FTI Consulting Q2 Earnings Miss Estimates

Zacks

FTI Consulting, Inc’s (FCN) net income of $23.5 million or 58 cents per share in second quarter 2013 jumped over threefold from $7.7 million or 18 cents per share in the year-ago quarter. The healthy year-over-year increase in earnings was primarily attributable to a strong performance by the Economic Consulting group and accretive acquisitions. However, the reported earnings missed the Zacks Consensus Estimate of 61 cents.  

Total revenue in the reported quarter increased 4.6% year over year to $414.6 million. Total quarterly revenue beat the Zacks Consensus Estimate of $412 million. Adjusted EBITDA stood at $74.2 million compared with $66.6 million in the prior-year quarter.

Segment Details

Corporate Finance/Restructuring segment reported revenues of $96.7 million versus $96.2 million in the year-ago quarter. The marginal increase in revenues was buoyed by acquisitions, but partially offset by decline in bankruptcy and restructuring revenues in the North America and Asia Pacific regions.

Economic Consulting revenues improved 11.6% to $111.0 million in the quarter. The upside was aided by strong demand for the segment's antitrust litigation services in North America and Europe, Middle East and Africa (:EMEA) and international arbitration, regulatory and valuation practices in EMEA.

Forensic and Litigation Consulting segment revenues decreased 1.0% year over year to $105.1 million due to weak demand for the segment's North America investigations and trial services practices.

Technology segment revenues were up 7.3% to $51.2 million. The increase in revenues was driven by increased volume for M&A-related second request services and continued growth in EMEA and North America.

Strategic Communications segment revenues increased 8.4% year over year to $50.6 million in the quarter, driven by higher project income in North America and EMEA.

Liquidity

At quarter-end, FTI Consulting had cash and cash equivalents of $92.6 million with long-term debt of $717.0 million. Net cash provided by operating activities in the quarter was $21.7 million compared with $0.5 million in the prior-year quarter. Additionally, the company completed a series of acquisitions, aggregating $25.8 million.

Moving Forward

The company expects Economic Consulting segment to perform well in 2013 due to the potential merger and acquisition matters. Based on current market conditions, the company expects revenues to be in the range of $1.62 billion to $1.65 billion and adjusted EPS in the range of $2.10 to $2.20.

FTI Consulting has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth considering now in the industry include Information Services Group, Inc (III), carrying a Zacks Rank #1 (Strong Buy), and Franklin Covey Co. (FC) and The Hackett Group, Inc (HCKT), both carrying a Zacks Rank #2 (Buy).
 

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