CRAI
$39.31
Cra International
($1.94)
(4.70%)
Earnings Details
2nd Quarter June 2020
Thursday, July 30, 2020 8:05:00 AM
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Summary

Cra International (CRAI) Recent Earnings

Cra International (CRAI) reported 2nd Quarter June 2020 earnings of $0.80 per share on revenue of $123.0 million. The consensus earnings estimate was $0.54 per share on revenue of $115.9 million. Revenue grew 11.3% on a year-over-year basis.

CRA International, Inc., is a consulting firm that provides economic, financial & management consulting services. It advises clients on litigation & regulatory proceedings & guides corporations through critical business & performance-related issues.

Results
Reported Earnings
$0.80
Earnings Whisper
-
Consensus Estimate
$0.54
Reported Revenue
$123.0 Mil
Revenue Estimate
$115.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Charles River Associates (CRA) Reports Financial Results for the Second Quarter of 2020

CRA Reports Highest Q2 Revenue in Its History; Strength Across Services and Geographies Drives Growth in Revenue and Profits

BOSTON--(BUSINESS WIRE)--Charles River Associates (NASDAQ: CRAI), a worldwide leader in providing economic, financial and management consulting services, today announced financial results for the fiscal second quarter ended June 27, 2020.

Key Second-Quarter Fiscal 2020 Highlights

  • Revenue grew 11.3% year over year to $123.0 million.
  • Utilization was 66%, while quarter-end headcount was relatively unchanged compared with the first quarter of 2020 and increased 20.8% year over year.
  • Net income increased 6.3% year over year to $5.9 million, or 4.8% of revenue, compared with $5.6 million, or 5.0% of revenue, in the second quarter of fiscal 2019; non-GAAP net income increased 4.7% year over year to $6.3 million, or 5.2% of revenue, compared with $6.1 million, or 5.5% of revenue, in the second quarter of fiscal 2019.
  • Earnings per diluted share increased 10.3% year over year to $0.75; non-GAAP earnings per diluted share increased 9.6% year over year to $0.80.
  • Non-GAAP EBITDA increased 2.0% to $11.9 million, or 9.7% of revenue, compared with $11.7 million, or 10.6% of revenue, in the second quarter of fiscal 2019.
  • On a constant currency basis relative to the second quarter of fiscal 2019, revenue would have been higher by $0.8 million, GAAP net income would have been higher by $0.1 million, and GAAP earnings per diluted share would have remained unchanged. Non-GAAP net income, earnings per diluted share and EBITDA would have been higher by $0.1 million, $0.01 per diluted share, $0.1 million, respectively.
  • CRA made dividend payments of $1.8 million during the quarter.

Management Commentary

“Our first priority is the health and well-being of our people as we continue to address our clients’ most important business challenges,” said Paul Maleh, CRA’s President and Chief Executive Officer. “We are focused on providing our colleagues with a foundation of stability and safety during this unprecedented time. Although our offices remain open and capable of hosting our colleagues, we have asked everyone to work from home whenever possible.”

“Continuing to build on a record fiscal 2019, CRA reported its highest second-quarter revenue in our company’s history. These results were led by double-digit revenue growth year over year in each of our Finance, Forensic Services, and Life Sciences practices, and continued strong contributions from our Labor & Employment and Risk, Investigations & Analytics practices. Geographically, we continue to see strong demand for our services resulting in revenue growth of 14.1% in our North American operations and 3.6% internationally on a constant currency basis.”

“Although we entered the year with lofty revenue expectations as evidenced by the increase in our headcount, we still grew second quarter profits year over year by effectively managing our consulting services and overhead. Combining the revenue and profit growth of the second-quarter with our strong Q1 performance, on a constant currency basis, we have increased revenue by 15.7% to $250.3 million and non-GAAP EBITDA by 24.2% to $25.1 million, achieving a margin of 10.0%. Although we are pleased with our performance through the second quarter, we recognize the challenges and uncertainties that accompany the ongoing COVID-19 pandemic. We remain confident that the same factors that have driven our success in recent years will continue to drive our performance in the months and years ahead,” Maleh concluded.

Quarterly Dividend

On July 30, 2020, CRA’s Board of Directors announced a quarterly cash dividend of $0.23 per common share, payable on September 14, 2020 to shareholders of record as of August 25, 2020. CRA expects to continue paying quarterly dividends, the declaration, timing and amounts of which remain subject to the discretion of CRA’s Board of Directors.

Conference Call Information and Prepared CFO Remarks

CRA will host a conference call today at 10:00 a.m. ET to discuss its second-quarter 2020 financial results. To listen to the live call, please visit the “Investor Relations” section of CRA’s website at http://www.crai.com, or dial (877) 709-8155 or (201) 689-8881. An archived version of the webcast will be available on CRA’s website for one year.

In combination with this press release, CRA has posted prepared remarks by its CFO Dan Mahoney under “Conference Call Materials” in the “Investor Relations” section on CRA’s website at http://www.crai.com. These remarks are offered to provide the investment community with additional background on CRA’s financial results prior to the start of the conference call.

About Charles River Associates (CRA)

Charles River Associates® is a leading global consulting firm specializing in economic, financial, and management consulting services. CRA advises clients on economic and financial matters pertaining to litigation and regulatory proceedings, and guides corporations through critical business strategy and performance-related issues. Since 1965, clients have engaged CRA for its unique combination of functional expertise and industry knowledge, and for its objective solutions to complex problems. Headquartered in Boston, CRA has offices throughout the world. Detailed information about Charles River Associates, a registered trade name of CRA International, Inc., is available at www.crai.com. Follow us on LinkedIn, Twitter, and Facebook.

NON-GAAP FINANCIAL MEASURES

In this release, CRA has supplemented the presentation of its financial results calculated in accordance with U.S. generally accepted accounting principles or “GAAP” with financial measures that were not calculated in accordance with GAAP. CRA believes that the non-GAAP financial measures described in this press release are important to management and investors because these measures supplement the understanding of CRA’s ongoing operating results and financial condition. In addition, these non-GAAP measures are used by CRA in its budgeting process, and the non-GAAP adjustments described below are made to the performance measures for some of CRA’s performance-based compensation.

The adjustments made to the financial measures identified in this release as “non-GAAP” are as follows: for each of the periods presented, the adjustments exclude non-cash amounts relating to valuation changes in contingent consideration and related tax effects. This release also presents certain current fiscal period financial measures on a “constant currency” basis in order to isolate the effect that foreign currency exchange rate fluctuations can have on CRA’s financial results. These constant currency measures are determined by recalculating the current fiscal period local currency financial measure using the specified corresponding prior fiscal period’s foreign exchange rates. On a constant currency basis relative to the first half of 2019, revenue would have been higher by $1.1 million and EBITDA would have been higher by $0.3 million. Finally, this release also presents the non-GAAP financial metric EBITDA.

All of the non-GAAP financial measures referred to above should be considered in conjunction with, and not as a substitute for, the GAAP financial information presented in this release. EBITDA and the financial measures identified in this release as “non-GAAP” are reconciled to their GAAP comparable measures in the financial tables appended to the end of this press release. In evaluating these non-GAAP financial measures, note that the non-GAAP financial measures used by CRA may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

SAFE HARBOR STATEMENT

Statements in this press release concerning our future business, operating results and financial condition, the impact of the COVID-19 pandemic, our ability to effectively provide our services remotely, the impact of exchange rate fluctuations on our financial results, our expectations regarding continued growth, our expectations regarding the payment of any future quarterly dividends and the level and extent of any purchases under our share repurchase program, and statements using the terms “outlook,” “expect,” or similar expressions, are “forward-looking” statements as defined in Section 21 of the Exchange Act. These statements are based upon our current expectations and various underlying assumptions. Although we believe there is a reasonable basis for these statements and assumptions, and these statements are expressed in good faith, these statements are subject to a number of additional factors and uncertainties. Our actual performance and results may differ materially from the performance and results contained in or implied by the forward-looking statements made herein, due to many important factors. These factors include, but are not limited to, the possibility that the demand for our services may decline as a result of changes in general and industry specific economic conditions; the timing of engagements for our services; the effects of competitive services and pricing; our ability to attract and retain key employee or non-employee experts; the inability to integrate and utilize existing consultants and personnel; the decline or reduction in project work or activity; global economic conditions including less stable political and economic environments; the extent and duration of the impact of the COVID-19 pandemic on our operations and results, including the effects on the financial health of our clients, and the impact of the imposition of public health measures and travel, health-related, business and other restrictions; foreign currency exchange rate fluctuations; unanticipated expenses and liabilities; risks inherent in international operations; changes in tax law or accounting standards, rules, and regulations; our ability to collect on forgivable loans should any become due; and professional and other legal liability or settlements. Additional risks and uncertainties are discussed in our periodic filings with the Securities and Exchange Commission under the heading “Risk Factors” (all of which risks may be amplified by the COVID-19 pandemic). The inclusion of such forward-looking information should not be regarded as our representation that the future events, plans, or expectations contemplated will be achieved. Except as may be required by law, we undertake no obligation to update any forward-looking statements after the date of this press release, and we do not intend to do so.

CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL QUARTERS AND FISCAL YEAR-TO-DATE PERIODS ENDED
JUNE 27, 2020 COMPARED TO JUNE 29, 2019
(IN THOUSANDS, EXCEPT PER SHARE DATA)
 
Fiscal Quarter EndedFiscal Year-to-Date Period Ended
June 27,
2020
As a % of
Revenue
June 29,
2019
As a % of
Revenue
June 27,
2020
As a % of
Revenue
June 29,
2019
As a % of
Revenue
Revenues

$

123,031

 

100.0

%

$

110,573

 

100.0

%

$

249,189

 

100.0

%

$

216,422

 

100.0

%

Cost of services (exclusive of depreciation and amortization)

 

90,168

 

73.3

%

 

75,972

 

68.7

%

 

181,165

 

72.7

%

 

149,607

 

69.1

%

Selling, general and administrative expenses

 

21,418

 

17.4

%

 

23,737

 

21.5

%

 

45,541

 

18.3

%

 

46,480

 

21.5

%

Depreciation and amortization

 

3,106

 

2.5

%

 

2,553

 

2.3

%

 

6,049

 

2.4

%

 

5,169

 

2.4

%

Income from operations

 

8,339

 

6.8

%

 

8,311

 

7.5

%

 

16,434

 

6.6

%

 

15,166

 

7.0

%

 
Interest expense, net

 

(372

)

-0.3

%

 

(519

)

-0.5

%

 

(734

)

-0.3

%

 

(530

)

-0.2

%

Foreign currency gains (losses), net

 

(102

)

-0.1

%

 

155

 

0.1

%

 

1,320

 

0.5

%

 

(589

)

-0.3

%

Income before provision for income taxes

 

7,865

 

6.4

%

 

7,947

 

7.2

%

 

17,020

 

6.8

%

 

14,047

 

6.5

%

Provision for income taxes

 

1,934

 

1.6

%

 

2,367

 

2.1

%

 

4,621

 

1.9

%

 

3,802

 

1.8

%

Net income

$

5,931

 

4.8

%

$

5,580

 

5.0

%

$

12,399

 

5.0

%

$

10,245

 

4.7

%

 
Net income per share:
Basic

$

0.76

 

$

0.70

 

$

1.59

 

$

1.28

 

Diluted

$

0.75

 

$

0.68

 

$

1.55

 

$

1.23

 

 
Weighted average number of shares outstanding:
Basic

 

7,764

 

 

7,925

 

 

7,784

 

 

7,970

 

Diluted

 

7,920

 

 

8,218

 

 

7,979

 

 

8,282

 

CRA INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE FISCAL QUARTERS AND FISCAL YEAR-TO-DATE PERIODS ENDED
JUNE 27, 2020 COMPARED TO JUNE 29, 2019
(IN THOUSANDS, EXCEPT PER SHARE DATA)
 
Fiscal Quarter EndedFiscal Year-to-Date Period Ended
June 27,
2020
As a % of
Revenue
June 29,
2019
As a % of
Revenue
June 27,
2020
As a % of
Revenue
June 29,
2019
As a % of
Revenue
Revenues

$

123,031

 

100.0

%

$

110,573

 

100.0

%

$

249,189

 

100.0

%

$

216,422

 

100.0

%

 
Net income

$

5,931

 

4.8

%

$

5,580

 

5.0

%

$

12,399

 

5.0

%

$

10,245

 

4.7

%

Adjustments needed to reconcile GAAP net income to non-GAAP net income:
Non-cash valuation change in contingent consideration

 

566

 

0.5

%

 

651

 

0.6

%

 

996

 

0.4

%

 

434

 

0.2

%

Tax effect on adjustments

 

(153

)

-0.1

%

 

(174

)

-0.2

%

 

(270

)

-0.1

%

 

(116

)

-0.1

%

Non-GAAP net income

$

6,344

 

5.2

%

$

6,057

 

5.5

%

$

13,125

 

5.3

%

$

10,563

 

4.9

%

 
Non-GAAP net income per share:
Basic

$

0.81

 

$

0.76

 

$

1.68

 

$

1.32

 

Diluted

$

0.80

 

$

0.73

 

$

1.64

 

$

1.27

 

 
Weighted average number of shares outstanding:
Basic

 

7,764

 

 

7,925

 

 

7,784

 

 

7,970

 

Diluted

 

7,920

 

 

8,218

 

 

7,979

 

 

8,282

 

CRA INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE FISCAL QUARTERS AND FISCAL YEAR-TO-DATE PERIODS ENDED
JUNE 27, 2020 COMPARED TO JUNE 29, 2019
(IN THOUSANDS)
 
Fiscal Quarter EndedFiscal Year-to-Date Period Ended
June 27,
2020
As a % of
Revenue
June 29,
2019
As a % of
Revenue
June 27,
2020
As a % of
Revenue
June 29,
2019
As a % of
Revenue
Revenues

$

123,031

 

100.0

%

$

110,573

 

100.0

%

$

249,189

 

100.0

%

$

216,422

 

100.0

%

 
Net income

$

5,931

 

4.8

%

$

5,580

 

5.0

%

$

12,399

 

5.0

%

$

10,245

 

4.7

%

Adjustments needed to reconcile GAAP net income to non-GAAP net income:
Non-cash valuation change in contingent consideration

 

566

 

0.5

%

 

651

 

0.6

%

 

996

 

0.4

%

 

434

 

0.2

%

Tax effect on adjustments

 

(153

)

-0.1

%

 

(174

)

-0.2

%

 

(270

)

-0.1

%

 

(116

)

-0.1

%

Non-GAAP net income

$

6,344

 

5.2

%

$

6,057

 

5.5

%

$

13,125

 

5.3

%

$

10,563

 

4.9

%

Adjustments needed to reconcile non-GAAP net income to non-GAAP EBITDA:
Interest expense, net

 

372

 

0.3

%

 

519

 

0.5

%

 

734

 

0.3

%

 

530

 

0.2

%

Provision for income taxes

 

2,087

 

1.7

%

 

2,541

 

2.3

%

 

4,891

 

2.0

%

 

3,918

 

1.8

%

Depreciation and amortization

 

3,106

 

2.5

%

 

2,553

 

2.3

%

 

6,049

 

2.4

%

 

5,169

 

2.4

%

Non-GAAP EBITDA

$

11,909

 

9.7

%

$

11,670

 

10.6

%

$

24,799

 

10.0

%

$

20,180

 

9.3

%

CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
 
 

June 27,

 

December 28,

2020

 

2019

 
Assets
Cash and cash equivalents

$

18,807

$

25,639

Accounts receivable and unbilled services, net

 

152,031

 

144,410

Other current assets

 

19,119

 

14,028

Total current assets

 

189,957

 

184,077

 
Property and equipment, net

 

65,402

 

61,295

Goodwill and intangible assets, net

 

93,704

 

94,980

Right-of-use assets

 

122,983

 

130,173

Other assets

 

76,543

 

62,718

Total assets

$

548,589

$

533,243

 
Liabilities and Shareholders’ Equity
Accounts payable

$

20,894

$

26,069

Accrued expenses

 

82,199

 

121,301

Current portion of lease liabilities

 

13,208

 

12,847

Revolving line of credit

 

59,000

 

-

Other current liabilities

 

22,223

 

11,193

Total current liabilities

 

197,524

 

171,410

Non-current portion of lease liabilities

 

141,528

 

146,551

Other non-current liabilities

 

7,322

 

17,531

Total liabilities

 

346,374

 

335,492

 
Total shareholders’ equity

 

202,215

 

197,751

Total liabilities and shareholders’ equity

$

548,589

$

533,243

CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
 

Fiscal Year-to-Date Period Ended

June 27,

 

June 29,

2020

 

2019

Operating activities:
Net income

$

12,399

 

$

10,245

 

Adjustments to reconcile net income to net cash used in operating activities:
Non-cash items, net

 

12,107

 

 

11,611

 

Accounts receivable and unbilled services

 

(8,962

)

 

(1,068

)

Working capital items, net

 

(59,844

)

 

(66,897

)

Net cash used in operating activities

 

(44,300

)

 

(46,109

)

 
Investing activities:
Purchases of property and equipment

 

(13,517

)

 

(3,904

)

Net cash used in investing activities

 

(13,517

)

 

(3,904

)

 
Financing activities:
Issuance of common stock, principally stock option exercises

 

569

 

 

1,526

 

Borrowings under revolving line of credit

 

77,000

 

 

50,000

 

Repayments under revolving line of credit

 

(18,000

)

 

(9,000

)

Tax withholding payments reimbursed by shares

 

(390

)

 

(388

)

Cash paid on dividend equivalents

 

(40

)

 

(35

)

Cash dividends paid to shareholders

 

(3,584

)

 

(3,196

)

Repurchase of common stock

 

(3,810

)

 

(11,510

)

Net cash provided by financing activities

 

51,745

 

 

27,397

 

 
Effect of foreign exchange rates on cash and cash equivalents

 

(760

)

 

176

 

 
Net decrease in cash and cash equivalents

 

(6,832

)

 

(22,440

)

Cash and cash equivalents at beginning of period

 

25,639

 

 

38,028

 

 
Cash and cash equivalents at end of period

$

18,807

 

$

15,588

 

 
Noncash investing and financing activities:
Purchases of property and equipment not yet paid for

$

3,784

 

$

4,053

 

Purchases of property and equipment paid by a third party

$

-

 

$

62

 

Asset retirement obligations

$

155

 

$

335

 

Right-of-use assets obtained in exchange for lease obligations

$

-

 

$

37,284

 

Right-of-use assets related to the adoption of ASC 842

$

-

 

$

82,329

 

Lease liabilities related to the adoption of ASC 842

$

-

 

$

106,765

 

Supplemental cash flow information:
 
Cash paid for taxes

$

2,057

 

$

3,583

 

Cash paid for interest

$

676

 

$

510

 

Cash paid for amounts included in operating lease liabilities

$

9,243

 

$

8,113

 

 

Dan Mahoney
Chief Financial Officer
Charles River Associates
617-425-3505

Nick Manganaro
Sharon Merrill Associates, Inc.
crai@investorrelations.com
617-542-5300

Source: Charles River Associates