Strength Across Services and Geographies Drives
Growth in Revenue;
Reinstates Financial Guidance for Fiscal Year
2020;
Increases Quarterly Dividend by 13%
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 26, 2020.
Key Third-Quarter Fiscal 2020 Highlights
- Revenue grew 5.3% year over year to $121.8 million.
- Utilization was 69%, while quarter-end headcount increased
11.5% year over year.
- Net income was $5.4 million, or 4.4% of revenue, compared with
$5.7 million, or 5.0% of revenue, in the third quarter of fiscal
2019; non-GAAP net income was $6.1 million, or 5.0% of revenue,
compared with $7.9 million, or 6.9% of revenue, in the third
quarter of fiscal 2019.
- Earnings per diluted share were $0.68, compared with $0.71 in
the third quarter of fiscal 2019; non-GAAP earnings per diluted
share were $0.76, compared with $0.98 in the third quarter of
fiscal 2019.
- Non-GAAP EBITDA was $12.0 million, or 9.8% of revenue, compared
with $12.6 million, or 10.9% of revenue, in the third quarter of
fiscal 2019.
- On a constant currency basis relative to the third quarter of
fiscal 2019, revenue would have been lower by $0.9 million, GAAP
net income and earnings per diluted share would have been lower by
$0.2 million and $0.02, respectively. Non-GAAP net income, earnings
per diluted share and EBITDA would have been lower by $0.2 million,
$0.02 per diluted share, $0.2 million, respectively.
- CRA returned $6.8 million of capital to its shareholders,
consisting of $1.8 million of dividend payments and $5.0 million
for share repurchases of approximately 110,000 shares.
Management Commentary and Financial Guidance
“Against a challenging economic backdrop, CRA again demonstrated
its ability to generate strong cash flows, providing funds to
support the growth of the business and return capital to
shareholders,” said Paul Maleh, CRA’s President and Chief Executive
Officer. “Highlighting the resiliency of our company, CRA delivered
year-over-year revenue growth for the 19th consecutive quarter. CRA
continued to invest in our practices by increasing headcount by
11.5% year over year, while at the same time reducing its
borrowings by $21.0 million and increasing its cash balance by 28%
compared to the second quarter of fiscal 2020. CRA also repurchased
110,000 shares of its common stock during the third quarter and
today announced a 13% increase in its quarterly cash dividend.”
“Building on a record fiscal 2019 and first half of fiscal 2020,
CRA produced growth across both the legal & regulatory and
management consulting lines of business. Many of our practices
generated revenue growth year over year, led by double-digit growth
in each of our Energy, Finance, Forensic Services, and Risk,
Investigations & Analytics practices. Geographically, we
experienced balanced growth across our North American and
international operations.”
“Through the first three quarters of fiscal 2020, on a constant
currency basis relative to fiscal 2019, we have increased revenue
by 11.8% to $371.1 million and non-GAAP EBITDA by 12.2% to $36.8
million, achieving a margin of 9.9%. Given the strength of our
year-to-date performance and the growing momentum across our
service portfolio, we are reinstating financial guidance for
full-year fiscal 2020. On a constant currency basis relative to
fiscal 2019, we expect revenue in the range of $498 million to $504
million and non-GAAP EBITDA margin in the range of 9.7% to 10.2%,”
Maleh concluded.
CRA does not provide reconciliations of its annual non-GAAP
EBITDA margin guidance to GAAP net income margin because CRA is
unable to estimate with reasonable certainty the revaluation of
contingent consideration liabilities, 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 October 29, 2020, CRA announced that it increased its
quarterly cash dividend by 13% from $0.23 to $0.26 per common
share. The dividend will be payable on December 11, 2020 to
shareholders of record as of November 24, 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 third-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 three quarters of fiscal 2019,
revenue would have been higher by $0.2 million and EBITDA would
have been higher by $0.1 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, including those
concerning guidance on future revenue and non-GAAP EBITDA margin,
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
SEPTEMBER 26, 2020 COMPARED TO
SEPTEMBER 28, 2019
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
Fiscal Quarter Ended
Fiscal Year-to-Date Period
Ended
September 26, 2020
As a % of Revenue
September 28, 2019
As a % of Revenue
September 26, 2020
As a % of Revenue
September 28, 2019
As a % of Revenue
Revenues
$
121,762
100.0
%
$
115,686
100.0
%
$
370,951
100.0
%
$
332,108
100.0
%
Cost of services (exclusive of depreciation and amortization)
88,304
72.5
%
83,805
72.4
%
269,462
72.6
%
233,412
70.3
%
Selling, general and administrative expenses
22,194
18.2
%
22,449
19.4
%
67,742
18.3
%
68,929
20.8
%
Depreciation and amortization
3,244
2.7
%
2,527
2.2
%
9,293
2.5
%
7,696
2.3
%
Income from operations
8,020
6.6
%
6,905
6.0
%
24,454
6.6
%
22,071
6.6
%
Interest expense, net
(277
)
-0.2
%
(424
)
-0.4
%
(1,011
)
-0.3
%
(954
)
-0.3
%
Foreign currency gains (losses), net
(217
)
-0.2
%
210
0.2
%
1,103
0.3
%
(379
)
-0.1
%
Income before provision for income taxes
7,526
6.2
%
6,691
5.8
%
24,546
6.6
%
20,738
6.2
%
Provision for income taxes
2,123
1.7
%
952
0.8
%
6,744
1.8
%
4,754
1.4
%
Net income
$
5,403
4.4
%
$
5,739
5.0
%
$
17,802
4.8
%
$
15,984
4.8
%
Net income per share: Basic
$
0.69
$
0.74
$
2.28
$
2.02
Diluted
$
0.68
$
0.71
$
2.23
$
1.94
Weighted average number of shares outstanding: Basic
7,771
7,769
7,780
7,903
Diluted
7,934
8,050
7,964
8,205
CRA INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
FOR THE FISCAL QUARTERS AND
FISCAL YEAR-TO-DATE PERIODS ENDED
SEPTEMBER 26, 2020 COMPARED TO
SEPTEMBER 28, 2019
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
Fiscal Quarter Ended Fiscal Year-to-Date Period
Ended September 26,2020 As a % ofRevenue
September 28,2019 As a % ofRevenue September
26,2020 As a % ofRevenue September 28,2019 As
a % ofRevenue Revenues
$
121,762
100.0
%
$
115,686
100.0
%
$
370,951
100.0
%
$
332,108
100.0
%
Net income
$
5,403
4.4
%
$
5,739
5.0
%
$
17,802
4.8
%
$
15,984
4.8
%
Adjustments needed to reconcile GAAP net income to non-GAAP net
income: Non-cash valuation change in contingent consideration
905
0.7
%
3,001
2.6
%
1,901
0.5
%
3,435
1.0
%
Tax effect on adjustments
(238
)
-0.2
%
(815
)
-0.7
%
(508
)
-0.1
%
(931
)
-0.3
%
Non-GAAP net income
$
6,070
5.0
%
$
7,925
6.9
%
$
19,195
5.2
%
$
18,488
5.6
%
Non-GAAP net income per share: Basic
$
0.78
$
1.02
$
2.46
$
2.33
Diluted
$
0.76
$
0.98
$
2.40
$
2.25
Weighted average number of shares outstanding: Basic
7,771
7,769
7,780
7,903
Diluted
7,934
8,050
7,964
8,205
CRA INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
FOR THE FISCAL QUARTERS AND
FISCAL YEAR-TO-DATE PERIODS ENDED
SEPTEMBER 26, 2020 COMPARED TO
SEPTEMBER 28, 2019
(IN THOUSANDS)
Fiscal Quarter Ended
Fiscal Year-to-Date Period
Ended
September 26, 2020
As a % of Revenue
September 28, 2019
As a % of Revenue
September 26, 2020
As a % of Revenue
September 28, 2019
As a % of Revenue
Revenues
$
121,762
100.0
%
$
115,686
100.0
%
$
370,951
100.0
%
$
332,108
100.0
%
Net income
$
5,403
4.4
%
$
5,739
5.0
%
$
17,802
4.8
%
$
15,984
4.8
%
Adjustments needed to reconcile GAAP net income to non-GAAP net
income: Non-cash valuation change in contingent consideration
905
0.7
%
3,001
2.6
%
1,901
0.5
%
3,435
1.0
%
Tax effect on adjustments
(238
)
-0.2
%
(815
)
-0.7
%
(508
)
-0.1
%
(931
)
-0.3
%
Non-GAAP net income
$
6,070
5.0
%
$
7,925
6.9
%
$
19,195
5.2
%
$
18,488
5.6
%
Adjustments needed to reconcile non-GAAP net income to non-GAAP
EBITDA: Interest expense, net
277
0.2
%
424
0.4
%
1,011
0.3
%
954
0.3
%
Provision for income taxes
2,361
1.9
%
1,767
1.5
%
7,252
2.0
%
5,685
1.7
%
Depreciation and amortization
3,244
2.7
%
2,527
2.2
%
9,293
2.5
%
7,696
2.3
%
Non-GAAP EBITDA
$
11,952
9.8
%
$
12,643
10.9
%
$
36,751
9.9
%
$
32,823
9.9
%
CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
September 26, 2020
December 28, 2019
Assets Cash and cash equivalents
$
24,108
$
25,639
Accounts receivable and unbilled services, net
157,684
144,410
Other current assets
14,869
14,028
Total current assets
196,661
184,077
Property and equipment, net
64,886
61,295
Goodwill and intangible assets, net
93,739
94,980
Right-of-use assets
123,390
130,173
Other assets
71,501
62,718
Total assets
$
550,177
$
533,243
Liabilities and Shareholders’ Equity Accounts payable
$
16,574
$
26,069
Accrued expenses
103,952
121,301
Current portion of lease liabilities
14,551
12,847
Revolving line of credit
38,000
-
Other current liabilities
24,105
11,193
Total current liabilities
197,182
171,410
Non-current portion of lease liabilities
141,331
146,551
Other non-current liabilities
7,269
17,531
Total liabilities
345,782
335,492
Total shareholders’ equity
204,395
197,751
Total liabilities and shareholders’ equity
$
550,177
$
533,243
CRA INTERNATIONAL, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Fiscal Year-to-Date Period Ended September
26,2020 September 28,2019 Operating activities:
Net income
$
17,802
$
15,984
Adjustments to reconcile net income to net cash used in operating
activities: Non-cash items, net
20,385
18,214
Accounts receivable and unbilled services
(13,042
)
(10,956
)
Working capital items, net
(35,797
)
(43,149
)
Net cash used in operating activities
(10,652
)
(19,907
)
Investing activities: Purchases of property and equipment
(15,742
)
(12,548
)
Net cash used in investing activities
(15,742
)
(12,548
)
Financing activities: Issuance of common stock, principally
stock options exercises
1,667
2,006
Borrowings under revolving line of credit
77,000
54,000
Repayments under revolving line of credit
(39,000
)
(18,000
)
Tax withholding payments reimbursed by shares
(390
)
(388
)
Cash paid on dividend equivalents
(40
)
(35
)
Cash dividends paid to shareholders
(5,372
)
(4,742
)
Repurchase of common stock
(8,807
)
(18,068
)
Net cash provided by financing activities
25,058
14,773
Effect of foreign exchange rates on cash and cash
equivalents
(195
)
(513
)
Net decrease in cash and cash equivalents
(1,531
)
(18,195
)
Cash and cash equivalents at beginning of period
25,639
38,028
Cash and cash equivalents at end of period
$
24,108
$
19,833
Noncash investing and financing activities: Purchases
of property and equipment not yet paid for
$
3,923
$
3,461
Purchases of property and equipment paid by a third party
$
-
$
126
Asset retirement obligations
$
155
$
427
Right-of-use assets obtained in exchange for lease obligations
$
2,601
$
37,298
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
$
5,933
$
6,078
Cash paid for interest
$
932
$
848
Cash paid for amounts included in operating lease liabilities
$
13,736
$
12,053
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029005649/en/
Dan Mahoney Chief Financial Officer Charles River Associates
617-425-3505
Nick Manganaro Sharon Merrill Associates, Inc.
crai@investorrelations.com 617-542-5300
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