FCN — FTI Consulting, Inc.

FTI Consulting Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: Achieved record revenues of $994.5 million, up 5.3% year-over-year. Excluding pass-through revenues, growth was 6.5%.
• Adjusted EBITDA: Declined to $104.5 million (10.5% of revenues) from $111.6 million (11.8% of revenues) year-over-year, primarily due to higher SG&A and direct costs.
• SG&A Expenses: Increased to $230.7 million from $202.2 million, driven by higher compensation, travel, and legal expenses, including extraordinary litigation costs.
• Earnings Per Share (EPS): GAAP EPS was $1.99; adjusted EPS was $2.16, reflecting a $0.17 reduction due to litigation-related expenses.
• Cash Flow: Net cash provided by operating activities was $152.3 million, significantly up from $55.7 million in Q2 2025.
• Share Repurchases: 2.6 million shares repurchased at an average price of $150.84, totaling $390.9 million.

2. Strategic Updates and Business Highlights

• Segment Performance:
  • CorpFin: Revenue growth of 8.5%, driven by higher bill rates and success fees, particularly in turnaround and restructuring.
  • FLC: Strong performance in financial services and cybersecurity, though overall volume was lower due to reduced regulatory enforcement.
  • Econ: Revenues increased significantly, with a notable sequential improvement attributed to M&A-related antitrust work.
  • Tech: Revenue growth of 18.4%, driven by increased demand for M&A-related services.
  • StratCom: Revenue growth of 5.4%, benefiting from corporate reputation services.
• Talent Acquisition: Continued investment in senior talent, with a 3.2% increase in billable headcount year-over-year.

3. Forward Guidance and Outlook

• Revenue Guidance: Reaffirmed for 2026, expecting revenues between $3.94 billion and $4.1 billion.
• EPS Guidance: Lowered GAAP EPS guidance to $8.70 - $9.30 from $8.90 - $9.60; adjusted EPS guidance set at $9.10 - $9.70.
• SG&A Expectations: Anticipated to be approximately $70 million higher than 2025, with a decrease expected in Q3 compared to Q2.

4. Bad News, Challenges, or Points of Concern

• Bottom-Line Performance: Adjusted EBITDA decline attributed to higher costs and SG&A, with concerns over the sustainability of this trend.
• Geopolitical Risks: Challenges in the Middle East due to ongoing geopolitical disruptions, with uncertainty on recovery timelines.
• U.K. Market Issues: Short-term revenue shortfalls in the U.K. attributed to case timing and client vacations, though management believes this is temporary.
• Litigation Costs: Extraordinary litigation-related expenses impacted earnings, with ongoing litigation against a former employee complicating financial outlook.

5. Notable Q&A Insights

• Middle East Operations: CEO Steven Gunby expressed uncertainty about the timing of recovery in the Middle East, citing geopolitical instability as a significant factor.
• Restructuring Outlook: While the restructuring market is currently uneven, there are pockets of activity that provide optimism for future growth.
• Capital Allocation: Management remains committed to a disciplined capital allocation strategy, prioritizing operations and investments while being opportunistic with share repurchases.
• Bill Rate Increases: Management acknowledged the need to adjust bill rates to align with inflationary pressures and indicated ongoing efforts to improve pricing strategies.

Overall, FTI Consulting reported solid revenue growth but faced challenges in profitability due to increased costs and geopolitical uncertainties. The company remains optimistic about its long-term growth trajectory, supported by strategic investments in talent and a strong market position.