FTI Strategic Comms revenue up almost one third in 'powerful' Q3 performance

Revenue in FTI Consulting's Strategic Communications segment increased 31.1 per cent to $69.4m in the third quarter of 2021, as the division outperformed the business as a whole.

Strategic Communications CEO Mark McCall: Plan to 'turbocharge' successful service areas
Strategic Communications CEO Mark McCall: Plan to 'turbocharge' successful service areas

The growth led to an almost doubling of underlying earnings in the segment. Adjusted EBITDA in Strategic Communications was $15.5m, or 22.3 per cent of segment revenues, in the quarter. That compares to $8.4m, or 15.9 per cent of segment revenues, in Q3 2020.

Revenue growth in the division excluding the impact of currency exchanges was 28.5 per cent.

Growth in Strategic Communications accelerated from 19.2 per cent in the second quarter, and the division outperformed the rest of FTI Consulting. Revenue across the group grew 12.9 per cent to $702.2m in the third quarter (growth excluding the impact of currency exchanges and acquisitions was 10.7 per cent).

Across FTI, adjusted EBITDA was $100.3m in Q3, versus $90.9m in the same period last year. Diluted earnings per share was $1.96, up from $1.35 in Q3 2020.

FTI raised its expectations for the year following the results. It now expects to achieve revenue for 2021 of between $2.75bn and $2.8bn - the previous expectation was $2.7bn to $2.8b. Earnings per share expectations also grew, from $5.89-$6.39 to $6.39-$6.64.

FTI is the second listed holding company with comms assets to upgrade its expectations for 2021 on Thursday following strong Q3 results; WPP did so after like-for-like revenue rose 15.7 per cent in the quarter.

Steven Gunby, president and chief executive of FTI Consulting, said: "These powerful results reflect our multi-year commitment to invest behind our leading positions and expand into new adjacencies by developing, attracting and supporting the best professionals. That commitment, in turn, has allowed us to grow our capacity and capabilities and increasingly deliver for our clients when they are facing their most significant challenges and opportunities."

Core business

Mark McCall, CEO of Strategic Communications, told PRWeek the division's growth in Q3 was due to the strategy undertaken over several years.

"We made the decision to continue investing in a couple of core areas of our business that had worked prior to the pandemic, and that strategy paid off. It's around transactions, crisis, regulatory impact - that has been the core of our business over a very long time."

McCall cited investments in core markets of the UK, Brussels and the US, alongside strengthening in other places, including Australia, Asia, and Latin America. "Given the uncertainty that's going on in terms of supply chains, governmental intervention... that global footprint has been really key for us."

He also pointed to integration between Strategic Communications and the wider FTI business, which includes Corporate Finance & Restructuring, Forensic and Litigation Consulting, Economic Consulting, and Technology segments.

FTI has made significant recent appointments in its Strategic Communications arm, including new MDs Doug Cooper, Shawn Bennett, Ed Goodwin and John Steitz (US); Renfeng Zhao and Angela Yu (China); and Nikita Sood (UK). Senior advisor hires include Allyson Y. Schwartz (US) and Neil Roberts and James Bowie (both Australia). McCall said the business has also focused on promoting from within. Global headcount at Strategic Communications was 817 at the end of Q3, up 6.7 per cent on the same time last year.

ESG

McCall highlighted the segment's growing ESG work, citing asset management and private equity clients who were increasingly using the services. "I consider almost everything we do is ESG related somehow in this environment," he stated. "It is only going to become a bigger and more important part of the world."

Regarding the COP26 climate conference in Glasgow, which starts on Monday, McCall said: "We have a number of people there. We've been helping clients think through positing in COP globally. It's an important part of what we do."

FTI's Strategic Communications arm is unlikely to follow other big corporate and strategic comms consultancies such as Finsbury Glover Hering and Teneo by making acquisitions. McCall said: "I'm very happy to lean into organic growth as a strategy for us, I think [the business has] grown well."

McCall said the business will stick to the current strategy "because it's working". However, there would be further investments, particularly in the UK, to help 'turbocharge' particularly successful services. These include the crisis, cyber, and the core transactions offers.

Meanwhile, FTI is taking a flexible approach to office openings, he said. "[COVID-19 has] impacted every office a little bit differently; we try to bear that in mind in the way we think about it. But I think every office is to a certain extent looking to bring people back again, and we're working to make that possible."

Of the London office, he said: "I believe it's been running around 40-50 per cent capacity. That probably ebbs and flows, not just in terms of months but days of the weeks. I know from my experience in other offices, Mondays and Fridays are typically quieter than Tuesdays, Wednesdays, Thursdays."

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