• Revenue: $3.7 billion, a 6% increase compared to $3.49 billion in 2023.
• GAAP Earnings Per Share (EPS): $7.81 compared to $7.71 in the prior year.
• Adjusted EPS: $7.99 compared to $7.71 in the prior year.
• Net Income: $280.1 million compared to $274.9 million in 2023.
• Adjusted EBITDA: $403.7 million or 10.9% of revenues, down from $424.8 million or 12.2% of revenues in 2023.
• Tax Rate: 20.2% in 2024, down from 23.3% in 2023.
• Fourth Quarter Revenue: $894.9 million, a decrease of 3.2% compared to Q4 2023.
• Fourth Quarter Net Income: $49.7 million compared to $81.6 million in Q4 2023.
• Fourth Quarter GAAP EPS: $1.38 compared to $2.28 in the prior year quarter.
• Fourth Quarter Adjusted EPS: $1.56 compared to $2.28 in the prior year quarter.
• Fourth Quarter Adjusted EBITDA: $73.7 million or 8.2% of revenues compared to $127.4 million or 13.8% of revenues in Q4 2023.
• Cash and Cash Equivalents: $660.5 million at December 31, 2024, compared to $328.7 million at December 31, 2023.
• Free Cash Flow: $360.2 million in 2024 compared to $174.9 million in 2023.
• 2025 Revenue Guidance: Estimated between $3.66 billion and $3.81 billion.
• 2025 GAAP EPS Guidance: Estimated between $7.44 and $8.24.
• 2025 Adjusted EPS Guidance: Estimated between $7.80 and $8.60.

• Warning! GuruFocus has detected 2 Warning Signs with FCN.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• FTI Consulting Inc (NYSE:FCN) reported record revenues for the 10th consecutive year in 2024.
• The company achieved a 6% increase in revenues, reaching $3.7 billion compared to 2023.
• FTI Consulting Inc (NYSE:FCN) maintained a strong balance sheet with no debt and increased cash and cash equivalents to $660.5 million by the end of 2024.
• The company continues to attract top talent, with significant interest from professionals wanting to join.
• FTI Consulting Inc (NYSE:FCN) has a strong multiyear growth trajectory, with 10 consecutive years of adjusted EPS growth.

Negative Points

• FTI Consulting Inc (NYSE:FCN) faced a slowdown in revenue growth in the second half of 2024, with a 3.2% decline in the fourth quarter.
• The company is experiencing significant headwinds in 2025, including senior departures in the US competition practice of its Compass Lexecon subsidiary.
• FTI Consulting Inc (NYSE:FCN) anticipates a substantial impact on revenue and profitability due to these departures, potentially similar to a $35 million decline in adjusted EBITDA experienced in 2014.
• The company is cycling a particularly low tax rate from 2024, creating tough year-on-year comparisons.
• FTI Consulting Inc (NYSE:FCN) has issued muted guidance for 2025, with expected revenue growth of only 1% and adjusted EPS growth of 2.6%.

Q & A Highlights

Q: Can you provide more details on the economic consulting outlook, particularly regarding the potential impact of senior departures on the 2025 outlook and beyond? A: Steven Gunby, President and CEO, explained that while it's early days, the potential impact could be substantial, similar to a $35 million decline in adjusted EBITDA experienced in 2014. The exact magnitude is uncertain, but the company has factored a similar scale into their 2025 guidance. The impact could extend into early 2026, depending on the timing of departures and project completions.

Q: How are you approaching headcount growth in 2025 given the recent senior-level hiring and headcount reductions? A: Steven Gunby noted that despite the headwinds, FTI Consulting remains focused on growth. The company anticipates hiring more senior people than it will lose, with headcount growth expected, particularly in the second half of the year. Ajay Sabherwal, CFO, added that they expect reasonable headcount growth despite recent reductions.

Q: Could you discuss the M&A trends and any expectations for a pickup in activity? A: Steven Gunby mentioned that while there were some headwinds in the fourth quarter due to projects winding down, there is optimism for a pickup in M&A activity as the year progresses. The company is seeing some early signs of improvement, although there is uncertainty due to potential government policies.

Q: Within the competition practice, is there any particular industry vertical being more impacted? How do you pitch FTI's network effect to potential recruits? A: Steven Gunby stated that the impact is not specific to any industry but rather related to personal connections with departing individuals. FTI's strength lies in its rigorous academic approach and the quality of its people, which continues to attract top talent. The company has recently signed up several academic affiliates, reinforcing its reputation.

Q: What are the key themes that underscore the attractiveness of FTI Consulting? A: Ajay Sabherwal highlighted several themes: a deep bench of experts helping clients navigate global volatility, successful talent attraction in key areas and geographies, a management team focused on growth and utilization, and a strong balance sheet that allows for flexibility in boosting shareholder value through organic growth, share buybacks, and acquisitions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.