M&A lag contributes to FD revenues decline in 2009

WEST PALM BEACH, FL: FTI Consulting's strategic communications firm FD reported a 20% decrease in revenues for 2009, according to its year-end earnings report released February 26.

WEST PALM BEACH, FL: FTI Consulting's strategic communications firm FD reported a 20% decrease in revenues for 2009, according to its year-end earnings report released February 26. FD's revenues for the year were about $180 million, down from $224.5 million in 2008. Its Q4 revenues dropped 12% from $51.6 million in the year-ago period to about $45 million this quarter, which ended December 31, 2009.

FD's Q4 operating income was down to $4.6 million, compared to $10.3 million for the fourth quarter in last year's earnings. For the year, FD's operating income declined to $16.5 million, a 63% drop from the $44 million it reported at the end of 2008.*

FTI attributed the decline to a downturn in M&A transactions and lower fees from clients, which shifted in 2009 from retainer-based to project revenues.

“We saw the worst economic time since the depression,” CEO Jack Dunn said. “Strategic consulting is the most sensitive area of our business economically, and we saw a reduction in M&A and IPO consulting last year.”

Executives at FD were not immediately available for comment.

FD ranked sixth in terms of value on MergerMarket's 2009 M&A League Tables of PR Advisers, and advised on the most number of deals for the year, 148.

Companywide, FTI reported $1.4 billion in revenues for the year, an 8% increase over the $1.3 billion in 2008. Net income was also up to about $143 million from $121 million in 2008.

The global advisory firm's Q4 revenues were $343 million, a 6% increase over 2008's $323 million. Net income for the quarter was $36.6 million, up from about $30 million in the year-ago period.

FTI is predicting 2010 revenues of between $1.47 billion and $1.57 billion. The company plans to lay off 150 employees and consolidate three offices.

*Correction: PRWeek previously reported FD's year-over-year operating income as a 66% drop from $49 million, but in fact it was a 63% decline from $44 million. In addition, in its 2008 year-end report, FTI originally reported FD's Q4 operating income as $10.9 million, and $47.3 million for the year. An accounting reclassification in Q3 of 2009 resulted in an update of figures, which was reflected in 2009's earnings report, according to an FD spokesperson.

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