FTI Consulting lowers 2004 outlook

It expects profit per share to fall as much as 20% after major resignations

February 10, 2004|By William Patalon III | William Patalon III,SUN STAFF

FTI Consulting Inc., which recently disclosed that top executives responsible for a fifth of the company's business had quit, yesterday reduced the outlook for this year's sales and profits.

In a message to analysts and investors, the Annapolis company said it expects earnings per share will be $1.27 to $1.40 this year, down as much as 20 percent from the $1.59 to $1.72 previously forecast. Revenue will also be down significantly according to the company - $422 million to $452 million for 2004, instead of the $475 million to $510 million previously projected.

Not as severe

The reduction, though substantial, was not as severe as investors had feared, said Mayank Tandon, director of research for the Boston branch of brokerage house Janney Montgomery Scott LLC.

FTI's shares gained $1.07, or 7.8 percent, to close at $14.82 yesterday. About 3.6 million shares traded.

"It was a relief rally of sorts," said Tandon. "These [outlook numbers] were a little less worse than what investors had been expecting."

The company announced on Jan. 28 the resignations of senior employees responsible for as much as 21 percent of the company's cash flow.

The departures of some senior executives had been expected. But what wasn't expected, however, was the exodus of some other top-level executives in FTI's corporate finance/restructuring unit.

At that time, the company said it was too early to say how badly those resignations would singe the bottom line. The shares plunged $8.24, or 35.8 percent, to close at $14.75 on the New York Stock Exchange, with 10.3 million shares changing hands.

FTI said yesterday that 13 managing directors, plus associated staff members from its finance/restructuring unit were leaving, noting that none of these former employees was governed by an employment agreement.

85% under contract

The company said that about 85 percent of its senior managing directors company-wide - including all 52 remaining high-level executives in the restructuring unit - were subject to employment agreements with remaining terms ranging from two years to six years.

The agreements also include "non-compete" clauses intended to keep executives from joining rivals for a specified period should they leave FTI.

Tandon characterized the near-term outlook for FTI, and its shares, as a "wait-and-see" period.

FTI, which provides consulting services to businesses both domestically and abroad, has about 1,000 employees and has offices in 24 cities.

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