Amid 3 takeover deals, FTI's earnings disappoint 2nd-quarter projection sends shares tumbling, but CEO is optimistic

Commercial services

July 08, 1998|By William Patalon III | William Patalon III,SUN STAFF

FTI Consulting Inc., which announced late yesterday two takeover agreements and the completion of a third acquisition, also disclosed that its revenues, earnings and earnings per share will be well below analysts' expectations for the second quarter, which ended June 30.

Annapolis-based FTI, which sells litigation- and claims-management services to big companies, will post profits of about 9 cents to 10 cents a share when it announces results in late July. That's far short of the 22 cents per share expected by analysts, Zacks Investment Research said.

FTI shares closed at $11.50 yesterday, about 26 percent lower than Monday's closing price of $15.625, before trading was halted in advance of the announcement. About 252,000 shares changed hands, roughly four times the average daily volume.

Company officials could not be reached for comment late yesterday. In a statement, however, FTI Consulting Chairman and Chief Executive Officer Jack Dunn blamed the earnings shortfall on early ends to several customer contracts and the postponements of others. Dunn said he is optimistic about the company's prospects.

"FTI has experienced significant growth -- both internal and through acquisitions -- since early 1997," he said. "Our acquisition plan is ahead of schedule, and we remain committed to our long-term strategy of securing FTI as a force in the consulting world. The investments we make over the next six months in completing and integrating these acquisitions should put us back on track with our expectations for next year."

The company had been expected to earn 88 cents per share for this year and $1.05 in 1999, Zacks said. Analysts who follow the company could not be reached yesterday to determine whether their forecasts will be revised.

FTI said yesterday that it had acquired Klick, Kent and Allen Inc., an Alexandria, Va., consulting company that specializes in advising companies about economic and strategic issues. Terms were not disclosed.

Also, FTI said it had agreed to buy S.E.A. Inc. and Kahn Consulting Inc. S.E.A., based in Columbus, Ohio, offers services relating to product failures, structural distress and fires and explosions. Kahn Consulting, based in New York City, provides litigation consulting services, including expert testimony for cases involving financial issues, forensic accounting and fraud investigation.

Together, the three companies should boost FTI's revenues by about $30 million, without diluting investors' stake in the company, FTI said.

Pub Date: 7/08/98

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