CRAI - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Charles River Associates Third Quarter Fiscal 2018 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. At this time, I would like to turn the call over to Mr. remarks. opening for Holmes sir. ahead, go Please

Chad Holmes

Information fiscal are Thank terms, condition expectations of you, forward-looking statements in the in is defined statements those remind that XX these Act. the uncertain. outlook, operating margin and like guidance concerning expect, And current similar other the as terms the actual future results Section CRA, based I Exchange factors. today during including those from statements would performance implied or business, for materially EBITDA expressed statements contained non-GAAP inherently including or revenue to management's in and forward-looking to this any on these due statements financial everyone and results and important ahead, Brenda. looking XXXX, on of differ or conference raising using may is estimate, call, many those

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

constant-currency basis. a Additionally, of is to financial non-GAAP and refer to constant-currency on to EBITDA calculation GAAP descriptions measures call basis. encouraged measures a certain reconciliation measures comparable for of will their measures these on today's the to a financial release and refer presented presented and of we this some Everyone non-GAAP on measures

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

Paul Maleh

contributions several to results past strong everyone. Thanks, years. Chad, led and during good from my have Broad-based colleagues morning the

no proved quarter third The be different. to

year. on net by compared and and the Revenue year-over-year double-digit basis, non-GAAP EBITDA last third and delivered respectively, quarter non-GAAP CRA growth. income quarter, consecutive organic eight grew XX% the of XX% by entirely the quarter during an to XX% grew For revenue

the Forensic year-over-year CRA's Labor we by grew performance consulting & colleagues. and revenue Life portfolio, companywide the growth Employment, XX% These XX% regulatory by welcoming the of quarter Economics, Sciences XXX operations third Further and legal even our During & and Services, while within XX% highlighting double-digit Practices. approximately respectively. management International Competition was Antitrust American of XX% Finance, revenue. utilization North Strong practices led in nearly of achieved represent and quarter, new and strength

consultant knees, closely of markets in Economics practices, This by Professor more opposing reports our this expert years involving Susan Ritchie consummated [indiscernible], anti-competitive Looking Senior groundbreaking companies and of Principi, likely another representing Analyses successful project Marissa yey Both Scott effects Moore was antitrust & an and colleagues in president Moore U.S. independent acquisition the of the Competition testimony on Carla prepared Shapiro, at on of Antitrust Federal and [indiscernible]. case provided microprocessor relevant work first and make Moniz Antitrust led in Trade provide trial and supported Stephanie merger, Autobox series discussed XX the a the the was by Vice that President case acquisition. a Jeffrey was manufacturer. the to Beck Julian Consultant jury freedom. Commission Sierra past case a its Fiona Scott Vice case door senior prosthetic rival challenge the its controlled CRAs by testimony a In retained

of announced for practice, contributed also During the experts economics the lawyers. antitrust publication economics third and to affiliated quarter, economists the trust competition we edition in that CRA of and first

the practice Organization. Vice of for International of XXXX that the was [indiscernible] from paper Industrial President a the in addition, In paper theoretical Journal Best won co-author award a

plans. Within consultants their the support and over universities to in retirement finance related continue practice, involved litigation parties employee

to on X opine related were or Xb plans. have to the Our IRS response that universities retirement to the XXXX of regulations implemented experts been engaged in

in practice the digital misconduct. forensic posted again of delivering of the assets, the financial support any of The practice misrepresentation, funds third to a and the criminal sources accounting the determine solutions overall Our forensic once identify impact of into retained practice and fraud investigation services and uses percentage allegations quarter. to largest to was gain forensic revenue solutions

and the to addition practice In a attack. a that Cyber provided experienced Incident university e-discovery Response solutions cyber major

labor litigation sectors of determined senior professional increasingly services. while education, consultants practice and nature and transportation, the including affiliated our high IT enforcements. Our the providing for In employees consultants regulators assist and law in communications engaged matters, extent support breach across consultants to profile employment and the to and

market launch the practice clients of breakthrough life also plan, within underpin strategy drug. startup, in European a company assessment national market the they for to Finally practice a sciences a oncology a in unique helped country go to multi new The a engaged were pharmaceutical product.

In practice platform assisted a manufacturer. for patient business medical of with monitoring large addition the generation a next designing device international

the three first and strong through sense New achieved to momentum trends we CRA use predict complex monitors conditions. the with data the quarters year. intelligence patient is well-positioned artificial to and on critical build of to

$XXX,XXX a Chad to tailwinds over is year-to-date non-GAAP $XXX.X currency on a a revenue $X.X basis I'll or a million, a guidance constant to comments. of range million XXXX additional To now guidance XXXX non-GAAP million the summarize is reflecting result on raising from EBITDA Chad? EBITDA currency announced to Similarly million currency to $XXX million of reduction constant and X.X%. million relative be fiscal of half reflecting the non-GAAP our of tailwinds. currency and previously revenue for few to narrowing our two reduction a non-GAAP million upper As $XXX due currency basis and to range basis $XXX to X.X% constant margin in X.X% call are the $XX.X on a we to $XXX revenue expect we year-to-date to turn

Chad Holmes

Thanks Paul.

our available of our As a remarks. commentary financial website the reminder more on Relations expansive Investor section underprepared on is CFO results

we additional metrics let the few provide of related Before to fiscal performance me to in your questions, XXXX. get a quarter third our

staff third effective a staff. third net junior a the XXXX. to quarter Sequentially, X.X% effective administrative the or increase This in XXXX the with by with on XXX consultants we the the rate XXX effective XXX with XXXX. to consulting is quarter attributable and second fiscal increased compensation. staff tax XX.X% and XXXX U.S. experts accounting coupled was XXXX. as other XXX of rate of headcount, primarily tax the basis is lower with benefit revenue of the consisted of XX compared statutory basis non-GAAP stock-based compared year XX.X% general net non-GAAP ago. quarter driven end fiscal quarter third ended XX.X% third the for commissions related terms of on basis compared XX.X% XX.X% of rate we our quarter of of which quarter In fiscal senior growth X.X% compared a rate of for was a XX fiscal increase for with an for excluding end a non-GAAP with a tax expenses percentage was Non-GAAP of selling, non-employee XXXX experienced The on third the of for XX.X% compared the a the year-to-date our The decrease with On year-to--date. officers, impact

quarter of balance fiscal XXX Since and build days compared DSO in significant a quarter of end fiscal was of concluded days on paid XX at Turning third second days second the outstanding of quarter DSO of days the portion our with XXX with and XX We with and of consisted of unbilled XXXX. internationally. the of of unbilled quarter XXXX. the the of of the million of residing the fiscal quarter the million. a cash to of third in compared line with third XXXX days we at credit build a balance XX end equivalents $X days the quarter, $XX.X XX cash third end the the sheet of down

confidence to earlier Finally that now of shareholders. $X.XX announced cash increase open dividend we like capital common dividend our of call commitment XXXX as December This shareholders prepared our XX, to questions. the an share. from and to my our remarks. will Board XX, for be concludes Directors XXXX. Brenda, on up a demonstrates in outlook our quarterly record long-term our of in would we today, payable returning declared November to to That for XX% $X.XX This

Operator

comes Tim Blair. with first McHugh William Instructions] from of question the line [Operator Our

Tim McHugh

thanks. but business or of I there, maybe ask Americon the you piece, update sounded areas the in about NOI string it the just guess management think Hi, business. the I more was felt how and highlighted just I broader is guess side on I legal [ph] Americon of doing, regulatory like is scientist first, the us the double-digit growth, guess consulting

Paul Maleh

management American business and fees. energy contributing of Life side the predominant of competitive there the consulting the of line the Management up portion Sciences auctions makes practice up. practice business bidding other and areas that are was consulting

were So management But post in American quite the happy the consulting overall with digit double in we didn't quarter question. portfolio. growth revenue overall

Tim McHugh

was area one look forward it any here? Okay particular and in the headcount practice as growth we

Paul Maleh

Sure, get you grow the we're organically. all of Tim that contribution way with practices last from it's been way now, grass the has really number balance this you're over the years pleased the balanced is growth been finding and the roots is really

pretty lines So hires. across junior the the hires across with nice staff of is that that, it's headcount distributed and the and well balance different our practices story continues senior business growth our across

ahead. further the So to quarters hoping contributes that some we're success in

Tim McHugh

volatile in kind the are last more world here of just rising we rate and maybe more month or interest okay, broadly, environment. I a least a two, guess at

or So as any year if about how in sensitivity look guess I pipeline, continues? the more business volatility will we you sort how change forward of all perform near-term can there's at to just you the broadly, next talk I [indiscernible] guess, about, think but

Paul Maleh

all as any of watching better kind for business most professional time, the of good services advice seek decisions. uncertainty are we organizations Yes, Clearly, make is clients to closely.

are have kind originations building rising the we in been uncertain past year demand lead XX the to fact looking the strength so has project we seen theory the that. What observations which observing firm. today are coming definitively dip new as I the to any interest although future our has relatively of say in not environment. see XX going into are not the in of progresses, robust are is its flow M&A months, in so to whatsoever at Here, can is change outside that whether any marketplace I seen rates we affect continuing the

Tim McHugh

you Thank Okay.

Paul Maleh

Tim. you, Thank

Operator

from comes Sidoti. the of Marc with question Riddick line next Our

Marc Riddick

you of the wanted hires things seemed wondering bit a kind was I could that to as that. a I morning. you was as you mean, normally with wondering during there the good that on sort the headcount seems activity be and you the would at out engaged that I was could though as of because it, and well certainly recruiting to or senior are seasonally touch that if increased that But just a is there's on -- in you of address little quarter the of side. one that the some pretty if would jumped activities touch kind decent there a bump Hi, on certainly recruiting of quarter, bit senior willing me think but part activity third and to the staff the jump take if efforts the of maybe to I maybe necessitate over it place come college folks are in? of during demand up little of

Paul Maleh

revenue number been of growth, clients managers quality to to has deliver back seeing significant hired. service and on never driven, our people execute and skilled the clients and project having as support always these of by of we've has to success provide to practices a our you demand the office our growth been course, our been we our see fortunate as projects across of on Yes, expect CRA revenue that the quality start

be market. in secondary took VPs. on was recruiting eventually we skill So also move to But charge College to really our that of for very the generation senior there a the next both project new the really staff tried as and a of aggressive in, bring and the managers

Marc Riddick

quarter to during we reasonable is could on but fourth reasonable, magnitude earlier around it third you the saw the given to and that is the well that see see had flow demand what side? you as that increase wise? seeing Is And it are would, expect reasonable lead not senior we it the it to we maybe quarter, the another commentary should say an during Okay.

Paul Maleh

during QX, because The calendar during you additions secondary even the just to some QX be comes majority the of hires that on market university see and inflow the side QX tend headcount of of will things. of QX into

to during same because call I So into will provide inflow XXXX. to of elaborate our QX of QX as in try and outlook headcount we expect guidance see more we on that QX during wouldn't the and kind that

Marc Riddick

been we it coming then, be is thinking touch how the active mean, you the are I -- And the I throughout level should I how you seems as last running get but wonder little I I had end everything was feeling down utilization are year multiple seasonality wanted strong there to are bit of that, and be usually about the a sort a bit mentioned about before we to during of very the if obviously quarter, little during year, fourth practices. the how given but thinking sort of Okay. on how the which your across sense not think utilization of the has about of know that, earnings you one if call, Great. could towards you getting the

Paul Maleh

times to is at revenue mid-XXs. letter, low believe attractive in try which our profits. stated and shareholder kind goal our we sort Sure, those growth both of as That's utilization deliver to to to of our capacity then yield of I CRA investors long-term is we've levels rates will numerous productivity calibrate what of

say business line Now, points that again the you one around running fluctuations is of than of have only think at with target -- it the there, it that one that XX% a comfort little don't year-to-date or within and you I by utilization still will produce is range target level around indicative having contributing. of practice but said, higher

to our mid to forward. our as I'm low So with target long-term state are of going steady XXs stick you levels going

Marc Riddick

moment? you if that could Okay, great. And, about you to if could touch a encouraging thoughts share wondering And was thinking forward. you increase certainly it's again the bit I some as the in how give wondering I at repurchase the going to little opportunity see maybe dividend. the on for are was

Paul Maleh

we strong Yes, pride of on great take I this firm's being think, stewards capital.

Clearly, the a happened effective amount into profitable trying six, job the shareholders. seven weeks I last returning balance to capital has very what driven hasn't have hope think, so a information, we business an reinvestment guidance substantive I we the dollar for that. investors stock has we been an done and have growth to of buying and any see see in are it attractive surprise, a undervalued opportunities. provided, over all disappointed by that any We been as

I one on that be across to and flexibility. will defer the distribution to the But business, in sometimes reinvestment balance the in have say you months, the continue they fungibility business capital if level in time. we it So can won't try months later. there you happens our reinvestment point in six nine reinvestment, those repurchases both wish of at I and for And three, same

these particularly no weigh trying can all over of capital. of those slide on I seven the last six, about argue way So to demands there's stock But attractiveness the price, we that the are weeks. XX% given

Marc Riddick

color. Okay, the great. much for you very Thank

Paul Maleh

Thank you.

Operator

Midwood the line comes next question Thank of you. Capital. from David Instructions] Our [Operator Cohen with

David Cohen

any in Yes, to quarter? about the ask the so buyback company third the stock going I buybacks, was

Paul Maleh

buybacks during the David. There third no is quarter

David Cohen

that And you the of fairly know give but so, you can back still in made a versus of capital attractive elsewhere stock in corner slide to the more just the deploy color recent relatively I sort buy have price? on stock choices the when was average was

Paul Maleh

program XXb-X that in in or was into you a third decision place period. the There fairly quarter, capital investment attractive no introduce redistribution blackout the It's the other so of was variable the still to price. during have

was factor a or So so big precluded the have now the for a of that our into quarter chunk between clearly time buying been this all the we decisions. quarter entering back for the equity, from majority of of end of

is really part do not basis to buying try our windows. on decisions term other shorter a longer-term plan we The and on

but it's of there's something we a that strength. other are maintain are to financial clearly, So looking to balance trying we David now, at lot their just variables here

David Cohen

has anything in soft to solid what the pretty done given And I you've the past? been mean, consideration given financials tender, there a

Paul Maleh

words no, use to to done you. we've the trying in my here right think past for Yes, and is of Yes. No, the no. hesitation

there's our And using of financial holders a a So am a communicated, debt as buying have believer equity of funded all I our been as and redistribution investments ended internally means as of clearly, and consideration we XX-Q difficulty] [technical with of engineering that back quarter not debt. the shows. no

and So that the really build purchases. of the strength debt I'll a it company, is future, of into foundation a firm the if the for vehicle to is that take as on not asset share

David Cohen

this in the sort continue and I Well, strength to company. value guys market about the educating in you make progress of Okay. hope

Paul Maleh

Same that to who it can in-depth are Yes. takes here, think I value this. give determine shareholders to of analysis the listening of don't any that, lot help know, attractive you our a

our going do to best So shout results, deliver we are on there, going I and our to also we best David. the the are communication, but continue do to out appreciate these excellent to

David Cohen

All right, thanks.

Operator

this the the reached remarks. Mr. you. I of closing Q&A turn At back Thank end time, like have session. we to the to Maleh for Okay. would conference

Paul Maleh

us Again, We do thanks your joining everyone today. really time for CRA. interest appreciate in and

very today. are happening about and is to the the what news at we are We report able firm excited

year. We you. the look and With fourth this be forward on meeting months, today's updating progress that, to with you our will concludes quarter coming on call. we in the call investors next Thank

Operator

teleconference. today's concludes This

time, for You and your may you your lines disconnect participation. this thank at

CRA International (CRAI) 1 Nov 182018 Q3 Earnings call transcript