FTI Consulting Beats on Earnings & Revs in Q1 - Analyst Blog

FTI Consulting, Inc FCN reported GAAP net income of $18.1 million or 45 cents per share in first quarter 2014 versus a net income of $23.7 million or 58 cents per share in the year-ago quarter. The year-over-year decrease in earnings was primarily due to high operating expenses. However, the reported earnings comfortably beat the Zacks Consensus Estimate of 26 cents

Excluding non-recurring items, adjusted net income was $16.8 million or 41 cents per share in the first quarter of 2014 versus $23.9 million or 59 cents a share in the prior-year quarter.

Total revenue increased 4.5% to $425.6 million in the reported quarter and exceeded the Zacks Consensus Estimate of $415 million. The top-line growth was driven by record revenues in Forensic and Litigation Consulting and Technology revenues and large assignments from high-stake clients.
 
Adjusted EBITDA stood at $51.2 million compared with $59.3 million in the prior-year quarter.

Segment Details

Corporate Finance/Restructuring segment revenues decreased 5.1% to $94.0 million in first quarter 2014. The decrease in revenues was primarily due to lower success fees and lower bankruptcy and restructuring revenues in North America.

Economic Consulting revenues decreased 7.2% year on year to $106.9 million in the reported quarter. The downside was driven by lower demand for its financial economics practice in North America and lower realization in international arbitration, regulatory and valuation practices in Europe, Middle East and Africa (EMEA), partially offset by higher demand for its antitrust litigation practice in EMEA.
    
Forensic and Litigation Consulting segment revenues increased 20.6% year over year to $121.4 million, primarily driven by increased demand for global data analytics, disputes and insurance practices in North America, and the forensic accounting and global risk and investigations practices (GRIP) in Asia Pacific.

Technology segment revenues were up 28.6% to $60.1 million. The increase in revenues was driven by higher services revenues primarily for investigations and other financial service matters.

Strategic Communications segment revenues decreased 4.9% year over year to $43.2 million in the quarter, driven by reduced pass-through revenues.

Liquidity

At quarter end, FTI Consulting had cash and cash equivalents of $77.0 million versus $205.8 million in Dec 31, 2013. Long-term debt stood at $711.0 million, unchanged from year-end 2013. Net cash used in operating activities in the quarter was $110.8 million compared with $2.3 million in the year-ago period. The company did not repurchase any stock during the reported quarter. The company invested $15.6 million on acquisitions.

Guidance

The company expects revenue and adjusted earnings per share in the range of $430.0 million to $445.0 million and 32 cents to 42 cents, respectively, in second quarter 2014.

FTI Consulting currently has a Zacks Rank #3 (Hold). Other stocks that look promising in the industry and are worth a look include Huron Consulting Group Inc. HURN, NV5 Holdings, Inc. (NVEE) and Towers Watson & Co TW, each carrying a Zacks Rank #2 (Buy).