FTI Consulting, Inc. (FCN) continued its streak of beating earnings estimates, witnessing its fifth successive earnings beat. Adjusted earnings for the consulting firm came in at 63 cents per share that surpassed the Zacks Consensus Estimate of 41 cents by a whopping 53.7% on the back of broad-based top line growth. However, a year-over year decline of 12.5% came as a setback but a sequential improvement of 14.6% restored confidence.
The company raised its full-year 2014 earnings guidance on the back of improved market conditions and higher expected demand in its Forensic and Litigation Consulting and Technology segments. Share price rose 5.8% in the trading session following the earnings release.
Total revenues for the quarter increased 8.8% year over year to $451.2 million, comfortably beating the Zacks Consensus Estimate of $435 million. The company witnessed robust top-line growth for all its segments.
Adjusted EBITDA stood at $63.4 million, down 12.6% from $72.5 million in the prior-year quarter.
Segment Details
Corporate Finance/Restructuring segment revenues grew 6.4% year over year to $100 million, driven by robust demand for North America non-distressed service offerings and strength in European transaction advisory and tax practices, partially offset by continued softness in global bankruptcy engagement. Adjusted EBITDA was $15.5 million, down 20.1% from $19.4 million in the year-ago quarter.
Economic Consulting revenues increased 6.6% year over year to $120.5 million. Higher activity in the mergers and acquisitions space, combined with improved pricing in the unit's international arbitration practice contributed to the revenue growth. Adjusted EBITDA came in at $18.4 million versus $23.2 million in the prior-year quarter, dragged down by higher compensation expense from employment contract extensions.
Forensic and Litigation Consulting segment revenues increased 7.7% year over year to $121.7 million, primarily driven by higher demand in disputes and global construction solutions, and better investigation practice operations in North America. Adjusted EBITDA was $22.3 million in the reported quarter versus $25.4 million in the prior-year quarter.
Technology segment revenues were up 21.8% to $62.4 million. The year-over-year increase in revenues was driven by improved demand related to large-scale complex global investigations. Adjusted EBITDA was $17.8 million in the reported quarter, up 15.6% from $15.4 million in the year ago quarter.
Strategic Communications segment revenues increased 7.5% year over year to $46.6 million in the quarter, driven by favorable foreign currency translation effect and growth in project work in the Asia Pacific and North American regions. Adjusted EBITDA was $6.6 million in the reported quarter, up 65% from $4 million in the year-ago quarter.
Other Financial Aspects
At quarter end, FTI Consulting had cash and cash equivalents of $178.8 million versus $205.8 million in Dec 31, 2013. Long-term debt (net of current portion) stood at $705 million, compared with $711.0 million at year-end 2013. Net cash provided by operating activities for the quarter was $97.6 million compared with $84.4 million in the year-ago period.
Guidance
The company revised its outlook for full-year 2014, and now anticipates revenues to lie between $1.755 billion and $1.770 billion, compared with the previous guidance range of $1.73 billion and $1.77 billion. Adjusted earnings per share were also revised upward to a range of 1.85 and $2.00, with the previous guidance being in the range of $1.55 and $1.70.
The guidance increase reflects the better-than-expected results in the Forensic and Litigation Consulting and Technology segments. Management stated that the adjusted earnings per share range also incorporates planned investments and expenses in the last quarter of 2014 in tune with its multi-year business plans. FTI Consulting also reiterated its medium-term growth targets of adjusted earnings per share exceeding $2.50 for 2016.
FTI Consulting currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the consulting industry include CoreLogic, Inc. (CLGX), CBIZ, Inc. (CBZ) and Exponent Inc. (EXPO). While CoreLogic and CBIZ hold a Zacks Rank #1 (Strong Buy), Exponent sports a Zacks Rank #2 (Buy).
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