FTI Consulting's profits fall 33%

Economy is neither bad nor good enough for Baltimore firm

August 05, 2010|By Jamie Smith Hopkins, The Baltimore Sun

Some of FTI Consulting Inc.'s corporate services flourish in terrible times and others rev up when the economy is good, but this uncertain recovery is kicking the Baltimore firm down a notch.

FTI said Thursday that its second-quarter profits fell 33 percent, to $25.1 million. The U.S. economy improved to the point that fewer companies need its corporate restructuring services, but not enough to accelerate demand for help with normal business activities such as mergers and acquisitions.

Revenue fell 3.2 percent, to $349 million, over the three-month period ending June 30.

"Our pro-cyclical businesses have not improved as fast as we thought, and our restructuring business has declined faster," Jack B. Dunn IV, FTI's president and chief executive, told investors.

The "tepid pace of recovery" in capital markets is a particular roadblock, he added.

That's not stopping FTI from making an acquisition of its own, though. It announced late Wednesday night that it is purchasing a corporate-turnaround firm in Asia. FTI did not disclose the acquisition price.

FS Asia Advisory Ltd., which operates in Hong Kong, Shanghai, Singapore and Manila, employs 130 and produced $35 million in revenues last year.

FTI officials said Thursday that they are also talking to other firms about possible acquisitions.

Joseph D. Foresi and Jeffrey Rossetti, analysts with Janney Montgomery Scott, reiterated their "neutral" rating of the company's stock on Thursday. They said in a research note that uneven economic conditions are having a "rock and a hard place" effect on the firm.

"FTI appears to need the economy to move in one direction to maximize its performance," they wrote.

The company's profits jumped 31 percent in 2008 — an awful year for many firms — and rose 18 percent in 2009.



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