Forensic Services and Life Sciences Deliver
Double-Digit Revenue Growth
Company Increases Quarterly Dividend by 17%
Company to Host Investor Day on November 29,
2023
Charles River Associates (NASDAQ: CRAI), a worldwide leader in
providing economic, financial and management consulting services,
today announced financial results for the fiscal third quarter
ended September 30, 2023.
“Our third quarter was shaped by an unexpected slowdown in new
project originations at a time of higher than expected headcount,
resulting in an unusual departure from CRA’s long history of
delivering revenue and profit expansion,” said Paul Maleh, CRA’s
President and Chief Executive Officer. “In light of the
macroeconomic uncertainty that marked the third quarter, I was
pleased that six of our 11 practices grew year over year, with two
of our largest practices – Forensic Services and Life Sciences –
delivering double-digit revenue increases. At the same time, our
international operations continued their strong performance by
expanding 13.2% year over year.”
Highlights for Third Quarter Fiscal 2023
- Revenue declined 0.6% year over year to $147.6 million.
- Utilization was 66%, and quarter-end headcount increased 11.3%
year over year.
- Net income decreased 27.6% year over year to $8.6 million, or
5.8% of revenue, compared with $11.9 million, or 8.0% of revenue,
in the third quarter of fiscal 2022; non-GAAP net income decreased
24.1% year over year to $8.0 million, or 5.4% of revenue, compared
with $10.6 million, or 7.1% of revenue, in the third quarter of
fiscal 2022.
- Earnings per diluted share decreased 25.8% year over year to
$1.21 from $1.63 in the third quarter of fiscal 2022; non-GAAP
earnings per diluted share decreased 22.1% year over year to $1.13
from $1.45 in the third quarter of fiscal 2022.
- Non-GAAP EBITDA decreased 23.4% to $13.8 million, or 9.3% of
revenue, compared with $18.0 million, or 12.1% of revenue, in the
third quarter of fiscal 2022.
- On a constant currency basis relative to the third quarter of
fiscal 2022, revenue, GAAP net income and earnings per diluted
share would have been lower by $1.8 million, $0.2 million, and
$0.03 per diluted share, respectively. Non-GAAP net income,
earnings per diluted share, and non-GAAP EBITDA would have been
lower by $0.2 million, $0.03 per diluted share and $0.4 million,
respectively.
- CRA returned $2.5 million of capital to its shareholders via
quarterly dividend payments.
Management Commentary and Financial Guidance
“Through the first three quarters of fiscal 2023, on a constant
currency basis relative to fiscal 2022, CRA generated total revenue
of $463.8 million and non-GAAP EBITDA of $50.0 million, achieving a
margin of 10.8%,” said Maleh. “Given results to date and lingering
uncertainties across the broader economy, we are lowering our
revenue and profit guidance. For full-year fiscal 2023, on a
constant currency basis relative to fiscal 2022, we expect revenue
in the range of $610.0 million to $620.0 million and non-GAAP
EBITDA margin in the range of 10.3% to 10.7%. This compares with a
prior revenue range of $625.0 million to $640.0 million and a prior
non-GAAP EBITDA margin range of 11.0% to 11.7%. We remain confident
in CRA’s overall competitive position, which is reflected in our
decision to raise our quarterly cash dividend by 17%, but we are
mindful that macroeconomic headwinds and geopolitical conditions
can affect our business.”
CRA does not provide reconciliations of its annual non-GAAP
EBITDA margin guidance to GAAP net income margin because the
Company is unable to estimate with reasonable certainty unusual
gains or charges, foreign currency exchange rates, and the
resulting effect of these items, and of equity awards, on CRA’s
taxes without unreasonable effort. These items are uncertain,
depend on various factors, and may have a material effect on CRA’s
results computed in accordance with GAAP. A reconciliation between
the historical GAAP and non-GAAP financial measures presented in
this release is provided in the financial tables at the end of this
release.
Quarterly Dividend
On November 2, 2023, CRA announced that it increased its
quarterly cash dividend by 17% from $0.36 to $0.42 per common
share. The dividend will be payable on December 8, 2023 to
shareholders of record as of November 28, 2023. 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.
Investor Day
CRA will host an investor day on Wednesday, November 29 at the
Fairmont Copley Plaza hotel in Boston to discuss its business,
strategy and industry trends in greater depth, with presentations
from members of the Company’s Antitrust & Competition
Economics, Forensic Services and Life Sciences practices. A live
webcast will be available on the “Investor Relations” section of
CRA’s website.
Conference Call Information and Prepared CFO Remarks
CRA will host a conference call today at 10:00 a.m. ET to
discuss its third-quarter 2023 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 “Quarterly Earnings” 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, X, 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 the following
financial measures that are not calculated in accordance with GAAP:
non‑GAAP net income, non‑GAAP net income per share and non‑GAAP
EBITDA. 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 are made to the performance measures
for some of CRA’s performance-based compensation.
As used herein, CRA defines non-GAAP EBITDA as net income before
interest expense (net), income taxes, and depreciation and
amortization further adjusted for the impact of certain items that
we do not consider indicative of our core operating performance,
such as non-cash amounts relating to valuation changes in
contingent consideration, acquisition-related costs, foreign
currency (gains) losses, net and related tax effects. Non-GAAP net
income and non-GAAP net income per share also exclude non-cash
amounts relating to valuation changes in contingent consideration,
acquisition-related costs, foreign currency (gains) losses, net 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 for the fiscal year-to-date period ended
September 30, 2023 relative to the fiscal year-to-date period ended
October 1, 2022, revenue and EBITDA would have been higher by $1.4
million and $0.8 million, respectively.
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, including those
concerning guidance on future revenue and non-GAAP EBITDA margin,
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 expanded 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 revenue and
non-GAAP EBITDA margin in fiscal 2023 on a constant currency basis
relative to fiscal 2022 could differ materially from the guidance
presented herein, and 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 impact of epidemics or pandemics such as the
COVID-19 pandemic; 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.” 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
SEPTEMBER 30, 2023 COMPARED TO
OCTOBER 1, 2022
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
Fiscal Quarter Ended
Fiscal Year-to-Date Period
Ended
September 30,
2023
As a % of
Revenue
October 1, 2022
As a % of
Revenue
September 30,
2023
As a % of
Revenue
October 1, 2022
As a % of
Revenue
Revenues
$
147,553
100.0
%
$
148,441
100.0
%
$
462,363
100.0
%
$
445,925
100.0
%
Costs of services (exclusive of
depreciation and amortization)
105,894
71.8
%
102,267
68.9
%
327,064
70.7
%
309,403
69.4
%
Selling, general and administrative
expenses
27,919
18.9
%
28,246
19.0
%
86,137
18.6
%
82,026
18.4
%
Depreciation and amortization
2,947
2.0
%
3,034
2.0
%
8,762
1.9
%
9,060
2.0
%
Income from operations
10,793
7.3
%
14,894
10.0
%
40,400
8.7
%
45,436
10.2
%
Interest expense, net
(1,025
)
-0.7
%
(667
)
-0.4
%
(3,212
)
-0.7
%
(1,343
)
-0.3
%
Foreign currency gains (losses), net
755
0.5
%
1,667
1.1
%
(459
)
-0.1
%
3,566
0.8
%
Income before provision for income
taxes
10,523
7.1
%
15,894
10.7
%
36,729
7.9
%
47,659
10.7
%
Provision for income taxes
1,927
1.3
%
4,017
2.7
%
9,707
2.1
%
12,713
2.9
%
Net income
$
8,596
5.8
%
$
11,877
8.0
%
$
27,022
5.8
%
$
34,946
7.8
%
Net income per share:
Basic
$
1.22
$
1.66
$
3.83
$
4.81
Diluted
$
1.21
$
1.63
$
3.78
$
4.72
Weighted average number of shares
outstanding:
Basic
6,977
7,119
7,026
7,247
Diluted
7,083
7,246
7,138
7,376
CRA INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
FOR THE FISCAL QUARTERS AND
FISCAL YEAR-TO-DATE PERIODS ENDED
SEPTEMBER 30, 2023 COMPARED TO
OCTOBER 1, 2022
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
Fiscal Quarter Ended
Fiscal Year-to-Date Period
Ended
September 30,
2023
As a % of
Revenue
October 1, 2022
As a % of
Revenue
September 30,
2023
As a % of
Revenue
October 1, 2022
As a % of
Revenue
Revenues
$
147,553
100.0
%
$
148,441
100.0
%
$
462,363
100.0
%
$
445,925
100.0
%
Net income
$
8,596
5.8
%
$
11,877
8.0
%
$
27,022
5.8
%
$
34,946
7.8
%
Adjustments needed to reconcile GAAP net
income to non-GAAP net income:
Non-cash valuation change in contingent
consideration
16
—
%
—
—
%
52
—
%
—
—
%
Acquisition-related costs
—
—
%
30
—
%
22
—
%
233
0.1
%
Foreign currency (gains) losses, net
(755
)
-0.5
%
(1,667
)
-1.1
%
459
0.1
%
(3,566
)
-0.8
%
Tax effect on adjustments
166
0.1
%
329
0.2
%
(138
)
—
%
647
0.1
%
Non-GAAP net income
$
8,023
5.4
%
$
10,569
7.1
%
$
27,417
5.9
%
$
32,260
7.2
%
Non-GAAP net income per share:
Basic
$
1.14
$
1.48
$
3.89
$
4.44
Diluted
$
1.13
$
1.45
$
3.83
$
4.36
Weighted average number of shares
outstanding:
Basic
6,977
7,119
7,026
7,247
Diluted
7,083
7,246
7,138
7,376
CRA INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
FOR THE FISCAL QUARTERS AND
FISCAL YEAR-TO-DATE PERIODS ENDED
SEPTEMBER 30, 2023 COMPARED TO
OCTOBER 1, 2022
(IN THOUSANDS)
Fiscal Quarter Ended
Fiscal Year-to-Date Period
Ended
September 30,
2023
As a % of
Revenue
October 1, 2022
As a % of
Revenue
September 30,
2023
As a % of
Revenue
October 1, 2022
As a % of
Revenue
Revenues
$
147,553
100.0
%
$
148,441
100.0
%
$
462,363
100.0
%
$
445,925
100.0
%
Net income
$
8,596
5.8
%
$
11,877
8.0
%
$
27,022
5.8
%
$
34,946
7.8
%
Adjustments needed to reconcile GAAP net
income to non-GAAP net income:
Non-cash valuation change in contingent
consideration
16
—
%
—
—
%
52
—
%
—
—
%
Acquisition-related costs
—
—
%
30
—
%
22
—
%
233
0.1
%
Foreign currency (gains) losses, net
(755
)
-0.5
%
(1,667
)
-1.1
%
459
0.1
%
(3,566
)
-0.8
%
Tax effect on adjustments
166
0.1
%
329
0.2
%
(138
)
—
%
647
0.1
%
Non-GAAP net income
$
8,023
5.4
%
$
10,569
7.1
%
$
27,417
5.9
%
$
32,260
7.2
%
Adjustments needed to reconcile non-GAAP
net income to non-GAAP EBITDA:
Interest expense, net
1,025
0.7
%
667
0.4
%
3,212
0.7
%
1,343
0.3
%
Provision for income taxes
1,761
1.2
%
3,688
2.5
%
9,845
2.1
%
12,066
2.7
%
Depreciation and amortization
2,947
2.0
%
3,034
2.0
%
8,762
1.9
%
9,060
2.0
%
Non-GAAP EBITDA
$
13,756
9.3
%
$
17,958
12.1
%
$
49,236
10.6
%
$
54,729
12.3
%
CRA INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS)
September 30,
2023
December 31,
2022
Assets
Cash and cash equivalents
$
27,604
$
31,447
Accounts receivable and unbilled services,
net
193,321
194,987
Other current assets
27,777
22,426
Total current assets
248,702
248,860
Property and equipment, net
39,963
45,582
Goodwill and intangible assets, net
101,008
101,510
Right-of-use assets
88,871
96,725
Other assets
60,501
58,240
Total assets
$
539,045
$
550,917
Liabilities and Shareholders’
Equity
Accounts payable
$
24,711
$
27,584
Accrued expenses
137,920
155,864
Current portion of lease liabilities
16,193
15,972
Revolving line of credit
32,000
—
Other current liabilities
13,424
17,705
Total current liabilities
224,248
217,125
Non-current portion of lease
liabilities
95,406
106,008
Other non-current liabilities
11,433
16,630
Total liabilities
331,087
339,763
Total shareholders’ equity
207,958
211,154
Total liabilities and shareholders’
equity
$
539,045
$
550,917
CRA INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Fiscal Year-to-Date Period
Ended
September 30,
2023
October 1, 2022
Operating activities:
Net income
$
27,022
$
34,946
Adjustments to reconcile net income to net
cash used in operating activities, net of effect of acquired
businesses:
Non-cash items, net
21,542
21,723
Accounts receivable and unbilled
services
1,559
(48,853
)
Working capital items, net
(50,150
)
(42,831
)
Net cash used in operating activities
(27
)
(35,015
)
Investing activities:
Purchases of property and equipment,
net
(2,008
)
(2,999
)
Consideration paid for acquisition,
net
(577
)
(10,185
)
Net cash used in investing activities
(2,585
)
(13,184
)
Financing activities:
Issuance of common stock, principally
stock options exercises
—
760
Borrowings under revolving line of
credit
105,000
124,000
Repayments under revolving line of
credit
(73,000
)
(79,000
)
Payments for debt issuance costs
—
(1,008
)
Tax withholding payments reimbursed by
shares
(2,040
)
(1,002
)
Cash dividends paid
(7,773
)
(6,860
)
Repurchase of common stock
(23,577
)
(27,630
)
Net cash provided by (used in) financing
activities
(1,390
)
9,260
Effect of foreign exchange rates on cash
and cash equivalents
159
(3,098
)
Net decrease in cash and cash
equivalents
(3,843
)
(42,037
)
Cash and cash equivalents at beginning of
period
31,447
66,130
Cash and cash equivalents at end of
period
$
27,604
$
24,093
Noncash investing and financing
activities:
Increase (decrease) in accounts payable
and accrued expenses for property and equipment
$
(129
)
$
(201
)
Excise tax on share repurchases
$
(190
)
$
—
Right-of-use assets obtained in exchange
for lease obligations
$
2,503
$
2,146
Supplemental cash flow
information:
Cash paid for taxes
$
9,953
$
11,407
Cash paid for interest
$
2,904
$
1,026
Cash paid for amounts included in
operating lease liabilities
$
16,660
$
15,864
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101875233/en/
Dan Mahoney Chief Financial Officer Charles River Associates
617-425-3505
Nicholas Manganaro Sharon Merrill Associates, Inc.
crai@investorrelations.com 617-542-5300
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