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What were the key takeaways from FTI Consulting's earnings call?

Did FTI Consulting beat or miss consensus estimates last quarter?

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- **Record Q3 Performance**: EPS up 41% YoY, driven by Corp Fin (+18.6%), FLC (+15.4%), and Strat Com (+7.4%).
- **Segment Challenges**: E Con revenue down 22% YoY due to talent transitions, Tech down 14.8% due to lower M&A demand.
- **AI Growth**: New client work leveraging AI tools, no negative impact on billable hours.
- **Restructuring Strength**: Q3 revenue at record levels, 11% YoY growth, winning major global mandates.
- **Guidance Update**: FY2025 revenue $3.685B-$3.735B, adjusted EPS $8.20-$8.70, reflecting segment resilience and share buybacks.

**【CEO Opening Remarks】**
- Reported record Q3 2025 EPS of $2.60, up 41% YoY, driven by strong performance in Corp Fin, FLC, and Strat Com despite headwinds in E Con and Tech.
- Emphasized organic growth strategy, investing in high-value adjacencies (e.g., U.K. insolvency, German restructuring) and talent retention during challenging quarters.
- Highlighted resilience across segments, with Corp Fin and FLC delivering double-digit growth and Strat Com achieving 34% EBITDA increase YoY.
- Acknowledged challenges in E Con and Tech, attributing 2/3 of E Con's revenue decline to talent transitions vs. market conditions.

**【CFO Financial Commentary】**
- Q3 2025 revenue: $956.2M (+3.3% YoY), EPS: $2.60 (+41% YoY), adjusted EBITDA: $130.6M (+27% YoY).
- Segment performance: Corp Fin (+18.6%), FLC (+15.4%), Strat Com (+7.4%), offset by E Con (-22%) and Tech (-14.8%).
- Updated FY2025 guidance: Revenue $3.685B-$3.735B, EPS $7.62-$8.12, adjusted EPS $8.20-$8.70.
- Key trends: Billable headcount decreased 3% YoY but increased 4% sequentially, with 331 new university hires.

**【Q&A Highlights】**
- **E Con Segment**: Costs stabilized, but EBITDA recovery uncertain; 28 new senior hires in Q3 2025. U.S. government shutdown impact negligible so far.
- **Transactions Practice**: Growth driven by team expertise and expanded service offerings, with 16% YoY revenue despite global transaction volume decline.
- **AI Impact**: Positive in client work (e.g., AI algorithm investigations), no negative impact on billable hours; focus on AI tools for complex investigations.
- **Restructuring Outlook**: Record Q3 revenue, 11% YoY growth, winning major mandates in U.S., U.K., and Australia.
- **Headcount Growth**: FY2025 headcount additions lower than historical rates; long-term strategy remains to grow talent in high-demand areas.


FTI Consulting, Inc. (FCN) Q3 2025 Earnings Call Transcript

- **Solid Q2 Performance**: Despite 17% and 28% YoY declines in Economic Consulting and Tech, FTI delivered flat revenue and record segments in Corporate Finance and Strategic Communications.
- **Key Growth Drivers**: Restructuring (25% YoY growth) and FLC (10% YoY revenue) offset headwinds, with FLC EBITDA up 106% YoY.
- **Talent Investment Payoff**: $355M in share buybacks YTD and 320 new hires position for long-term growth, despite near-term margin pressure.
- **Challenges Ahead**: FY25 guidance narrowed due to ongoing Tech/Econ Consulting weakness, with Q4 EPS expected 13% below Q2 average.

**【CEO Summary Section】**
- **Resilience Amid Headwinds**: Despite challenges including regulatory shifts, slower M&A activity, and disruptions in Economic Consulting, FTI delivered solid Q2 results, with key segments like Corporate Finance & Restructuring (up 9%) and FLC (up 10%) outperforming expectations.
- **Segment Performance Highlights**: 
  - **Corporate Finance**: Record Q2 revenue ($379.2M) driven by restructuring (25% YoY growth) and transaction services.
  - **FLC**: Strong FCPA-related work and cybersecurity demand offset regulatory headwinds, with adjusted EBITDA up 106% YoY.
  - **Strategic Communications**: Record revenue ($102.7M) due to crisis management and corporate reputation services.
  - **Tech & Economic Consulting**: Down 28% and 17% YoY, respectively, due to paused M&A-related cases and antitrust enforcement changes.
- **Investment in Talent**: Hired 320 graduates and senior professionals, positioning for long-term growth despite near-term margin pressure.

**【CFO Financial Commentary】**
- **Q2 Financials**: Revenue $943.7M (flat YoY), EPS $2.13 (down 9% YoY). Adjusted EBITDA $111.6M (11.8% margin), down 4% YoY.
- **Segment Margins**: 
  - **Corporate Finance**: 21.5% EBITDA margin (vs. 19.1% YoY).
  - **FLC**: 16.7% margin (vs. 8.8% YoY).
  - **Tech**: 6.3% margin (vs. 18.1% YoY).
- **Capital Allocation**: $355M spent on share buybacks YTD, with $309M remaining under authorization. Effective tax rate expected 22-24% for FY25.
- **Guidance Update**: Narrowed FY25 revenue range to $3.66-3.76B (prev. $3.66-3.81B) and adjusted EPS to $7.80-8.40 (prev. $7.80-8.60), reflecting ongoing Tech/Econ challenges.

**【Q&A Highlights】**
- **Economic Consulting Recovery**: CFO expects EBITDA low point in Q3, with gradual improvement as new hires gain traction.
- **Hiring Strategy**: CEO notes record senior professional hires in H1, driven by market disruptions and talent availability.
- **Restructuring Strength**: Q2 restructuring revenue up 25% YoY, fueled by LME-related cases and global vertical expertise.
- **Tech Segment Outlook**: CFO predicts slow recovery in M&A-related second request volumes, with no near-term return to 2024 levels.

FTI Consulting, Inc. (FCN) Q2 2025 Earnings Call Transcript

- **FLC Outperforms**: Q1 revenue up 8.3% YoY, driven by high-margin risk investigations and export controls work. Regulatory uncertainty could amplify demand for compliance services.
- **Econ Consulting Transition**: $162M in forgivable loans to attract top talent positions for medium-term recovery, but Q1 revenue down 12.1% YoY due to departures and M&A slowdown.
- **Tariff-Driven Restructuring**: Early signs of increased restructuring demand from companies facing supply chain stress, with Corp Fin well-positioned to capitalize.
- **M&A Market Weakness**: Q1 HSR filings at lowest level in five years, weighing on Econ and Tech segments but creating opportunities for market share gains.
- **Share Buybacks Signal Confidence**: $186M repurchased in Q1, with $568M remaining under expanded authorization, despite near-term macro challenges.


**【CEO Key Business Updates】**
- **Forensic & Litigation Consulting (FLC)**: Record Q1 revenue of $190.6M (+8.3% YoY), driven by high-margin risk & investigation services. FLC's visibility and expertise in anti-money laundering, cyber, and export controls are attracting large, critical assignments. However, regulatory shifts (e.g., DOGE policy changes) could impact future demand.
- **Corporate Finance & Restructuring (Corp Fin)**: Q1 revenue $343.6M (-6.1% YoY), with restructuring representing 46% of segment. Despite M&A market pause, transaction services showed strength. Recent tariff-induced stress in supply chains may drive restructuring demand.
- **Technology Consulting**: Q1 revenue $97.2M (-3.5% YoY), with M&A-related second request services declining. Long-term investments in crypto, AI, and digital assets position the business for medium-term growth despite near-term headwinds.
- **Economic Consulting (Econ)**: Q1 revenue $179.9M (-12.1% YoY), impacted by Compass Lexecon departures and M&A slowdown. However, $162M in forgivable loans to attract top academic affiliates (e.g., FTC/SEC alumni) positions the business for medium-term recovery.
- **Strategic Communications (Stratcom)**: Q1 revenue $87M (+7.2% YoY), benefiting from clients' need for crisis communications around cybersecurity and regulatory advocacy.

**【CFO Financial Highlights】**
- **Q1 2025 Results**: Revenue $898.3M (-3.3% YoY), Adjusted EPS $2.29 (flat YoY). GAAP EPS $1.74 (-22% YoY) due to $25.3M special charge.
- **Segment Performance**: 
  - FLC: EBITDA $37.5M (+19.7% margin), driven by higher bill rates and demand.
  - Corp Fin: EBITDA $55.9M (+16.3% margin), benefiting from restructuring strength.
  - Tech: EBITDA $11.6M (+11.9% margin), despite M&A slowdown.
  - Econ: EBITDA $14.4M (+8% margin), offset by headcount reductions.
  - Stratcom: EBITDA $12.9M (+14.8% margin), supported by pass-through revenues.
- **Cash Flow**: Net cash used in operations $465.2M, driven by $162M in forgivable loans. Share buybacks: 1.7M shares ($186M) repurchased Q1, with $568M remaining under authorization.
- **Guidance**: Full-year 2025 Adjusted EPS range maintained, reflecting uncertainty in M&A, tariffs, and regulatory enforcement.

**【Q&A Key Takeaways】**
- **Tariffs Impact**: Potential increase in restructuring demand from companies facing supply chain stress. FLC and Corp Fin could benefit if tariff-induced financial stress persists.
- **Regulatory Policy (DOGE)**: Unclear impact on anti-consumer fraud and FCPA-related work, but FLC's Q1 strength suggests demand for regulatory compliance services remains strong.
- **Econ Consulting Recovery**: New academic affiliates (e.g., former FTC/SEC officials) may take 1-2 years to drive revenue, but long-term positioning as global leader is intact.
- **M&A Market**: Q1 HSR filings at 89/month (vs. 188/month prior 12 months) indicate sustained M&A slowdown, weighing on Econ and Tech segments.
- **Share Repurchases**: $400M additional authorization highlights confidence in long-term growth despite near-term headwinds.


FTI Consulting (FCN)-24 Apr 25-2025 Q1 Earnings call transcript

- **2024 Results**: $3.7B revenue (+6%), adjusted EPS $7.99 (+3.6%), but Q4 revenue down 3.2% YoY.
- **2025 Risks**: $35M+ EBITDA hit in Econ, 23%-25% tax rate, and $70M cost savings from headcount cuts.
- **Growth Outlook**: 1% revenue growth (midpoint) and 2.6% EPS growth, despite 4% headcount reduction.
- **Key Catalysts**: Disputes/investigations growth, M&A rebound, and disciplined talent investment.

**【CEO Summary Section】**
- **2024 Performance Overview**: Full-year revenue grew 6% to $3.7 billion, driven by strong first-half growth (12% YoY) but offset by a slower second half (flat YoY). Adjusted EPS increased 3.6% to $7.99, though Q4 revenue declined 3.2% YoY due to lower demand in key segments.
- **2025 Headwinds**: 
  1. **Econ Segment Challenges**: Senior departures in U.S. competition practice may cause $35M+ EBITDA impact, similar to a prior crisis. 
  2. **Tax Rate Reset**: 2024's 20.2% tax rate (vs. 23.3% in 2023) will create tough comparisons. 
  3. **Talent Investment**: Continued hiring of top talent will pressure near-term margins despite long-term benefits.
- **Growth Outlook**: Despite headwinds, expects solid growth in all segments except Econ. 2025 guidance midpoint: 1% revenue growth and 2.6% EPS growth.

**【CFO Financial Commentary】**
- **2024 Financials**: 
  - GAAP EPS: $7.81 (vs. $7.71 in 2023)
  - Adjusted EBITDA: $403.7M (10.9% of rev, down from 12.2% in 2023)
  - Free Cash Flow: $360.2M (vs. $174.9M in 2023)
- **2025 Guidance**: 
  - Revenue: $3.66B-$3.81B (1%-5% YoY)
  - Adjusted EPS: $7.80-$8.60 (2.6%-10.4% YoY)
  - Key Assumptions: 4% headcount reduction ($70M cost savings), flat SG&A, 23%-25% tax rate.

**【Q&A Highlights】**
- **Econ Segment Impact**: Departures expected to weigh on 2025 EBITDA, with potential spill-over into 2026. 
- **M&A Trends**: Slow Q4 activity but optimism for pickup in 2025. 
- **Headcount Strategy**: Net growth expected despite targeted reductions in low-utilization areas. 
- **Regulatory Environment**: Monitoring U.S. competition policy changes, but long-term growth drivers remain intact.

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