FTI Consulting Stock Declines 4.1% Since Q2 Earnings Beat

Lower pass-through revenues partly offset growth in Corporate Finance, Technology and Forensic and Litigation Consulting. Billable headcount increased 3.2%.

However, the results did not impress the market as the stock has declined 4.1% since the earnings release on July 30.

FCN shares have depreciated 6.4% over the past year compared with the industry’s 30.2% decline. The Zacks S&P 500 composite has risen 22.9% over the same time frame.

FCN's Profitability Faces Cost Pressure

Net income declined 19.4% year over year to $57.8 million. GAAP earnings were $1.99 per share, down 6.6%, and included $0.17 in extraordinary litigation-related expenses.

Adjusted EBITDA fell 6.4% to $104.5 million as higher direct costs and selling, general and administrative expenses more than offset revenue growth. The adjusted EBITDA margin contracted 130 basis points to 10.5%.

Direct costs reflected continued investments in senior talent and supporting teams across Corporate Finance, Forensic and Litigation Consulting and Strategic Communications. Selling, General & Administrative (SG&A) expenses increased to $230.7 million from $202.2 million due to higher compensation, travel and entertainment, and legal costs.

FTI Consulting's Corporate Finance Revenues Rise

Corporate Finance revenues increased 8.5% year over year to $411.4 million. Higher realized bill rates across transactions, transformation, and turnaround and restructuring services, along with increased transformation demand and higher success fees, supported growth.

Transformation revenues advanced 26%, while transactions revenues increased 10%. Turnaround and restructuring revenues declined 2%, reflecting a softer market, although management said the company continued to gain share in large and complex restructuring matters.

Adjusted segment EBITDA rose 5.3% to $86 million. However, the margin declined to 20.9% from 21.5% as higher compensation, including the impact of a 7.8% rise in billable headcount and increased SG&A expenses, partly offset revenue gains.

FCN's Technology Segment Delivers Strong Growth

Technology revenues increased 18.4% to $99 million, driven by stronger demand for merger-related second-request services. This was partly offset by lower demand for investigations services.

Adjusted segment EBITDA jumped 71.3% to $9.1 million, while the margin expanded to 9.1% from 6.3%. Higher revenues more than offset increased compensation, including higher as-needed consultant costs, and SG&A expenses.

Forensic and Litigation Consulting revenues grew 4.1% to $194.3 million. Higher realized bill rates and demand for risk and investigations services offset weaker demand for dispute advisory services. Adjusted segment EBITDA edged up 0.5% to $31.4 million.

FTI Consulting's Economic Business Improves Sequentially

Economic Consulting revenues declined 1.5% year over year to $188.8 million. Lower demand for non-merger & acquisitions (M&A)-related antitrust and international arbitration services was partly offset by stronger M&A-related antitrust demand and higher realized bill rates in financial economics.

The segment improved sharply compared with the first quarter, with revenues rising 7.5% sequentially. Adjusted segment EBITDA improved to $8.8 million from a loss of $5.9 million, reflecting higher revenues and lower compensation expenses.

Strategic Communications revenues decreased 2.6% to $100 million due to a $7.4 million decline in pass-through revenues. Excluding pass-through revenues, sales increased 5.4%, driven primarily by higher demand for corporate reputation services.

FCN Generates Strong Quarterly Cash Flow

Net cash provided by operating activities increased to $152.3 million from $55.7 million a year earlier. Free cash flow totaled $141 million, compared with $38.3 million in the prior-year quarter.

FTI Consulting repurchased 2.6 million shares at an average price of $150.84, spending $390.9 million. The company had approximately $344 million remaining under its repurchase authorization at quarter-end.

Cash and cash equivalents were $163.7 million as of June 30, 2026, compared with $198.3 million at the end of the preceding quarter. Total debt reached $1.02 billion, primarily reflecting capital deployed for share repurchases.

FTI Consulting Reaffirms Revenue Guidance

The company reaffirmed its 2026 revenue guidance of $3.94-$4.10 billion, with the midpoint of $4.02 billion being higher than the Zacks Consensus Estimate of $3.98 billion. It lowered GAAP earnings guidance to $8.70-$9.30 per share from $8.90-$9.60, reflecting extraordinary litigation-related expenses.

Adjusted earnings are projected between $9.10 and $9.70 per share, with the midpoint of $9.40 per share being higher than the Zacks Consensus Estimate of $9.25 per share. Management expects Economic Consulting to generate year-over-year revenues and adjusted segment EBITDA growth during the second half.

The effective tax rate is expected to be between 21% and 23%, down from the previous 22-24% range. SG&A expenses are projected to be roughly $70 million higher than in 2025, compared with the earlier expectation of a $60 million increase.

Currently, FTI Consulting 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 plc TT reported impressive second-quarter 2026 results. TT’s adjusted earnings of $4.31 per share outpaced the consensus mark by 0.9% and rose 11.1% from the year-ago quarter’s actual. TT’s total revenues of $6.35 billion surpassed the consensus mark by 2.9% and increased 6.4% year over year.

Clean Harbors, Inc. CLH posted better-than-expected second-quarter 2026 results. CLH’s adjusted earnings of $3.22 per share beat the Zacks Consensus Estimate by 17.5% and rose 36.4% year over year. Total revenues of $1.74 billion surpassed the consensus estimate by 6.8% and increased 12% from the year-ago quarter.

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