FTI Consulting, Inc. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. FTI Consulting, Inc. is a global expert firm providing professional services in corporate finance, forensic and litigation consulting, economic consulting, technology, and strategic communications. The company operates as a large accelerated filer with approximately 8,170 employees as of the period end.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenues | $983.3 million | $898.3 million |
| Net Income | $57.6 million | $61.8 million |
| Diluted EPS | $1.90 | $1.74 |
| Adjusted EBITDA | $96.8 million | $115.2 million |
| Operating Cash Flow | ($310.0 million) used | ($465.2 million) used |
| Free Cash Flow | ($320.6 million) | ($483.0 million) |
| Cash and Equivalents | $198.3 million | $151.1 million |
| Total Debt | $755.0 million | $365.0 million |
| Days Sales Outstanding (DSO) | 98 days | 100 days |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 9.5% year-over-year, driven by higher demand in Corporate Finance (+19.2%), Strategic Communications (+18.4%), and Technology (+5.3%). This was partially offset by a decline in Economic Consulting (-2.3%).
- Profitability: Net income decreased 6.8% due to higher direct costs, increased SG&A expenses, and higher interest expense. The prior year included a non-recurring legal settlement gain.
- Debt Structure: Total debt increased significantly from $365.0 million to $755.0 million. This was primarily due to the issuance of a new $300.0 million Incremental Term Loan in March 2026 and increased utilization of the revolving credit facility.
- Cash Flow: Net cash used in operating activities improved (decreased outflow) by $155.2 million compared to the prior year, attributed to lower forgivable loan issuances and higher cash collections.
- Share Repurchases: The company repurchased approximately 787,000 shares for $126.8 million, reducing the weighted average shares outstanding and contributing to higher EPS despite lower net income.
Outlook, Risks, and Management Commentary
- Capital Allocation: Management expects to fund operations and capital expenditures through cash flows and existing credit facilities. Approximately $364.9 million remains available under the stock repurchase program.
- Capital Expenditures: The company spent $10.6 million in Q1 2026 and expects to spend between $34 million and $42 million for the remainder of the year.
- Risks: Key risks include changes in demand for services, ability to recruit/retain talent, geopolitical disruptions, foreign currency fluctuations, and the impact of AI adoption. The company notes no material changes to risk factors from the previous 10-K.
- Unusual Items: There were no special charges in Q1 2026, compared to $25.3 million in Q1 2025 related to headcount reductions. The prior year also included a legal settlement gain that did not recur.
Investor Verification Checklist
- Verify the sustainability of revenue growth in the Corporate Finance and Strategic Communications segments.
- Monitor the impact of the new $300 million term loan on future interest expense and leverage ratios.
- Assess the trend in Days Sales Outstanding (DSO) and the adequacy of the allowance for expected credit losses ($106.4 million).
- Review the utilization rates and billable rates across segments to understand margin pressure.
- Confirm the status of the $364.9 million remaining stock repurchase authorization and future buyback intent.