FTI Consulting, which helps bring strapped companies out of distress, can hardly keep up with demand for its services. By Elizabeth Leary, Contributing Editor April 2, 2008 FTI Consulting fancies itself "the company behind the headlines." But with earnings that only get better as the news gets worse and a soaring stock, FTI has been commanding some headlines of its own lately.You wouldn't guess its importance from the company's unassuming headquarters. FTI (symbol FCN) is nestled in a nondescript high-rise among the tourist traps and museums of Baltimore's inner harbor, with a view of a 65-foot tall neon guitar promoting the Hard Rock Café. But scan FTI's client list and you'll find 66 of the Fortune 100 companies and 97 of the top 100 U.S. law firms. MF Global, Northern Rock and Centro are just a few of the front-page names that have recently sought FTI's guidance. Less accessible is the FTI Web site, where the consulting-jargon is thicker than molasses. To boil down the buzzwords, FTI operates in five segments. The Corporate Finance division works with strapped companies "to stop the bleeding and bring the company out of financial distress," explains chief executive Jack Dunn. The Economic Consulting arm advises companies considering a merger or acquisition. And the Strategic Communications unit handles public and investor relations for companies in a crisis -- Société Générale (which recently reported a $7.1 billion loss because of what it said was fraudulent trading) was one recent client. Advertisement The remaining two divisions often overlap substantially. The Technology arm licenses software that companies use to mine their electronic paper trail, to "come up with all the e-mails people shouldn't have sent each other," says Donald Bisson, manager of Evergreen Mid Cap Growth. In tandem, the Forensic and Litigation Consulting division does electronic detective work. Usually, that entails snooping for signs of cooked books. However, that segment recently worked on the investigation into steroids use among current and former Major League baseball players. FTI's been growing like it's had a shot or two of steroids itself. Revenues expanded by 41% in 2007, to a bit more than $1 billion. The company, which operates in 16 foreign countries, generated 16% of revenues abroad. And its bottom line reached $92 million in 2007, up 119% from 2006 (earnings per share rose from $1.04 to $2.00). FTI can hardly keep up with the demand for its services. "At the economic consulting segment they've had to use outside consultants because there's too much demand," Bisson says. The company expanded its workforce of consultants by 94% during 2006 and 2007, and it currently employs 2,200 billable consultants. FTI has already announced eight acquisitions since the start of 2008. But the good thing about moving against the tide is that FTI can hire when everyone else is downsizing. "We're thriving from turnover around the world," Dunn says. Management focuses on luring the "rock star" economists, lawyers and scientists, who in turn attract bright young minds looking for a challenge. "It's like the Yankees, everyone wants to be with the best," Dunn says. Advertisement Founded in 1982, what was originally called Forensic Technologies International Corp. began as a two-man operation to provide expert-witness testimony. The company kept its focus on litigation for many years, mastering its niche in complex technical investigations. Dunn joined FTI in 1992 as its Chief Financial Officer to assist management in buying out the company's original investors. He says the major turning point for FTI came in 1998, when it began diversifying out of litigation with the acquisition of two financial consulting firms. Dunn says that today's environment reminds him of the economic and stock-market woes of the first few years of the decade. "It's a crisis of transparency, liquidity and confidence," he says. "But this is tougher than in 2000-2001, because with Enron you knew how bad it was going to get." While FTI thrived through the pricking of the technology bubble and the accompanying recession, its leaders have since been aggressively diversifying the business to avoid becoming exclusively a foul-weather business. "Five years ago we were 80% in the restructuring business, and then we were a dead on indicator of bad times," Dunn says. Advertisement But in 2007, only 26% of the revenue mix came from that arm, while the technology and strategic-communications businesses experienced the strongest growth. Now, Dunn says, as long as the business landscape keeps changing FTI will have work to do. "People ask us: Do you root for good times or bad times?" Chairman Dennis Shaughnessy says. "We root for interesting times." FTI is no stock for bargain hunters. The stock soared 121% in 2007 and at its April 2 price of $66.19 has already gained 12% in 2008. Over the past six months, insiders have dumped 84% of their shares. FTI now trades for 28 times the average analyst estimate for 2008 of $2.46 per share. FTI is managing its growth with finesse, but investors may want to let some of the froth fizzle before sinking their money into the stock.