CRAI - Earnings call transcript Q4 2019

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Operator

Good day, everyone, and welcome to Charles River Associates Fourth Quarter and Fiscal Year 2019 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

or and Thank operating you, or those statements XX outlook condition of on everyone terms the of in Section fiscal to revenue concerning I'd during this like are XXXX for forward-looking the the using made results margin CRA, guidance non-GAAP remind other conference terms Act. statements the future financial and business, defined that Exchange EBITDA expect, similar including Rob. statements any as call, future including

these contained management's to differ due implied Information and and is current or expectations forward-looking statements may in statements actual many based important and materially results uncertain expressed these on from factors. those is inherently in performance

and SEC. periodic with Additional our XX-K including in CRA's information factors today's regarding these the reports is included release in

undertakes to obligation of call. after any statements this forward-looking no CRA the date update

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

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

Paul Maleh

shareholders. requires value-creating everyone. Thanks, long-term distribution capital growth maximize optimal to investments us today. Such Chad value with drive between is our for an you CRA that return per morning, and out goal and sets With of a each good that joining Thank of to each decision directed year share. a capital and

an translated utilization than our growth past consulting XX% into XX%, over years. of have XX%. During the while count head increased has past by five revenue five the of This we more average maintaining years,

as During and XX%, and EBITDA, than over frame, XXX%, become contributed increasing the vice five per assets growth This president this of productive XX% year XX%. EPS by non-GAAP net by more income more our average period. demonstrated the has revenue have time to respectively

substantial capital addition our In reinvesting shareholders. in to our to have also returned business, we

Since at yield an of million our years for X.X%. shares $XX of reduced approximately stock five $XX XX%. common a provided payments we million shareholder $XX price and of a per average our to $XXX fiscal share over have repurchased shareholders Dividend approximately additional XXXX, outstanding total the equating our of million redistribution to by an past

growth for I'm a CRA Following record-setting an same and we head especially with year. future encore XXXX, growth at position time count the in fiscal revenue full X.X% pleased the to XX% success. in of utilization delivered firm XXXX the way while year-over-year XX.X% recording for the continue

continued investments efforts Forensic several approximately Competition Finance, XX During consultants XXXX, These & talent Services Investigations & in practice. & fourth in Antitrust a Risk our hire as quarter to in Analytics Economics the we fiscal we welcomed Practice. Competition and our teams Antitrust made new our group Economics, augment of

house Pleasanton approximately office this month look downtown Oakland. into and will consolidated practices. new space CRA consolidating Next forward This in with XX offices from to colleagues our and Oakland new office our colleagues three we

basis would imposed in court without facts. the the recent a their State quarter. such in basis the the without Uber to advised Court drivers to New of high-profile & and cruising time that Lower Manhattan. case. in cruising a few cap Uber's driving Supreme regard without in the on reason colleagues The of Uber required spent a ruled total limit the platform was Within that favor annulled time in have of vehicle our for-hire sound to to XX% Lyft passenger and Europe as Antitrust York Turning practice Economics in regulation a highlights The Competition our of vehicle

government's heightened in and financial the continues CRA practice for prosecuting and finance manipulative and individuals institutions our Within activity work spoofing activity stemming investigating from markets. to matters related on

litigation large the In U.S. to on continues and matters in work other and has addition, worked CRA securities countries.

help, Our and Forensic demand team responding investigated allegations non-compliance. Services to practice operations that that our from impacted at multiple a countries. The international need in misconduct of care to experience fraud continues recently an strong ransomware companies event company health

CRA determined efforts map the the the source with Board. the a intrusion, with provided syndicate, security associated information e-crime client to remediation provided company's of assisted the and

experienced affecting practice similar global performed investigation operations. a its company a addition, a also the event media at global In that ransomware

variety hour to Labor transportation. Employment facing information sectors clients Our and federal across and including nationwide a of professional & continues services, litigation issues and assist practice technology and wage discrimination state

most to As we pay an clients work incentive of to with is assist -- the important privileged practice engaged start colleagues their ensure and their challenging unbiased audits with decisions as help for proactive grateful consistent I'm all challenges. hard annual processes, year process. most throughout compensation are their clients my regularly their address the to review our

basis fiscal EBITDA revenue currency $XXX.X $XXX.X year X.X%, and respectively. million non-GAAP year $X.X million $XX.X constant margin and Full reported currency for were XXXX. and was of relative XXXX fiscal headwinds consisting EBITDA a to Recapping adjustment of on a results million million non-GAAP

If margin a On add foreign on million million been currency $X.X a basis. would currency of EBITDA constant EBITDA constant $X.X have decreased non-GAAP XX% currency of non-GAAP to back $XX basis or revenue. loss million we X.X% by the

demonstrates our XXXX fiscal continued performance success financial in the marketplace. Our

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

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

of arising conditions global business. remain are CRA's performance XXXX, can that short-term course political strong our around pleased with we in we affect While uncertainties challenges economic and mindful the from

Chad few additional I'll now over comments. to call the Chad? a And turn for

Chad Holmes

Thanks, Paul.

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

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

In staff net staff. the XXXX. and senior year at we with officers, we increase headcount is reported fiscal junior compared of the XXX a terms of headcount, other year-over-year with XX.X% which consulting of end staff XXX consisted total XXX ended XXX XXX the of This

expenses of that percentage general noting working revaluation XXXX year and the for excluding net was of fiscal X.X% foreign capital negatively worth approximately losses a administrative non-employee XX.X% of is selling fourth losses on and Also as impacted which currency the resulted quarter the profits quarter, XX.X% by balances. revenue commissions the in foreign-denominated transactions a $XXX,XXX were from of Non-GAAP ago. to attributable experts to compared with fourth

mainly euro which pound political the uncertainty These in fluctuations exchange ongoing by arose losses the from Brexit. rates, and were affected surrounding

a total $X.X FX the For million. profits impacted losses year, of by negatively

effective The non-GAAP the XXXX. fourth a quarter rate for the of XX.X% quarter for basis was with compared fourth basis non-GAAP tax XX.X% a on on

effective quarter For compared mix for our was non-GAAP tax was the full and our driven XX.X% The XXXX, tax rate XXXX. rate primarily with the year for both fiscal earnings. of full by in jurisdictional year fourth XX.X% effective increase our

fourth of XXX the of balance days outstanding days XX billed with end the the the XXXX. equivalents the $XX.X third million DSO of end and cash borrowings. DSO sheet. XXX unbilled. of cash consisted quarter quarter to days at and of days fiscal We and at of quarter was fiscal fourth no concluded XX in XXXX with the of compared Turning

we In dividend from quarterly the per the cash fourth quarter, share, third common paid up $X.XX a of quarter. XX%

commitment and year, repurchases through dividend we dividends, quarterly For a share confidence our returning In to returned our the our million. to our full to $X.X combination payments long-term in shareholders. of and shareholders capital equaled our total, $XX.X outlook million demonstrating

million. Further million repurchase of common in announced earlier to value stock, supporting additional this $XX the repurchase to amount CRA's program under view authorized Board expansion our of of shares as an existing our bringing an total today, share share available program Directors of $XX.X

Directors we cash announced of a Board quarterly earlier share XX, common our March today Finally, record XX, XXXX of of shareholders $X.XX March as per XXXX. of payable that to on dividend declared

That prepared concludes my remarks.

few Paul? turn to Paul the we a over Before has comments. call final questions,

Paul Maleh

Thanks, Chad.

have earnings morning's the and communicated announcements, years years and dividend few and on intended organizational and in several to we CRA changes quarters the over past to In to that a ahead. enjoyed continue addition build the momentum successes this governance the

are led President our we has the into CFO Officer of executive new Development new Chief me. and responsibilities Corporate a identify since Executive Officer, development to full-time, Vice once the two Development we Corporate efforts Chad and directly corporate CFO. XXXX role dividing officer and Chief to First, as positions this transition reporting will

the We have also July. become I that will our at will Chairman, annual member, Chairman to Concannon meeting plans retire Row Bill and Independent assume current Director for Board role. scheduled Lead Board Moriarty announced

over leadership forever be thoughtful for years. to the XX Row dedicated grateful We past and his will

to to I questions. turn And the fielding be to with call going that, would over who's some like Robert,

Operator

Thank time session we the line Blair. Instructions] question. Our Please you. with of proceed At William Nicholas this question [Operator question-and-answer be your a with will first is conducting Andrew from

Trevor Romeo

call. Hi, Thanks good on is my morning. actually Romeo taking This for for Trevor Andrew.

Paul Maleh

morning. Hey, good

Trevor Romeo

morning. Good

uncertainties political ask imply at accelerating in you and XXXX First about economic conditions. guidance to wanted and kind of growth to global talked kind seems just revenue the on in of the which time same

So see just in guess growth be to right despite you what able the I now? the you'll gives confidence uncertainties that accelerating you XXXX achieve

Paul Maleh

revenue-generating are just the kind for our not that globe. second those we're several have in slowdown of mean into years. ability of with door; CRA's our activities this business the in past and always projects. I to XXXX any uncertainties you but that said, by have coming colleagues; both We've to the mindful terms seen hire quite observed convert opportunities frankly lastly I to be ability consistency seeing of the not across the business in talented But through

in was confident remain guidance that today. we that with So the communicated

Trevor Romeo

you specifically XXXX? you've you any growth concentrated guess revenue then pretty be past few guess, similar Or be where pockets? it Okay. across almost And accelerating? broad-based firm practice see growth what given over years would Would in certain accelerating I in I said, seen every like that the as seems the Great. would

Paul Maleh

pleasant different the that performance. This the has different trajectory surprises the contributing led team In of it it I by upward to will that levels practices, our at growth. contributions And from overall broad-based of effort of really definition some be in and XXXX, and We've time. of go some different really means, but consistency my our to expected as be practices course, along. enjoyed expecting we have I all at of am results points of

going you're our in and creating you're us expectation shareholders our a portfolio, be assisting the for XXXX of service in beyond. if So is member to value

Trevor Romeo

we Chief that. on Could read then this maybe currently role your maybe particularly Should the you the focus just the and there? could the today an talk regarding given if as thoughts way I And one announcements Development announcement increasing just Great. by acquisition Corporate about Chad ask on more environment? congrats

Paul Maleh

but to I over that provide a advantage the of to we're the last also quite would the read was to we're team quite bolster our what our and with us think also requirements, that is we've way marketplace. intended to in the internally administration the the pat several leadership provide the proud future the enjoyed have years, hiring like bandwidth opportunities respect announcement to seeing we but is not We frankly to the way senior success bandwidth for do take success. we financial both of to acknowledge recipe staying it

Trevor Romeo

you Thank helpful. Okay, Very great. very much.

Paul Maleh

Sure.

Operator

question. [Operator Kevin Steinke Barrington Research. you. comes question the from line of your proceed next Please Instructions] with Our with Thank

Kevin Steinke

morning. Good

Paul Maleh

morning. Good

Kevin Steinke

so lot see know scrutiny in an just antitrust generally outlook XXXX maybe it's in you big beyond? been in the for involved specific out over into a companies that see from tech I terms a playing beyond. wondering as Do Hey, you growth your that a you're there, news role largest the driver perspective. the of the if move XXXX in on and significant and as lately all matters you

Paul Maleh

result a states divulging significant scrutiny a any engagements abroad of be here We're past, player specifics clearly the and our this have the the of matters in in increased of we seeing of is active driver future to expect a that and Without going we're we forward. activity as the Sure. as matters demand. our both regulatory in mentioned seeing

Kevin Steinke

hiring a And anticipation Is you bit great. It's just see of the typical quarter. accelerated touch your on going the mid-XXs. maybe to the forward? of growth kind of reflective rate strong Okay, utilization just below kind that in of in the

Paul Maleh

you. providing your Yeah, good is I think Growth be I'm as about as answer to investments. takes going

range grow as investment acquisition takes to here in form it's XX% and XX% the of you that that we services. the and to the those a more need delivering the hiring. If implied to capable individuals bring grassroot on Sometimes one of sometimes want little guidance, at on an by we time our colleagues have

of between that quickly headcount get have happy bringing in going and little you XX% the staff ramped fact utilization on a that bit So year-over-year are the can We're how it's quite a to level assets you grew of always up. QX than the more quarter. just with in then lag given those

expectations long we business trajectory utilization us we're not as overall the have productivity. So cause for changing And our that the upper doesn't concern. any as of XX%

Kevin Steinke

maybe investments XXXX. Okay, great. And up lean is I in as on and where touch can you of margin already move you or the into just you a XXXX or operating terms came for implies comments any versus guidance But expenses down as just then in know margin on trends XXXX? it organization. CRA pretty

Paul Maleh

an some been of an now I my comments earlier profits grow to of extended statistics able period for rate period gave for the faster than revenue extended able demonstrated been of We've time we've time. a at by now as in Sure.

is to the goal to our also looking more Our in deliver The to both to selling guidance we think but administrative We're we way expansion. X.X% continue our to range I range. general and become XX.X% to that deliver always provide covers that clients. of efficient services way the services, try

to retreating statement. So line top our from be desire driving on our value-creating growth not by line we're bottom and creating the income

Kevin Steinke

what VP And talked your you believe prepared being in comments Okay. up, average about revenue I per XX%.

opportunity period. you if to that room as Is per that you was expand the But is still multiyear VP a think forward? going for over forward? see any what metric that there I revenue move

Paul Maleh

guess highlight. VP important expansion I a of are That Sure. revenue has per of couple to that factors

that we're for industry looking revenue important in is raise and various or consultant per first figure. revenue is The helping that experts per academia affiliations with or in VP always either

our improving. quality has been the of portfolio steadily Secondly,

of years, rate. Those If quality the you look all is for CRA remained XX% time of the past of but over flat, count that the comment the at VP on growth five go extended this improving has yet that nearly enjoyed annum relatively that. window has it are into portfolio per things

is potential upside that. we there So believe still on

the room So, I there's growth don't know seen to get five of next level whether enjoy as you're going years but in to still we've same think previously, the better. I

Kevin Steinke

sense. makes Yeah, sure. Sure,

all of mean, I travel? terms seen, question, headline given any the ability you your And of news Okay. in obligatory in suppose I and the at terms people's have impact coronavirus. to

on But around Or in situation? any that impact your keeping fluid potential clients' mind a thoughts obviously, any comment that your business activity any impact? just to-date, or it's on,

Paul Maleh

can't activity, the Sure. the To-date, coronavirus of a a that have we say in business result that. observed as I shift on

abroad is right of as colleagues, to the of outside office. home their regularly, Our now safety travel who main our concern

without safety So get much is home the they our monitoring to colleagues, related more ensuring of ensuring event. our

Kevin Steinke

in think XXXX? about that? And tax rate, you Okay. do for Chad, should that's helpful. How what then then -- maybe lastly, expect And we

Chad Holmes

Sure.

in to For full range estimating, a year rate, tax to of, XXXX, the XX%. be XX% non-GAAP effective we're

could range, course And a discrete factors by few jurisdictional affected relates our as our the year, for mix price stock-based items, earnings, compensation. during That such of notably, be it comp. stock as to of accounting stock-based most

to range. would year All of introduce quarter-to-quarter. XX%, But be the volatility our to these things the rate, XX% effective for can tax

Kevin Steinke

one role. your Chad, one last throw given I'll Okay, Maybe to the transition new great. in there

yeah, search I assist your -- of the Just one see search. large to in firms hired you

looking like new how of have characteristics quickly to for? you'd do the be And kind CFO? person, find maybe, of to line, But a time as a a you you'd any

Paul Maleh

a line is I corporate role Officer, that, time. a to it. Chad, new member Sure. comfortable Corporate CFO, for Chief about quite feel We're actively On and time if team. one, defined CFO the Kevin? Development searching senior there new no our take until both of for that How We continuing on such

the office. know, be role, also will CEO. first new And at also to as we Development the the When you will of an reporting me, do will individual, to time to that Corporate Chief CEO's which all be report Officer, identify Chad's CFO

Kevin Steinke

taking And on Okay. for results questions. Thanks the today. nice my congratulations,

Paul Maleh

you. Thank you. Thank

Operator

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

Marc Riddick

morning. Hey, Good

Paul Maleh

Marc. morning, Good

Marc Riddick

I going I want to address Wanted with did So, to on, a talk already small see couple was a what covered. about of if a were follow-up to there lot was items. you of just CapEx. was where

I increased mean, facilities. I we on Boston were know with, finishing up spending

And levels could you CapEx was guess more we're for, looking I if for where continuing look discuss to wondering normal So XXXX. to to if there. return you're I

Chad Holmes

Sure.

to our towards our build-outs prior with outlays expansions, support primarily have office been in count. consistent the quarters, So and CapEx growth head directed

estate so, last relatively to maintain on efficient handful space we've focused our over years. employee of the real a been flat estate doing have And in per investments planning. real And cost, able

spent In investments office build-outs, and our property fiscal These on $XX XXXX, million on around in we Cambridge. and equipment. Boston focused primarily

Oakland began into those build-outs New Our of outlays in majority with in, the and earnest in XXXX. shifting, QX, York

they thought We materialize, in to start had might originally XXXX.

Toronto. XXXX, year New up the as expansions, around for we of our construction So some in both full in $XX office CapEx, expect we in And complete on Oakland. and million, to our York wrap new we spend office

Marc Riddick

trends that potential activity, Okay. of maybe little sort of but the around business far activity, very And touch just I a you Europe Great, not international wondering targets then, for also bit is like if helpful. particularly Thank as see on, there? could to that's marketplace was as acquisition maybe you. what some sort maybe Thanks. from

Paul Maleh

consistency of really have quite the the office. on resources, that European They impressive. They lateral been bringing from growth grown marketplace. has the our of been We've performance with grown have organically. Sure. in But pleased

our looking those are know, for abroad. represented improve their a -- operations. European operations each of ways or practices, And practices have actively I to that represent number We of

Marc Riddick

Okay. much. Great, thank you very

Paul Maleh

Thank you, Marc.

Operator

you. Thank

have Q&A to, We end call of the now the session. remarks. reached Paul I Maleh, will the back closing for turn

Paul Maleh

us your for on in time appreciate, months. and interest our investors And meeting call. we We thanks our with on today. Again, look be updating We'll first to progress, forward you, to everyone in the joining CRA. coming quarter

With that, today's concludes this everyone. you call. Thank

Operator

you. Today's has concluded. call Thank

may You day. your a lines, And wonderful at time. have this disconnect now

CRA International (CRAI) 28 Feb 202019 Q4 Earnings call transcript