Report) recorded first-quarter 2020 adjusted earnings of 71 cents per share, which missed the Zacks Consensus Estimate by 2.7% and plummeted 48.9% year over year.

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