FTI Consulting Margins Slip as Buyback Drives Debt Higher
FTI Consulting reported second-quarter revenue of $993.5 million, up 5.3% from a year earlier, as profitability narrowed and net debt nearly tripled year-over-year to fund share repurchases.
FTI Consulting (FCN) posted second-quarter revenue growth of 5.3% to $993.5 million, decelerating from the 9.5% growth it reported in the first quarter, as the business advisory firm's earnings declined for a second straight quarter.
The deceleration accompanied a third consecutive quarter of year-over-year margin compression. Adjusted EBITDA margin fell to 10.5% in the quarter from 11.8% a year earlier, extending a slide that had already pulled six-month margins to roughly 10% in the first quarter. Net income dropped to $57.8 million from $71.7 million in the prior-year period, an approximately 19% decline that widened from the 7% year-over-year drop FTI Consulting reported in the first quarter.
Segment results showed a widening split between FTI Consulting's businesses. Technology revenue climbed 18.4% to $99.0 million, with Adjusted EBITDA margin expanding to 9.1% from 6.3%, as merger-related "second request" regulatory work drove demand. Corporate Finance revenue grew 8.5%, but its margin slipped to 20.9% from 21.5% as billable headcount rose 7.8%, outpacing revenue. Economic Consulting was the weakest performer, with revenue down 1.5% to $188.8 million and segment margin falling to 4.7% from 7.4%, continuing a trend that had already pulled six-month margin to 0.8%. Strategic Communications revenue fell 2.6% to $100.0 million on lower pass-through billings, though margin held roughly steady at 18.5%.
FTI Consulting lowered its full-year GAAP earnings guidance to $8.70 to $9.30 a share from $8.90 to $9.60, a range it had reaffirmed as recently as the first quarter, while reaffirming revenue guidance of $3.940 billion to $4.100 billion. The company also introduced Adjusted EPS guidance for the first time, at $9.10 to $9.70, alongside a new non-GAAP adjustment for $6.6 million of "Extraordinary Litigation-Related Expenses" tied to the FTI vs. Orszag litigation, which the company began treating as non-recurring in the quarter.
FTI Consulting's balance sheet moved in tandem with an accelerated buyback program. Net debt rose to $856.3 million at June 30 from $556.7 million three months earlier and $317.2 million a year ago, driven primarily by $390.9 million of share repurchases under a $370 million authorization the board approved June 3. FTI Consulting disclosed on July 1 that it had expanded its revolving credit facility to $1.5 billion from $900 million and extended its maturity to June 2031 from November 2027, leaving $1.019 billion in long-term debt outstanding at quarter-end.
Operating cash flow offered a counterpoint to the debt increase. Net cash from operations reached $152.3 million in the quarter, up from $55.7 million a year earlier, reversing a first-half cash deficit that had reached $157.7 million against $409.5 million used in the same period last year.
The combination of slowing growth, compressing margins and a debt-funded buyback marks a shift for FTI Consulting from the balance-sheet conservatism of recent quarters toward a more leveraged capital-return posture, even as its guidance cut signals caution about the pace of profit growth for the remainder of 2026.