FTI Consulting Q3 Earnings Call Highlights

Key Points

• Strong third-quarter performance: Revenue surpassed $1 billion for the first time, rising 6% year over year, while adjusted EBITDA climbed 18% to $153.7 million and adjusted EPS reached a record $3.84. Growth occurred across all five business segments, despite a $46 million special charge weighing on GAAP results.
• Economic Consulting showed signs of recovery: Compass Lexecon contributed positively year over year after materially weakening consolidated results over the prior 18 months, though management cautioned that a full return to historical profitability will take time. FTI also expects targeted workforce actions affecting about 4% of employees to generate approximately $80 million in annualized savings.
• Full-year adjusted EPS guidance increased: FTI raised its 2026 adjusted EPS outlook to $9.50–$10.00 from $9.10–$9.70 while maintaining revenue guidance of $3.94 billion–$4.10 billion. The company also repurchased $79.4 million of stock in the quarter and reduced debt to $852 million.

FTI Consulting NYSE: FCN reported third-quarter 2026 revenue above $1 billion for the first time, with growth across all five business segments and record adjusted earnings per share. Management said the results reflected a return to the company’s longer-term growth trajectory after an approximately 18-month period in which weakness at its Compass Lexecon economic consulting business weighed on consolidated performance.

Revenue rose 6% year over year, while adjusted EBITDA increased 18% to $153.7 million. Adjusted EBITDA margin expanded 150 basis points to 15.2%. Adjusted EPS reached a record $3.84, up 48% from $2.60 in the prior-year quarter.

GAAP EPS was $2.35, compared with $2.60 a year earlier. The company said GAAP results included a $46 million special charge, equivalent to $1.36 per share, and $4.5 million of extraordinary litigation-related expenses, or $0.13 per share.

Leadership cites recovery in economic consulting

CEO and Chairman Steve Gunby said the quarter included favorable items such as unusually high success fees and a lower tax rate, but he said underlying performance also improved materially. After normalizing for those items, Gunby said he had “a hard time getting the number below $2.90 a share,” compared with average adjusted EPS in the low-$2 range over the preceding four quarters.

Gunby attributed much of the company’s recent relative underperformance to disruption in Compass Lexecon. He said FTI’s economic consulting segment had generally generated $25 million to $30 million of quarterly adjusted EBITDA in 2023 and 2024, but its cumulative adjusted EBITDA over the most recent four quarters was approximately zero.

“The dislocation that we have been working through in Compass Lexecon” was the principal factor obscuring progress elsewhere in the business, Gunby said. He added that the segment became accretive to year-over-year results during the third quarter, though he cautioned investors not to expect an immediate return to its historical profitability levels.

Gunby said the company issued significant forgivable loans in connection with retaining and recruiting talent during the disruption. He expects their amortization to remain a factor, estimating that approximately $50 million of forgivable loans could be amortized this year, with a comparable level possible next year under current contracts.

Targeted workforce actions expected to yield $80 million in annual savings

CFO Angela Nam said FTI recorded a $46 million third-quarter special charge, including $45.5 million in salary and benefits costs tied to targeted headcount actions and $500,000 of non-cash real estate-related costs. The actions affected all segments and regions, but were concentrated in the Middle East and the United Kingdom, as well as selected investments in EMEA and Asia-Pacific.

The company also cited construction solutions operations primarily outside the U.S. and certain strategic communications activities as areas affected by the actions. Nam said FTI is shifting strategic communications toward higher-margin, event-driven work.

FTI expects an additional $7 million special charge in the fourth quarter, including approximately $2 million in salary and benefits costs and $5 million in real estate-related costs. The third- and fourth-quarter actions are expected to generate approximately $80 million in annualized cost savings.

About 4% of FTI’s total employees were affected by the actions. Approximately 230 impacted employees remained included in third-quarter headcount because of varied notice periods, with most expected to depart by the end of the fourth quarter. Nam said the company expects about $15 million of benefits from the actions during the fourth quarter.

Gunby characterized the actions as responses to investments or market positions that were not working as intended rather than a reaction to normal cyclical demand weakness. He said the company generally seeks to retain strong employees through down cycles, but will exit or address bets that do not offer a credible path to improvement.

Segment results included record success fees and growth across businesses

• Corporate Finance & Restructuring: Revenue increased 5%, aided by higher success fees and realized bill rates. Adjusted segment EBITDA rose 7% to a record $102.8 million. Record success fees of $40.7 million included a particularly large fee from a transactions assignment involving the sale of a loan portfolio for the Federal Reserve Bank of Boston.
• Forensic and Litigation Consulting: The segment delivered record revenue, despite lower volumes in global risk and investigations and data and analytics. Nam attributed the lower volume largely to reduced regulatory enforcement. Adjusted segment EBITDA was $38 million, compared with $42.6 million a year earlier, when the segment benefited from a legal gain contingency.
• Economic Consulting: Revenue increased 9%, driven by non-M&A and M&A-related antitrust demand in North America and EMEA. Adjusted segment EBITDA increased $18.5 million year over year.
• Technology: Revenue grew 10%, supported by demand for M&A-related second requests and antitrust services across North America, EMEA and Asia-Pacific. Adjusted segment EBITDA increased $2.4 million, and margin rose 100 basis points to 15.5%.
• Strategic Communications: Revenue rose 13%, led by public affairs and corporate reputation demand. The business supported transactions involving Prologis, SEGRO and McCormick-Unilever Foods, among others.

Management said demand remains uneven in major end markets. The company cited lower overall volumes in restructuring, M&A and regulatory work as it enters the seasonally slower fourth quarter. In particular, FTI said announced deal volume slowed notably in the third quarter, while reduced U.S. regulatory enforcement and the completion of several large engagements created headwinds for Forensic and Litigation Consulting.

Guidance updated for earnings

FTI reaffirmed its full-year revenue outlook of $3.94 billion to $4.1 billion. It raised its adjusted EPS guidance to $9.50 to $10.00 from a previous range of $9.10 to $9.70, while forecasting GAAP EPS of $7.55 to $8.05.

The company said its adjusted EPS outlook excludes expected third- and fourth-quarter special charges of $1.55 per share and extraordinary litigation-related expenses of $0.40 per share. FTI expects fourth-quarter economic consulting adjusted segment EBITDA to be closer to its second-quarter level, reflecting third-quarter benefits that it does not expect to recur, including a paid-time-off true-up and lower bad debt.

During the quarter, FTI repurchased approximately 524,000 shares for $79.4 million, at an average price of $151.55 per share. Through the first nine months of 2026, the company repurchased 3.9 million shares for an average of $153.09 per share. Total debt fell to $852 million at Sept. 30 from $1 billion at June 30, following $168 million in debt repayment during the quarter.

About FTI Consulting (NYSE:FCN)

FTI Consulting, Inc is a global business advisory firm that helps organizations address complex financial, legal, operational and reputational challenges. The company provides independent expertise to corporations, law firms, financial institutions, government agencies and other organizations involved in major disputes, transactions, investigations, restructurings and regulatory matters.

FTI Consulting operates through several practice areas, including Corporate Finance & Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology and Strategic Communications.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.