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FTI Consulting Beats on Earnings

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Management services provider FTI Consulting, Inc. (FCN - Free Report) reported net income of $23.7 million or 58 cents per share in first quarter 2013 versus $18.4 million or 43 cents per share in the year-ago quarter. The healthy year-over-year increase in earnings is primarily attributable to a strong performance by the Economic Consulting group, accretive acquisitions, and stringent cost-cutting measures. The reported earnings exceeded the Zacks Consensus Estimate of 52 cents.

Excluding non-recurring items, adjusted earnings for the reported quarter were 59 cents per share compared to 43 cents in the year-earlier quarter.  
Total revenue in the reported quarter increased 3.0% year over year to a record first quarter high of $407.2 million. Adjusted EBITDA stood at $59.3 million compared to $54.0 million in the prior-year quarter.

Segment Details

Effective first quarter 2013, FTI Consulting restructured its reportable segments to better reflect changes in its business operations. The company combined healthcare practices from both its Corporate Finance/Restructuring and Forensic and Litigation Consulting segments under a single organizational structure within the Forensic and Litigation Consulting reportable segment.

Corporate Finance/Restructuring segment reported revenues of $99.1 million, up 2.3% year over year. The increase in revenues was buoyed by acquisition of an Australian restructuring business and higher demand for telecommunications, media and technology practice services.

Economic Consulting revenues improved 15.1% to $115.2 million in the quarter. The upside was aided by robust demand and higher average bill rates across the board, including financial economics, antitrust, European international arbitration, regulatory and valuation practices.

Forensic and Litigation Consulting segment revenue decreased 2.8% to $100.7 million due to lower demand for global financial and enterprise data analytics and core North American services.

Technology segment revenue was down 6.0% to $46.7 million, due to winding down of large investigation and litigation matters and lower pricing for consulting and services.

Strategic Communications segment revenues increased 1.0% year over year to $45.5 million in the quarter, driven by higher project income in North America and Europe, Middle East and Africa.


At quarter-end, FTI Consulting had cash and cash equivalents of $100.7 million with long-term debt of $717.0 million. In the reported quarter, the company repurchased 826,800 shares for $28.8 million. Additionally, the company completed a series of acquisitions aggregating $14.7 million.

Moving Forward

The company expects Economic Consulting segment to perform well in 2013 due to the potential merger and acquisition matters coupled with progress for industry initiatives, in Telecommunications, Media and Technology; Energy; Healthcare; Insurance; and Global Risk and Investigations. Additionally the company will continue its focus on organic growth and cash flow.

FTI Consulting currently has a Zacks Rank #3 (Hold). Other players in the industry worth reckoning include Huron Consulting Group Inc. (HURN - Free Report) , Stantec Inc. (STN - Free Report) , and Towers Watson & Co. , each having a Zacks Rank #2 (Buy).

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