CRAI - Earnings call transcript Q4 2017

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Operator

Good day, everyone. And welcome to Charles River Associates Fourth Quarter and Fiscal 2017 Results Conference Call. Today's call is being recorded. Today's release and prepared remarks from CRA's Chief Financial Officer are posted on the Investor Relations section of CRA's Web site at crai.com. With us today are CRA's President and Chief Executive Officer, Paul Maleh and Chief Financial Officer, Chad Holmes. would turn I to call time, Mr. this like the to over At remarks. for Holmes opening ahead, go Please sir.

Chad Holmes

CRA, call, financial our Thank other and current estimate, those due to, remind for or as XXXX statements factors. And uncertain. believe, business, conference seek, full everyone future Rob. fiscal expressed statements of statements contained that guidance condition to you, I based the from of results anticipate, terms, including look effective and expectations operating target, the performance Section concerning made important actual these would management's forward-looking XXXX, in our terms expect, year projected, those during the may the or statements our and EBITDA position, non-GAAP forward-looking and is these using any differ continues, non-GAAP Act. revenue in many materially like Information is in should of estimate to inherently including and are margin on fiscal this Exchange implied rate results tax XX similar statements defined looking-forward, on

SEC. information update undertakes Additional factors in the included release no in of these CRA's after with reports obligation is and to the statements any periodic call. forward-looking today's date regarding CRA this

on EBITDA and to refer to Investor refer certain calculations presented to on adjusted of GAAP measures descriptions for measures will reconciliation measures presented equivalents, the the on a basis. of these or Web margin, their and EBITDA is a non-GAAP measures this site Relations release above basis. noted of non-GAAP constant-currency the encouraged we to Additionally, including financial EBITDA a some adjusted call, including non-GAAP non-GAAP today's Everyone constant-currency

Paul it for turn over Paul? now me Let report. his to

Paul Maleh

the tax fourth and adjusted geographies based enjoyed everyone. in year more entire CX Year-over-year this business. the consulting more end non-GAAP morning, good regulatory than continued performance utilization to services strong between inorganic in year increase up XX% non-GAAP and acquired American largely experienced reported grew across respectively. quarter last services Non-GAAP XXXX quarter tripled appreciation. the our performance Companywide of ended revenue due XX% grew to XX% their than the strong nearly Year-over-year income across continued net than revenue ago. the contribution benefits again XX% increased legal growth. strength fourth and operations management with the from with stock XX%, of aided portfolio. our and XXXX North quarter EBITDA associated and We by XX% quarter from was We and XX% more CRA organic balance nearly growing and contributions and a headcount European broad growing and XX% year-over-year. operations during fiscal with XX% fiscal with the fourth grew from Chad, Thanks,

Competition Economics Our growth Forensic practices. Economics, our Employment, in strong solid and Antitrust contributions to with practice our Competition was performance driven regulatory, Life Within Energy, year-over-year the and Antitrust and and Services, by practices, Sciences double-digit & & legal Finance ongoing from Marakon Antitrust revenue engagement. support continued Labor

crime, build Visa campaign. a we sophisticated the to advised Services response experts to the U.S. mortgage and Europe largest response its assistance and email assisted fees. Demand misconduct interchange companies through in the CRA a one case example, the continued restricted for breach corporation For involving competition allegation also caused that multilateral of in residential to independent fraud, clients area throughout of Forensic non-compliance. phishing allegations seek by In cyber of data a its as

another investment electric groups and strategy, strengthen practice counter-terrorism our generation and complex delivered in anti-money Within driving generating America. the quarter the continued build to clients with In U.S. solid work its foreign continued been its laundering project and The interaction industrial. continue to sustainable for project to to life provide our analytical a The Marakon for and leveraging of the gas approach its customers care analytics see government anticipates life providers, similar In strategy, upon energy marketing patients included of new our of across four and U.S. strategic expanded to clients payers pharmaceutical level utilities, management In work addition, health was contract to the science market value. medication comes completely branded innovate to and the we all have practice ways fourth programs. Europe quarter, XXXX. been these teams companies the will the using projects in the energy The and projects compliance sources advanced performance implementation practice, it assisting sciences claims market. team segment foundation evaluate consulting, North gas leading rework has analysis. as in the partners engaged top with model on this experts monitoring. results global help data both merger growth company tactical results clients CRA when to support other from strong a and and new in patient it enterprise who and for

net non-GAAP XX% grew adjusted For XX%, XX% non-GAAP revenue, full by EBITDA and non-GAAP the income year, respectively. we and

of in million our driven contributions XX.X% exceeded EBITDA both was to We guidance the a relative fiscal and across of million, guidance basis XX.X%, non-GAAP inorganic adjusted revenue $XXX portfolio our a to achieved constant balance on non-GAAP currency and XXXX. and contributions. of strong by range organic Our our success $XXX to

nearly our returning was to this million $XX of shareholders. All while achieved

As the fiscal and half our origination, average XXXX. new strong with second solid the of with compared fiscal by after adjusting fiscal strength for project flow nearly indicate lead continue contributions portfolio More demand of growing XX% Even XXXX. half metrics see of recent originations compared weekly the approximately with CX each, these for XXXX. in X% we project new for greater second flow lead XXXX, business, services the each and to increased of project results demonstrate, project

timing continued for the success. position business be and determined size new these fundamentals CRA’s projects While the in of firm and cannot strategy advance,

look to Turning build broad-based in to XXXX. guidance. growth our our trend profitable of on We

year a CRA fiscal to For million to XXXX, full million non-GAAP XXXX, on margin $XXX in X.X%. relative basis revenue to $XXX of EBITDA expects range the X.X% and constant fiscal range in of the currency

Chad? XXXX, to our And the change margin XXXX, and over fiscal margin EBITDA a Chad for and now, margins our X.X%, the X.X% from non-GAAP remarks. XXXX in few non-GAAP X.X% Given reference to call guidance for non-GAAP EBITDA adjusted metric respectively. profit years turn were purposes, I'll to EBITDA additional

Chad Holmes

Thanks, Paul.

our results is commentary the on on As Web available site. section of Investor Relations a expansive financial reminder, our more

get fiscal additional we provide comments to performance. our on to quarter Before and a your few related fourth XXXX questions, me let metrics

tax a excluding In the for fourth a quarter with tax compared XX% for effective XXX fourth X.X% is administrative non-employee junior consulting year experts of consulting of XX.X% in the to fourth attributable fiscal staff. primarily by as increase growth headcount of terms general XX was of the effective expenses, a XXXX. rate for the revenue of a accounting XXXX. to The net ago. and year stock-based compensation. the XX.X%, for experts, selling, compared non-GAAP X.X% This with consisted non-GAAP on non-employee from XX.X% attributable with decline The significant non-GAAP excluding XXXX our percentage XXX ended we the of which basis total XXX of commissions to and at quarter X.X% driven quarter or to Non-GAAP rate XXX the staff senior we commissions approximately was reported staff, a end was fiscal officers, basis consultants other headcount, on XXX the

our appreciated stock from value, As tax benefits. received excess we in benefit the windfall

enacted XX% fiscal impact our XX.X% relating for 'XX. Again, and compared tax among XXXX. other non-GAAP Tax rate December rates on XXXX things, Cut U.S. XX, the stock-based with and full compensation. the of to for corporate as January the benefiting tax For Act lowered year, Jobs income The accounting X, was effective from was

charge the are As of on we billion tax toll repatriation estimated incurred in the assessment, changes our liabilities, statues, subject and non-GAAP from believe we deferred tax the re-measurement excluded the quarter, do our provision metrics. to initial our the tax. in have a we fourth $X.X one-time been of to related which not result of a assets to Based

fiscal to XX%, full XX% Going range year forward, stock-based account before effective compensation, volatility estimate tax non-GAAP our from we tax in quarter-to-quarter. items taking rate of the XXXX such which cause into in discrete impact rate effective be from will our could the as

and equivalents. with This to compared DSO of and $XX 'XX as nearly identical quarter consisted office the XX investment fiscal sheet. despite of days concluded We in the as of the capital is cash CX business for balance 'XX. the our of the was fiscal balance, XXX acquisition days the third of to XX DSO cash business the of both of days with fourth year’s million in nearly billed expansions, to talent, of continuing end ending days fiscal million days compared in third at last and the year. billed including the shareholders of with of fourth the fiscal well the returning XXX days of $XX in at quarter during Turning unbilled end quarter XX and XXXX. quarter XX unbilled

an share dividend the consisted of For of the million year capital million shares $XX.X to approximately at repurchases XXXX, approximately share. per price average of $XX.XX for shareholders return XXX,XXX of $X.X full of and payments

CRA’s bringing some As otherwise concludes adopt trading repurchase because authorized so Board our my be program Any cash common million common payable XX% to for under under announced share share, quarter, XX, to a quarter. its which shares XXXX. call to the blackout such on of that million. has stock, would declared allow XXbX-X an CRA per $X.XX remarks. authorized up laws today, Company the earlier might also this the self-imposed the prevented would aggregate announced our rule Rob, In expansion discretion from for quarterly connection total February totaled in Directors open shares at third to additional plan $X.X per million fourth from existing now of paid of repurchase quarter, That it times all when plan in dividend to $XX.X doing of as questions. or program, XX, CRA’s we program up March periods. share a of like cash repurchase a $X.XX today the expanded trading record shareholders in covering we value of insider Directors of of common of earlier our share In amounts with Directors repurchase to an purchases. dividend Board its quarterly $XX of XXXX We or of share these available Board of the

Operator

now We’ll [Operator a you. Thank be question-and-answer conducting session Instructions].

line of Blair. Please the from question. your is with Tim McHugh Our with question first William proceed

Trevor Romeo

in our This for Tim actually thanks Trevor is for Romeo today, taking questions.

First, basis. exchange just I a rates year, will this we’ve the that on you amortization expect for assuming to on to currency you’ve second, year? wanted from on been adjusted from comps any weaker of the regular modeling. guys similar a we what guidance stock-based know adjusted And EBITDA lift model given forgivable chose If loan profit or But you’re two at you dollars levels guidance. the the metric, the color change the then the thus stay parter and EBITDA? seen to why end more to far guide currency EBITDA revenue constant

Paul Maleh

the what with our here Associates. Charles to we guess, first the and question River to try the fundamentals me the economics address is of business I constant respect know at best Let currency.

take So movement other as dollar foreign occur exchanges to wanted in the CRA out in I within. any may or operates which that of variability just result a

now, of relative expectations the currency right with It, what the constant XXXX. of the our stayed dollar, up just for to or an we strength means either measure. indication So is are down

guidance. with the question second the your of So part respect to

longer annual we utilize connection internal when adjusted financial for purposes the guidance. EBITDA and adjusted providing measure facility, with we various still are our their credit referencing in While no margin EBITDA

measure. metric this in seen with we correspondents of the a some have financial our asked SEC, been to stop you have as may using As recent

economics We on historical have respect loan investors the of share-based there, and provide amortization compensation our those investors are detail that analyze. all and With forgivable still provide to of not amount will they current to forecasting and for find analyzing to quarters expense quarterly CRA. information who the reported going but assist useful we will to we the on prospective information be to continue measures, been outlook in

Trevor Romeo

you be big IQVIA, as would then you hires And the of give that I going for the And us $X.X to falling and how -- the adjustment forward practices why life And the essentially science contribute purchase on guess maybe the any how million transaction? much is SG&A? for can result? a through price expect new that idea now

Paul Maleh

part You SG&A take the first.

Chad Holmes

through pay be P&L. of traditional flow isolated context It transaction sense. outflow in isolated not former to consideration you came was and for We was financial summary the the it that to employer we the us, our did specifically acquisition it that those in to could And so a individuals that the was this all. call, to in provided had our it earnings identified therefore,

Paul Maleh

with exciting for specifically, sciences CRA to things a contributions our the and so And respect for these of colleagues, more happened XXXX of practice. during life lot

of by business, expanded the With the life services significantly CX acquisition breadth of we sciences the offered practice. our

in office that Switzerland through Lucerne, small a acquisition. added also We

in broad-base platform our in consultants aforementioned for to we everything think incorporated that interested we So practice. the of life a having ramp senior we going still jumped ahead. individuals in And guidance margin. for quarters can to to seeking found global Europe But our are When sciences XXX the benefit in base provide we going profit significantly from The to services. are these we joining, just we’re on their clients provided those a who contributions and XXX opportunity. we were to of do have are help that truly

Trevor Romeo

quick And just more then one. one maybe

great prepared from quarter and some unusual there But make quarter, and in year So now? activity results revenue project obviously, something have in this mentioned was you comp utilization would the any that tough may remarks. the

Paul Maleh

happy the that this quarter. just we've is project. for that about project dominated wonderful one There the is of not CRA it things And across was truly been revenue There No, I'm large one that XXXX. distribution singing to contingency several think quarters, that’s no really I no in say story projects broad-based. now

moving XXXX all shows really unison, results. from the we contributions of when get just having of practices to in portfolio. continue of a it the number produces fourth start And We parts quarter those special

going it does take XXXX, comp yes, to difficult going give in forward. us challenge, think that a So we’re I on

Operator

coming next Our your question. Riddick Please question with of from is Sidoti. proceed Marc with the line

Marc Riddick

to was the start take pick if was cadence could us how the and -- was quarter did that to wanted wondering up anything through moment, if around rate out a -- beginning utilization I through there at I on maybe the you you’ve it out and the for the But a and played I covered the quarter quarter? or did sense it of sense surely broad a that quarter. grow of throughout was rate that utilization revenue certainly wondering I was it played through the just get how the get based. want that to

Paul Maleh

real There was the movement utilization of peculiar during no quarter.

different, impacted matter with QX quarter consultants, You Thanksgiving December is very then is not and of heavy a level QX activity do and clients. clearly any holidays XXXX holiday vacation the traditionally that for the have and our our

quarter. those during stretches. that, in steady So expected our pretty throughout absent declines we was utilization productivity the saw holiday But

Marc Riddick

was going XX if the it end already the -- pretty into of quarter you’re at quarter the the to strong. very pick up was the third at of fourth So beginning

Paul Maleh

yes. think that’s I to fair say,

Marc Riddick

and going you’re you there, I wondering you little if certainly could anticipate could you touch was then what at the bit Europe spend a with you significant post and look -- potential upside Brexit I maybe a and what what greater environment. you’re some operations forward might little increase seeing was more there’s seeing if wondering on give European there? around a detail little as

Paul Maleh

decision continued side. entire my in we’re in the much regulatory lot activity directly segment say whether Europe to are and clients, has And But our Europe. life European management enjoying specifically also result, side I going the to are to is the activity Marakon sciences, in both ramp from complexity and can of pretty don't on UK’s not, always the exit the or But an is Brexit increase anticipate related competition Union seeing all going Well, increased colleagues on I we the it's across a know. consulting and clearly portfolio legal as the introduced what read. also hard a forward to what for

Marc Riddick

wondering the January I guess remember of switching if I you wondering When look I take correctly. -- guess was on that guess line, so rolling guide -- CX up XXXX you timing I little I I mean primarily at I through was how for rolls looking over the of on mix. could more as top at I organic. the bit that And if maybe a guess off end and

us give you bit little color 'XX? guidance behind more if on wondering revenue could Just your a into thoughts the

Paul Maleh

our is colleagues ongoing. close welcome and thrilled But CX times into ongoing, the we is to the is ask may acclimated skills We're all just applications an and unique also people from sector has and A and of effort services analytics of they services brought the we integration life introduced integration integration that throughout clients, sciences CRA in lot that of make administrative just new to XXXX. complete complete them our get of not Associates colleagues The think River be with that to the contributions not to the the are but XX standpoint. Charles other organization, broader I to provides. but sure capabilities, will that

set growth to does it an be with going We of XXXX we With contributions. impact integration. on organic think revenue still include of is range had work skills. its on that or are to going forward that there's we’re opportunity acquisition not those to large So expectation that respect any XXXX continue here It on expansion. to unique revenue inorganic through

and sciences life expansion. colleagues, So that help XXXX expansion, also of organic be we new part also have we’re that in will contributions as organic of in ramp their European their part our CX to looking

Marc Riddick

potential certainly imagine thoughts about? thinking are should would be 'XX, of one we maybe headcount wondering any But and in target I there And areas be you maybe life target potentially if I could growth was science would on areas. the share that other

Paul Maleh

going mid revenue always I in the So goal to am financial stated in grow long-term utilization in mid-single assume in be XXXX to it's that to safe given to to metrics of our the operate we terms increase increase go that have area fact XX% mid -- digits the that our back medium to in in range. is right roughly equal revenue. the to headcount the will pretty exited that range, we XX% in And

you in and lagging. But revenue bit headcount ahead to it's Sometimes revenue that think going are I it be a acquisitions. a we to roughly in means arriving, sometimes life-sciences, outside XXXX our little growth outside is to areas of but of the we’re life-sciences to came hire year. grew that of realized you C-X the Clearly, organic area is growth and half hire from main that the going that of have safe growth assume equivalent to was

So respect need too investments head. they with to

competition looking finance practice Our the marketplace, always list. there, on to can the to our continues practice through energy invest thrive in the I practice, go

targeted. we’ll no just contribution areas the I'm But in XXXX. that particular broad-based get So same hopeful

Operator

turn floor Instructions] back like Mr. I’d the to [Operator additional to closing Maleh remarks. for or

Paul Maleh

us being also patient for close to with year XXXX, is equation a value the on for my send appreciate really and the the a as the we’re of And thank our team success want And thanks out CRA. equation. through all to at interest investors on basis. as both joining sustained your and the side side this to a corporate of a true Again, also I trying appreciate consulting effort, them everyone have time special deliver just truly I We to colleagues today. CRA us in to

updating ahead. concludes everyone that, my look you. So the comments and that today, to Thank we in quarters with forward

Operator

teleconference. today's concludes This

lines your you disconnect your may this You time. participation. Thank for at

CRA International (CRAI) 15 Feb 182017 Q4 Earnings call transcript