Monday, FTI Consulting Inc. (FCN) posted a higher profit in its fourth quarter, bolstered by strong performances across all its business segments. On a per share basis, earnings dropped from last year on higher share count, yet topped the Street view.
Q4 Results
The Baltimore, Maryland-based company's fourth quarter net income totaled $31.2 million, compared to $30.8 million in the prior year quarter. Earnings per share dropped to $0.58 from $0.60 in the same quarter of last year, and reflected an increase of 4% in weighted average shares outstanding.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.
Quarterly revenues advanced 15.1% to $322.9 million from $280.5 million in 2007, and surpassed eight Wall Street analysts' consensus revenue estimate of $318.56 million for the quarter.
The company stated that its quarterly performance was "at the top end" of its expectations despite the tremendous level of uncertainty plaguing the markets.
Segmental Review
The company's Corporate Finance/Restructuring division continues to witness increases in demand from a broadening range of industries suffering from the financial crisis. Revenue in this segment grew 45.7% to $107.3 million from $73.6 million last year, with 33.1% organic growth.
Fourth-quarter performance at the Economic Consulting segment was driven by growing demand from clients preparing to address the damage from the credit crisis and the expectation of attendant litigation or regulatory inquiries. Segment revenues rose 19.5% to $53.3 million from last year's $44.6 million.
Forensic and Litigation Consulting generated fourth-quarter revenue of $58.6 million, an increase of 6.9%, compared to $54.8 million in the same quarter of last year. Technology unit posted revenues of $52.2 million, up 9.7% from $47.5 million in 2007.
Strategic Communications segment results were adversely affected by significant weakness in the values of key foreign currencies as well as a dearth of capital markets activity. Revenues for the latest quarter dropped to $51.6 million from $60.0 million in the comparable quarter of the previous year.
FY08 Highlights
For the full year 2008, the company reported net income of $125.4 million or $2.34 per share, compared to $92.1 million or $2.00 per share in 2007. Analysts expected earnings of $2.30 per share for 2008.
Annual revenues for 2008 rose to $1.29 billion from $1.00 billion reported in the previous year. Wall Street analysts had a consensus revenue estimate of $1.29 billion for the full year.
FTI Consulting, on February 25, announced that its board has authorized a stock purchase program for up to $50 million of its common stock that would expire on February 25, 2010.
FY09 Forecast
Looking ahead, the company expects fiscal 2009 earnings to be in the range of $2.55 - $2.70 per share, and revenues between $1.45 billion and $1.55 billion. Wall Street analysts have a consensus earnings estimate of $2.65 per share, on revenues of $1.47 billion for 2009.
The company noted that it expects to see continued strong demand throughout the year for restructuring and dispute engagements in connection with the recession and credit crisis, and the company brings the largest restructuring practice and the industry's strongest set of economists to bear to meet that demand.
Dunn concluded, "We believe there will be a growing level of work advising clients on their litigation and regulatory challenges as the new Congress and Administration cooperate to investigate the causes of our economic crisis and develop new, tougher regulatory frameworks."
Peer Performance
Among FTI Consulting's rivals, the Boston, Massachusetts-based CRA International Inc. (CRAI) in mid-January posted a decline in its fourth-quarter profit, hurt by overall business slowdown due to general economic downturn, as some litigation went on hold and certain consulting clients froze projects. Net income for the quarter fell to $1.92 million or $0.18 per share from $10.3 million or $0.89 per share in the prior year. Revenues dropped to $85.62 million from $98.7 million last year.
Another competitor, the Emeryville, California-based LECG Corp. (XPRT) reported a fourth-quarter net loss of $93.8 million or $3.70 per share, compared to a net loss of $2.7 million or $0.11 per share in the previous year. Revenues for the quarter fell 20.6% to $70.0 million from $88.2 million in the same quarter of last year.
Yet another peer, the Chicago, Illinois-based Navigant Consulting Inc.'s (NCI) fourth-quarter net income increased to $11.33 million or $0.23 per share from $5.98 million or $0.13 per share in the year ago quarter. Total revenues declined to $194 million from $203.29 million last year.
Stock Quotes
FTI Consulting closed Friday's regular trading on the NYSE at 36.54, on an average 3-month volume of 1.18 million shares. In the past 52 weeks, the stock has been trading between $36.14 and $80.00.
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