Yahoo Finance FTI Consulting Inc (FCN) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth and ...
Revenue: $928.6 million, up 15.1% year-over-year.
Net Income: $80 million, compared to $47.5 million in the prior year quarter.
Earnings Per Share (EPS): $2.23, a 66.4% increase from $1.34 in the prior year quarter.
Adjusted EBITDA: $111.1 million, up from $78.4 million in the prior year quarter.
Effective Tax Rate: 19.6%, down from 24% in the prior year quarter.
SG&A Expenses: $201.9 million or 21.7% of revenues, compared to $184.2 million or 22.8% of revenues in the prior year quarter.
Billable Headcount: Increased by 180 professionals or 2.9% year-over-year.
Free Cash Flow: Net cash used in operating activities of $274.8 million, compared to $254.2 million in the prior year quarter.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: I wanted to start on the restructuring environment. Ajay, I think you said it was even stronger than you expected in the quarter. Obviously, first quarter, I think, is higher than fourth quarter levels. Just curious if you could kind of unpack the strength. How much of it is the environment and kind of the market staying higher than you had expected versus the company winning a higher share of mandates? A: Steven H. Gunby, President and CEO of FTI Consulting, responded that the market is robust not only for FTI but for others as well, indicating a generally strong market environment rather than solely share gains by FTI.
Q: In terms of Economic Consulting, you mentioned the revenue deferrals and that potentially pressuring first quarter margins. Just to clarify there, is the work that you did or, I guess, the expenses tied to that work that you expect to come through maybe in the second half of the year, did that all happen in the first quarter? A: Ajay Sabherwal, CFO of FTI Consulting, confirmed that the impact of the $6 million mentioned was specific to the first quarter, with ongoing work continuing into the second quarter.
: I appreciate all the insight so far. I think if it wasn't yesterday, there was some news on non-compete legislation. I know that there's been already some pretty significant pushback from corporations on the new legislation. But if you could speak to either your thoughts on the legislation, the likelihood of it ultimately coming to pass and the impact on the business, that would be really helpful. A: Steven H. Gunby discussed the non-compete legislation, noting that while FTI is monitoring the situation, the company's use of non-competes is primarily for senior roles to protect investments in these individuals. He expressed that there are many aspects of the legislation still to be determined.
Q: I was hoping you could give us some color on the investments in the kind of calls you're getting from interested potential lateral hires across the segments, geographies, and I don't know if those investments also include external acquisition opportunities. So any color you can provide would be helpful. A: Steven H. Gunby explained that FTI is receiving significant interest from potential hires globally, largely due to disruptions in the marketplace and FTI's growing reputation. He emphasized that these opportunities are mostly about hiring individuals rather than making acquisitions.
Q: Maybe just starting on the Corporate Finance & Restructuring segment, we've seen more challenging M&A trends in this quarter for many investment banks. How do you expect the higher rates for longer environment to impact growth of your business transformation & strategy and transactions businesses going forward? A: Ajay Sabherwal addressed the impact of interest rates on the Corporate Finance & Restructuring segment, noting that the business transformation and strategy areas are not as sensitive to interest rate changes. He mentioned that M&A activity is picking up, which could positively influence FTI's related services.
Q: Maybe just turning back to Econ Consulting, which obviously was substantially better than I think at least I had been forecasting and with revenue only down, I think, 1% quarter-on-quarter. Previously, you have talked about Econ Consulting being back-half weighted for this year. And you noted on this call, the deferred revenue could support revenue further out in 2024. So should we think of this as being a good starting point and revenue can grow from here and they're still being the same second half weighted component to Econ Consulting? A: Ajay Sabherwal clarified that while he does not recall stating that Econ Consulting would be weighted towards the second half, he expressed satisfaction with the segment's performance and anticipates continued robust activity, particularly in non-M&A antitrust services.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
