Core Insights - Charles River Associates (CRAI) shares have increased by 20.7%, outperforming the industry decline of 9.4% and the Zacks S&P 500 Composite rise of 10% [1] - CRAI reported strong fourth-quarter 2024 results with adjusted EPS of $2.03, exceeding the Zacks Consensus Estimate by 27.7% and showing a year-over-year increase of 24.5% [1] - Revenues reached $176.4 million, surpassing the consensus mark by 6.1% and rising more than 9.2% from the previous year [1] Business Performance - The growing demand for specialized advisory services in a complex global marketplace is beneficial for CRAI [2] - The company's focus on attracting top talent and innovation positions it for significant growth [2] - CRAI's expertise is expected to see rising demand as industries navigate technological advancements and regulatory complexities [3] Client Relationships and Operations - CRAI's strategy of strengthening client relationships across its primary business lines enhances customer retention and brand image [4] - The company delivers consistent value by streamlining internal operations to improve efficiency [4] Geographic Presence - CRAI's geographic reach in North America and Europe allows it to serve a diverse client base and cater to various industrial and regional demands [5] Dividend and Share Repurchase - The company has steadily increased its dividend payouts, from $9.6 million in 2022 to $12.3 million in 2024, with dividend per share growing from $1.24 in 2022 to $1.75 in 2024 [6] - Share repurchase activity has also been consistent, with $27.6 million in 2022, $31.4 million in 2023, and $33.3 million in 2024 [7] Challenges - The company faces higher talent costs due to a competitive market and is heavily dependent on foreign talent [8] - Advancements in automation and AI may reduce clients' reliance on consulting services [8] Liquidity Position - CRAI's liquidity is challenged by significant short-term debt of $60 million against cash reserves of only $24 million, resulting in a current ratio of 1.07, below the industry average of 1.19 [9][11]

Group 1 - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market over the next 30 days [2] Group 2 - Stocks are rated based on value, growth, and momentum characteristics, with scores ranging from A to F, where A indicates the highest potential for outperformance [3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Sales [3] - The Growth Score assesses a company's financial health and future outlook based on earnings and sales projections [4] - The Momentum Score identifies optimal entry points for stocks based on price trends and earnings estimate changes [5] - The VGM Score combines all three Style Scores to provide a comprehensive assessment of stocks [6] Group 3 - The Zacks Rank utilizes earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988 [7][8] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for the best chances of significant returns [10] - Stocks with lower ranks, even with high Style Scores, may still face downward price pressure due to negative earnings forecasts [11] Group 4 - CRA International (CRAI) is highlighted as a 2 (Buy) stock with a VGM Score of A, indicating strong potential for growth investors [12] - CRAI is projected to have a year-over-year earnings growth of 2% for the current fiscal year, with upward revisions in earnings estimates from analysts [13] - The Zacks Consensus Estimate for CRAI has increased by $0.23 to $7.75 per share, with an average earnings surprise of 25.9% [13]

Group 1: Investment Strategy - The Zacks Rank system focuses on earnings estimates and revisions to identify winning stocks, while also considering trends in value, growth, and momentum [1] - Value investing is a popular strategy that relies on traditional analysis of key valuation metrics to find undervalued stocks [2] Group 2: Charles River Associates (CRAI) Overview - CRAI has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating it is among the best value stocks [4] - The stock has a P/E ratio of 22.85, compared to the industry average of 25.32, suggesting it is undervalued [4] - CRAI's Forward P/E has ranged from 21.59 to 28.96 over the past year, with a median of 25.08 [4] Group 3: Valuation Metrics - CRAI's PEG ratio is 1.43, lower than the industry average of 1.90, indicating favorable growth expectations [5] - The P/B ratio for CRAI is 5.68, compared to the industry average of 6.51, suggesting an attractive valuation [6] - CRAI's P/S ratio is 1.7, slightly below the industry average of 1.72, indicating competitive sales performance [7] - The P/CF ratio for CRAI is 16.60, lower than the industry average of 18.69, highlighting its strong cash flow outlook [8] Group 4: Investment Outlook - The combination of these metrics suggests that CRAI is likely undervalued, making it one of the strongest value stocks in the market [9]

Company Overview - CRA International, Inc. (CRAI) has experienced a stock gain of 36% over the past year, significantly outperforming the industry, which saw an 8% decline [1] - The company holds a Growth Score of A, indicating strong quality and sustainability in its growth, with an expected long-term earnings growth rate of 16% [1] Market Position and Growth Potential - CRAI operates as a small player in the consulting and research services sector, benefiting from a growing demand for specialized advisory services in a complex global marketplace [2] - The company's strong reputation for high-quality analytical and strategic consulting services positions it well for future growth [2] Talent and Innovation - CRAI's success is heavily reliant on its ability to attract and retain top talent, with 74% of its senior staff holding advanced degrees [4] - The company focuses on innovation and client-centered solutions, which is crucial as industries face rapid technological advancements and regulatory complexities [3] Financial Performance and Shareholder Returns - CRAI has consistently increased its dividend payouts, from $9.6 million in 2022 to $12.3 million in 2024, with dividend per share rising from $1.24 to $1.75 in the same period [5] - Share repurchase activity has also shown consistency, with $27.6 million repurchased in 2022, increasing to $33.3 million in 2024, reflecting the company's commitment to long-term value creation [6] Competitive Landscape - CRAI faces significant competition from larger firms like McKinsey & Company and Boston Consulting Group, which have more resources to compete on price and invest in technology [7] - The competitive talent market is increasing costs for consulting services, and advancements in automation and AI may reduce clients' dependence on consulting firms [8]

Core Insights - CRA International, Inc. (CRAI) reported strong fourth-quarter 2024 results, with earnings and revenues exceeding the Zacks Consensus Estimate, yet the stock declined by 4.7% post-release [1] Financial Performance - Quarterly adjusted EPS was $2.03, surpassing the Zacks Consensus Estimate by 27.7% and increasing 24.5% year over year [2] - Revenues reached $176.4 million, beating the consensus mark by 6.1% and rising more than 9.2% from the previous year [2] - Non-GAAP EBITDA increased by 28.4% year over year to $24.4 million, with a non-GAAP EBITDA margin improvement of 210 basis points to 13.1% [3] Operational Metrics - The company achieved a utilization rate of 78%, while headcount decreased by 5.8% year over year [3] - Cash and cash equivalents at the end of the quarter were $26.7 million, up from $24.5 million in the prior quarter [4] - Operating activities generated $49.7 million in cash, with capital expenditures of $18.1 million [4] - Dividends paid out during the quarter amounted to $3.4 million [4] Future Guidance - For 2025, CRAI provided constant currency revenue guidance of $715 million to $735 million for the first quarter [5] - The company anticipates a non-GAAP EBITDA margin in the range of 12% to 13% [5]

Financial Data and Key Metrics Changes - Revenue for fiscal 2024 increased by 10.2% to $687.4 million, marking the seventh consecutive year of record annual revenue [7] - Net income, earnings per diluted share, and EBITDA each grew at rates of more than 20% year over year [8] - In Q4, revenue increased by 9.2% compared to Q4 fiscal 2023, resulting in the best quarterly revenue in the company's history [9] - Non-GAAP net income, earnings per diluted share, and EBITDA increased year over year by 21.2%, 24.5%, and 28.4% respectively [11] Business Line Data and Key Metrics Changes - Legal and regulatory services led growth with a 12% increase year over year for fiscal 2024 [7] - In Q4, seven of CRA's eleven practices in energy, finance, and intellectual property delivered double-digit revenue growth compared to Q4 fiscal 2023 [10] - Revenue from legal and regulatory services in Q4 increased approximately 7%, surpassing growth rates in the broader legal market [12] Market Data and Key Metrics Changes - North American operations contributed to revenue growth with a 7.8% increase, while international operations increased by 15.7% [9] - Total case filings in Q4 were up 1% year over year, and the number of total court judgments increased by 2% [12] Company Strategy and Development Direction - The company aims to continue broad-based profitable growth, with fiscal 2025 revenue expected in the range of $715 million to $735 million [23] - The company is focused on capital deployment, returning 49% of adjusted net cash flows from operations to shareholders [29] - CRA's Board of Directors authorized an expansion of the share repurchase program by $45 million, indicating confidence in long-term prospects [30] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding uncertain global macroeconomic, business, and political conditions affecting the business [24] - The company noted that M&A transactions in January were at a ten-year low, indicating a cautious market environment [46] - Management expects headcount growth to align with revenue growth, with a focus on optimizing staff levels [43] Other Important Information - The effective tax rate for Q4 fiscal 2024 on a non-GAAP basis was 30.9%, compared to 26.1% in Q4 fiscal 2023 [34] - The company ended Q4 with a consulting headcount of 946 and firm-wide utilization of 78%, up from 73% in the previous year [11] Q&A Session Summary Question: Thoughts on high utilization levels and headcount expectations for 2025 - Management indicated that high utilization is partly due to the growth of legal and regulatory services, which operate at higher utilization rates [42] Question: Impact of the new administration on business - Management stated it is too early to assess the impact, noting a significant drop in M&A activity in January [46] Question: Outlook for 2025 and contributions from various practices - Management expressed confidence in strong growth across the portfolio, particularly in life sciences and energy practices [58] Question: Margin guidance for fiscal 2025 - Management discussed maintaining profitability while managing costs and portfolio composition, with a non-GAAP EBITDA margin guidance of 12.0% to 13.0% [60] Question: Market for talent and ability to attract new hires - Management noted strong retention rates and a competitive market for talent, emphasizing the need to attract and retain skilled employees [72]

An Overview of Charles River Associates Q4 FY2024 This presentation is subject to and should be read in conjunction with the disclaimers and other statements contained under the heading "Safe Harbor Disclaimer." 1 Safe Harbor Disclaimer Statements included in this presentation which are not historical in nature, including those concerning the company's future business, operating and financial condition, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forwar ...

Business Model and Operations - CRA International, Inc. has a diversified business model across multiple dimensions, including service offerings, industry coverage, and geography, which reduces dependence on any particular market[14]. - CRA's consulting services are primarily offered in two areas: litigation, regulatory, and financial consulting, and management consulting[32]. - The company has completed thousands of engagements for clients across various industries, including financial services, healthcare, technology, and energy[28]. - The company maintains close working relationships with renowned academic and industry experts to enhance the expertise provided to clients[30]. - The firm focuses on high-stakes assignments, such as obtaining regulatory approval for mergers and analyzing damages in class action cases[33]. - The company relies heavily on key employee consultants for revenue generation, and losing any of them could adversely affect revenues and operational results[58]. - The company faces intense competition in the economic and management consulting services market, with key competitive factors being reputation, analytical ability, and industry expertise[55]. - The company works closely with non-employee experts from leading universities and industry to supplement its consulting services[49]. Workforce and Expertise - As of December 28, 2024, CRA employed 946 consultants, with approximately 74% of senior staff holding advanced degrees, including 40% with doctorate degrees[24]. - Employee consultants have backgrounds in various disciplines, including economics, life sciences, and engineering, contributing to the company's analytical capabilities[45]. - The company has a structured training and career development framework for employee consultants, focusing on managing teams and building client relationships[45]. - The majority of revenues are generated from new engagements with existing clients, with no single client accounting for more than 10% of revenues in fiscal 2024, fiscal 2023, or fiscal 2022[42]. Financial Performance - Revenues increased by $63.4 million, or 10.2%, to $687.4 million for fiscal 2024 from $624.0 million for fiscal 2023[167]. - Net income increased by $8.2 million to $46.7 million for fiscal 2024, with diluted net income per share rising to $6.74 from $5.39[173]. - The effective tax rate for fiscal 2024 was 29.6%, up from 26.4% in fiscal 2023, primarily due to nonrecurring items and changes in tax laws[172]. - Costs of services increased by $40.1 million, or 9.1%, to $479.9 million for fiscal 2024 from $439.8 million for fiscal 2023[169]. - Selling, general and administrative expenses increased by $10.0 million, or 8.6%, to $125.1 million for fiscal 2024 from $115.1 million for fiscal 2023[170]. Revenue Sources and Risks - The company derived approximately 18% of consolidated revenues from fixed-price contracts in fiscal 2024 and fiscal 2023, and 19% in fiscal 2022[43]. - Revenue generated from fixed-price contracts accounted for approximately 18% of total revenues for the year ended December 28, 2024[98]. - The company derives a portion of its revenues from a limited number of large engagements, making it vulnerable if new large engagements are not secured each year[76]. - Clients can terminate engagements at any time, which could lead to underutilization of consultants and immediate adverse impacts on revenues[69]. - Changes in global economic conditions, including inflation and geopolitical unrest, could materially affect the company's revenues and financial condition[79]. Cash Flow and Capital Management - Net cash provided by operating activities was $49.7 million for fiscal 2024, with significant sources including a $23.2 million increase in accounts payable[178]. - Cash and cash equivalents decreased by $18.9 million, ending fiscal 2024 with $26.7 million, driven by performance bonuses and share repurchases[175]. - The company expects to fund future cash obligations related to performance awards from existing cash resources and cash generated from operations[190]. - Future capital and liquidity needs will primarily consist of operating expenses, employee compensation, hiring, capital expenditures, and debt service[199]. Shareholder Returns and Stock Performance - The company has continued to pay quarterly dividends throughout fiscal 2024, with the declaration of future dividends subject to the discretion of the Board of Directors[112]. - The company repurchased 5,782 shares of common stock at an average price of $203.93 during the five weeks ended December 28, 2024[131]. - An additional $45.0 million was authorized for the existing share repurchase program, with approximately $13.1 million available for future repurchases as of December 28, 2024[131]. - The cumulative total return of the company's common stock over a 5-year period was $375.29, compared to a $100 investment at the end of 2019[134]. Compliance and Risk Management - The company faces risks related to cybersecurity incidents that could compromise sensitive information, leading to reputational damage and financial losses[70]. - Compliance with complex privacy laws and regulations could incur significant costs and affect financial results[74]. - The company may face challenges in integrating new hires or acquisitions, which could disrupt operations and increase costs[65]. - Future changes in tax laws and regulations may adversely affect the company's business, cash flow, and effective income tax rate[83]. Market and Economic Conditions - The company expects fluctuations in revenues, operating results, and cash flows due to various factors, including client engagement timing and employee utilization[86]. - The company may experience significant fluctuations in quarterly revenues and results of operations, which could depress the market price of its common stock[87]. - Foreign exchange risk is present due to operations in foreign currencies, with a hypothetical 10% movement in exchange rates potentially affecting income by approximately $2.9 million[204]. - Translation losses for foreign subsidiaries were $2.9 million, gains of $2.8 million, and losses of $5.0 million for fiscal years 2024, 2023, and 2022 respectively[207].

Revenue Performance - For Q4 of fiscal 2024, revenue was $176.4 million, a 9.8% increase from $161.6 million in Q4 of fiscal 2023[5] - For the full year fiscal 2024, revenue reached $687.4 million, up 10.2% from $624.0 million in fiscal 2023[6] - Net revenue for Q4 2024 was $176,435,000, up from $161,613,000 in Q4 2023, representing a year-over-year growth of 9.3%[49] Net Income - Net income for Q4 of fiscal 2024 was $15.0 million, or 8.5% of revenue, compared to $13.7 million, or 8.5% of revenue in Q4 of fiscal 2023[6] - For Q4 of fiscal 2024, net income was $15.0 million, or 8.5% of revenue, compared to $11.5 million, or 7.1% of revenue, in Q4 of fiscal 2023[24] - For the full year fiscal 2024, net income was $46.7 million, or 6.8% of revenue, compared to $38.5 million, or 6.2% of revenue, in fiscal 2023[25] - Basic net income per share for FY 2024 was $6.82, compared to $5.48 in FY 2023, marking an increase of 24.4%[49] Non-GAAP Metrics - Non-GAAP net income for the full year fiscal 2024 was $52.6 million, or 7.7% of revenue, compared to $48.1 million, or 7.7% of revenue in fiscal 2023[6] - Non-GAAP net income for FY 2024 was $52,605,000, an increase from $38,957,000 in FY 2023, reflecting a growth of 35%[50] - Non-GAAP EBITDA for Q4 of fiscal 2024 was $24.4 million, or 13.9% of revenue, compared to $19.0 million, or 11.8% of revenue, in Q4 of fiscal 2023[26] - For the full year fiscal 2024, non-GAAP EBITDA was $90.4 million, or 13.2% of revenue, compared to $68.3 million, or 10.9% of revenue, in fiscal 2023[28] - Non-GAAP adjusted net cash flows from operations for FY 2024 reached $92,468,000, a significant increase from $81,620,000 in FY 2023[43] - Non-GAAP adjusted net cash flows from operations as a percentage of net revenue for Q4 2024 was 45.0%, up from 37.7% in Q4 2023[43] Expenses - SG&A expenses for Q4 of fiscal 2024 were $31.3 million, or 17.7% of revenue, slightly down from 17.9% in Q4 of fiscal 2023[10] - For the full year fiscal 2024, SG&A expenses totaled $125.1 million, or 18.2% of revenue, compared to $115.1 million, or 18.4% of revenue in fiscal 2023[12] - Total selling, general and administrative expenses for FY 2024 were $125,050,000, representing 18.2% of net revenue, slightly down from 18.4% in FY 2023[49] Cash Flow and Capital Expenditures - Cash and cash equivalents were $26.7 million at December 28, 2024, down from $45.6 million at December 30, 2023[35] - Net cash provided by operating activities for Q4 of fiscal 2024 was $79.4 million, compared to $60.1 million for Q4 of fiscal 2023[35] - GAAP net cash provided by operating activities for FY 2024 was $49,735,000, compared to $60,072,000 in FY 2023, indicating a decline of 17.8%[43] - The company incurred $16,623,000 in capital expenditures for property and equipment during the fiscal year ended December 28, 2024, compared to $2,366,000 in the previous year[55] - Capital expenditures totaled $10.6 million for Q4 of fiscal 2024, significantly up from $0.4 million for Q4 of fiscal 2023[36] Shareholder Returns - During the full year fiscal 2024, approximately 206,000 shares of common stock were repurchased for $33.3 million, compared to 296,000 shares for $31.4 million in fiscal 2023[37] - A quarterly cash dividend of $0.49 per common share was paid in Q4 of fiscal 2024, compared to $0.42 per common share in Q4 of fiscal 2023[38] - Cash dividends paid increased to $12,300,000 in 2024 from $10,807,000 in 2023, indicating a commitment to returning value to shareholders[55] Operational Efficiency - Company-wide utilization for Q4 of fiscal 2024 was 78%, an increase from 73% in Q4 of fiscal 2023[8] - Income from operations for Q4 of fiscal 2024 was $21.5 million, or 12.2% of revenue, compared to $17.1 million, or 10.6% of revenue in Q4 of fiscal 2023[16] - The cost of services as a percentage of revenue decreased to 68.3% in Q4 2024 from 69.7% in Q4 2023, indicating improved operational efficiency[49] Foreign Currency Impact - For the full year fiscal 2024, net foreign currency losses were $0.1 million, compared to losses of $1.4 million in fiscal 2023[20] - The company experienced a foreign currency gain of $1,145,000 in Q4 2024, contrasting with a loss of $987,000 in Q4 2023[50] Assets and Liabilities - Total assets as of December 28, 2024, were $571,439,000, compared to $553,211,000 as of December 30, 2023, reflecting a growth of 3.3%[53] - The company reported a net cash used in financing activities of $48,857,000 for the fiscal year ended December 28, 2024, compared to $44,482,000 in 2023[55]

Core Insights - The article compares two stocks in the Consulting Services sector: CRA International (CRAI) and Equifax (EFX), focusing on which stock offers better value for investors [1] Valuation Metrics - CRAI has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision activity compared to EFX, which has a Zacks Rank of 3 (Hold) [3] - CRAI's forward P/E ratio is 23.78, while EFX's forward P/E ratio is 26.86, suggesting CRAI may be undervalued relative to EFX [5] - CRAI has a PEG ratio of 1.49, compared to EFX's PEG ratio of 2.43, indicating CRAI's expected EPS growth rate is more favorable [5] - CRAI's P/B ratio is 5.93, while EFX's P/B ratio is 6.15, further supporting CRAI's valuation advantage [6] Value Grades - CRAI has a Value grade of B, while EFX has a Value grade of D, highlighting CRAI's superior valuation metrics and earnings outlook [6]