CRAI - Earnings call 4 2023 | CRA International, Inc.

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Operator

Good day, everyone, and welcome to Charles River Associates Fourth Quarter 2023 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 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. opening his for Mahoney remarks. Please go ahead.

Daniel Mahoney

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

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

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

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

Paul Maleh

North the balanced morning, annual for for XXXX new consecutive the was today. for everyone. geographically a record year X% our sixth good for marking X%. year operations revenue. grew to X.X% joining and increased international and growth American CRA's by fiscal us $XXX which in established as you operations million, Dan, CRA Thanks, increased by by Revenue Thank revenue

XX practices, Labor their relative CRA's double-digit of X X revenue practices XXXX, Services line, and fiscal XXXX. fiscal with top grew to For $ Employment, growth delivering Forensic

fourth the to quarter an XXXX. of into top at of line fourth in portfolio revenue We strength increase an drove profits compared that In the translated quarter, rate. fiscal XX.X% even our this across expansion faster grew

all-time income the and share diluted per respectively, year-over-year quarter, both metrics. XX%, increased and net new non-GAAP by highs earnings For as CRA XX% for established

our originations reflected consulting expectations. improvement headcount that in and new line Our project were with more

of continued the side, expand. demand third improved the Flow project levels revenue-producing conversion XXXX. assignments approaching a new in in to the our project increase fourth double-digit Notably originations the fuel to of relative Lead new years, prior of Flow and significantly, helped with On quarter fiscal quarter Lead consistent XXXX, into

our Retention consulting high. rates team remain within

high-single-digit represents quarter pleased with percentage this our a and the increase balancing focused the are we ended the that quarter at the With in the of we supply against to mindset, services. on increase We with remain a with is labor for of and our team call. consulting third we demand X.X% have line headcount projected of assembled mid- which time the year-over-year, X,XXX, earnings

expectations, XX% reported With headcount from firm-wide as QX. conversion with XX% quarter for fourth consulting align in rates improving, our surged and the utilization to

and to minutes delivered the few I would some our projects our market fourth now like highlighting to services clients quarter. during the of the for spend a

more XX% number surpassed observed year-over-year, legal fourth which fourth each Within while year-over-year. the than growth delivering Legal Forensic XX% services quarter the from CRA's case & broader XX%, the Regulatory Services were growth Regulatory in practices the the Economics market. and Competition core increased Total legal increased with led the of services, in rates judgments filings & X% year-over-year. quarter Revenue total way & of our quarterly in Antitrust up revenue

revenue Labor expanded Employment practice & our addition, In year-over-year.

our increase for merger-related this activity in mark for Economics and the eclipsing on the second M&A revenue, value, for another to antitrust Capitalizing high market Competition established third quarter quarter the the compared fourth to transaction of Antitrust XX% practice. measured & Turning increased this the year. services, demand continued prior Worldwide in by activity, aggregate in the established quarterly of XXXX. as practice quarter

combining challenges across Commission, supported Trade addressing solutions United the Broadcom's hardware During for that data Commission, software and CRA's Market Competition Administration Supervision Kingdom, the the the Authority Federal center most Korea of & Responding for these the CRA played authorities China, in the servers for Broadcom. State Trade the multiple Fair Markets Commission. team by to role European in economists recently by authorities. investigated U.S. for transaction experts offerings globe, a were challenges, antitrust data presented completed crucial the antitrust complex quarter, the acquisition the regulatory VMware's VMware The with advanced centers notably of of concern

comprehensive future effective The concerns analysis decisions clearance satisfied competition. and about team's the of the regulators' that design informed remedies

experts market market service on and using team first electric and shares shares for different market vehicle The utility current their to a its provider assistance between kind possible charging and station station candidate counsel cleared regional the calculated market segmentations. the venture CRA CRA following of Phase various Iberdrola and European X forward and venture competitive supported unconditionally areas assessment. Ibedrola. economic provided BP transaction, another definitions, In local Commission provider, CRA joint the investigation. multiple gasoline The and and markets

responding who as Boards regularities, cyber and statements misconduct and and practice Forensic such clients seek demand crime secret fraud depth. Services and trade Our continues financial strong to of experience help to allegations from C-suite

fourth third of quarter, SOCS XXX the accounting testing. flawed Board publicly irregularities, investigate during the undisclosed to the team allegations I'm the a company and sorry, conflicts quarter called by control energy traded -- upon was or During interest large of internal of falsified

actors to threat as in Ransomware innovate the and XXXX continue attacks came evolve. roaring back

the multinational fourth massive a actor, respond to environment. harden helped caused client For eradicated breach operations Services and helped information quarter, broker a We insurance during compromised restore multiple that and network the shutdown example, security the the partial a practice Forensic its threat servers.

We could also data client notify structured of in the manner. around world staggering quantity a timely impacted individuals and unstructured data so mined a the

to proactive litigation. across practice Labor Employment set a entertainment CRA's be of government diverse to automotive, mediation, technology, continues and engaged information with retail & industries, investigations software, agency assist including clients computer and consulting,

matter filed of federal ongoing quarter, in CRA well the California by and firms involving and experts computer Tapel Professor assist in power During information monopoly investigations retained entertainment also Rights as the technology Department. the alleged software as industry. supported sports to court a in monopsony and practice Robert discrimination the examining allegations were Civil

delivered serve our management North of Within matters, practice revenue In base the regularly services, quarter, our assist our equity year's while diverse and wake its across its of is clients the navigate practice -- practice to net practice Energy last year-over-year. the retained inclusion Court Sciences The consulting Harvard the double-digit and continued during ruling Energy Life to our in diversity, assist initiatives. energy expanded Supreme chain. client to growth Carolina revenue also value University clients

firms, clients included and government agencies operators, grid Our consumers. energy law investors, utilities, large

NiSource practice resource the including quarter, the for and practice utilities their energy with During plans -- with worked integrated several fourth procurement. the

in For on both market future operator that litigation testimony X practices several will design. studies, mid-continent the experts support including and with internationally. and system system operators, offered arbitration working CRA domestically the confidential independent MISO, proceedings,

For electric provided diligence of assets. have individual to investors, transactions we support and utilities

plans. to For gas York the New is regulator practice government utility audit agencies, working decarbonization the with

continues to practice Sciences initiatives. support Life Our clients' strategic

for factors During continue success we global European the In on focusing the for U.S., supporting strategic lay the for the product a dynamics performed drug immunology review a products, formulations, opportunity pharmaceutical cross-functional of impactful products model inhaled company, strategy. assessing the on pharmaceutical for variety market identify quarter, to possible a across a work the company, another team pricing commercial access portfolio of and commercial and foundation and for Asia. project customer a Germany of and to an combination inform device critical

on $XX.X on million constant or basis. on basis. constant to constant basis $XXX.X or was currency reported Full million EBITDA million XXXX Recapping Non-GAAP record million revenue fiscal for a XX.X% financial fiscal performance. currency currency of a non-GAAP our margin CRA a EBITDA was year $XX.X $XXX.X XXXX. relative

XXXX success marketplace, fiscal continued in the profitable broad-based of years and trend financial our continue performance in demonstrates growth ahead. our to we Our are the looking

non-GAAP of XX.X% our during we important work the challenges. for grateful clients year EBITDA range XXXX, of margin full For currency my as and quarter the the XXXX, relative I'm colleagues to to the XX.X%. throughout in help to most fiscal their fiscal on basis, revenue to in year a fourth hard and we their all million, $XXX $XXX million constant range expect address Overall,

Chad? call few will comments. I to for to Dan that, With turn and the Chad over a then additional

Chad Holmes

Thanks, XXX% years, non-GAAP as is This prior cash strong flows Stated XXX% operations. continues fiscal consistent to our everyone. over cash flows year-over-year the during X our way, from into performance from with net update at XX% X CRA from operations you XXX% capital cash $XX.X generate the during of revenue want and in net quarter. I CRA's another 'XX, operations increased CRA CRA our of into the converted years and quality strong its Paul. fiscal operations EBITDA past and flows. strength has Hello, Demonstrating of adjusted XXXX cash to converted flows rates EBITDA net adjusted on the deployment to million. respectively.

These in fund business cash the and of flows redistributions capital reinvestment to represent used a discretionary to pool shareholders.

our of now our have credit $XX quarter. debt detail to I how during outstanding under years. the prior our to borrowings repaid in We we line capital as zero we allocated revolving bring fourth done million our year-end of will

at for Our capital the year-to-date to on XXXX cash We bringing the investments to also million. by cash end million. total spent fourth talent year $XX $X.X saw million $XXX,XXX of net increased outlays quarter quarter The expenditures, balance of during $XXX,XXX. $XX.X our

spend to headcount to come. we in million XXXX, to infrastructure to $XX and to For offices expenditures fund our of $XX capital support the million in fiscal investments IT in years support growth our on expect

fourth We million of shareholders share for and repurchases $X returned payments $X.X of during $XX.X XX,XXX million our million shares. the of consisting to dividend approximately quarter,

our year, repurchases ongoing amount total from flows full operations, returning operations combination of of and represents flows a shareholders. of This of from and dividends. returned shareholders to exceeds half we through quarterly XX% to XXXX cash the our CRA's adjusted of share aim cash million net For $XX.X a adjusted our

Directors share CRA's we of repurchase additional program under an As existing authorized announced expansion, to share stock. an earlier value of this available approximately in have of common $XX.X million $XX million expansion repurchase program. our With our today, Board of shares

shareholders. our continued profitable in the same in at invest we to capital returning confidence our substantive capital for decisions Taken to CRA's the together, business look while, allocation demonstrate as prospects long-term growth, time,

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

Daniel Mahoney

Thanks, Chad.

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

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

consultant and XXX of officers, with we X,XXX, consultant headcount, consisting end of junior terms XXX increase a staff. the XXX staff at In of the X.X% fiscal year compared XXX senior the headcount represents ended other reported at This XXXX.

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

was ratio revenue. impacted growth by This positively in the quarter's

of compensation quarter XXXX, basis was the arising of non-GAAP quarter fiscal fourth increased in benefit for the fiscal U.K. in The XX.X% an with lower XXXX. a the into XX.X% compared full statutory non-GAAP and XX% to that rate accounting from fourth a the effective compared year XX.X% attributable largely of was XXXX of second went quarter tax a year XXXX. full The on stock-based was for fiscal higher fiscal effect basis fiscal with the on XXXX. XXXX for rate rate quarter the the for For fourth ratio

of fiscal We a in and Turning to quarter $XXX.X with equivalents concluded million the days XXXX. at of sheet. $XXX.X unbilled. the on of quarter XXX third and the line million. XXXX quarter of end fourth cash DSO quarter XX of fourth the credit for days the and in XXX end cash of balance compared our fourth XX available billed fiscal the of days with DSO liquidity of of consisted $XX.X days total was capacity million of the further at

That concludes our remarks. prepared

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

Operator

[Operator comes from Sidoti Company. Marc with Riddick Instructions] question first Our &

Marc Riddick

of end the little a talk well. guidance, the year a you the into some So and maybe trends improved quarter as certainly we to at wondering saw going have that for 'XX drivers revenue and significantly, about bit of lot that. you've and could the I generally the guide with of was this the if [indiscernible] that

of commentary across with seems case a made kind M&A activity to board. of but seen driving the filings, what as be you've sort as certainly sort as some far well as it You've of

maybe those might little bit So we year? of touch drivers play though for feel sort and on I as the the of And follow-up then how have commentary. can a sort a CapEx those you around out

Paul Maleh

sure. Sure,

shot. didn't it What volatility If with flow we new the of that conversion was quarter-to-quarter. across with The we it line the portfolio organization for we much experienced pretty is went nature in fiscal through to give expected. whipsaw a rates me the Let the the respect revenue-generating this expected. lead wasn't projects, year as coming into from expect XXXX what

was I our the year. wish of XXXX fiscal foundation quarters, the we're that from turn timely other was to that. demand significantly work conversion matters the that quarter get remains fourth started can simply I a it So strong and throughout different that not. on than It over, I of take the was but say these manner that, the able of to to

are environment, think increase X is broader the use optimistic try activity reading through. respect expansion Hopefully, still a range fiscal XXXX. case slight I the would coming positioned. range, that's to expectations from the the of broader to not our hope just given There well in line. bit move demand volatility CRA to thing macroeconomic tried that the will I we conditions cautiously terms I'm need see optimism of XXXX. we M&A entire on guidance. in we're given we prior, in broader the I into glimpses pretty With the that to years top improve that the reason difference, The experienced that about. for say, but And We there will filings that

Marc Riddick

on helpful. investments of a could bit CapEx discuss looking the planned and then year? might then being Can And there. flow talk the sort commentary That's and about bit you about, through little the I that we're you little at a guess, the that what's how

Paul Maleh

because say those start colleagues. of need would expansion We In tied office outlays services investing growing. I we're have, in good that are to firm, some right? to just Sure. a to growth our is locations more professional having

outlays. those So we welcome

planning. is other part our part of normal The

upgrade to of of much is year. services we infrastructure ability and are strengthening planned for in throughout operations, IT terms our our our not In some tied our provide to This fiscal strengthening while. XXXX. expectations side to the not But to of QX infrastructure our looking consulting or pretty the to this tied a was

Marc Riddick

in made you. the the And the Got Okay. multiple you commentary certainly, around areas. -- strength then practice

like you to practice target bit as to increases of was if the where where talk XX growing you'd there? vis-a-vis Can maybe year, particular ended the any there're far that about I any X year-over-year. little would a areas you like think particular we areas there're more it if headcount add as

Paul Maleh

Yes.

my portfolio growth love And my reason that I performance. all feel really I a is I The sometimes in like strong children. of is capable all children parent think are not have we delivering a linear. Here,

have of sawtooth little You bit a a pattern.

I As are trajectory provided. long portfolio I'm happy have an there, with of as that services very upward the

of and Services Investor account practice, we practices firm & As Antitrust total roughly X the at largest for Day, Life comprised Forensic our of Competition all practice, talked Economics our about revenue. Sciences XX%

let's delivered they're sight the size. of With not and time they majority and the of also get talent focus going of lose also the that time the again. just hiring that, have majority investments the to because And

going there. investments talent see I So

Energy trying practice. I've talking step-change growth about opportunities for in to our find been

market the is think to receptive that. I

think I they to organic healthy expansion for deserves delivering just want Practice because across that talent their energy looking pure call we're are the practice I And would time have what operations. and that. our host, any a has you investments,

would our practices, their I'll Labor offering. Finance and to practice. love other to I is try The continue find bolster to ways quickly upon touch to just

greenfield a the within practices. we of a think I our with lot it excellence lot a depth the demonstrated in lot different But of I space. it's quite on. past in strategy So aligns there's that in services that of think overall frankly, there's our And have

Operator

Our question next from Research. with Barrington Steinke Kevin is

Kevin Steinke

on to Marc's wanted follow there. I questions up Well, of X

You ratio as the in conversions you about originations, talked conversion and the and the in and broad-based, quarter the quarter? slowdown Was fourth in the also the third project originations pickup being originations ratio broad-based. in saw as conversion

Paul Maleh

was. again, across And year don't are the result it earlier adds think seeing the I shared drops losing that of was. and share. a to little bit drop confidence the the market Yes, in these the my -- It of that portfolio us I broad-based rise

I volatility impacting market broader us. think they're factors just

Kevin Steinke

Okay.

have And that had is conversion so know Do themes outlook? field factors any if interacting the and comfortable just pinned to economic I other more know any the a there -- might the are and sense the to? teams I the with the base little of is led with ratio economic out kind on the number you improvement a clients, if in macro your reasons Or might that you of in improvement you client don't originations? you uncertainty. or attribute have getting

Paul Maleh

all environment. uncertainty in some throughout in can I my on 'XX, a light most -- reduction -- seen negative in it, put our about reduction we Yes, towards we've saw macro the the

are I for overall a little to direction better with are rates interest think a little respect feeling feeling the as inflation. People people of better borrowing.

see we signs in So uncertainty. overall whether of for is better of times think, fact market, can't But or that discretionary M&A dollars has everyone to maybe feeling and this I ahead. of are I releasing comfortable reduction services uncertainty going more that the speak some reduce the the helped not. life

Kevin Steinke

helpful. Okay. That's

assuming XXXX conversion what both about assuming the also normalized to for are utilization we the back and Are flow think conversion consultant levels? lead so and that And you guidance essentially are as utilization? ratio provided, you you of kind that

Paul Maleh

in Clearly, the of of past as going consistent we normal my that that. it part nonanswer you, you're get more with operations the So the depends best I return range on to a assuming upper really what on. to on are range, am years to focus of to Kevin, half

in So to operate this firm our goal is to utilization. always try mid-XXs

capital growth, profitable capacity I reduces could my It -- colleagues capacity think it. reward return that for innovation. for shareholders for adequately to and reduces to

for changed it. hasn't that So

quarter-to-quarter utilization. new just of It's have mid-XXs way going particularly as But You're always on utilization term, the target. holidays the to with come long a volatility that. at life, medium, the we're still and with aboard people

Kevin Steinke

Yes. Okay. Understood.

of still what in been normal been any significantly meaningful there the Or it terms consultant trends levels? sort lately have change there? ranks? so And seeing has Is attrition among you of junior below

Paul Maleh

was also I that performance occupation move utilization, that board. to the of very told there But record that. in the the corrected we're those we're ability needed Yes. realize And across to uncertainty creating. But matter. that, impacting about when attrition X with I of from we got XX% market to board negative I'm right? I'm pleased near take -- the of really factors retention the in heads. my of strong QX, environment That are advantage that this by another. the all people going broader is look I in way X at it. We're is enjoying sure colleagues to talking having subject across a we're

shift sometimes through going seeing cycle more of summer historical of QX or QX as dramatic another we're is get we start whether bonus any approach our retention retention to in rate. and as way we seen haven't standards. approach X We telling kind rates into

Kevin Steinke

continued could know specific a of in think know lead Okay. don't the just strong you quarter. share? flow, about you've don't the that rate the have but then quarters, you you number if Great. mentioned for be it -- you growth flow? And I had lead few I a talked did last terms to fourth I in

Paul Maleh

that on try Days, question. But do try available. should and X good readily What have of What going front it a share in I'll information. to It's Investor I that don't. to not do find Kevin, of is is do I to I'm me, I our communication next have I will I'll it

Operator

I the of the We closing comments. the have reached Paul like back session. for question-and-answer to call to now would over Maleh end turn

Paul Maleh

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

quarter investors As with participating Kevin, forward we'll mentioned that meetings you that, the months, Thank our weeks we coming to and today's concludes be you. to look on first With on call. progress virtual in session. and I updating in our

Operator

today's This concludes conference.

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

CRA International (CRAI) 29 Feb 242023 Q4 Earnings call transcript