CRAI - Earnings call transcript Q2 2024

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Operator

Good day, everyone, and welcome to Charles River Associates Second Quarter 2024 Conference Call. Please note that today's conference 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 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

the of first morning, combined for this run $XXX.X XXXX. represents highest today. When everyone. half to million. the in fiscal good continued quarter Revenue history. with into performance joining and quarter, company's the its us the by increased year-over-year revenue you second Dan, X.X% Thanks, of strong CRA Thank first

flat of the Consultant During quarter manage increased XX.X%, solid as of respectively. Broad-based XXXX, continued per year-over-year profitability business of period XX.X% compared This and this in growth to to we growth, have utilization revenue to the & Competition increased EBITDA net share earnings quarter relatively X diluted performance second Employment drove by Financial income, contributions XX%. quarterly strong with supported utilization X.X% effectively. this contributed the growing Both and remained of second practices count to business XX.X%, head non-GAAP growth management XXXX. Antitrust quarterly expanded and Sciences. legal lines Life Property, as Intellectual relative regulatory consulting the fiscal year-over-year: year-over-year X.X% of quarter's Labor and to & Economics. Economics, and producing

pipeline. a sales For continue the we company whole, to as our replenish

Our rates with case strong second XXXX, grew quarter filings This flow norms to core our originations transition as X%. new project consistent increased part the projects broader XX% X% second total which total by project grew market, performance that and of expansion recent increased legal outpaced Intellectual increase quarter judgments by as conversion new and of practice, CRA of lead even project still originations remain year-over-year. CRA year-over-year. saw Property by in by year-over-year the relative XX% the XX% historical to the excluding by

a quarter. spend I would the second now projects of like highlighting delivered the to during few minutes some

in industries, litigation across a matters. goods and Competition variety These and home & range including of hospitals, has regulatory cases high-profile been Economics consumer technology, furnishings. insurance, health Antitrust Our practice involved actively

involved intricate them also competition matters, on a transactions. in to has of and team helping successfully respond supported antitrust range continued to practice clients damages claims. Our clients The assist merger

competition horizontal the European of overlaps Health. the The analysis Consumer acquisition closeness products CRA prepared CRA second the over-the-counter business quarter, experts the hundreds during of of team Cooper markets. example, supported parties' by assessing Viatris' of and across For the

With the concerns. result competition the that in exception did not found X the any Commission overlaps European products, of

and any competition analyzed did CRA also these conglomerate concerns. In commission in addition, concerns by vertical were the team, result the not with concluding

second assisted respect providing by practice mortgages, numerous quarter, banks credit and pricing cards. loans products, of analysis underwriting consumer CRA's Financial to the During and auto Economics with including statistical

CFPB. efforts. These practice of Additionally, Justice the to imposition to assisting several in distribution of the Department clients continued of dating by remediation including by related practice and fees supplied lenders analysis response and of Financial the mortgage Regulators, back investigations applications geographic originations the for Separately, were the the analyzing overdraft and XXXX. Federal analyses

in matters sciences, stakes and litigation, alleging experts semiconductors litigation including of classes continue software. electronics, products, of matters, CRA's on actions. arbitration multiple and a Intellectual CRA energy, Property mortgage industrial FHA false advised high protected discrimination valuation context range and claims industries, broad life of supporting covering the multiple consumer e-commerce, automotive, Finally, banks practice and lending

harm the District accuse with agreed CRA's Court from manufacturers litigation. final launch findings that Innovation For example, for was a patent treatment biologic granted degeneration. Through plaintiffs injunctions age-related preventing irreparable whether and biosimilars biosimilar entering irreparable testimony, the CRA matter the is should oral litigation Competition of Price and and would Act The suffer would high-profile manufacturer CRA harm patent to there before assess branded on the written the retained behalf in the market. resolution be involving of asked macular a

welcomed and of well underway. active cross most Integration of client the plan early addition in now venue patent U.S. Intellectual footprint projects in the Property previously litigation is practice has a teams efforts a the The Chris Julia the is announced, and led May, Rowe. marketing practice legacy Texas, with which In X to the significant joint XX-person for by as Bakewell staffing of team tracking

forensic in fourth and focused is Houston. energy the undertaking planned cross-practice with for cybersecurity. to and and secrets a conference conference in IP practices the example, initiative our The For new participate on trade quarter practices develop a

regularly due of multitude assisting requests and and misclassifications actively facing clients also supports The early issues, off-the-clock employment-related Also across with made during the claims clients expert to & data second practice to of provide by by underpayment litigation practice audit collection. to clients job a assisting the the Experts Federal Office the of have allegations. court-ordered prepare litigation Employment Programs. including been Labor quarter, stages during and data discrimination for Compliance Contract CRA's continue practice analysis employment responses

Life emerging to Sciences space. of in CRA's with strategies series leading for working practice continues investing company care business health support in by the with pharmaceutical cases solutions a neuroimmunology evolution beyond-the-pill an therapy of to regarding a build

witness generation dispute profits. of regarding role the and the large and a we support and pharmacy manager claims continue adjudication revenues the the U.S. practices Regarding with tax government expert to a work, benefit of

our and generic price regarding continue pharmaceuticals. U.S. the in also allegations work both We of Canada fixing in

as Overall, to work we I'm colleagues during second most helped the hard our their challenges. their address clients my all quarter important grateful for

$XXX.X To generated recap, fiscal of the total to revenue XX%. relative EBITDA million, XXXX, first and through of of quarters currency constant of X CRA margin achieving $XX.X basis non-GAAP XXXX fiscal on million a a

performance While company, a business, with optimize steps by proactive to the the pleased took in half practices. quarter consulting areas affected further during the we of our strong targeted team which the of about portfolio reconfiguring dozen the service

persistent within demand delivery for resources capacity rates led bring with select excess over operations discussed natural Normal rates high better services, year, the pockets to attrition and remained As we consulting into alignment of retention the our we our our that staff overcapacity. past helped but seen have in have have to practices.

conclusion Following ahead. we well continue to actions, pursuit growth during optimization in feel the quarters of of quarter, the the positioned second profitable the the

a are year, XX.X% the financial XX.X%. of new revenue the Turning we revenue guidance start to $XXX range Reflecting compares guidance. margin prior full with we of $XXX currency constant to non-GAAP million for $XXX guidance expect profit to the XXXX. EBITDA relative range million range strong to to On fiscal and EBITDA increasing in fiscal This of margin the basis revenue XX.X% and our XX.X%. to our $XXX million XXXX, of non-GAAP and million in range of prior year

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

Chad Holmes

concluded a capital million quarter the everyone. to of you of borrowings the Hello, Paul. during under million practice fund and prior which net $XX.X to our our facility, in debt $XX.X of primarily The payments with with were in first consistent cash is want revolving quarters, Thanks, borrowings on credit during quarter. years. X $XX I deployment our bonus We update the resulting million.

bonus the quarter $XX.X million the cycle, also cash of outlays of second normal addition net investments to talent XXXX $X.X expenditures million. saw and In of for capital

second repurchases available of program. also our during under quarter, approximately consisting for $XX.X million $XX.X million We've currently our have shareholders and share XXX,XXX dividend million the $XX.X shares. of $X.X payments We of million repurchase total a returned share of to

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

Daniel Mahoney

Chad. Thanks,

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

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

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

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

primarily in expenses an labor costs. ratio entertainment quarter's increase was higher and This and travel impacted by

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

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

That prepared remarks. concludes our

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

Operator

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

Marc Riddick

that about So of maybe for I remainder that the full count head have that as sort going the see year of Can though the utilization to what the around of talk, us your sort up. the comments around as that where through of for ended walk you if utilization plays number, year? provided? into time thoughts far flowing could Can the talk there, some maybe you I wanted with the see remainder after your in quarter you kind head the with of how the follow-up sort guidance and how was start then that. and of how of dovetails spend are the reconfiguring team into And was year you the count a pullback we guide, increase with

Paul Maleh

Sure.

had I the had I since take really of start quarter second It's that I to Let the such don't that kind with, oversee my would XX and tenure. during actions been during that hope never we me actions, do to I lightly. years see

set see we through would ago, we shareholders was our paths of out said, the correction all that. year. but excess pockets of some it capacity." is move to year of talking capacity rightsize had I We And we that some had I to about and still existed of and attrition these a thought And what it, to practices. excess "I to normal as a we self-correct number saw we wanted try across

utilization. over with repeated over, holidays. Clearly, the to is mid-XXs operate the we've and cyclicality there's calendar our some in As goal

incorporates guidance people, that As that operating have actions. But utilization target will those we actions be with new is to in The provided associated move. the bring long-term mid-XXs the and we the have savings we on utilization. the that

to The guidance. moving of lot is coming go parts one a with up say there's into that, the thing that

put. staying not are We

are people. still hiring revenue. We're still We growing

depth for expand the looking increase to ways We services. still of or are our

the at it So savings playing simple next as associated it over just not the is of as couple quarters. forward action with and looking the labor

is I we be profitability that strength to where to guidance coming X off think ahead. good record of about good continue over going the those that with and the feel we combined the we're months. So The momentum And news actions, the able is portfolio stand.

Marc Riddick

as mention looks flow being far very strong appreciate strongly, commentary. lead new a project then originations -- quite And as I did the good. you very

see Can that seeing conversion-wise talk little what quarter near out you through and bit maybe in the a the sort how you about playing term? you're of

Paul Maleh

but fiscal I to supposed I'm quarter Sure. second to know about talking XXXX. going the through back us XXXX, we're of take be

projects. that except year on those leads lot were of good the a conversion We into was conversion we of into XXXX rate. revenue-generating that bringing a for saw CRA volatility

rates QX are that 'XX XXXX. look are and We pleased at of the leads of very enjoying with fiscal of in we've been What of XXXX, enjoyed QX during 'XX level like fiscal conversion historically QX we've CRA. what

in new is conversion So percent this that XXs nothing of rate we services. for portfolio and are that low

indication pretty or shift I see that pleased. no experienced we're that So we QX a of reemerging. during volatility

credit across of colleagues to my So a lot goes the practices.

Marc Riddick

And then more. just Okay. Great. one maybe

talked transactions and what you're You've the about sort far the of increased past as seeing scrutiny regulatory landscape in the of as and like.

maybe out. of maybe maybe to sort sort your Maybe So update it provide play certainly can just that. because if on us you an seems on to views give an be continuing can certainly, update you of

Paul Maleh

no a of are We indication see companies Europe. strong. terms may read all now, administration regulatory no facing. what or still of shift new here. to be mean pressures the both We of Yes. tea States oversight relatively leaves the And But in see in slowdown in a right the regulatory trying here now, administration a we're and continued right to

Operator

Our Blair. question from with comes Nicholas Andrew next William

Andrew Nicholas

touch I margin at if think it margin guide, I would first on have. is that ever, strongest the not certainly the the the represent, numbers wanted I I which mean, midpoint here to it's in

And there's certainly outside strong, portfolio what's unpack maybe going there that of making of onetime actions and then future this for is anything I one? wouldn't your I could on it's nature? is 'XX you off enacted. some expectation. a in But normal point such in but So restructuring a Or years? this profitable say you Utilization, decent is jumping range optimization that relatedly, year understand

Paul Maleh

enjoyed a expansion our grow profitable at top XXXX. That able for we're since revenue We're ability more than our to to and revenue grow Sure. have our it profitably been has such to also line, We're now quite substantive rate. a decade. history grow of proud the margin able growth and

giving by plus in we you looking improved onetime If in us here to a that just these our many And going portfolio amortization, you we're to reinvest ingredients our of is by nature my is margins of or points to over forgivable the last XXX continuation but CRA for right think this creating I business, strong years. boost loan do want are compare, years is XXXX consider the at terms the look whether in nothing basis to performance wisely, of a value key and shareholders. really EBITDA the to for one at the would X EBITDA and that best profitability. colleagues grow there opportunities always I of right? This in we've for

Andrew Nicholas

pauses year in maybe potential speak back related that Could the what on you any Very baking mean you've I in of helpful. ask or And delays to to a administration movement expectations. changes this then latest event? just wanted month, and past lot But over business your might surrounding for what you're kind for what's past. about thoughts in talked on of know of election of politically the the -- in decision-making publicly the terms of with kind terms on the I of half in gone

Paul Maleh

notions Party past must party sort led There's or an of always watch administration Sure. norms was office administrations. It's last administration on call with Republican the preconceived time by would kind administration I based it. led in the Republican about what TV. didn't been But follow the necessarily by definitely historical Democratic the of

change be we a administration the the don't last say in and they're office I is whether to in don't maintain would continuation to the control. taken the I a question answer -- is, Democrats change to going regulation, actions closer the administration, or going dramatic if that, to that So see are know a gee, during Republican if follow there's and know.

don't that signs we real of also easing to keep any see And in a in thing other pressures regulatory of operate in mind do Europe. we global is The marketplace.

in So I'm of have the deviation if see what much to here are see how relaxation is going personally we a in there observed curious to Europe. States, regulatory scrutiny from we

is through to to need a that it a Also happen of play that haven't So lot There's a and that in the things happen. mind keep system need lot overnight. of noticed changes that. there is if doesn't I change, to

am closely. So I, like you, just watching

Andrew Nicholas

Great. That's one I And the then helpful. on business. Antitrust if could question last ask maybe

your it. apologize specifically missed if the You Antitrust highlighted in to I speak between But kind quarter? in non-M&A-related the some prepared performance maybe wins couple year? could and M&A there and of more I in you and remarks, divergence as any over major you into Is there next growth of terms look rates even quarters sentiment ahead next of the or the

Paul Maleh

a these activity -- clearly a of into We're first half what if quarter whether of M&A we'll QX. the the see. mergers during a in we're wait waiting XXXX, a there. breaking to rates, strong to cut half market Well, couple go months some coming whole in I'm going life signs sure happens and next the down first two XXXX. QX everyone that the weakening you holds, CRA. relatively new shown seeing But start in as is coming has of or quarters in from of the What you get of see with to

practice activity merger some work. but side definitely have the of signs mergers. of still enjoying Antitrust seen we litigation probably with the on more It's heavily the is the So of weighted house,

Operator

comes Research. with Our Kevin Steinke next question Barrington from

Kevin Steinke

have through guidance guidance increase? year broad-based kind that's growth you But just Economics driving Antitrust increase in trended is about than revenue a the of can that increase? thus guidance, You quarter. in relation it better continued particular this perhaps Competition just & Life in Sciences talked in and any again, talk that's enabling contribution far to practices expected So through that that the

Paul Maleh

and able brand round that. practice. world. begin Their organically. able been do from to I Antitrust Kevin, recruits & you has are sort in those the think record question, enjoy the grow going their They're of performance applause for offering record I your a Economics exemplary. of maybe answer benefits inside of Competition to have to once recruit. They're to they to best They're the quarter quarter And and on the practice, could

amazed, than to business a great the why work antitrust work, you anywhere know am other to never would model. want do going you may have discount future I but I what So They hold. I'm don't And CRA. if

off extraordinary on hats practice it. that performance the for to So just

growing going I'm year-over-year. both rates, those of it. for practices, X part lines yes, we had growing had point both other to practices The different is We digits growing, double business at number a are of to but

is the flat same a portfolio really Life always saw working. Services, practices. quarter. It's drives so the And saw of Sciences our relatively normally quarter with it. not had growth, Forensic a have which We set part We of good a nice

doesn't and and we've the CRA's contribute doesn't book the of time time me the the parts the because me at business it. give of that on So give pause. different seen, come It of apprehension portfolio year, end any through, all of expansion to again,

we're lines, to assumption who happening is shift So with the across more of help the second in next particular what's the same. geographies. looking and across pretty for I'm is half what's drive months. a for going performance pleased happening the us not And over the X the

Kevin Steinke

senior then the that tie practice? Intellectual you first pipeline the I for there I Great. could that talent, And opportunity that happened a looks adding there guess, hire quarter that and what to call the just call after just And it that shortly saw Maybe forward? the, build and helpful. conference maybe like your out going the announced. Property think Okay. into was came group about That's to practice just you additional how speak outlook

Paul Maleh

to thrilled were practice. group IP that higher expand make our and we Sure,

practice. enjoyed Labor of we helped couple of it Employment has lot expand a For we ago me, to years & what a significantly our when similarities

Property They than and decade worked Intellectual heard are the more done of they They ago when So began Julia talking a lot Chris several CRA. liked They the alum. practice. about CRA senior at Bakewell both knew and And a have within people from the we ago. what things months CRA wonderful Rowe portfolio. CRA away

and it So our We our the to an expand that. fast. knew easy were loved able and how really come knew discussions we They services relatively them. on to agreement were we quite footprint, geographic us,

So numerous as our I've portfolio services. said like I really times, of

I services space across think of across of the have geographies. there's we a both all green lot

practices there So our exist. that to our is of dollars, apprehension to any the time no invest

Kevin Steinke

for this campus It of Okay. And Great. when there? -- to terms you're hiring like, higher the continuing plans -- you people of Or team. you consulting as look still soft you what that look can like think there? talk demand consultants going of kind hiring, market? that for even you post of kind more Are more relatively is about just reconfiguration then in the the across about level sounds you, though junior you on said, the at seeing and even tech, have that

Paul Maleh

Yes.

I lateral successful to strategy addition hires. a as think talent university level in pursuits both involves

in still I'm top we level is just see seen than overall little address going think largely an this to years maybe what university hires talent for your softer to with So demand be the have I I past. market. question. the employer a

But try with to attractive convey summer really new number We seminars to said, we're the CRA during recruits. that hard how recruiting a hold months. even of is to working

an 'XX. that recruiting planning to we into active head nice already a expansion are of as university recruiting and see level fall expect We

the it hard be though have still from to your market little to side top even a softer you attract may So the employee able organization. to talent be into house, work of

Kevin Steinke

back Congratulations Okay. strong the turn results and Great. on outlook. over. it I'll

Paul Maleh

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

call. and in forward with months be quarter in progress third call. our look concludes today's participating on on Thank to We'll our investors you. you updating we That meetings the coming

Operator

concludes This conference. today's

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

CRA International (CRAI) 1 Aug 242024 Q2 Earnings call transcript