FTI Consulting Inc.
) first quarter 2012 earnings of 43 cents per share considerably
lagged the Zacks Consensus Estimate of 61 cents, but were a penny
ahead of the year-ago quarter level. The lower-than-expected
earnings was mainly attributable to increased cost incurred on
benefits and payroll taxes and additional higher expense burden
from the first quarter onwards related to equity bonus
Total revenue in the reported quarter jumped 9.2% year over year
to $395.2 million. The upside in revenue was driven by strong
performance of Economics. The Corporate Finance/Restructuring
segment as well as Forensic and Litigation Consulting also recorded
upside, partially offset by weak performance of the Technology and
Strategic Communications segment. Geographically, the company
witnessed solid results in Latin America (up 100%) and EMEA (up
42%). However, Asia-Pacific revenues slipped in the quarter on the
back of growing concern about China.
Adjusted EBITDA during the quarter was up 13.7% to $54.0 million
from $56.6 million in the year-ago quarter.
Economic Consulting segment reported strong results with
revenues surged 34.7% year over year to $100 million in the
quarter. The upside was aided by strong demand for financial
economics and growth in its antitrust and M&A
practice. The segment also gained from the Euro zone debacle
and the acquisition of LECG practices.
After experiencing a decline in the last quarter, Corporate
Finance/Restructuring segment revenue improved 5.8% year over year
to $113.5 million in the first quarter, due to increased demand for
European restructuring and U.S. healthcare consulting practices as
well as contributions from the acquisition of LECG practices.
Forensic and Litigation Consulting revenue climbed 5.0% year
over year to $87.0 million, despite pricing pressure in North
America. This upside in revenue was attributable to increased
demand for global risk and investigation practice in Latin America
as well as higher sales in Asia Pacific from construction
solutions, forensic accounting and litigation support practices.
Growth in data analytics practice and the acquisition of LECG
practices in the first quarter of 2011 also drove revenue.
Technology segment revenues fell 2.7% year over year to $49.7
million, due to unfavorable revenue mix and slowdown in the
execution of large assignments.
Strategic Communications revenues dipped 2.9% year over year to
$45.0 million in the quarter, due to lower M&A-related projects
in Asia Pacific and continued softness in Europe, partially offset
by increased activity in Latin America.
For the first quarter of 2012, FTI Consulting's cash and cash
equivalents (excluding restricted cash) totaled $182.4 million,
compared with $264.4 million as of December 31, 2010. Shareholders'
equity totaled $1,149.6 million as of March 31, 2012, compared with
$1,106.2 million as of December 31, 2011.
We expect estimates to move down in the coming days based on
disappointing first quarter results, lack of clarity and poor
performance in the Asia Pacific region as well as in the Technology
segment. However, stabilization in the company's restructuring
business was encouraging. The Zacks Consensus Estimates for 2012
and 2013 are pegged at $2.88 and $3.25, respectively.
FTI Consulting competes mainly with
CRA International Inc.
Navigant Consulting Inc.
). FTI Consulting currently retains a Zacks #4 Rank, which
translates into a short-term 'Sell' rating. We are also maintaining
our long-term "Neutral" recommendation on the stock.
CRA INTL INC (CRAI): Free Stock Analysis Report
FTI CONSULTING (FCN): Free Stock Analysis
NAVIGANT CONSLT (NCI): Free Stock Analysis
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