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FTI Consulting, Inc. 10-Q Summary: Quarter Ended June 30, 2026

Business Context and Reporting Period

This summary covers the quarterly report (Form 10-Q) for FTI Consulting, Inc., a global expert firm specializing in crisis and transformation consulting. The reporting period is the three and six months ended June 30, 2026. The company operates through five segments: Corporate Finance, Forensic and Litigation Consulting (FLC), Economic Consulting, Technology, and Strategic Communications.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Revenues increased 5.3% year-over-year (YoY) for the quarter and 7.3% for the six-month period, driven by growth in Corporate Finance, Technology, and FLC segments.
• Profitability Decline: Net income decreased 19.4% YoY for the quarter and 13.6% for the six-month period. This was primarily due to higher direct costs, SG&A expenses, and a significant increase in interest expense.
• Interest Expense Surge: Interest expense rose 121.2% YoY for the quarter to $11.6 million, attributed to higher borrowings on the Revolving Credit Facility and a new $300 million Incremental Term Loan.
• Debt Structure: Total debt increased from $365.0 million at year-end 2025 to $1,020.0 million as of June 30, 2026, following the execution of a new credit agreement and term loan.
• Operating Cash Flow: Net cash used in operating activities improved significantly to a use of $157.7 million for the six months ended June 30, 2026, compared to a use of $409.5 million in the prior year period, largely due to reduced forgivable loan issuances and higher collections.

Guidance, Outlook, and Risks

• Capital Allocation: The company continues its aggressive share repurchase program. During the six months ended June 30, 2026, it repurchased approximately $520 million of stock. As of June 30, 2026, $344.0 million remained available under the program.
• Unusual Items: The company recorded $6.6 million in "Extraordinary Litigation-Related Expenses" in Q2 2026 related to the FTI vs. Orszag, et al. case, which management deemed non-recurring and outside the ordinary course of business.
• Tax Equity Investment: FTI entered into a $42.1 million tax equity investment (TEI) in clean energy projects during Q2 2026, utilizing the proportional amortization method.
• Outlook: Management expects cash flows from operations and available credit facilities to fund needs for the next 12 months. Capital expenditures for the remainder of 2026 are estimated between $24 million and $29 million.
• Risks: Key risks include demand fluctuations, ability to retain talent, foreign currency exposure, and the outcome of ongoing litigation. The company noted no material changes to risk factors from the previous 10-K.

Investor Verification Checklist

• Debt Covenants: Verify compliance with the new Credit Agreement's leverage ratio covenants given the increased debt load ($1.02 billion).
• Utilization Rates: Monitor billable professional utilization rates, which declined in Corporate Finance (59% vs 61% prior year) and FLC (54% vs 57% prior year), impacting gross margins.
• Legal Exposure: Track the status and potential financial impact of the FTI vs. Orszag litigation, which generated $6.6 million in expenses in Q2.
• Pass-Through Revenues: Analyze the impact of declining pass-through revenues (noted in Strategic Communications and overall revenue commentary) on net revenue quality.
• Share Count: Confirm the impact of continued buybacks on diluted share count, which decreased from 34.5 million (6-month 2025) to 29.7 million (6-month 2026), supporting EPS despite lower net income.