Earnings call transcript Q3 2022

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

Operator

Good day, everyone, and welcome to Charles River Associates Third Quarter 2022 Conference Call. Please note that today's call is being recorded. The company's earnings 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; Chief Financial Officer, Dan Mahoney; and Chief Corporate Development Officer, Chad Holmes.

At this time, I'd like to turn the call over to Mr. remarks. opening his for Mahoney Dan, please ahead. go

Daniel Mahoney

forward-looking these any Thank the expect, results in or statements statements Rob, on current expressed economic changes of results contained services revenue margin or are statements materially and business, Information is of similar the call, statements inherently including management's good and Act. Exchange general in due that note future in using and the those defined on forward-looking expectations EBITDA factors, in non-GAAP including Please our financial important as everyone. and statements made uncertain. the operating based outlook, as of Section statements a these guidance from concerning many implied future conditions. industry-specific or morning, Actual may level result XX including you, is to for other and CRA, during those of condition conference this terms: performance and differ the terms demand

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

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

Paul it Paul? report. will to over turn for I his now

Paul Maleh

services from morning, our for momentum X.X% achieved quarterly basis. $X.X strong today. everyone. representing as good drove its constant revenue and a business joining or and reported The growth currency performance was that continued us shaved revenue demand to associated despite million U.S. increased million, X.X% you for the headwinds Dan, $XXX.X dollar Thanks, on in year-over-year the growth. currency year-over-year CRA with Thank

We from by American was currency our North our when expanded reported grew headwinds. but adjusted by year-over-year. operations Revenue XX% flat for third quarter more on basis revenue XX% than a in international operations

broad-based, Our Finance XX X Employment, & of year-over-year was and with Bidding, revenue X performance expanding and Competitive Competition revenue Labor Energy, our growth. practices practices Auctions of those & delivering and Economics, double-digit Antitrust

while of We welcomed XXX quarter new utilization XX%. colleagues consulting maintaining company-wide the during strong

performance the strong continue mitigating into effectively cost pressures CRAs We manage profitability. top to business, and line converting

CRA share increased and non-GAAP XX.X%, net EBITDA, per and For quarter, respectively. earnings the diluted X.X% income third XX.X%, year-over-year by

the I levels. the services Merger will provided ago during third compared now considerably as to worldwide XX% some a of in year M&A slowed levels quarter. we the by declined highlight activity quarter

XXXX trillion the marked backdrop, XXXX $X challenging the relative below of lead Despite & quarter activity, Competition merger-related quarter third opportunities the of year flow The third the to level the our Antitrust continued in our practice & of same to in M&A second Antitrust XXXX. strong first performance. since Economics quarter saw practice of its of Economics fall quarter this worldwide Against Competition a ago. decline

telecommunications North considerations. of assess industries, a private and the of our continued range new require technology, broad and product geographic Europe. experts among on continuing support other and The care, a and America span variety engagements M&A-related regulators health to engagements of to markets and practice The in including parties transportation, characteristics and

Commission. the involved several retail wholesale and a pharmaceutical OCP merger, CRA team The quarter, subsidiary of and the the Authority French was overlaps McKesson and in deal example, advised the Repartition, during Europe European goods a which of their Phoenix by distribution Group, third For regarding European reviewed in countries. Competition

a and pivotal market, of markets the PPGs considered from constraints the the that by national convincing in role played the pharmaceutical role CRA into regulators a clearance competitive outside the the power the both, account purchasing European increasing showing unconditional taking local of group. buying follow the accept Commission. players behavioral defined Competition evolving and proposed markets, remedies Authority the to French The

X% broader CRA's regulatory as market during Turning revenue market and from third while core to X% the legal the year-over-year. offerings the total case year-over-year. year-over-year, exceeded -- increased quarter This were filings quarter mixed legal grew XX% judgments third market. trends during expansion down total

continued disputes CRA's addition the to Antitrust in of context practice to in support clients merger-related & Competition legal their Economics work.

certification that of CRA the that nationwide class issues For alleged labor would companies litigation, opportunities, million damages. transportation wages. drivers' among reduce is nation's Plaintiff restrict on Antitrust more retained a a example, to action defense conspiracy of than companies. largest high-profile behalf plaintiffs job analyze joint group about no-poaching in class some and comprise $XXX trucking mobility sought long-distance in suppress information driver Truck

plaintiffs The but for of their was false. class-wide their and was motions The pursue theory The deny favorably individually. named that to settled showed of foundation clients, matter pending. ruling while class a judgment court CRA experts' summary harm plaintiffs team's claims analysis CRA's certification allowed the on

deal and instance testimony manipulations related litigation, in practice spoofing the and active which our and damages companies sorry, insurance, and experts issues and conditions, its world. Delaware the including analyze instances law during of issues for insurance related of lapse adverse matters valuation markets, litigations, Chancery events, in our was and of third from finance matters material and around areas financial of of insurance venues including international quarter, fairness the industry I'm services focus, California allegations cost Our prices merger on experts arising Court, the expert investment of to providing all provide fraud -- to litigation securities arbitration in of which and

be including post-agreement as Within monitoring. all in litigation, of initial phases Employment engaged our of later CRA of expert and testimony to by well phase to Labor data clients continues & aspects practice, the assist collection as

to that can reorganization regularly to adjusting issues equity companies by examine complicated taken compensation & CRA's by be As clients cycles, Labor approach annual actions practice markets. pay adjustment Employment changing is retained

post care to in who of adjustments. examine pay colleagues appropriate assisting implementation provider pay a as practice provide the team potential of the of guidance national and example, a continues For equity part reorganization, concern The CRA joined CRA Consulting. from Welch to new the is identified health areas benefit currently of acquisition

scale. has according we're to continued integration Our plan, greater benefiting from and

and For example, Associations market. Social candidates the upcoming identify practice Annual new PhD of Science PhD Meeting the labor and to is Allied leveraging expanded network the economists at recruit job

the management decarbonization the our consulting ways energy Within with offering, ongoing energy energy the of numerous practice sector. assisted and clients the transformation in of the industry

resource strategic make investment regarding in and our utility planning, helping continued decisions We utilities multiple work decisions impacts. customers'

evaluation continue of nuclear and investment a assist to also power and infrastructure fund water community We large infrastructure assets. company investor large and and its the a the and operations energy advise technology of its

continued to legal disputes international related supporting the generation, development. project we work with pipelines community, gas Finally, power and our

the of potentially pulse third CRA its to dairy inaugural trading auctions. enhanced Competitive daily trade launched series a platform During quarter, CRA's Bidding Auctions basis. facilitate its global & and weekly on practice auctions

solar development and Energy's in with utilities the Additionally, South identify to CRA franchise is projects the energy Carolina North for Duke region. working

of the element is carbon company's procurement a Solar plan. critical

is After its been Sciences gaining As back for the a has mentioned momentum. currency in revenue trajectory. calls, prior practice on adjusting our the in third headwinds Life growth practice quarter,

cancer. its one oncology, in continued our quarter, identify in the an the and from clients of patient's work suffering lung disease pediatric the practice rare helping new fight ultra-rare and against During journey the for product diseases genetic potential to building patients second-line

a continues support practice the platform of at and addition, In its major to a design, part the testing client digital investment transformation in long-time of as business business intelligence implementation efforts.

our grateful important challenges. quarter address their and our results Moreover, colleagues my I'm of by our remains their all always, hard highly as our to most clients. work demonstrate, As portfolio for valued services clients helping third

continue the maintain sales momentum replenish well our are We to we positioned the as business pipeline. in to

In quarter, in September. during this saw the lead project culminating by project grew flow acceleration September of of XX% lead relative an Notably, quarter, surge the flow X% a last flow to roughly we third year-over-year. lead greater

quality continued revenue profit strength business, of raising our the are guidance. we and Reflecting and our

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

comments. additional turn then to for call Chad Chad? Dan I'll that, With the over and

Chad Holmes

update Thanks, generate to continues cash during Paul. to capital flows. the quarter. everyone. initiatives deployment I you on want Hello, CRA strong our

million. For XX from CRA's XXXX, quarter operations third trailing months fiscal through adjusted flows cash net $XX.X the of were the

cash million. of figures detail, As revolving we resulting net Dan revolving borrowings quarter and in under borrowings the and million equivalents during our credit facility, to facility. with These $XX million will of $XX payments in our position debt concluded cash greater of under the of quarter reduce $XX.X million credit a $XX.X reflect describe

shareholders investments million. quarter to the for third year-to-date We third spent million bringing approximately payments the million consisting and The $X.X cash talent capital of our XXXX quarter, of outlays for $X shares. on capital dividend saw XX,XXX $X.X expenditures, during to of of million. repurchases share $XXX,XXX $X.X of also We total of million returned $X

program. We million have share $XX.X our approximately repurchase available under

announced to a as This returning of XXXX. reflecting capital in record increase payable in $X.XX XX% confidence cash share. and from December X, to XX, our demonstrating we dividend be XXXX, to shareholders, dividend Finally, our will $X.XX November long-term today, common per commitment quarterly of on to earlier shareholders outlook our

long-term portfolio remains high per at value the to objective to CRA's share, a level. perform Our maximize and continues

time, back while driving are at growth, dollars profitable same to significant our shareholders. returning the We

for comments. the I final call that, to Dan With turn few over will Dan? a

Daniel Mahoney

Thanks, Chad.

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

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

the a QX at end junior up headcount In XXXX. By of quarter X.X% to increase headcount officers, terms of ended year-over-year. XXX expect we of the staff. XXX to XXX-consultant represents X% compared at and we This end staff of consultant XXX senior X% fiscal the with consultant XXX, which other be headcount, consisted reported the year, the

XX.X% third the to XX.X% fiscal year commissions XXXX compared and experts, to of attributable general with Non-GAAP administrative expenses, excluding X.X% a the of nonemployee selling, revenue ago. for quarter was

impacted This quarter's an entertainment in expenses. travel increase by primarily was and percentage

a accounting from quarter rate XX.X% for compared tax non-GAAP of a to stock-based fiscal of fiscal XXXX was of was rate the the effective the in quarter third for for basis third arising benefit on basis higher XX.X% quarter the XXXX attributable lower third a The largely on The compensation. with non-GAAP XXXX.

of a and fiscal quarter XXX end of balance DSO XX third the the and And pattern the days of quarter typically our days in the increases quarter cash has Turning third consisted on of based XXX fiscal unbilled. fourth X DSO DSO at The of of follows a of strength and and second we fiscal quarter reduction quality the XXXX. fiscal DSO at with a of sheet. averaged quarters to collections similar end billed XX the the the fiscal compared was the seasonal years. in fourth last XX% reduction expect of our in in in second the quarter with each fourth third reduction days receivables XXXX. quarter-to-date, quarter. of the days

of fiscal XXXX line the credit $XXX.X million of cash on $XXX.X a cash total quarter of in liquidity capacity available $XX.X of further and concluded for third million and our equivalents We million. with

concludes That prepared remarks. our

now questions. for We go will ahead. the please Rob, open call

Operator

Instructions]. [Operator

comes Our with question Company. & Sidoti from Riddick first Marc

Marc Riddick

to a maybe a that the given talk ramp-up maybe sort sort the seeing little flow as of So what coming lead there. you're you could put about a to on a the from? bit sort of your the in far seeing you're of picture, broader us demand X as sort little wanted you start ramp-up there? of that's where I and sort together macroeconomic view bit commentary Could of of And give

Paul Maleh

shot. it Sure. I'll a give

seeing it's been consulting with begin And just originate I'm like broad-based. contributions I'll flow I'm practices. our we're our practices, contributions seeing lead regulatory pretty and seeing from performance, there, legal our the from First, who substantive from. management

revenue performance. So in their no I've those to seen terms imbalance of relative contributions

to at started Secondly, we and flow. I year-over-year and September July, in quarter it when Day, necessarily Labor flat led the looked as post were because increase conditions. we in strong month inbound given pretty an basically August, very a strong wasn't the we were when seeing sitting overall lead opportunities, market that Once encouraging of a

Marc Riddick

encouraging, a wanted very shift That's I actually. gears little to bit.

and about the as pullback as we've really going that's on guess, which far throughout M&A, year. accelerated, commentary in the the mentioned global and kind You talked been of I

over And were of bit if we to ramping the and are know some about So talk being could consultants things shifted much area. up, far of were where put consultants. little a that when and I how some consultants your usage kind to I forth you seen there Have wonder kind might relate use of to back as M&A a slowdown? that as of

Paul Maleh

Sure.

is Our consultants and their use from offices global well-oiled who truly Antitrust regularly Economics consultants a & They across use Competition practice skill other have the appropriate set. regularly also practices practice.

continue quarter. we a performance quarter CRA to of of nice share contribute of to which see been to out So the that type way you after stable has resources, see

is try consultants their surge provide we not, of But So staff on them resources need. do again, to it's best they ahead not often another, originating one than the forced sometimes our the has to competition work practice enough keep practice. practice and adequately busy. More the to

Marc Riddick

then I the I been performance was as or you're -- much to maybe relative seeing wondering wanted you're as behavior you're -- a if revenue, your activity? of bit a office physical little sort in-person, I far certainly, SG&A clients what of And tell of has where thought maybe as own be? see more good. you And of to kind as percentage that, Or a sort expectations? would not really of requiring seeing off really things Great. margin whether piggyback to the beginning to them return to curious you face-to-face by of but maybe as was can't certainly

Paul Maleh

person to you to we opportunity insights, So throughout that jump I'll that share opportunities. in about their in takes opportunity. steady in-person terms clients asked relatively start the hear an and demanding more year. CRA has the first of to opportunity has question with with virtually needs or place But clients been of at Whenever that whether meet mix XXXX our the our

we as a fall. bit always more There's the conferences go into

and some are where the increased incidentals speaking related conferences responsibilities. we to coordinating So attending travel of of have our oftentimes

meeting. attendee part, The first a for vice office, presidents you actually in time in as but the X company-wide return use nothing It September ever CRA, was other connecting mentioned VPs to been gathered the was years in-person largest about we've list fantastic with and energy. a we great engagement. our a our for there us is Zoom of had at has and for people, to vehicle really substitute the

we've the So the a course, to happy XX.X% aiming levels so. have out think steady-state we're in our of really I SG&A I'm that meeting. a September But past, coming or That, of contributed about in little right as increase SG&A around on bit levels. talked basis, to

Marc Riddick

least the at then And for Okay. for now. me, last one

has you're talk heavy, relative expectations? So been certainly, wonder what with seeing wondering a U.K. performance little you about and if in -- bit your that maybe could U.S. was about very you activity you're but if could talk how little I the bit a to

Paul Maleh

units I is are reason hours because do the really are selling hours growth those whether the they the European our pressures marketplace. revenue -- nothing because rate exchange is The restated having convert they with of there success or into how to of in more Yes.

currency XX% although reported operations. region the XX% time on quarters ahead. basis, by North XX%, the a a lot are So heavily for constant years expanding me results more a company Any our optimism by I influenced of see of comprising and American gives

Operator

time. There to for back this point, at over closing further are turn Paul Maleh I'd questions Instructions]. to the like [Operator comments. no this At call

Paul Maleh

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

virtual on This updating call. the on well, Be you progress we and year-end everyone. call. with look today's meetings be coming our to months, participating investors our forward will in Thanks. concludes in We

Operator

today's concludes This conference.

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

CRA International (CRAI) 3 Nov 222022 Q3 Earnings call transcript