FTI Consulting Balances Record Results With Econ Drag
FTI Consulting ((FCN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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FTI Consulting’s latest earnings call struck an upbeat tone despite clear pressure points. Management highlighted record full-year and quarterly results, broad-based strength in several segments, and heavy share repurchases that signal confidence. At the same time, they acknowledged sharp disruptions in Economic Consulting and softer cash generation, but framed these as manageable, with a detailed plan to repair the damage.
Record Full-Year Financials Underscore Resilience
Full-year 2025 revenues reached $3.79 billion, up 2.4% year over year and setting a new high-water mark for the firm. Record adjusted EBITDA of $463.6 million and GAAP EPS of $8.24, alongside adjusted EPS of $8.83 and an 11th straight year of adjusted EPS growth, reinforced the narrative of a durable franchise.
Fourth Quarter Delivers Strong Finish to the Year
The company closed 2025 with a robust fourth quarter, as revenues climbed 10.7% year over year to $990.7 million and rose 3.6% sequentially. Net income reached $54.5 million, while GAAP and adjusted EPS came in at $1.78, driving adjusted EBITDA to $106.2 million and lifting margins to 10.7% from 8.2% a year earlier.
CorpFin Outperformance Leads the Charge
Corporate Finance and Restructuring was the engine of Q4 growth, with revenues jumping 26.1% to $423.2 million. Turnaround and restructuring rose 25%, transaction work surged 46%, and transformation grew 13%, pushing adjusted segment EBITDA to $80.1 million and nearly doubling profitability versus the prior year.
FLC and Stratcom Extend Growth Runway
Forensic and Litigation Consulting posted Q4 revenues of $192.9 million, up 9.7% year on year, with adjusted segment EBITDA of $23.8 million and a 12.3% margin. Strategic Communications also delivered, growing revenues 14.8% to $99.4 million and generating $19.0 million of adjusted EBITDA at a healthy 19.2% margin, supported by rising revenue per professional.
Technology Segment Rebounds in Second Half
The Technology business showed a notable turnaround, with Q4 revenues rising 9.3% year over year to $99.0 million and segment EBITDA reaching $14.8 million, a 14.9% margin. Across the second half of 2025, Technology revenues were up 7% and adjusted EBITDA soared 69% versus the first half, fueled by stronger demand in second-request and litigation matters.
Share Repurchases Signal Management Confidence
FTI leaned hard into buybacks, repurchasing 5.3 million shares in 2025, roughly 15% of its share base, for $858.6 million at an average price of $163.07. In the fourth quarter alone, the company bought back about 520,000 shares for $83.5 million and still has nearly $492 million left under its authorization, underscoring confidence in long-term value.
Receivables Management Shows Operational Discipline
Management also highlighted improved working-capital discipline as days sales outstanding fell to 88 days at year-end 2025 from 97 days a year earlier. That tighter collections performance is particularly important as the firm balances heavy investment in talent and buybacks against a weaker year for operating cash flow.
Economic Consulting Hit Hard by Compass Lexecon Disruption
Economic Consulting was the clear weak link, with Q4 revenues down 14.5% to $176.2 million and adjusted segment EBITDA collapsing to $1.0 million, a 0.6% margin. The company tied the shortfall to disruption at Compass Lexecon, noting that this created a major drag in 2025 and that Q1 2026 is likely to mark the trough for the business.
Tech and Econ Create Nearly $100 Million EBITDA Drag
Taken together, Technology’s earlier softness and Economic Consulting’s troubles produced almost a $100 million adjusted EBITDA headwind in 2025. Management stressed that record company-wide results were achieved despite these pressures, implying that underlying strength in CorpFin, FLC and Stratcom more than offset the drag.
Operating Cash Flow Squeezed by Forgivable Loans
Operating cash flow dropped sharply to $152.1 million in 2025 from $395.1 million in 2024, a point that will matter to cash-focused investors. The largest factor was about $255 million of forgivable loan issuances, which the company framed as strategic investments in talent rather than a sign of weakening fundamentals.
Higher SG&A and Tax Noise Pressure Near-Term Earnings
Fourth-quarter results were also weighed down by an $11.8 million valuation allowance that shaved roughly $0.38 from EPS and pushed the effective tax rate to 37.1%, more than double the prior-year level. Looking ahead, management expects 2026 SG&A to run about $45 million above 2025, with Q1 alone roughly $30 million higher because last year’s legal settlement gains will not repeat.
Headcount, Leverage and Talent Investment Strategy
Billable headcount declined 3.2% and non-billable staff fell 2.5% year over year in Q4 as the firm adjusted its cost base. Even so, the company added 85 senior hires in 2025, acknowledging that such investments initially pressure the P&L and signaling plans for stepped-up junior hiring in the back half of 2026 to fully leverage that senior bench.
Tough Early-2026 Comparisons and Econ Recovery Timing
Management cautioned that year-on-year comparisons will be challenging in early 2026 as the firm laps pre-disruption results at Compass Lexecon. Economic Consulting is expected to remain a drag on EBITDA through the first half of 2026, with relief only in the second half as rebuilding efforts begin to bear fruit and the segment stops weighing on growth.
One-Time 2025 Benefits Mask Some Underlying Pressure
Executives were candid that certain one-time benefits, including prior legal settlement gains, boosted 2025 earnings and will not recur. That transparency sets expectations for tougher near-term comparisons, particularly as higher SG&A and ongoing investment in talent intersect with a still-recovering Economic Consulting franchise.
Guidance and AI Tailwinds Shape 2026 Outlook
For 2026, FTI guided revenues to $3.94–$4.10 billion, implying about 6.1% growth at the midpoint, and GAAP and adjusted EPS of $8.90–$9.50, with a lower expected tax rate of 22%–24%. The outlook assumes stronger aggregate growth from CorpFin, FLC, Technology and Stratcom, continued investment in senior and junior talent, and a gradual Economic Consulting recovery, while management sees AI trends as a structural demand tailwind.
The call painted a picture of a firm balancing short-term turbulence with long-term opportunity. Record 2025 results, strong segment performances and aggressive buybacks support a constructive view, even as Economic Consulting disruption, higher SG&A and softer cash flow cloud the near term. For investors, the story now hinges on execution against 2026 guidance and the pace of the Compass Lexecon rebuild.
