FTI Consulting (FCN) Barely Moves Since Q2 Earnings Beat
FTI Consulting, Inc. FCN reported impressive second-quarter 2023 results, with both earnings and revenues beating the Zacks Consensus Estimate. The better-than-expected results, however, failed to impress the market as there has not been any major price change since the earnings release.
Adjusted earnings per share of $1.75 beat the consensus mark by 12.2% and increased 22.4% on a year-over-year basis. Total revenues of $864.6 million surpassed the consensus mark by 5.2% and increased 14.5% on a year-over-year basis.
The stock has gained 8.8% in the past six months compared with the 8.1% rise of the industry it belongs to.
FTI Consulting, Inc. Price, Consensus and EPS Surprise
FTI Consulting, Inc. price-consensus-eps-surprise-chart | FTI Consulting, Inc. Quote
Quarterly Numbers in Detail
Forensic and Litigation Consulting revenues increased 10.9% year over year to $182.2 million and beat our estimate of $173.4 million. The uptick was primarily driven by higher demand and realized bill rates for investigations and data & analytics services.
Strategic Communications revenues increased 15% year over year to $82.7 million and beat our estimate of $76.4 million. The upside can be attributed to higher demand for corporate reputation and public affairs services.
Technology revenues increased 25.3% year over year to $97.4 million and surpassed our estimate of $86.9 million. The improvement was primarily driven by higher demand for investigations and litigation services, partially offset by lower demand for information governance, privacy & security services.
Economic Consulting revenues increased 23% year over year to $201.8 million and surpassed our estimate of $184.3 million. The rise can be attributed to higher demand for non-merger and acquisition (“M&A”)-related antitrust, M&A-related antitrust and international arbitration services. Revenue growth was also driven by higher realized bill rates from the recognition of revenues previously deferred.
Corporate Finance & Restructuring revenues increased 8.4% year over year to $300.4 million and beat our estimate of 299.2 million. The uptick was primarily due to higher demand for restructuring and business transformation services, partially offset by a decrease in demand for transaction services.
Operating Results
Adjusted EBITDA came in at $100.2 million, up 31.5% on a year-over-year basis. This compares favorably with our expectation of an adjusted EBITDA of $87 million, up 14.3% year over year.
Adjusted EBITDA margin expanded 150 basis points (bps) year over year to 11.6%. This compares with our expectation of an adjusted gross profit margin of 10.6%, up 50 bps year over year.
Balance Sheet and Cash Flow
FTI Consulting exited the quarter with cash and cash equivalents of $203.5 million compared with the prior quarter’s $238.5 million. Long-term debt was $340.5 million compared with $360.6 million witnessed at the end of the previous quarter. FCN used $11 million of net cash in operating activities while CapEx was $11 million.
The company currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots of Some Service Providers
Omnicom OMC reported mixed second-quarter 2023 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
OMC’s earnings of $1.81 per share beat the consensus estimate by 0.6% and increased 7.7% year over year. Total revenues of $3.6 billion lagged the consensus estimate by 0.3% but increased 1.2% year over year.
Equifax EFX reported mixed second-quarter 2023 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same.
EFX’s adjusted earnings came in at $1.71 per share, beating the consensus mark by 2.4% but declining 18.2% from the year-ago figure. Total revenues of $1.32 billion missed the consensus estimate by 0.4% but matched the year-ago figure on a reported basis.
Interpublic’s IPG second-quarter 2023 earnings surpassed the Zacks Consensus Estimate while revenues missed the same.
IPG’s adjusted earnings came in at 74 cents per share, beating the Zacks Consensus Estimate by 23.3% but declining 17.5% on a year-over-year basis. Net revenues of $2.33 billion missed the consensus estimate by 2.9% and decreased 14.9% on a year-over-year basis. Total revenues of $2.67 billion decreased 2.6% year over year.
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