CHARLES RIVER ASSOCIATES (CRA)
SECOND QUARTER FISCAL YEAR 2019
EARNINGS ANNOUNCEMENT
PREPARED CFO REMARKS
CRA is providing these prepared remarks by CFO Chad Holmes in combination with its press release. These remarks are offered to provide the investment community with additional information on CRA’s financial results prior to the start of the conference call.
As previously announced, the conference call will be held August 1, 2019 at 10:00 a.m. ET. These prepared remarks will not be read on the call.
Q2 Fiscal 2019 Summary (Quarter ended June 29, 2019)
· Revenue: $110.6 million
· Net income: $5.6 million, or 5.0% of revenue; non-GAAP net income: $6.1 million, or 5.5% of revenue
· Net income per diluted share: $0.68; non-GAAP net income per diluted share: $0.73
· Operating margin: 7.5%; non-GAAP operating margin: 8.1%
· Non-GAAP EBITDA: $11.7 million, or 10.6% of revenue
· Effective tax rate: 29.8%; non-GAAP effective tax rate: 29.6%
· Utilization: 77%
· Consultant headcount at the end of Q2 of fiscal 2019: 664, which consists of 123 officers, 378 other senior staff and 163 junior staff
· Cash and cash equivalents: $15.6 million at June 29, 2019
Revenue
For Q2 of fiscal 2019, revenue was $110.6 million, compared with revenue of $105.5 million for Q2 of fiscal 2018.
Headcount
The following table outlines CRA’s consultant headcount at the end of the stated quarters:
|
| Q2 |
| Q1 |
| Q4 |
| Q3 |
| Q2 |
|
Officers |
| 123 |
| 123 |
| 124 |
| 125 |
| 127 |
|
Other Senior Staff |
| 378 |
| 387 |
| 375 |
| 367 |
| 343 |
|
Junior Staff |
| 163 |
| 177 |
| 188 |
| 193 |
| 158 |
|
Total |
| 664 |
| 687 |
| 687 |
| 685 |
| 628 |
|
Utilization
For Q2 of fiscal 2019, companywide utilization was 77%, compared with 79% for Q2 of fiscal 2018.
Client Reimbursables
For Q2 of fiscal 2019, on a GAAP and non-GAAP basis, client reimbursables were $12.5 million, or approximately 11.3% of revenue, compared with $12.1 million, or 11.5% of revenue, for Q2 of fiscal 2018.
Contingent Liability
For Q2 of fiscal 2019, the estimated value of the contingent consideration obligation increased by $0.7 million to $6.6 million at June 29, 2019, which is reported as a component of cost of services for Q2 of fiscal 2019. For Q2 of fiscal 2018, the estimated value of the contingent consideration obligation decreased by $1.7 million to $3.3 million at June 30, 2018, which was recorded as a reduction of cost of services for Q2 of fiscal 2018.
Selling, General and Administrative (SG&A) Expenses
For Q2 of fiscal 2019, on a GAAP and non-GAAP basis, SG&A expenses were $23.7 million, or 21.5% of revenue, compared with $23.7 million, or 22.5% of revenue, for Q2 of fiscal 2018. Commissions to non-employee experts are included in SG&A expenses. On a GAAP and non-GAAP basis, these commissions represented approximately 2.9% of revenue for Q2 of fiscal 2019, compared with 3.3% in Q2 of fiscal 2018. Excluding these commissions, on a GAAP and non-GAAP basis, SG&A expenses were 18.6% of revenue for Q2 of fiscal 2019, compared with 19.2% in Q2 of fiscal 2018.
Depreciation & Amortization
For Q2 of fiscal 2019, on a GAAP and non-GAAP basis, depreciation and amortization expenses amounted to $2.6 million, or 2.3% of revenue, compared with $2.4 million, or 2.3% of revenue, for Q2 of fiscal 2018.
Forgivable Loan Amortization
For Q2 of fiscal 2019, on a GAAP and non-GAAP basis, forgivable loan amortization was $6.5 million, or 5.9% of revenue, compared with $6.3 million, or 6.0% of revenue, for Q2 of fiscal 2018.
Share-Based Compensation Expense
For Q2 of fiscal 2019, on a GAAP and non-GAAP basis, share-based compensation expense was approximately $0.8 million, or 0.8% of revenue, compared with $1.1 million, or 1.1% of revenue, for Q2 of fiscal 2018.
Operating Income
For Q2 of fiscal 2019, operating income was $8.3 million, or 7.5% of revenue, compared with operating income of $9.7 million, or 9.2% of revenue, for Q2 of fiscal 2018. Non-GAAP operating income was $9.0 million, or 8.1% of revenue, for Q2 of fiscal 2019, compared with $7.9 million, or 7.5% of revenue, for Q2 of fiscal 2018.
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| Quarter ended |
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|
| June 29, |
| As a % of |
| June 30, |
| As a % of |
| ||
Income from Operations |
| $ | 8,311 |
| 7.5 | % | $ | 9,661 |
| 9.2 | % |
Adjustments needed to reconcile GAAP income from operations to non-GAAP income from operations: |
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Non-cash valuation change in contingent consideration |
| 651 |
| 0.6 | % | (1,739 | ) | -1.6 | % | ||
Non-GAAP Income from Operations |
| $ | 8,962 |
| 8.1 | % | $ | 7,922 |
| 7.5 | % |
Interest and Other Expense, net
For Q2 of fiscal 2019, interest and other expense, net was ($0.4) million on a GAAP basis and non-GAAP basis. This compares with interest and other expense, net of $0.1 million on a GAAP and non-GAAP basis for Q2 of fiscal 2018.
Income Taxes
The following table outlines CRA’s income tax provision recorded (in $000) and the resulting effective tax rates:
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| GAAP |
| NON-GAAP |
| ||||||||
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| Q2 |
| Q2 |
| ||||||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| ||||
Tax Provision |
| $ | 2,367 |
| $ | 2,898 |
| $ | 2,541 |
| $ | 2,197 |
|
Effective Tax Rate |
| 29.8 | % | 29.8 | % | 29.6 | % | 27.5 | % | ||||
Net Income
For Q2 of fiscal 2019, net income was $5.6 million, or 5.0% of revenue, or $0.68 per diluted share, compared with net income of $6.8 million, or 6.5% of revenue, or $0.79 per diluted share, for Q2 of fiscal 2018. Non-GAAP net income for Q2 of fiscal 2019 was $6.1 million, or 5.5% of non-GAAP revenue, or $0.73 per diluted share, compared with $5.8 million, or 5.5% of non-GAAP revenue, or $0.67 per diluted share, for Q2 of fiscal 2018.
Non-GAAP EBITDA
For Q2 of fiscal 2019, non-GAAP EBITDA was $11.7 million, or 10.6% of revenue, compared with $10.7 million, or 10.2% of revenue, for Q2 of fiscal 2018.
Constant Currency Basis
For Q2 of fiscal 2019 revenue was $110.6 million, and net income was $5.6 million, or 5.0% of revenue, or $0.68 per diluted share. On a constant currency basis relative to Q2 of fiscal 2018, Q2 of fiscal 2019 revenue would have increased by approximately $1.2 million to $111.8 million, net income would have decreased by $0.1 million to $5.5 million and earnings per diluted share would have decreased by approximately $0.01 to $0.67.
For Q2 of fiscal 2019, revenue was $110.6 million, and non-GAAP net income was $6.1 million, or 5.5% of revenue, or $0.73 per diluted share, and non-GAAP EBITDA was $11.7 million, or 10.6% of non-GAAP revenue. On a constant currency basis relative to Q2 of fiscal 2018, Q2 of fiscal 2019 non-GAAP revenue would have increased by approximately $1.2 million to $111.8 million, while non-GAAP net income would have decreased by $0.1 million to $6.0 million, earnings per diluted share would have decreased by approximately $0.01 to $0.72, and non-GAAP EBITDA would have decreased by $0.1 million to $11.6 million.
A description of the process for calculating the measures presented on a constant currency basis is contained under the heading “Non-GAAP Financial Measures” below.
Key Balance Sheet Metrics
Billed and unbilled receivables at June 29, 2019 were $132.1 million, compared with $127.2 million at June 30, 2018. Current liabilities at June 29, 2019 were $152.8 million, compared with $117.0 million at June 30, 2018.
Total DSO for Q2 of fiscal 2019 were 105 days, consisting of 68 days of billed and 37 days of unbilled. This compares with 107 days reported for Q2 of fiscal 2018, consisting of 74 days of billed and 33 days of unbilled.
Cash and Cash Flow
Cash and cash equivalents were $15.6 million at June 29, 2019, compared with $9.0 million at June 30, 2018.
Net cash provided by operating activities for Q2 of fiscal 2019 was $10.5 million, compared with $7.7 million for Q2 of fiscal 2018.
As of June 29, 2019, there was $41.0 million of borrowings in the U.S. and no outstanding borrowings in the U.K., compared with $17.5 million of borrowings in the U.S. and £2.5 million of borrowings in the U.K. outstanding at June 30, 2018.
Capital expenditures totaled approximately $3.1 million for Q2 of fiscal 2019, compared with $5.7 million for Q2 of fiscal 2018.
During Q2 of fiscal 2019, approximately 177,000 shares of common stock were repurchased for approximately $7.2 million, compared with Q2 of fiscal 2018, approximately 216,000 shares of common stock were repurchased for approximately $12.1 million.
A quarterly cash dividend of $0.20 per common share, for total dividends and dividend equivalents of $1.6 million, was paid in Q2 of fiscal 2019, compared with a quarterly cash
dividend of $0.17 per common share, for total dividends and dividend equivalents of $1.4 million, which was paid in Q2 of fiscal 2018.
GAAP Condensed Consolidated Statement of Cash Flows
CRA has derived the condensed consolidated statement of cash flow data for the years ended December 29, 2018 and December 30, 2017 from its audited financial statements appearing on Form 10-K for fiscal year ended December 29, 2018, filed with the Securities and Exchange Commission on February 28, 2019. The condensed consolidated statement of cash flow data for the fiscal third and fourth quarters of fiscal year 2017, each of the fiscal quarters of fiscal year 2018, and the first and second quarters of fiscal year 2019 have been derived from CRA’s unaudited financial statements appearing on Form 10-Q for each of the respective fiscal quarters as well as the consolidated statements of cash flows appearing on Form 10-K for the fiscal year ended December 29, 2018 and December 30, 2017 and have been prepared on the same basis as CRA’s audited financial statements.
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| LTM |
| Q2 |
| Q1 |
| Q4 |
| Q3 |
| FY |
| ||||||
(In thousands) |
| Q2 2019 |
| 2019 |
| 2019 |
| 2018 |
| 2018 |
| 2018 |
| ||||||
Net cash provided by (used in) operating activities |
| $ | 22,881 |
| $ | 10,458 |
| $ | (56,567 | ) | $ | 44,583 |
| $ | 24,407 |
| $ | 36,189 |
|
Net cash used in investing activities |
| (10,412 | ) | (3,130 | ) | (774 | ) | (2,068 | ) | (4,440 | ) | (15,447 | ) | ||||||
Net cash used in financing activities |
| (5,560 | ) | (6,741 | ) | 34,138 |
| (16,217 | ) | (16,740 | ) | (35,747 | ) | ||||||
Effect of FX rates on cash and cash equivalents |
| (346 | ) | 43 |
| 133 |
| (133 | ) | (389 | ) | (1,002 | ) | ||||||
Net increase (decrease) in cash and cash equivalents |
| $ | 6,563 |
| $ | 630 |
| $ | (23,070 | ) | $ | 26,165 |
| $ | 2,838 |
| $ | (16,007 | ) |
Cash and cash equivalents at beginning of period |
| 9,025 |
| 14,958 |
| 38,028 |
| 11,863 |
| 9,025 |
| 54,035 |
| ||||||
Cash and cash equivalents at end of period |
| $ | 15,588 |
| $ | 15,588 |
| $ | 14,958 |
| $ | 38,028 |
| $ | 11,863 |
| $ | 38,028 |
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|
| LTM |
| Q2 |
| Q1 |
| Q4 |
| Q3 |
| FY |
| ||||||
|
| Q2 2018 |
| 2018 |
| 2018 |
| 2017 |
| 2017 |
| 2017 |
| ||||||
Net cash provided by (used in) operating activities |
| $ | 21,540 |
| $ | 7,738 |
| $ | (40,539 | ) | $ | 38,067 |
| $ | 16,274 |
| $ | 45,858 |
|
Net cash used in investing activities |
| (16,046 | ) | (5,691 | ) | (3,248 | ) | (4,391 | ) | (2,716 | ) | (25,670 | ) | ||||||
Net cash used in financing activities |
| (11,818 | ) | (2,791 | ) | 1 |
| (1,016 | ) | (8,012 | ) | (21,851 | ) | ||||||
Effect of FX rates on cash and cash equivalents |
| 681 |
| (1,083 | ) | 603 |
| 476 |
| 685 |
| 2,168 |
| ||||||
Net increase (decrease) in cash and cash equivalents |
| $ | (5,643 | ) | $ | (1,827 | ) | $ | (43,183 | ) | $ | 33,136 |
| $ | 6,231 |
| $ | 505 |
|
Cash and cash equivalents at beginning of period |
| 14,668 |
| 10,852 |
| 54,035 |
| 20,899 |
| 14,668 |
| 53,530 |
| ||||||
Cash and cash equivalents at end of period |
| $ | 9,025 |
| $ | 9,025 |
| $ | 10,852 |
| $ | 54,035 |
| $ | 20,899 |
| $ | 54,035 |
|
Adjusted Net Cash Provided by (Used in) Operating Activities
Below are the annual, quarterly and last twelve-month reconciliations of GAAP net cash provided by (used in) operating activities for each of the periods presented to non-GAAP adjusted net cash provided by (used in) operating activities. The reconciling items are forgivable loan issuances and repayments for each period which are reported as a component of GAAP net cash provided by (used in) operating activities.
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| LTM |
| Q2 |
| Q1 |
| Q4 |
| Q3 |
| FY |
| ||||||
(In thousands) |
| Q2 2019 |
| 2019 |
| 2019 |
| 2018 |
| 2018 |
| 2018 |
| ||||||
Net cash provided by (used in) operating activities |
| $ | 22,881 |
| $ | 10,458 |
| $ | (56,567 | ) | $ | 44,583 |
| $ | 24,407 |
| $ | 36,189 |
|
Forgivable loan issuances |
| 31,806 |
| 1,953 |
| 21,930 |
| 1,219 |
| 6,704 |
| 30,572 |
| ||||||
Forgivable loan repayments |
| (763 | ) | (300 | ) | (400 | ) | 3 |
| (66 | ) | (3,396 | ) | ||||||
Adjusted net cash provided by (used in) operating activities |
| $ | 53,924 |
| $ | 12,111 |
| $ | (35,037 | ) | $ | 45,805 |
| $ | 31,045 |
| $ | 63,365 |
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Net Revenue |
| $ | 429,056 |
| $ | 110,573 |
| $ | 105,849 |
| $ | 108,763 |
| $ | 103,871 |
| $ | 417,648 |
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GAAP net cash provided by (used in) operating activities as a percentage of net revenue |
| 5.3 | % | 9.5 | % | -53.4 | % | 41.0 | % | 23.5 | % | 8.7 | % | ||||||
Adjusted net cash provided by (used in) operating activities as a percentage of net revenue |
| 12.6 | % | 11.0 | % | -33.1 | % | 42.1 | % | 29.9 | % | 15.2 | % |
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| LTM |
| Q2 |
| Q1 |
| Q4 |
| Q3 |
| FY |
| ||||||
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| Q2 2018 |
| 2018 |
| 2018 |
| 2017 |
| 2017 |
| 2017 |
| ||||||
Net cash provided by (used in) operating activities |
| $ | 21,540 |
| $ | 7,738 |
| $ | (40,539 | ) | $ | 38,067 |
| $ | 16,274 |
| $ | 45,858 |
|
Forgivable loan issuances |
| 30,116 |
| (379 | ) | 23,028 |
| 1,538 |
| 5,929 |
| 11,672 |
| ||||||
Forgivable loan repayments |
| (5,338 | ) | — |
| (3,333 | ) | (251 | ) | (1,754 | ) | (2,135 | ) | ||||||
Adjusted net cash provided by (used in) operating activities |
| $ | 46,318 |
| $ | 7,359 |
| $ | (20,844 | ) | $ | 39,354 |
| $ | 20,449 |
| $ | 55,395 |
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Net Revenue |
| $ | 393,355 |
| $ | 105,538 |
| $ | 99,476 |
| $ | 97,016 |
| $ | 91,325 |
| $ | 370,075 |
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GAAP net cash provided by (used in) operating activities as a percentage of net revenue |
| 5.5 | % | 7.3 | % | -40.8 | % | 39.2 | % | 17.8 | % | 12.4 | % | ||||||
Adjusted net cash provided by (used in) operating activities as a percentage of net revenue |
| 11.8 | % | 7.0 | % | -21.0 | % | 40.6 | % | 22.4 | % | 15.0 | % |
NON-GAAP FINANCIAL MEASURES
In these remarks, CRA has supplemented the presentation of its financial results calculated in accordance with U.S. generally accepted accounting principles or “GAAP” with financial measures that were not calculated in accordance with GAAP. CRA believes that the non-GAAP financial measures described below are important to management and investors because these measures supplement the understanding of CRA’s ongoing operating results, financial condition and cash flows. Non-GAAP adjusted net cash provided by (used in) operating activities is also
used by management to assess CRA’s ability to fund items such as the acquisition of talent, office expansions and distributions to shareholders. In addition, non-GAAP net income and non-GAAP EBITDA are used by CRA in its budgeting process, and the non-GAAP adjustments described below are made to the performance measures for some of CRA’s performance-based compensation.
The adjustments made to non-GAAP net income and non-GAAP EBITDA in these remarks are as follows: for all periods presented, the adjustments exclude non-cash amounts relating to valuation changes in contingent consideration and related tax effects; for the year to date period ended June 30, 2018, the adjustments also exclude net costs related to a lease recapture, related tax effects. The adjustments made to non-GAAP adjusted net cash provided by (used in) operating activities add back forgivable loan issuances, net of repayments. These remarks also present certain current fiscal period financial measures on a “constant currency” basis in order to isolate the effect that foreign currency exchange rate fluctuations can have on CRA’s financial results. These constant currency measures are determined by recalculating the current fiscal period local currency financial measure using the specified corresponding prior fiscal period’s foreign exchange rates. Finally, these remarks also present the non-GAAP financial metric EBITDA.
All of the non-GAAP financial measures referred to above should be considered in conjunction with, and not as a substitute for, the GAAP financial information presented in these remarks. EBITDA and the financial measures identified in these remarks as “non-GAAP” are reconciled to their GAAP comparable measures either in these remarks or in the attached financial tables. In evaluating these non-GAAP financial measures, note that the non-GAAP financial measures used by CRA may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
CRA INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL QUARTERS AND FISCAL YEAR-TO-DATE PERIODS ENDED
JUNE 29, 2019 COMPARED TO JUNE 30, 2018
(IN THOUSANDS, EXCEPT PER SHARE DATA)
|
| Fiscal Quarter Ended |
| Fiscal Year-to-Date Period Ended |
| ||||||||||||||||
|
| June 29, |
| As a % of |
| June 30, |
| As a % of |
| June 29, |
| As a % of |
| June 30, |
| As a % of |
| ||||
Revenues |
| $ | 110,573 |
| 100.0 | % | $ | 105,538 |
| 100.0 | % | $ | 216,422 |
| 100.0 | % | $ | 205,014 |
| 100.0 | % |
Cost of services (exclusive of depreciation and amortization) |
| 75,972 |
| 68.7 | % | 69,705 |
| 66.0 | % | 149,607 |
| 69.1 | % | 139,096 |
| 67.8 | % | ||||
Selling, general and administrative expenses |
| 23,737 |
| 21.5 | % | 23,739 |
| 22.5 | % | 46,480 |
| 21.5 | % | 45,389 |
| 22.1 | % | ||||
Depreciation and amortization |
| 2,553 |
| 2.3 | % | 2,433 |
| 2.3 | % | 5,169 |
| 2.4 | % | 4,664 |
| 2.3 | % | ||||
Income from operations |
| 8,311 |
| 7.5 | % | 9,661 |
| 9.2 | % | 15,166 |
| 7.0 | % | 15,865 |
| 7.7 | % | ||||
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Interest and other income (expense), net |
| (364 | ) | -0.3 | % | 76 |
| 0.1 | % | (1,119 | ) | -0.5 | % | (202 | ) | -0.1 | % | ||||
Income before provision for income taxes |
| 7,947 |
| 7.2 | % | 9,737 |
| 9.2 | % | 14,047 |
| 6.5 | % | 15,663 |
| 7.6 | % | ||||
Provision for income taxes |
| 2,367 |
| 2.1 | % | 2,898 |
| 2.7 | % | 3,802 |
| 1.8 | % | 3,938 |
| 1.9 | % | ||||
Net income |
| $ | 5,580 |
| 5.0 | % | $ | 6,839 |
| 6.5 | % | $ | 10,245 |
| 4.7 | % | $ | 11,725 |
| 5.7 | % |
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Net Income per share: |
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Basic |
| $ | 0.70 |
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| $ | 0.84 |
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| $ | 1.28 |
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| $ | 1.43 |
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Diluted |
| $ | 0.68 |
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| $ | 0.79 |
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| $ | 1.23 |
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| $ | 1.35 |
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Weighted average number of shares outstanding: |
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Basic |
| 7,925 |
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| 8,053 |
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| 7,970 |
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| 8,169 |
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Diluted |
| 8,218 |
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| 8,550 |
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| 8,282 |
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| 8,649 |
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CRA INTERNATIONAL, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE FISCAL QUARTERS AND FISCAL YEAR-TO-DATE PERIODS ENDED
JUNE 29, 2019 COMPARED TO JUNE 30, 2018
(IN THOUSANDS, EXCEPT PER SHARE DATA)
|
| Fiscal Quarter Ended |
| Fiscal Year-to-Date Period Ended |
| ||||||||||||||||
|
| June 29, |
| As a % of |
| June 30, |
| As a % of |
| June 29, |
| As a % of |
| June 30, |
| As a % of |
| ||||
Revenues |
| $ | 110,573 |
| 100.0 | % | $ | 105,538 |
| 100.0 | % | $ | 216,422 |
| 100.0 | % | $ | 205,014 |
| 100.0 | % |
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Net income |
| $ | 5,580 |
| 5.0 | % | $ | 6,839 |
| 6.5 | % | $ | 10,245 |
| 4.7 | % | $ | 11,725 |
| 5.7 | % |
Adjustments needed to reconcile GAAP net income to non-GAAP net income: |
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Non-cash valuation change in contingent consideration |
| 651 |
| 0.6 | % | (1,739 | ) | -1.6 | % | 434 |
| 0.2 | % | (1,846 | ) | -0.9 | % | ||||
Net costs related to lease recapture |
| — |
| — |
| — |
| — |
| — |
| — |
| 555 |
| 0.3 | % | ||||
Tax effect on adjustments |
| (174 | ) | -0.2 | % | 701 |
| 0.7 | % | (116 | ) | -0.1 | % | 633 |
| 0.3 | % | ||||
Non-GAAP net income |
| $ | 6,057 |
| 5.5 | % | $ | 5,801 |
| 5.5 | % | $ | 10,563 |
| 4.9 | % | $ | 11,067 |
| 5.4 | % |
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Non-GAAP net Income per share: |
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Basic |
| $ | 0.76 |
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| $ | 0.72 |
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| $ | 1.32 |
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| $ | 1.35 |
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Diluted |
| $ | 0.73 |
|
|
| $ | 0.67 |
|
|
| $ | 1.27 |
|
|
| $ | 1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| 7,925 |
|
|
| 8,053 |
|
|
| 7,970 |
|
|
| 8,169 |
|
|
| ||||
Diluted |
| 8,218 |
|
|
| 8,550 |
|
|
| 8,282 |
|
|
| 8,649 |
|
|
|
CRA INTERNATIONAL, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE FISCAL QUARTERS AND FISCAL YEAR-TO-DATE PERIODS ENDED
JUNE 29, 2019 COMPARED TO JUNE 30, 2018
(IN THOUSANDS)
|
| Fiscal Quarter Ended |
| Fiscal Year-to-Date Period Ended |
| ||||||||||||||||
|
| June 29, |
| As a % of |
| June 30, |
| As a % of |
| June 29, |
| As a % of |
| June 30, |
| As a % of |
| ||||
Revenues |
| $ | 110,573 |
| 100.0 | % | $ | 105,538 |
| 100.0 | % | $ | 216,422 |
| 100.0 | % | $ | 205,014 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Income |
| $ | 5,580 |
| 5.0 | % | $ | 6,839 |
| 6.5 | % | $ | 10,245 |
| 4.7 | % | $ | 11,725 |
| 5.7 | % |
Adjustments needed to reconcile GAAP net income to non-GAAP net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-cash valuation change in contingent consideration |
| 651 |
| 0.6 | % | (1,739 | ) | -1.6 | % | 434 |
| 0.2 | % | (1,846 | ) | -0.9 | % | ||||
Net costs related to lease recapture |
| — |
| — |
| — |
| — |
| — |
| — |
| 555 |
| 0.3 | % | ||||
Tax effect on adjustments |
| (174 | ) | -0.2 | % | 701 |
| 0.7 | % | (116 | ) | -0.1 | % | 633 |
| 0.3 | % | ||||
Non-GAAP net income |
| $ | 6,057 |
| 5.5 | % | $ | 5,801 |
| 5.5 | % | $ | 10,563 |
| 4.9 | % | $ | 11,067 |
| 5.4 | % |
Adjustments needed to reconcile non-GAAP net income to non-GAAP EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense, net |
| 519 |
| 0.5 | % | 301 |
| 0.3 | % | 530 |
| 0.2 | % | 338 |
| 0.2 | % | ||||
Provision for income taxes |
| 2,541 |
| 2.3 | % | 2,197 |
| 2.1 | % | 3,918 |
| 1.8 | % | 3,305 |
| 1.6 | % | ||||
Depreciation and amortization |
| 2,553 |
| 2.3 | % | 2,433 |
| 2.3 | % | 5,169 |
| 2.4 | % | 4,664 |
| 2.3 | % | ||||
Non-GAAP EBITDA |
| $ | 11,670 |
| 10.6 | % | $ | 10,732 |
| 10.2 | % | $ | 20,180 |
| 9.3 | % | $ | 19,374 |
| 9.5 | % |
CRA INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
| June 29, |
| December 29, |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 15,588 |
| $ | 38,028 |
|
Accounts receivable and unbilled services, net |
| 132,097 |
| 130,585 |
| ||
Other current assets |
| 17,773 |
| 12,527 |
| ||
Total current assets |
| 165,458 |
| 181,140 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 52,003 |
| 48,088 |
| ||
Goodwill and intangible assets, net |
| 95,369 |
| 96,054 |
| ||
Right-of-use assets |
| 114,704 |
| — |
| ||
Other assets |
| 58,393 |
| 45,564 |
| ||
Total assets |
| $ | 485,927 |
| $ | 370,846 |
|
|
|
|
|
|
| ||
Liabilities and shareholders’ equity |
|
|
|
|
| ||
Accounts payable |
| $ | 21,486 |
| $ | 21,938 |
|
Accrued expenses |
| 72,394 |
| 108,233 |
| ||
Revolving line of credit |
| 41,000 |
| — |
| ||
Current portion of lease liabilities |
| 10,898 |
| — |
| ||
Other current liabilities |
| 7,015 |
| 12,326 |
| ||
Total current liabilities |
| 152,793 |
| 142,497 |
| ||
Non-current portion of lease liabilities |
| 127,281 |
| — |
| ||
Other non-current liabilities |
| 10,973 |
| 31,877 |
| ||
Total liabilities |
| 291,047 |
| 174,374 |
| ||
|
|
|
|
|
| ||
Total shareholders’ equity |
| 194,880 |
| 196,472 |
| ||
Total liabilities and shareholders’ equity |
| $ | 485,927 |
| $ | 370,846 |
|
CRA INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
| Fiscal Year-to-Date Period Ended |
| ||||
|
| June 29, |
| June 30, |
| ||
|
| 2019 |
| 2018 |
| ||
Operating activities: |
|
|
|
|
| ||
Net income |
| $ | 10,245 |
| $ | 11,725 |
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
| ||
Non-cash items, net |
| 11,611 |
| 11,090 |
| ||
Accounts receivable and unbilled services |
| (1,068 | ) | (14,179 | ) | ||
Working capital items, net |
| (66,897 | ) | (41,437 | ) | ||
Net cash used in operating activities |
| (46,109 | ) | (32,801 | ) | ||
|
|
|
|
|
| ||
Investing activities: |
|
|
|
|
| ||
Purchases of property and equipment |
| (3,904 | ) | (8,939 | ) | ||
Net cash used in investing activities |
| (3,904 | ) | (8,939 | ) | ||
|
|
|
|
|
| ||
Financing activities: |
|
|
|
|
| ||
Issuance of common stock, principally stock option exercises |
| 1,526 |
| 916 |
| ||
Borrowings under revolving line of credit |
| 50,000 |
| 30,161 |
| ||
Repayments under line of credit |
| (9,000 | ) | (8,802 | ) | ||
Tax withholding payments reimbursed by shares |
| (388 | ) | (1,783 | ) | ||
Cash paid on dividend equivalents |
| (35 | ) | (98 | ) | ||
Cash dividend paid to shareholders |
| (3,196 | ) | (2,795 | ) | ||
Repurchases of common stock |
| (11,510 | ) | (20,389 | ) | ||
Net cash provided by (used in) financing activities |
| 27,397 |
| (2,790 | ) | ||
|
|
|
|
|
| ||
Effect of foreign exchange rates on cash and cash equivalents |
| 176 |
| (480 | ) | ||
|
|
|
|
|
| ||
Net decrease in cash and cash equivalents |
| (22,440 | ) | (45,010 | ) | ||
Cash and cash equivalents at beginning of period |
| 38,028 |
| 54,035 |
| ||
|
|
|
|
|
| ||
Cash and cash equivalents at end of period |
| $ | 15,588 |
| $ | 9,025 |
|
|
|
|
|
|
| ||
Noncash investing and financing activities: |
|
|
|
|
| ||
Purchases of property and equipment not yet paid for |
| $ | 4,053 |
| $ | 4,704 |
|
Purchases of property and equipment by a third party |
| $ | 62 |
| $ | — |
|
Asset retirement obligations |
| $ | 335 |
| $ | 220 |
|
Right-of-use assets obtained in exchange for lease obligations |
| $ | 37,284 |
| $ | — |
|
Right-of-use assets related to the adoption of ASC 842 |
| $ | 82,329 |
| $ | — |
|
Lease Liabilities related to the adoption of ASC 842 |
| $ | 106,765 |
| $ | — |
|
Supplemental cash flow information: |
|
|
|
|
| ||
Cash paid for taxes |
| $ | 3,583 |
| $ | 1,158 |
|
Cash paid for interest |
| $ | 510 |
| $ | 273 |
|