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FTI Consulting (FCN) Beats on Q2 Earnings, Ups 2021 View

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·4 min read
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FTI Consulting, Inc. FCN delivered impressive second-quarter 2021 results, with both earnings and revenues beating the Zacks Consensus Estimate. The better-than-expected results failed to impress the market as there has not been any major price change since the earnings release.

Adjusted earnings per share of $1.74 surpassed the Zacks Consensus Estimate by 20.8% and increased 31.8% on a year-over-year basis. The bottom line was positively impacted by higher operating income.

Total revenues of $711.5 million beat the consensus mark by 10.4% and increased 17% on a year-over-year basis. This uptick was driven by positive impact of foreign currency translations, acquisition-related revenues and increased demand in Forensic and Litigation Consulting, Technology, and Economic Consulting segments.

Revenues by Segment

Forensic and Litigation Consulting revenues increased 41.7% year over year to $150.7 million. The surge in revenues was primarily due to the positive impact of exchange rates, acquisition-related revenues, and higher demand for investigations and disputes services. The segment contributed 22% of total revenues. The segment contributed 21% to total revenues.

Strategic Communications revenues increased 19.2% year over year to $67.8 million. The uptick was due to higher demand for corporate reputation and public affairs services, and favorable exchange rates. The segment contributed 10% of total revenues.

Technology revenues increased 67% year over year to $78.6 million. The upside resulted from higher demand for cross-border investigations, mergers and acquisitions (M&A)-related second request, and positive impact of exchange rates. The segment contributed 11% of total revenues.

Economic Consulting revenues were up 21% year over year to $183.3 million. The upside can be attributed to higher demand for non-M&A-related antitrust services and favorable exchange rates, partially offset by lower realized rates and demand for M&A-related antitrust services. The segment contributed 26% of total revenues.

Corporate Finance & Restructuring revenues decreased 6.1% year over year to $231 million. The decline was mainly due to lower demand for restructuring services, partially offset by higher demand for transactions and business transformation services, favorable foreign exchange rates, and acquisition-related revenues. The segment contributed 32% of total revenues.

FTI Consulting, Inc. Price, Consensus and EPS Surprise

FTI Consulting, Inc. Price, Consensus and EPS Surprise
FTI Consulting, Inc. Price, Consensus and EPS Surprise

FTI Consulting, Inc. price-consensus-eps-surprise-chart | FTI Consulting, Inc. Quote

Operating Results

Adjusted EBITDA was $92.3 million, up 21.8% on a year-over-year basis. Increase in Adjusted EBITDA was primarily due to higher revenues. Adjusted EBITDA margin expanded 50 basis points year over year to 13%.

Balance Sheet and Cash Flow

FTI Consulting exited the quarter with cash and cash equivalents of $256.9 million compared with the prior quarter’s level of $233.4 million. Long-term debt was $391.6 million compared with $458.8 million witnessed at the end of the previous quarter. The company generated $125.6 million of net cash from operating activities and CapEx was $19.7 million.

2021 Guidance

FTI Consulting raised its full-year 2021 guidance.

The company now expects revenues to be between $2.7 billion and $2.8 billion compared with the previous guidance of $2.575 billion to $2.7 billion. The raised guidance is higher than the current Zacks Consensus Estimate of $2.64 billion.

Adjusted EPS is now expected between $6.00 and $6.50 compared with the previous guidance of $5.80 to $6.50, the midpoint ($6.25) of which is lower than the current Zacks Consensus Estimate of $6.3.

FTI Consulting currently carries a Zacks Rank #2 (Buy).

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

Performance of Some Other Business Services Companies

Equifax EFX reported better-than-expected second-quarter 2021 results. Adjusted earnings of $1.98 per share beat the Zacks Consensus Estimate by 15.8% and improved 23.8% on a year-over-year basis. Revenues of $1.23 billion outpaced the consensus estimate by 6.4% and improved 25.6% year over year.

IHS Markit’s INFO second-quarter fiscal 2021 adjusted earnings per share of 81 cents beat the consensus mark by 1.3% and increased 17.4% on a year-over-year basis. Total revenues came in at $1.2 billion, surpassing the consensus mark by 3.8% and increasing 15% from the year-ago quarter.

Omnicom OMC reported second-quarter 2021 adjusted earnings of $1.46 per share that beat the consensus mark by 9.8% and increased 58.7% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 6.7% and increased 27.5% year over year.


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