FTI Consulting (FCN) Q4 Earnings Beats Estimates, View Solid

FTI Consulting, Inc. (NYSE:FCN) reported solid fourth-quarter 2017 results with healthy year-over-year increase in earnings and revenues.

Adjusted earnings in the quarter were $29.2 million or 78 cents per share compared with $9.9 million or 24 cents in the year-earlier quarter. Adjusted earnings for the reported quarter comfortably surpassed the Zacks Consensus Estimate of 50 cents.

In 2017, the company posted adjusted earnings of $2.32 per share compared with $2.24 in 2016.

Quarter Details

In the quarter under review, GAAP earnings were $66.9 million or $1.78 per share compared with $7.1 million or 17 cents per share in the year-ago quarter. The year-over-year improvement in GAAP earnings was primarily due to benefits from the newly enacted tax law and higher revenues.

Total quarterly revenues came in at $467.7 million compared with $441.9 million in the year-ago quarter. The reported revenues outpaced the Zacks Consensus Estimate of $452 million. Higher segmental revenues from Corporate Finance & Restructuring, and Forensic and Litigation Consulting led to the increase. In 2017, revenues totaled $1,807.7 million compared with $1,810.4 million last year.

Revenues at the Corporate Finance & Restructuring segment came in at $130.5 million, up from $113.4 million in the prior-year quarter. This increase was led by higher demand for restructuring services and favourable foreign currency movements. At the Forensic and Litigation Consulting segment, the metric was up $120.9 million from $105.5 million on higher demand for global investigations and litigation services.

On the flipside, the Economic Consulting segment’s top line was down to $121.1 million from $129.3 million on decreasing demand for antitrust services. Also, revenues from Technology declined to $40.9 million from $43.5 million in the prior-year quarter due to reduced demand for managed review services. Meanwhile, at Strategic Communications segment, revenues came in at $54.3 million compared with $50.3 million in the fourth quarter of 2016. The uptick was owing to higher retained revenues from public affairs and corporate reputation services in Europe, the Middle East and Africa.

FTI Consulting, Inc. Price, Consensus and EPS Surprise

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

Margins

In the quarter under review, adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $55.5 million compared with $30.3 million in the year-earlier quarter. This improvement was driven by higher revenues and lower general and administrative costs. Adjusted EBITDA margin was 11.9% with margin expansion of 500 basis points.

At Corporate Finance & Restructuring segment, adjusted EBITDA was $25.8 million compared with $16.3 million in the year-earlier quarter. The same for the Forensic and Litigation Consulting segment was $23.6 million compared with $6.3 million in the year-earlier quarter. Strategic Communications segment’s adjusted EBITDA was $10.5 million compared with $8.4 million in the year-earlier quarter. Notably, rise in adjusted EBITDA for these three segments were backed by higher revenues and improved utilization.

Adjusted EBITDA for Economic Consulting segment was $14.3 million compared with $19 million in the year-earlier quarter. At the Technology segment, adjusted EBITDA was $3 million compared with $5.6 million in the year-earlier quarter. Lower revenues for these two segments led to the decline in the metric.

Balance Sheet and Cash Flow

As of Dec 31, 2017, FTI Consulting had $190 million in cash and cash equivalents compared with $216.2 million in the prior-year period. Long-term debt was $396.3 million compared with $365.5 million a year ago. In 2017, the company generated $147.6 million of cash from operating activities compared with $233.5 million last year. .

Outlook

Concurrent with the earnings release, the company provided its outlook for 2018. FTI Consulting now expects revenues to be in the range of $1.83-$1.88 billion. Also, EPS is projected to lie between $2.35 and $2.65 for the same time period.

Zacks Rank & Other Stocks to Consider

FTI Consulting carries a Zacks Rank #2 (Buy). Other stocks in the industry worth considering include CBIZ, Inc. (NYSE:CBZ) , Exponent, Inc. (NASDAQ:EXPO) and Alliance Data Systems Corporation (NYSE:ADS) , each carrying the same bullish rank as FTI Consulting. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CBIZ surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average beat of 75.1%.

Exponent exceeded estimates in three of the trailing four quarters with an average beat of 12.4%.

Alliance Data Systems has an expected long-term earnings growth rate of 13%. The company outpaced estimates in each of the trailing four quarters with an average beat of 9%.

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