FTI Consulting tops $1 billion in revenue as staffing charge hits profit

FTI Consulting reported record third-quarter revenue of $1.013 billion while booking a $46.0 million charge tied to a plan to align staffing with demand, according to its Oct. 29 earnings release. Revenue rose 5.9% from $956.2 million a year earlier, with growth across all five business segments. Net income fell to $63.4 million from $82.8 million, with FTI attributing the decline primarily to the charge and higher operating and interest costs.

The growth was not uniformly a story of more work. Corporate Finance revenue increased 4.8% to $424.4 million, primarily because of higher success fees and realized billing rates, while demand for turnaround, restructuring and transactions services declined. In Forensic and Litigation Consulting, higher billing rates offset weaker demand for risk and investigations and data and analytics services, leaving revenue up just 0.2%.

Other practices reported stronger demand. Economic Consulting revenue rose 9.3% to $189.3 million, primarily on increased antitrust work. Technology revenue increased 9.7% to $103.2 million, led by M&A-related second-request services; its compensation costs included higher spending on as-needed consultants. Strategic Communications revenue grew 12.5% to $100.6 million as demand increased for public affairs and corporate reputation services.

Billable headcount also rose in parts of the business: Corporate Finance reported a 6.3% year-over-year increase and Strategic Communications a 5.5% increase. FTI had more than 8,200 employees across 32 countries and territories at Sept. 30.

The staffing-alignment charge included $45.5 million in salary- and benefits-related costs and $0.5 million in noncash real estate costs. FTI expects another approximately $7 million charge in the fourth quarter, including about $2 million in salary- and benefits-related costs associated with targeted headcount reductions and about $5 million in real estate costs. The company estimates the third- and fourth-quarter actions will produce approximately $80 million in annualized savings.