Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FTI Consulting Inc (FCN, Financial) reported a 3.7% year-over-year revenue growth, marking it as the third highest revenue quarter in the company's history.
- The company has made significant investments in talent acquisition, hiring 25 Senior Managing Directors (SMDs) in the last six months, and welcomed over 320 new professionals from campuses, the largest class ever.
- Economic Consulting and Technology segments showed year-over-year revenue growth, with Economic Consulting increasing by 14.5% due to higher demand for M&A related antitrust services.
- FTI Consulting Inc (FCN) maintains a strong balance sheet with a significant increase in net cash provided by operating activities, reaching $219.4 million for the quarter.
- The company continues to focus on long-term growth by investing in AI capabilities and expanding its talent pool, which is expected to enhance its service offerings and client engagement.
Negative Points
- FTI Consulting Inc (FCN) experienced a decline in adjusted EBITDA by 13.3% due to increased direct costs and SG&A expenses.
- The Corporate Finance & Restructuring and Strategic Communications segments reported a year-over-year decline in revenues.
- The company's earnings per share decreased by 20.9% compared to the prior year quarter, impacted by FX remeasurement losses and a higher tax rate.
- FTI Consulting Inc (FCN) revised its full-year revenue and EPS guidance downwards, reflecting slower revenue momentum and seasonal business slowdowns.
- The company faces challenges in its Asia businesses and experienced delays in assignments and slowness in its strategy business, impacting overall revenue performance.
Q & A Highlights
Q: Can you discuss the current state of the restructuring business and its outlook?
A: Ajay Sabherwal, CFO, explained that the restructuring business remains strong, driven by various factors such as changes in consumer behavior post-COVID and inflationary pressures. He noted that even with potential interest rate reductions, the restructuring environment is currently robust.
Q: How is the M&A environment affecting your business, and are there differences in M&A appetite by firm size?
A: Ajay Sabherwal, CFO, stated that the availability of credit is supporting M&A activities, with M&A-related revenues contributing significantly across segments. He noted a slight sequential decline but emphasized the overall robustness of the M&A environment.
Q: Can you elaborate on your investments in AI capabilities and how you plan to leverage this technology?
A: Steven Gunby, CEO, highlighted that FTI Consulting is actively investing in AI to stay at the forefront of technological advancements. The company is developing internal tools and engaging with clients to address AI-related opportunities and risks, focusing on building organizational capabilities.
Q: What are the expected headwinds and tailwinds for FTI Consulting in 2025, excluding election outcomes?
A: Steven Gunby, CEO, refrained from predicting election impacts but emphasized focusing on client needs arising from geopolitical and economic events. He stressed the importance of positioning the company to address these needs rather than speculating on external factors.
Q: How does FTI Consulting plan to use its cash reserves, particularly regarding stock buybacks?
A: Steven Gunby, CEO, stated that the company is focused on strategic use of cash to enhance shareholder value, whether through share buybacks, debt reduction, or acquisitions. He emphasized that decisions are made based on long-term leverage rather than short-term needs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
