CRAI - Earnings call transcript Q4 2018

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Operator

Good day, everyone, and welcome to Charles River Associates' Fourth Quarter and Fiscal Year 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 website 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

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

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

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

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

Paul Maleh

with delivering ended CRA in XXXX the company's results everyone. continued year entire performance full the morning, good fiscal and Chad, best across strong Thanks, our portfolio, history.

impressive utilization end the more XX% XX% the which to double-digit What the of in growth our our over the from of year-over-year we of XXX, our rate This since growth period. investment portfolio increase delivering that reflects services, is demand ninth profit XX% same fiscal even consulting period. is quarter of broad-based quarter. XXXX, across fourth the headcount, grown fiscal consecutive with over During revenue has growth for to an combined continued of XXXX experienced by

than XX% example, and Building net while grew For and income respectively. non-GAAP net performance, increased EBITDA non-GAAP XX% XX%, fiscal and while income XX% by XXXX XXXX, year-over-year, strong this XX% fiscal with XXXX grew fiscal on compared more by EBITDA by and non-GAAP XX%, respectively. revenue increased

closely practice. Services, revenue our fourth and more in Looking at quarter, our was with performance from by the practices solid Sciences Finance, Energy, &Competition driven contributions Economics Forensic Life Antitrust double-digit our growth

& American X% regulatory, also European We and experienced North continuing across practice engagements. Within enjoyed to another quarter, operations strong legal with the geographies Competition Antitrust and operations growing ongoing XX% Economics year-over-year. strength growing merger-related support while

Court Burrows case example, and were states. cases. case. valuation the practice of ultimately provide plan horizontal vertical merger Insurance on the The divestiture on and company. issues in in CVS CRA of President, economic to number consultant, consultants Mark senior concerns subject drug issues testimony the testimony issues pipeline Stillwater Seabron CRA's merger continue Chancery CRA's for expert Columbia addressed Vice both competitive another the raise one prescription on practice DOJ of that provided CRA and Justice trials, of concluded and The Mining Industry departments in expert that prepared or Aetna's Part of addressed Columbia competitive Stillwater advise the D U.S. did not extensive Medicare the U.S. valuation by any Adamson Department two For concerns Jim Aetna. individuals. business other group Finance Vice Zmijewski a for in Delaware Appraisal by in raised analysis for Chairman, to

of seek allegations of noncompliance. to strong across fraud, and a experienced independent industries assistance, growth variety misconduct practice responding as Services when clients Forensic Our

on solutions provide to retained specialized was e-discovery multinational inventory of hit behalf by For was example, company the ransomware. practice incident a cyber that services and response

into to of In to our engaged consultants areas hospice help and Energy provider investigations government and transactional consultants quarter, centered shareholder oil to ongoing energy litigation consulting our support. renewable Energy respond management Statute. arbitration grow were in practice international the industry multistate violations worked continued CRA support, the refining. its false In consulting, in Anti-Kickback strategy fourth and an alleged of a in the Within litigation addition, claims dissenting the around supported matter act

TransCanada and Energy In addition, gas practice a between -- collaboration assisted litigation. in pipeline across cross Finance our practices,

as and supporting the Life performance continued made by the resource District clients Finally, and the benefited over of utilities alternatives. clearly with past assisting such two Empire analysis practice work of years. XXXX from Energy talent regulate Power commercial its planning acquisition Gulf investments NextEra its Sciences

commercial came resulting non-GAAP groups. helping develop of is development guidance CRA currency million, pharmaceutical basis, company ensure our of reported to XXXX For AD basis X.X% revenue a The $XX late-stage to of fiscal million global fiscal $XXX million million client $XXX.X large introduction tailwinds. involved million governments product constant-currency tailwinds, on for efforts $XXX X.X%. consisting blueprints To $X.X country at helping $XX.X of the margin $X.X million, positioning. a targeting margin results optimal closely results strategic patient on in and the in is sclerosis. consisting example, develop strategy a working markets were helped a to the XXXX adjustment opportunity CRA country range in understand for EBITDA their the with and team pharmaceutical companies to currency reported educate and go-to-market These end basis. of XX relative EBITDA non-GAAP non-GAAP a million Full and options is on blockbuster and of Alzheimer cross-functional non-GAAP revenue for our year a crucial of a for upper Recapping non-GAAP drug. also global summarize, and effectively EBITDA consultants the support teams blueprints define engagement to constant-currency constant-currency in a multiple leading asset and to XXXX, basis exceeded of the a constant-currency guidance on we a of adjustment X.X% million $XXX

our demonstrate success in continued performance XXXX fiscal the marketplace. Our

new and project opportunities look of over trend calendar our significantly year. improved and fiscal XXXX broad-based on XXXX. throughout the growth profitable to business grew build We New in originations

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

And we additional Chad? While comments. remain performance call arising that and a from we around short-term are over conditions business. in to I'll with turn political few global CRA's XXXX, pleased the our uncertainties for mindful can now, Chad affect challenges economic strong

Chad Holmes

Thanks, Paul.

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

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

higher and with commissions terms on XX.X% X.X% reported a consisted In of a for with compared senior fiscal the U.S. expenses selling, XXXX as for non-GAAP increase at with growth end XXXX. ago. headcount which rate to total excluding experts, was of non-GAAP the X.X% for XXX the of of staff consulting XXXX rates attributable we staff, officers, headcount, quarter effective the tax ended X.X% nonemployee year Non-GAAP statutory The XX.X% junior This related smaller XXXX. fiscal for comp, primarily a with of lower XXX general quarter attributable a The to was consultants net was quarter fourth to the revenue, XX.X% of is in the other excess basis the year to in the accounting compared we a rate fourth quarter by staff. stock-based benefit XXX a the XXX the tax or that of XX XXX offset compared of percentage basis fourth on the and fourth administrative

during full XXXX, our XXXX the XXXX. with new For driven The for tax U.S. the XX.X% by lower non-GAAP statutory effective was rate rate the largely XX.X% fiscal year in was compared rate

Turning XX of XXX we of the of was of of equivalents. at third of through million value remain per days fourth and $XX fiscal fourth quarterly the with the fiscal DSO days quarter of XXXX. XX quarter quarter returning XX with share balance the cash DSO XX long-term repurchases days compared to in maximizing compared consisted days end our by cash reinvesting at and sheet, third XXX capital to and concluded both the quarter unbilled days the end We committed billed and unbilled the days in and with XXXX. business in fiscal of of share billed in XXXX dividends.

shares the million. total we XXX,XXX stock value of approximately a for repurchased of our During quarter $X.X common

$XX.X share year, full XXX,XXX the For repurchases million shares. or approximately totaled

quarter, bringing additional value the repurchase $XX authorized Board announced an expansion of to of common shares available today, stock a of amount CRA's from of As our program quarter. the program to Directors cash in quarterly the our million an XX% we million. earlier paid up total share under existing share of In per also $X.XX $XX.X dividend third repurchase common share, fourth

quarterly of XXXX. a concludes Directors share, earlier up total prepared would For call our of March and XXXX the Brenda, in as that returned full to commitment XX, announced shareholders our our XX, for long-term dividend million. payable like open today, total, we our In per demonstrating million through share $X of quarterly We on capital That Board repurchases equaled and cash our payments to shareholders questions. March $X.XX of $XX.X the dividend we my declared remarks. to common confidence record now to to year, shareholders. dividends, returning outlook

Operator

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

Timothy McHugh

and in maybe Europe, you if First, you're look Is bit expanding in And guess, it the trends mostly for forward then I market as you you we've but there, or on I strength more about up others is there's Europe, want share growing, like little about as how that Europe. of well you a that do that, others, into probably in guess, are ask like also lately do the talk go new all to I so. you guess, fairly seen at taking they can One, I I think in the following 'XX? the about seems think, we market are economic market? feel impacting you, ways seeing outlook international Europe, choppier do you just kind that's

Paul Maleh

driven QX years, I a Economics in going in of a been incredibly XXXX not We've is Antitrust over & by guess, with start Europe couple and number in past practices. Europe Europe the to in of you that in nice practice phenomenon. been performance actually back even has growth our XXXX. is The busy have Competition experiencing way

presence, We Life continue they significantly gain our Sciences to and expanded traction have there.

nice seeing Marakon marketplace. our practice Energy other success. penetration seeing then also we're and And into practices Europe like the So are

me for segment taking to speak impressive read one success for business, board. and we're line economic these or may is not to I services. we're respect market on guess, can't the I particular it's is the of impact do the but that the trying find across specifically outlook, whether tea it expanding broader is demand harder leaves we're fare all to I or as Brexit whether that But it So the share -- seeing With strength services. all global exactly the to how going how across market our basis.

even to Union can Our seen for countries. we're London all of across we U.K., any signs date, services the to say European not companies in in have and are demand the those Europe, office our services I services. necessarily is providing slowdown largest limited is, even to though other But though

Timothy McHugh

the the just was officers your years, senior pyramid and -- you've hasn't so at go back relative we three had consultants, much When just that I I even thinking that late and I looking guess, guess, you number junior guess, kind about, to looking use, quarter this question back versus I grown of XXXX, headcount I significantly. grown really of other yet

is of antitrust the Is why So that? how more from, going here managing growth with business last think again, plan a is regard the where management what from the consulting bit from less about the traditional quite kind I years? because of bit Life the and nature three should obviously and guess, over or from has of to differently? you come pyramid we And forward are then Sciences the that

Paul Maleh

board. the Sure, is the across I yes. staffing our answer improvement The in leverage guess, is really

delivery progress a few throughout try the clients that as start been the doesn't our years. to company to side. smaller over It efficient there's X, of levered, provide be we'll legal the equation. But Typically, side VPs. meaning happen in but our to last to our regulatory X legal quickly, mechanism effort by we for the in leaders in years conscious tend So the of regulatory number a past less with made non-VPs services

to The -- driver practices like tend more you're Sciences, that levered be more model. Life other staffing of have that levered changes big Forensic like a highly highly is the a seeing practices

is the And rapid So our is now. average to I growth seeing contributing the the revenue know up probably we're quicker improvement And deliver I our clearly, the number don't has Sciences more thing can do than of able other VP increases, guys practices per to been that right can but increasing. productivity of VP Life efficiently we're per has in productivity been the years, leverage. you exactly math now, those services. going as

Timothy McHugh

VP that kind separate think mix to, you the productivity state steady are where or the I think level Can number? the dynamic, from we I pyramid would at shift we -- what of relative as optimal or that of just about guess,

Paul Maleh

Sure.

you. I growth a hard provide don't there to is have there. think for number still I room

I rapidly. Sciences Forensic think Life practice our is now, and our right growing practice

oftentimes ahead demand services. order our So meet of there growing in the needs hiring are we for to

So become the that you're as a more legal again, on revenue little front. than side. the going Within into other those regulatory, company integrated assets as see more bit happens improve to just on leverage ramps, continue change slowly staffing to

the a think have profits. profit basis. lead also upside that on number gross across seeing on and And We're both higher seeing still basis you're total margin I there. we I margin think, operating So the of to leverage it margins different

Timothy McHugh

think what And for a one you as rate, do the you last then baseline? one would any have sense XXXX tax of about

Chad Holmes

like much from is currently stock-based full on effective we're an tax there non-GAAP a rate for year, of before I'd discrete range taking into comp. in estimating last items basis, say the the XXXX XX% like fiscal What to year impact XX% account

Operator

[Operator from Riddick Sidoti. Marc Instructions] Our question next the comes with line of

Marc Riddick

any maybe seen if wondering you've company from commentary the impacts thoughts to maybe should or a thinking could you the we or some bit share about was seen at you've any shutdown anything either things much of around as from the of I or little to that specific that clients all. if be

Paul Maleh

that's always there short time. Sure, a hard was measure window very to because of

come cases slower tends January, that as You general, have be to calendar people back in year and and up. the month the in ramp from a holidays

combination is hard have starting off. pleased unable the shutdown seeing far year So solid in the sometimes being to December. disentangle We're impacts. disentangle January traditionally slower I how month, been -- We're with two of so activity those to and is the is we've there. But

Marc Riddick

And a also a then you I if strong quarter holidays that about was floated. wondering fourth the with utilization bit utilization about how bit sort little ended could but talk you certainly being little of sort number. and the in all, the think Usually a of being up down

of through I of just there? then So get to forward sort thoughts wanted flowed and and that any how the maybe thoughts your expectations quarter going the

Paul Maleh

heavy up holiday deliver states gave colleagues very up both my the quarter holiday have giving their in families holidays vacation time Europe in a and of utilization in kind lot is A XX% that their I of results. here the people with and those to deliver of to Sure. a heavy.

$XXX a of So figure you without beyond. record don't above $XXX million, revenue people going and million around

So we're utilization 'XX But that been last it's even that. if pretty at really with said, you years, pleased over X with and tight. our the look in

mid-XXs the our about, to to talked we range. we manage As utilization try

wish So it estimate. that time you're going I point didn't to QX have periods. But fluctuations truthfully, around in really happen

Marc Riddick

able for CapEx very that. That's we those should some as I spend or I of for think the you going of curious the that to up Also it sort about and look how components thing? was of how we that if thoughts tax like rest, sort And kind what where and helpful any was of it might versus will, break if maintenance as XXXX? was be to of might about type to with or

Paul Maleh

specifics with sort to answer and I'll contribute of try I'll give some Yes, that general more Chad a let to there.

regular is relative estate. we all in the been significantly our years. the hasn't XXXX homes of CapEx Our new maintenance but CapEx to or our colleagues. Growth fantastic, Really, of prior main of to of find expansion real our need changed for input CapEx really level has

that to expanding details do capital to So have constantly we some want you and and get across add requires running. it are Chad, any our you up geographies there?

Chad Holmes

about that spent Chicago in CapEx was consulting million directed we Paul expansions and growth on and to XXXX, $XX London. this and as In probably support was 'XX build-outs the and in our headcount alluded, primarily towards in

we similar with make forward, the real to our in focus fiscal 'XX. support investments Boston Looking estate in expect receiving to growth

going magnitude our I couple with So in they're outlays, the say be our would estimating of past CapEx terms years. of to consistent over the experience of

you're a estimate the a when for more last look 'XX, as that's If office. specific at touched Boston for looking probably we outlays, XXXX for anticipated I proxy

Marc Riddick

to of the was I opening of of guess, for of on as M&A sort you're last flow I that seeing on. detailed you're you things opportunities and the have had positive fairly of you me that activity and you And some thoughts working of the other or commentary economic then, on to remarks out sort the some wondering had activity piece things the appreciated any around I look that guys the the the for? or -- the globally and been of and if sort

Paul Maleh

Sure.

more even more important in us believe of of economic times assist economic had years. number during to Our volatility. like provide the the this assist was number recession exited over ago, we've clients to us services continue stronger. to add in general to that's to to strategy asset going is now strength, years good But and that our make want back conditions we we of that as of times goes to last depth past and going we our this I

in services, there. of realm of still the to the a going that our you're of clients you're choice first we to provider be are number there. And provider If services believe that

our you conditions are practice, performed exceptionally go well, services. a of of go-to if irrespective the of because a market the rate So example, competition of they back and economic for overall years has dozen those volatility provider

we So faring colleagues more I'm go we pretty well my love times during but confident M&A in it volatility. see of activity up, in when

Marc Riddick

the like there, of on one more. then want I did I'd of also updated Europe is there for pipeline and just on there acquisition opportunity, an me looks And I so one your what you're end if update is presenting if the to And well? thought is thoughts to want sort where more get of but for seeing a as maybe to you? an thoughts valuation there kind given uncertainty, bit get

Paul Maleh

Sure.

my hard, listening. a having but here's working are a make to for opportunity potential fun. lot So We're all pitch of that recruits we're

We are to across companies including recruits, growth that of clients lines businesses of our We're all are people because taking I geographies. able taking new growing. are both potential notice, taking are that, think, notice, offer And across notice.

opportunities of growing. sake diligence where for your you capital. pipeline quite to value maintain not that, is to we're growth full with We provide our because is of our want have right But So the now. growth use with

a So of in I any stewards forward. job opportunity good being I take capital, this value-creating it. will for shareholders to reinvest and that to to going do we've back business we we're have continue going growth, think, done good our But

We untapped credit. have line constraint. We an I great capital of cash produce flows. are not

look to want we those value for So opportunities.

where right stand happy So now. with to but I'm pretty disclose, we imminent nothing

Operator

closing to for And time, back additional or Q&A like over turn the now conference the reached would session. we this end to any the I Maleh Mr. remarks. at of

Paul Maleh

joining also It everyone today's many We months, I you that of you in Great. we on it's see house. and call. corporate my want CRA. quarter appreciate year, call. our again, put be that a the interest you, our thank a to great colleagues, concludes the of side Thank and the coming to work, investors look on today's to both thank updating on forward And just to I hard on to great first want work in and was results. meeting consulting all lot and again, turning hard for call a and With that, to positive We'll time with progress such everybody. your us

Operator

This teleconference. concludes today's

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

CRA International (CRAI) 3 Mar 192018 Q4 Earnings call transcript