FTI Consulting, Inc.FCN reported impressive third-quarter 2026 results, with earnings of $3.84 per share, surpassing the Zacks Consensus Estimate of $2.66 by 44.4%. Earnings surged 47.7% year over year, supported by record success fees, improved segment profitability and a lower tax rate.
FTI Consulting, Inc. Price, Consensus and EPS Surprise
FTI Consulting, Inc. price-consensus-eps-surprise-chart | FTI Consulting, Inc. Quote
Revenues increased 5.9% year over year to a record $1.01 billion, exceeding the consensus estimate of $1.006 billion by 0.7%. All five business segments registered growth. Adjusted EBITDA rose 17.7%, while billable headcount increased 1.8%.
The better-than-expected results and raised earnings outlook for 2026 impressed investors, with the stock gaining 14.3% since the company released results on Oct. 29.
The company's adjusted earnings guidance for 2026 increased to $9.50-$10 per share from the previous $9.10-$9.70 range. The Zacks Consensus Estimate for earnings is pegged at $9.25 per share for the same period.
Over the past year, FCN's shares have gained 9.9% against the industry's 14.2% decline. The Zacks S&P 500 composite posted 13.3% growth during the same time frame.
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FCN's Profitability Improves Despite Special Charges
Net income declined 23.4% year over year to $63.4 million. GAAP earnings fell 9.6% to $2.35 per share, reflecting a $46 million special charge and $4.5 million in extraordinary litigation-related expenses.
Adjusted EBITDA increased to $153.7 million from $130.6 million. The adjusted EBITDA margin expanded 150 basis points to 15.2%, benefiting from higher success fees and improved Economic Consulting performance.
Selling, general and administrative expenses rose to $214.4 million from $199.5 million, primarily due to higher compensation and legal expenses. The effective tax rate declined to 17.8% from 25.9%, supported by favorable tax adjustments and benefits related to a renewable energy investment.
FTI Consulting's Corporate Finance Revenues Rise
Corporate Finance revenues increased 4.8% year over year to $424.4 million. Higher success fees and realized bill rates supported growth, partially offset by weaker turnaround, restructuring and transactions demand.
Success fees reached a record $40.7 million, including a substantial fee related to a Federal Reserve Bank of Boston loan portfolio transaction. Transaction revenues grew 13%, while transformation revenues advanced 7%. Turnaround and restructuring revenues declined 1%.
Adjusted segment EBITDA rose 6.7% to $102.8 million. The margin improved to 24.2% from 23.8%, as higher revenues more than offset increased compensation expenses associated with a 6.3% rise in billable headcount.
FCN's Economic Consulting Business Rebounds
Economic Consulting revenues increased 9.3% year over year to $189.3 million. Stronger demand for merger and acquisition (M&A)-related and non-M&A antitrust services offset softer financial economics demand.
Adjusted segment EBITDA reached $14 million against a loss of $4.6 million a year earlier. The margin improved to 7.4% from negative 2.6%, reflecting higher revenues and reduced administrative expenses. Management noted that favorable one-time adjustments also supported profitability.
Forensic and Litigation Consulting revenues edged up 0.2% to $195.1 million. Higher realized bill rates offset weaker risk and investigations and data analytics demand. Adjusted segment EBITDA declined 10.7% to $38 million, reflecting higher administrative expenses.
FTI Consulting's Technology Segment Gains Momentum
Technology revenues grew 9.7% year over year to $103.2 million, driven by increased demand for M&A-related second-request services. Management highlighted strength across North America, Europe, the Middle East and Africa and Asia Pacific.
Adjusted segment EBITDA climbed 17.4% to $16 million. The margin expanded 100 basis points to 15.5%, as higher revenues outweighed increased consultant compensation and administrative costs.
Strategic Communications revenues advanced 12.5% to $100.6 million, supported by stronger public affairs and corporate reputation demand. Adjusted segment EBITDA increased 20.8% to $20.4 million, with the margin improving to 20.3% from 18.9%.
FCN Generates Solid Cash Flow
Net cash provided by operating activities totaled $190.4 million compared with $201.9 million a year earlier. Free cash flow declined to $182 million from $187 million, reflecting higher operating expenses and compensation payments, partly offset by stronger collections.
FTI Consulting repurchased approximately 523,588 shares for $79.4 million during the quarter. About $264.7 million remained available under its share repurchase authorization.
Cash and cash equivalents totaled $88.1 million as of Sept. 30, 2026, compared with $163.7 million at the preceding quarter-end. Total debt decreased sequentially to $852 million from $1.02 billion.
FTI Consulting's 2026 Outlook
The company reaffirmed its 2026 revenue guidance of $3.94-$4.10 billion.
GAAP earnings guidance was lowered to $7.55-$8.05 per share from $8.70-$9.30, reflecting restructuring and extraordinary litigation-related expenses.
Management expects staffing adjustments undertaken during the third and fourth quarters to generate approximately $80 million in annualized savings. However, softer restructuring, M&A and regulatory activity could constrain near-term demand.
Economic Consulting profitability is expected to moderate in the fourth quarter, while the effective tax rate is projected at approximately 23%.
FTI Consulting currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
Trane Technologies plcTT reported better-than-expected third-quarter 2026 results. TT's earnings per share of $4.86 outpaced the Zacks Consensus Estimate by 2.5% and increased 25.3% from the year-ago quarter. TT's revenues of $6.76 billion surpassed the consensus estimate by 5% and improved 17.7% year over year.
ManpowerGroupMAN posted mixed third-quarter 2026 results. MAN's earnings of $1.01 per share matched the consensus mark and rose 21.7% from the year-ago quarter. MAN's total revenues of $4.84 billion missed the consensus mark by 1.4% but increased 4.4% year over year.
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This article originally published on Zacks Investment Research (zacks.com).
