CRAI - Earnings call transcript Q4 2024

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Operator

Good day, everyone, and welcome to Charles River Associates Fourth Quarter 2024 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 conference over to Mr. remarks. opening for Mahoney ahead. go please Dan,

Daniel Mahoney

financial any Thank results you, or statements the XX outlook of CRA, guidance Please terms that of in Section along morning, future the and made during good are with margin, forward-looking the future using statements or EBITDA including including and everyone. statements this terms Act. concerning the business, condition revenue operating defined note Exchange non-GAAP expect, similar those Rob, statements other as conference on call,

these contained a level management's many materially to in Information demand of of results Actual is current implied expectations forward-looking services due the general in changes differ in statements performance factors economic for our based and and and from may result uncertain. or industry-specific statements on those many expressed is as conditions. important inherently these including and factors,

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

and we currency some Additionally, to financial measures non-GAAP constant refer on presented a basis measures call. will this on certain

on descriptions turn to the his report. remarks release non-GAAP and and CFO GAAP Paul it for calculation is these encouraged Everyone of to over refer constant reconciliations of presented for I their measures measures today's a basis. comparable of and Paul? will related to financial to EBITDA currency measures now

Paul Maleh

Revenue this a increased and annual XX.X% year for everyone. Regulatory CRA's of Legal morning, Thank record XXXX XX% to good Services seventh for by marking you us and led year-over-year. with Dan, today. consecutive joining increase growth Thanks, $XXX.X revenue. million, fiscal

with & XXXX. relative Investigations and X double-digit Antitrust fiscal Economics, their Analytics, Economics, Financial Property and grew growth to X Competition fiscal Risk Energy, Intellectual top lines delivering For XXXX, practices revenue

earnings In resulting XX% income, drove in at the and XXXX, revenue each as of our record than the strength quarter, EBITDA revenue revenue posted fourth for profits per CRA the grew X.X% year-over-year. in diluted faster the year quarter fiscal the best increase net fourth of more quarterly in compared with also and company's of an history. portfolio than share rates

North and contributed the international and Our American to revenue operations quarter's increasing respectively. both growth, XX.X%, X.X%

relative practices For with top XX of X, the Property, quarter, Finance fourth XXXX. quarter Intellectual CRA's grew and growth fourth lines, of to X fiscal Energy, delivering double-digit their the revenue

sales conversion we to of relative growth new quarter QX drove levels, Continued our and X.X% rates our of XXXX. lead fourth project the With pipeline which expansion this supported across project respectively, at customary both X.X%, and revenue. record increased originations, flow

a headcount reported and compared fourth We EBITDA XX.X%, strong QX year. by of XX.X% share XX% ended diluted respectively. income, The even in generate profits per the last consulting quarter to firm-wide XXX that quarterly XX% top quarter increasing the XX.X%, grew with net and of non-GAAP earnings helped utilization faster year-over-year rates our utilization with expansion and at for line

the in few quarter delivered a increased were Services surpassed CRA's fourth the X%, judgments from X% fourth for and the the court X%. of clients of Regulatory rates Total spend some the up in which to Legal minutes our growth like I number case and projects the approximately observed quarter while would fourth legal highlighting increased the to now in filings total broader market. Revenue year-over-year, during markets quarter. our services

the property than finance and Services, the year-over-year. each quarterly our intellectual and practices Legal delivering led XX% way, more revenue growth Regulatory Within of

revenue and year-over-year. practices and Labor expanded and In Analytic Investigations Employment addition, our Antitrust & Competition Economics, Risk

& across range and a transactions geographies. During merger of on Competition industries the practice quarter, Antitrust Economics CRA's worked

and development in Holdings Novo a Novo acquisition contract well as organization of manufacturing X For example, assisted from manufacturing Nordisk's experts Holdings. Catalent CRA acquisition sites as its subsequent Novo Catalent, of

and transaction European market, fill/finish United capacity supported rivals in the both not with a Europe access industry. that transaction manufacturing the proposed within would the the CRA Commission processing the hamper transaction critical in unconditionally The element to the team States end-stage and clearing finding pharmaceutical the

compliance United Canada. on of regulatory CRA destruction concerns Furthermore, and Management, States acquisition. to and Waste secure on effects provider Inc. Evaluating the to the Waste regulated the potential by retained the was of medical information $X leading economic of provided assistance CRA Stericycle, competition compliance services. and advise aspects billion acquisition it's a in and competitive acquisition of Management waste, services

declined Justice and of request Competition Canadian Department received U.S. approvals a issue parties the second to The Bureau. from the

the disputes, including practice arbitration bankruptcy, actions high-profile litigation criminal in controversies, quarter, and disputes finance and to our continued matters and active adversarial litigation in matters. securities fourth During tax cryptocurrency sentencing, valuation involving be

gas concerning CRA for midstream a of company. example, testified of For an shares condition market the expert and a European an in arbitration the oil IPO

the Following range of demand for and in legal denied on damages. practice the industries intellectual matters litigation of panel billion a claimants the covering $X testimony, forms. broad experts arbiters high-stakes The advised CRA property over multiple

and example, sector, to major digital For was models retained secret alleged a used vision a in the technology CRA by misappropriation machine the damages plaintiffs company related copyright from the to research. technology artificial stemming trade expert claim three-dimensional infringement for evaluate intelligence

avoided royalties, to product other expert X lack provided CRA harm issues patent leading between testimony reasonable CRA Vice and business in of companies. plaintiffs damages a on IP X to the provided the testimony development consumer the matter, reports and In juice. Presidents alleged and related multi-jurisdictional resulting economic another costs expert dispute from

sector, the by appliance International in and the supported experts CRA of Federal District Court a was Commission. one to the that the settlement opinion home favorable in global provided clients, Trade secured top CRA's innovators

on issues. experts were QX, diverse practice Labor During set of opine Employment and labor a the supported multiple retained to who

a For Code. example, alleging complaint CRA Labor class of opined multiple expert a California action violations in

those plaintiffs time, made in the their team of that CRA Through the recording analysis variations idiosyncratic inappropriate. work including data named analysis class-wide timekeeping reporting of when employees' the choices, a terabytes of demonstrated behavior employees'

and mediation In practice addition matters. both and complex continue on testimony, assistance for risk be executing providing to to assignments. multidisciplinary and practice to early-stage litigation for expert experts discrimination focus wage and analytic The investigative clients partners and investigations analytics valued hour assessments CRA's continues in

quarter, performed the during by assets diligence of in-depth corporation. multiple fourth anticipated various example, the on large due to practice multinational For related bidders sale the a

a ongoing is matters. false matter personal with a on state of fraud, and and litigation The injury and detailed review includes federal claims focus

with the customers consulting offering, Additionally, and management to team our employees, is CRA status, and each media effectiveness. from practice during Within diverse range at the of the utilities centers. strong management quarter with across social generational bidder's load performance financial growth electric the relating collaborated from analyzing support the The media regulatory services. accommodating filings, data and input aimed operational delivered to planning team energy multiple

design. procurement This work and energy markets, rate in demands policy, strategies deep expertise electricity

major Additionally, role in transactions supporting prospective practice significant played as a in the a North a transmission of America. energy buyer such electric portfolio large

countries for Sciences continue early-stage recently with X attractive reviewing our for Life respect in completing company investment. therapeutic efforts we CRA's a expand assets, to to XX areas identify In practice, project opportunities to a X-month pharmaceutical

dispute. such leads potential for to as and strategy our the and are to associated asked regulatory on regarding further in in companies, pivotal work novel the The development label, optimal Due work retention cancer. often on a against testimony and product provide to regarding often licensing the key including payers early-stage working expert on agreements experience with access in product a engagements, a European we the definition focused deductions and pharmaceutical industry, of opine a oncologists recent fight on trial assets recent project clinical expectations sales

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

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

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

and CRA's our conditions global we're strong While business. political in mindful affect uncertain can that pleased remain with macroeconomic, we XXXX, business performance

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

Chad Holmes

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

how We to $XX used bring to capital prior capital discretionary I and These in to allocated have we credit shareholders. cash in now under will year-end of as X of line repaid done of represent flows our we the borrowings a reinvestment the during outstanding detail to business fourth net our quarter. revolving distributions our pool debt our million fund years.

by increased end to million. at million cash balance Our quarter during $X.X $XX.X year the the

on million. The investments spent million cash to $XX.X of capital $XX.X net expenditures, our fourth quarter talent $X.X bringing million. of XXXX total We year-to-date outlays saw for also

quarter, to on XXXX, the spending $X fiscal our consisting to in million million million. capital the We $X.X lower dividend $X during For payments. of of we expenditures fourth range expect returned shareholders

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

aggregate at flows this XXXX, of operations. net of have stating XX% CRA's cash shareholders we returned aim adjusted fiscal Since the to from beginning

X-year share. returned of consisting a million total $XX repurchases $XXX to this $XX shareholders, of at of over dividend of price of payments $XXX Specifically, million our an we share average per and period, million have

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

Dan in Taken substantive over for value with time business prospects long-term demonstrate profitable CRA's our aim to for in of growth, as the together, per call few invest the shareholders, all comments. turn a look continued our the share. we decisions returning final Dan? will that, capital to same confidence while maximizing long-term I allocation With to the at CRA's capital

Daniel Mahoney

Thanks, Chad.

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

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

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

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

year with basis full for fiscal For non-GAAP was XX.X% XXXX full effective fiscal XX.X% non-GAAP for the on the rate compared XXXX, fourth of XX.X% compared fiscal a the fourth tax XX.X% The a XXXX. quarter XXXX. of year quarter on was ratio the with basis, fiscal for

The impact in to of of benefit rate our tax decrease largely of the remeasurement related a XXXX current as the quarter fourth tax to a the of compensation. the higher tax laws assets -- share-based attributable changes was in and year deferred result deferred in our

of at XX the quarter the fiscal unbilled. days days the of the XXX the fourth with quarter and DSO sheet. consisted of XX the fourth in of end of DSO of XXX was to XXXX. balance at billed days compared third days Turning quarter end

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

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

Operator

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

Marc Riddick

touch to wanted things. I few So on a

about for thanks the play and might the into fourth remarks that you in that as into to all prepared that and a the you're sort around for utilization forward how the all, wanted provided just high of detail expectations how and well. going in little the 'XX. of First of quarter maybe thinking experienced particularly level get thoughts materials headcount I bit

Paul Maleh

Sure.

constantly We demand, supply to match the trying are services. supply the of our for and demand

phenomenon. parts the in XXXX benefit excess XXXX, as in an overall colleagues took doesn't portfolio. we what that action some These work to actions And try a to the was an not some that's reduction there their saw So we generation. of capacity In business. from to that across targeted of the mean revenue most are meant correct hard staff the get my

put to wanted out there. I So that

growing is operates point in a our seen utilization at average. past Legal and management reason that Regulatory that the relevant years, consulting services. Legal on thing than other and is at a we've few management consulting is The faster Regulatory higher rate than The

portfolio, So up. report if is Legal a utilization part up that we making larger the and of Regulatory inch will

part had absolutely. QX, So we is of busy a it

part But you the that see the in up of that Regulatory just of and larger piece XX% is a making portfolio. Legal percentage. increase other Thus, a is natural just the

Going long still headcount to take. growth on any be of In growth. I term, of forward, run, roughly kind think changed. market of we That the when equal optimization impacts any medium actions I from that the and short again, revenue our is key to may driver kind impact growth. disruptions any to think you that get hasn't should

Marc Riddick

the mean, But that I to areas I was that. several appreciate maybe jour. maybe there's any you over you've another if one weeks wondering or if I that speak far particular could that standard be about, I if administration, any thoughts could anything Okay. a bit should seen a you've guess, way question,du talk you thus the with thinking move wondering new about? or it's, we seen last little

Paul Maleh

Sure.

weeks to too call. we new the new are even less year, into it's early the think less into what or I administration. Clearly, X

the a myself, of are So get some what clarity I to trying think see underlying to we these market is lot of as actions. many of objective observers where

market. that in expectations saw is M&A As were That almost the that an the low XX-year a month example, of broader like January at we in not transactions the for month.

a administration's don't necessarily the point. think new I that's to shake we're trying out I see objectives all think expectation where here. just So

Marc Riddick

pickup consistent the -- or the aspect obviously, around of sort the then growth. the quarter? of And that were one any timing areas was -- But commentary not sort sort to there of was broad-based as quarter the was any of of or at Okay. things curious was that of particular my there that or fourth of very you was end gains the throughout if whether I saw caught if sort the eye

Paul Maleh

All a gradually and strong in October say started picked of up. that I QX was we it off can't weak quarter, right?

we had different December but and observed that it October than front, markedly we wasn't the strong I in a November. on think that rate

Operator

Our Kevin next with Stankey Barrington question comes from Research.

Kevin Steinke

morning, everyone. Good

Paul Maleh

Kevin. morning, Good

Kevin Steinke

growth your called XXXX, maybe you're the the larger XXXX. a want practices outlook solid that And I start Antitrust grew and out wondering to by outlook for the like that revenue to contributing just which some asking about quarter. Life practices how Competition for I outlook, about in various Economics of in Sciences, & specifically Life out note fourth that Science you thinking

how buildup various wondering XXXX practices to the just contributing So guidance. are to the

Paul Maleh

that you is thank XXXX for rather strong. for Well, noticing Sure. guidance the provided

the the XXXX on contributions entire think portfolio. broad-based we're it's across whether board, talking I also whether for strong it's highs One, on few rather the and on that We're reasons. basing a it's not easy about fiscal a profitability topped comparables. revenue, all-time that of

portfolio that's that. profitable we thing solid us on. the hard to growth for the think provides growth and at a really opportunity So And build

grew really practices rates see growth see just been it's that the and -- seeing one contributor still best didn't an portfolio they've right? double quarter a like exceptional to try but after in on but QX, grow -- just only competition X%. love we quarter, than quarter, I started year competition QX, to competition. would that year. contributor close gap X%, didn't digits those steady of We would in the parts the after And they in other to They because I marketplace. entity the other are and

quarter after quarter. when that's do pretty you're hard delivering all-time And highs to

to regulatory opportunities love the little would legal practice see sciences parts practice love fruition. That's to I in the resident life we faster rate. see grow. have That's other the and growth embedded a would to I of that at And So that in energy come the in forecast.

Kevin Steinke

in XX.X% and the puts that for of the margin margin terms for talk XXXX believe, comparing you as for just Maybe guidance there formulated XXXX. the there. in XX.X% takes XXXX. guidance fiscal outlook And to, XX.X% you that thinking to about EBITDA about you're margin non-GAAP comments Thank Okay. fiscal of I

Paul Maleh

to we time What over comes profit rate cost your making management, And are of lower make has also of the of that of at margin a with any the My cost I'm kind it these to is last composition profits. Sure. at years. gains lot the do excited a the revenue the back? have you our large is, gains. handful profits. with do growth of your on of because profitability about concern lot it That on been Growth portfolio cost any in you going of biggest to sometimes has comes lower but give

fact drive the that on of to of same revenue and So the we've delivered profit, pretty rates dollar profits growth kind and highs feel continuing the good to able we've that about. I at been rates all-time time, deliver

guidance put the what the the of put the beginning guidance range, XXXX. at guidance range that And last at year for is forth in same the XXXX update we we forth roughly of

not planning above not give take ready threshold I'm step the pretty I good back, to 'XX. about feel we are our to company. achieved the So take a to ready it capacity I'm but profit leap, we that generating XX% that in whether of

Kevin Steinke

Or clients any with what's up, from enforcement. et that in the just to in guess, the appear And business seeing create -- was usual. as I wouldn't tariffs, earlier among of XXXX the be quarter from know But and outlook. sort fourth Good. Okay. the that have to it Trump just -- I about cetera, case administration forward? in it asked shifts of ongoing any and are of results of regulatory relation But to the landscape picked some you you any terms move the customers hesitancy

Paul Maleh

I Clearly, Again, statistics experienced it's little about administration into I pickup. when month We've X in of declare will pretty that again, Usually, that looked or the year. the little January new declare a too weeks before. for delay haven't were uncertainty early month only M&A and low. new about date. the to think again, expectations marketplace carefully I saw happen overall only the expenditures. I But defeat victory. that a into a seen the to But I'm of

impact into government with going don't know go quarters on what to I So ahead. to the for direction the respect economy we're

Kevin Steinke

enough. just on -- utilization. Fair again, following And we Okay. up as

Legal that think that as grow business utilization do you... appropriate of Regulatory it and we the rate? you about As think mean, still I piece mid-XXs Could to continues higher? should faster, How the a bit as about be

Paul Maleh

Yes.

we enjoyed -- Again, on to don't you a higher that quarterly or to definitely of not the to mid-XXs and management we potential change have sciences opportunity are want target demand think the XXXX. that I that overall a But grow outside ready trend I'm in right? during life X results opportunity the forward, of environment. data I fiscal little start and risks exists. of I'm that's mid-XXs X definitely consulting to go the than the at hope really start always rates terms What overall possibility, why is One, going points not faster

always grow consulting. as same Things Regulatory They aren't linear. Legal doesn't at pace management oscillate. and the

drop So couple services points. and take of consulting rate in litigation utilization would to management a I basis a the gladly of have relative pickup growth

Kevin Steinke

River talent then of pipeline can as Charles just able still well? look And side for and people continuing Is of the as senior ability -- being junior terms in the pipeline like? like the in And and market looks soft it Associates well what your bring consultant there? relatively talent you looks what's to in terms for lastly, the Okay. overall to attract talent just discuss

Paul Maleh

try our of What will revenue it so buckets. and the the Sure. portfolio. the help break consultants up I services of that that consultants will call generation on of I help into the to X on those more delivery

we portfolio. across of yes, the the still retention services, strong are On seeing the delivery very rates

means that we norms. historical turnover levels, think I to So lower at have that relative may say,

to be placing capacity buyer's need used also that places, to So fungible but a it's staff that it hire be always and can of at right market, wisely the you whether terms need across that. going in also your test the and services in means you means to

delivery So aspect. pretty on capacity I'm the feeling good

On now, capacity, disruption lot news of anyone. legal services in the of marketplace happening not regulatory. you revenue-generating -- right a in it's around I know, to as our particularly or the There's

existing that a colleagues You dual end an both. on the We're why role to We're is play goal pursuit. doing attractive for of doing hires. respective both. And the and your of to also positive trying at is trying that provide be the great environment home net communicate lateral the year to for

great I there opportunities. think are So

Our their also are full, their staff doing pipeline of to having recruit try them to opportunities firms best that but is to organization. rather great means other

Kevin Steinke

All Thank right. strong again, fourth the results. congratulations on turn you. over. it quarter I'll Well, back

Paul Maleh

Kevin. Thank you,

Operator

Our question from comes next Andrew William Nicholas Blair. with

Andrew Nicholas

of to How Obviously, up little that week. Can your talked to about yours the if competitor to bit wanted thread changes quite you're your of is here much antitrust the more. net are more start outlook within outflows, you're that also the competition broadly economics I into talk response little there's potential will, that positive about what market and you net bit to of as -- A bit targeting? news a has you pull particular? dynamic year. quite a some bit antitrust on if going there a or here retention outlook in expecting if the you of 'XX? last that the for And this baking of opposed kind downside for a

Paul Maleh

Yes.

on also is there. of the of net If legacy work done But haven't to laterals the our of incorporated a some going going think this and adjustment we year. said, kind we've both to the the indication, in I'm about time. of any outlook, got So colleagues we're we Andrew, what where be the be track net-net retention things are at record I probability know by of to any point our that do, recruitment positive. I into I end like

boss, a in long I was I more to from to lot ahead. from got my when I months a I going was And me. calls a said, So come concerned more I call going and to I be to I Paul, got going you're raise competitor, a the when competitors. the thought and at getting thought from ago throwing said, much not back comment he's told get I'm money be

a what expectations -- you has this positive we always Accumulating my be that end kind at surprise. the with time. that as want spin-off CRA to It's including the going every is not to the And stuck me. guidance Is not includes try the your Absolutely. are bolster competitor, in the right a to colleagues of this their means best of have try at But look to a the being That's to do But created use disruption being it that's the surprise. CRA to from now. range to of day strength market my exhausting? net portfolio.

Andrew Nicholas

helpful. super That's

related the think I one people same if follow-up. approach similar does a some keep to great your maybe of also some that comp that increased to that reflect of frame Is talent way expectation guess, takes a in some a maybe example? to And it. just best -- those your or

Paul Maleh

happening. there's a surprise, to that, result, from to on does bow that. talent. Yes. when Usually, surprise benefit the But just put that employees for is a response from It wages. higher competition And my

those at again, of expectations. put our that best incorporates, across arrangements of new happening margin CRA competitors. the to is forth comp that I my The knowledge, many comp and range and all think I of

Operator

session. We Maleh any have closing end Mr. reached to the of the comments. now I or for will call additional question-and-answer the back turn over

Paul Maleh

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

in concludes be call. progress forward participating call. investors and virtual We you. on our on quarter with meetings look Thank we today's coming months, first the updating This will you in to our

Operator

concludes conference. This today's

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

CRA International (CRAI) 20 Feb 252024 Q4 Earnings call transcript