FTI Consulting Beats Estimates
FTI Consulting, Inc (FCN) reported a loss of $2.15 per share in fourth quarter 2012 versus income of 93 cents in the year-ago quarter. Adjusted EPS was 67 cents in the reported quarter, ahead of the Zacks Consensus Estimate of 60 cents.
For 2012, GAAP loss was 92 cents versus income of $2.39 per share in 2011. Adjusted EPS of $2.30 was ahead of the Zacks Consensus Estimate of $2.20.
Total revenue in the reported quarter increased 2.2% year over year to $399.3 million and was ahead of the Zacks Consensus Estimate of $387.0 million. Revenue increased mostly due to increase in revenues in the Economic Consulting segment, Corporate Finance/Restructuring and Strategic Communications segment.
For full year 2012, revenues stood at $1,576.9 million versus $1,566.8 million in the previous year.
Adjusted EBITDA stood at $68.1 million in the quarter with adjusted operating margin of 17.1%. Utilization for Corporate Finance/Restructuring segment decreased to 64% from 72% in the year-ago quarter, Economic Consulting dipped 80% from 83% and Forensic and Litigation Consulting segment declined marginally to 67% from 68%.
Segment Details
Corporate Finance/Restructuring reported revenues of $123.2 million, up 13.7% year over year. The increases in revenues were driven by acquisition of an Australian restructuring business, strong results in North America, higher success fees and revenues increases from the Asia Pacific region.
Economic Consulting revenues improved 6.9% to $95.7 million in the quarter. The upside was aided by revenue growth in antitrust litigation, financial economics, international arbitration and regulatory consulting practices, particularly in the energy, telecommunications and transportation industries
Forensic and Litigation Consulting revenue decreased 8.2% to $82.6 million as North American practices remained weak.
Technology segment revenue was down 11.3% to $47.6 million, due to winding down of large investigation and litigation matters.
Strategic Communications revenues increased 2.2% year over year to $50.3 million in the quarter due to growth in capital market activities.
Liquidity
As of Dec 31 2012, FTI Consulting’s cash and cash equivalents totaled $156.8 million.
In the reported quarter, the company repurchased 923,379 shares at $32.51 each totaling $30 million. This brought the total tally of stock repurchases under the company's $250 million stock repurchase program to 1.6 million shares for approximately $50 million. As of Dec 31, 2012, long-term debt stood at $717.0 million versus $643.6 million in the year-ago period. Additionally, the company completed a series of debt refinancing transactions and extended debt maturities at lower interest rates.
Outlook
For 2013, the company continues to expect revenues in the range of $1.63 billion and $1.70 billion and adjusted EPS between $2.40 and $2.60.
The company expects Economic Consulting segment to perform well in 2013 due to the potential merger and acquisition matters coupled with progress for industry initiatives, in Telecommunications, Media and Technology; Energy; Healthcare; Insurance; and Global Risk and Investigations. Additionally the company will continue its focus on organic growth and cash flow.
However, the company needs to be wary of its competitors, which includes formidable names such as CoreLogic, Inc (CLGX) and CRA International Inc (CRAI).
FTI consulting currently has a Zacks Rank #3 (Hold). One of its competitors, Towers Watson & Co (TW) carries a Zacks Rank #1 (Strong Buy).
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