Summary of CRA International Conference Call - December 10, 2025 Company Overview - **Company Name**: Charles River Associates (CRA) - **Ticker**: CRAI - **Industry**: Economic consulting and management consulting - **Anniversary**: Celebrated 60th anniversary in 2025 and over 27 years as a publicly traded company [2][3] Core Business Segments - **Revenue Composition**: - Legal and Regulatory: Approximately 80% of total revenue - Management Consulting: Remaining 20% [4] - **Key Practices**: - Antitrust and Competition Economics: 40%-45% of total revenue - Life Sciences, Energy, Auctions and Competitive Bidding, Maritime Practices: Contribute to management consulting [8][9] Financial Performance - **Revenue Growth**: Over 50% growth in the past five years; year-to-date 2025 shows continued growth [11] - **Headcount Growth**: Increased by 20% over the past five years [11] - **Earnings Per Share (EPS)**: Grew by 142% over the past five years [11] - **Shareholder Returns**: Nearly $200 million returned to shareholders through share repurchases and dividends [12] - **Share Repurchase**: Average repurchase price over the past five years was $88, with current trading above $190 [12] Talent and Workforce - **Employee Qualifications**: - Approximately 75% of senior colleagues have advanced degrees; over 40% hold PhDs [5][6] - Less than 10% voluntary turnover among top revenue-generating employees over the past five years [7] - **Diversity**: Employees from over 70 countries, speaking more than 35 languages [6] Market Position and Clientele - **Client Base**: Worked with 85 of the Fortune 100 companies and 98 of the Am Law 100 law firms in the past two years [10] - **Project-Based Business Model**: Trust built on a project-by-project basis rather than subscription-based [10] Investment Thesis - **Long-Term Value Maximization**: Focus on earning returns above the cost of capital and returning excess capital to shareholders [13] - **Organic Growth**: Approximately two-thirds of growth is organic, with a focus on talent acquisition and retention [17] Current Market Dynamics - **M&A Activity**: Increasing momentum in mergers and acquisitions, with CRA involved in significant deals [24] - **Litigation Activity**: Notable increase in litigation filings, indicating a robust demand for consulting services [26] Conclusion - **Outlook**: CRA anticipates continued success and record performance in 2025, with a strong pipeline of new business opportunities and talent acquisition [19][23]

PresentationKevin McVeighUBS Investment Bank, Research Division Great. Why don't we get started here. I'm Kevin McVeigh, part of the UBS research effort here. We're thrilled to kick off. This is my first fireside chat. We're thrilled to have Charles River. We've got their CEO, Paul Maleh. First year, I think, on our account that Charles River is attending. So we're thrilled to have Charles River as part of this process. Really appreciate all you folks coming out. I guess with that said, Paul, maybe just a l ...

Summary of CRA International (NasdaqGS:CRAI) 2025 Conference Call Company Overview - CRA International is celebrating its 60th anniversary, founded in 1965 by professors from Harvard and MIT to provide high-quality research in economics, finance, and strategy to assist business leaders in decision-making [3][4] - The company has approximately 1,000 consulting professionals, with 80% of its business in legal regulatory services and 20% in traditional management consulting [3][17] Financial Performance - CRA has experienced consistent growth of approximately 9%-10% annually since 2012, with profits growing at a faster rate [5][6] - The company does not have annuity-type revenue streams; instead, it operates on a project-by-project basis, requiring proof of value for each assignment [6][17] - Revenue growth is primarily organic, with about two-thirds of the growth coming from selling more hours and services, while rate increases contribute an average of 2%-4% [17] Competitive Landscape - The competitive set varies between legal regulatory services and management consulting, with CRA focusing on its core competencies in economics and regulations within life sciences and energy [21][22] - CRA has been gaining market share over the past dozen years, outpacing industry growth in both legal regulatory and management consulting sectors [22] AI and Technology Integration - AI is seen as an opportunity to enhance efficiency in research projects, but there are limitations regarding accuracy and data usage due to legal constraints [26][27][28] - The company emphasizes the importance of human expertise and creativity in consulting, which may be jeopardized by over-reliance on AI tools [29][30] - AI is also driving demand for legal services due to increased litigation related to property rights disputes [30] Client Relationships and Market Position - CRA serves 85 of the Fortune 100 companies and has worked with 98 of the Am Law 100 law firms, indicating a strong client base [48][49] - The company aims to increase its share of wallet from existing clients, focusing on becoming more client-centric rather than consulting-centric [48][49] Employee Retention and Culture - CRA has maintained a low voluntary attrition rate of around 10% over the past five years, indicating a strong workplace culture and employee satisfaction [39][43] - The company prioritizes creating value for its consultants to retain top talent, emphasizing the quality of colleagues and client relationships [43][44] International Growth Opportunities - Approximately 20% of CRA's revenue comes from international markets, with growth opportunities arising from a more vigorous regulatory environment in Europe compared to the U.S. [65] Revenue Forecasting and Engagements - At any given time, CRA has about 55%-60% of the preceding 12 months' revenue in-house, relying on industry trends and lead flow for revenue forecasting [62][63] - The company anticipates 2025 to be its eighth consecutive record year for revenue and profits, driven by strong client demand [63]

Core Insights - CRA International, Inc. (CRAI) reported strong third-quarter 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate, leading to a 2.8% increase in share price post-earnings release [1] Financial Performance - Quarterly EPS was $2.06, surpassing the Zacks Consensus Estimate by 14% and reflecting a 16.4% increase year over year [3][8] - Total revenues reached $185.9 million, exceeding the Zacks Consensus Estimate by 3.8%, although this represented a 10.8% decline compared to the previous year [3][8] - Non-GAAP EBITDA increased by 14.6% year over year to $24.4 million, with a non-GAAP EBITDA margin improvement of 40 basis points to 13.1% [4] Guidance and Outlook - CRAI raised its 2025 constant-currency revenue guidance to a range of $740-$748 million, up from the previous range of $730-$745 million, with the midpoint exceeding the Zacks Consensus Estimate of $743.1 million [2][8] - The company expects a non-GAAP EBITDA margin in the range of 12.6-13%, an increase from the prior estimate of 12.3-13% [2] Operational Metrics - The company achieved a utilization rate of 77%, while headcount decreased by 1% year over year [4] - Cash and cash equivalents at the end of the second quarter were $22.50 million, down from $26.7 million at the end of December 2024, with $85.25 million generated from operating activities [5]

Core Insights - Charles River Associates (CRA) has strengthened its Forensic Services Practice by appointing David Shin as Vice President, bringing over 20 years of experience in high-stakes investigations related to cyber breaches and regulatory inquiries [2][4]. Company Overview - CRA is a global leader in economic, financial, and management consulting services, advising clients on litigation and regulatory matters, and guiding corporations through critical business strategy issues [5]. - The firm has been operational since 1965 and is headquartered in Boston, with offices worldwide [5]. Forensic Services Practice - CRA's Forensic Services Practice is recognized for handling thousands of client matters annually, focusing on areas such as cybercrime, digital forensics, forensic accounting, and eDiscovery [4]. - The addition of David Shin is expected to enhance the practice's capabilities, particularly in e-Discovery and digital technologies, which are crucial for complex litigation and merger reviews [2][4].

Financial Data and Key Metrics Changes - Revenue increased by 10.8% year over year to $185.9 million, marking the best three revenue quarters in CRA's history [6] - Non-GAAP net income, earnings per diluted share, and EBITDA increased by 12.7%, 16.4%, and 14.6% respectively [7] - Non-GAAP EBITDA margin for the first three quarters of fiscal 2025 was 13.0% [15] Business Line Data and Key Metrics Changes - Revenue from legal and regulatory services increased by 11.5%, driven by activity in the broader legal market [7] - The antitrust and competition economics practice achieved record quarterly revenue, supported by ongoing merger-related activity [8] - Management consulting services revenue increased by 8% year over year, led by the energy practice [11] Market Data and Key Metrics Changes - North American operations revenue increased by 6.8%, while international operations expanded by 30.3% year over year [6] - Worldwide M&A activity totaled $3 trillion during the first nine months of 2025, an increase of 33% compared to the previous year [8] Company Strategy and Development Direction - The company is raising its revenue guidance for fiscal 2025, now expecting revenue in the range of $740 million to $748 million [15] - CRA continues to focus on cross-functional economic analysis, particularly in response to growing needs in transfer pricing and antitrust services [11] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future performance, noting the consistency of results and strong demand across various practices [46] - The company remains mindful of uncertain global macroeconomic conditions that could impact business [16] Other Important Information - The company concluded the quarter with $22.5 million in cash and $95.0 million in borrowings, resulting in net debt of $72.5 million [17] - A 16% increase in quarterly cash dividend from $0.49 to $0.57 per common share was announced, reflecting confidence in business quality [19] Q&A Session Summary Question: Headcount dynamics and sustainability - Management explained that headcount changes reflect evaluations of growth opportunities, with a focus on profitable practices [25][26] Question: Bill rates and revenue growth - Management confirmed that bill rates have increased low double digits, driven by rate card increases and consistent client demand [28][30] Question: International growth drivers - The competition practice in Europe has shown strong performance, with consistent enforcement driving growth compared to North America [34] Question: Legal and regulatory activity drivers - Management noted broad-based inflow activity across several practices, indicating strong demand for consulting support [42][44] Question: Regulatory scrutiny on antitrust and M&A - Management observed no significant contraction in project inflows despite changes in regulatory stance, indicating continued strong demand [56] Question: Life sciences practice outlook - The life sciences practice is showing signs of growth, but management remains cautious about declaring a significant upward trend [57] Question: Intellectual property practice sustainability - The intellectual property practice is collaborating with other practices, indicating strong demand for complex matters [60] Question: Hiring pipeline for Vice Presidents - Management expressed satisfaction with the influx of new Vice Presidents, highlighting the value proposition of CRA in attracting talent [62]

Core Insights - CRA International (CRAI) reported quarterly earnings of $2.06 per share, exceeding the Zacks Consensus Estimate of $1.80 per share, and showing an increase from $1.77 per share a year ago, resulting in an earnings surprise of +14.44% [1][2] - The company achieved revenues of $185.89 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.82% and up from $167.75 million year-over-year [2] - CRA has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.13, with expected revenues of $185.81 million, and for the current fiscal year, the EPS estimate is $8.04 on revenues of $733.61 million [7] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Consulting Services industry, to which CRA belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Revenue for Q3 of fiscal 2025 was $185.9 million, a 10.9% increase from $167.7 million in Q3 of fiscal 2024[3] - Net income for Q3 of fiscal 2025 was $11.5 million, or 6.2% of revenue, compared to $11.4 million, or 6.8% of revenue, in Q3 of fiscal 2024[20] - Non-GAAP net income for Q3 of fiscal 2025 was $13.7 million, or 7.3% of revenue, compared to $12.1 million, or 7.2% of revenue, in Q3 of fiscal 2024[20] - Net revenue for Q3 2025 was $185,891,000, compared to $167,748,000 in Q3 2024, reflecting a growth of 10.8%[40] - Net income for the fiscal quarter was $11.473 million, representing 6.2% of revenue, compared to $11.437 million and 6.8% in the prior year[42] - Non-GAAP net income for the quarter was $13.651 million, or 7.3% of revenue, up from $12.114 million and 7.2% in the same quarter last year[42] - Non-GAAP EBITDA for the quarter was $24.406 million, accounting for 13.1% of revenue, compared to $21.291 million and 12.7% in the prior year[44] Cash Flow and Liquidity - Cash and cash equivalents at September 27, 2025, were $22.5 million, down from $24.5 million at September 28, 2024[27] - The company reported a net increase in cash and cash equivalents of $(1,985,000) for Q3 2025, compared to a net increase of $3,048,000 in Q2 2025[32] - The total cash and cash equivalents at the end of Q3 2025 were $22,496,000, a decrease from $24,481,000 at the end of Q3 2024[32] - Cash dividends paid were $10.098 million, an increase from $8.850 million in the same period last year[48] - The company reported a net cash used in operating activities of $37.595 million for the year-to-date period, compared to $29.689 million in the prior year[48] Operational Metrics - Consultant headcount at the end of Q3 of fiscal 2025 was 968, a decrease from 978 in Q3 of fiscal 2024[4] - Companywide utilization rate for Q3 of fiscal 2025 was 77%, up from 76% in Q3 of fiscal 2024[5] - SG&A expenses for Q3 of fiscal 2025 were $33.7 million, or 18.1% of revenue, compared to $31.3 million, or 18.6% of revenue, in Q3 of fiscal 2024[7] - Selling, general and administrative expenses for Q3 2025 were $33,725,000, which is 18.1% of revenue, compared to $31,269,000 or 18.6% of revenue in Q3 2024[40] - Total Days Sales Outstanding (DSO) for Q3 of fiscal 2025 was 115 days, down from 122 days in Q3 of fiscal 2024[26] Assets and Liabilities - Total assets increased to $629.041 million as of September 27, 2025, up from $571.439 million at the end of December 2024[46] - Cash and cash equivalents decreased to $22.496 million from $26.711 million at the end of the previous fiscal year[46] - Borrowings under the revolving line of credit increased to $132 million, compared to $95 million in the previous year[48] Other Financial Metrics - Non-GAAP EBITDA for Q3 of fiscal 2025 was $24.4 million, or 13.1% of revenue, compared to $21.3 million, or 12.7% of revenue, in Q3 of fiscal 2024[21] - The percentage of GAAP net cash provided by operating activities as a percentage of net revenue was 5.7% in Q3 2025, down from 18.8% in Q3 2024[34] - Adjusted net cash flows from operations for Q3 2025 reached $114,867,000, significantly higher than $69,310,000 in Q3 2024, indicating a year-over-year increase of 65.9%[34] - The adjusted net cash flows from operations as a percentage of net revenue for Q3 2025 was 15.7%, up from 10.3% in Q3 2024[34] - The company experienced foreign currency gains of $763,000 in Q3 2025, contrasting with losses of $(904,000) in Q3 2024[40] - The company incurred restructuring and separation benefits totaling $3.7 million in the fiscal quarter, including $2.6 million in cash[42]

Core Insights - Charles River Associates reported a strong financial performance for the fiscal third quarter of 2025, with a year-over-year revenue increase of 10.8% to $185.9 million [1] Financial Performance - Revenue for the third quarter reached $185.9 million, reflecting a 10.8% increase compared to the same period last year [1] - The company's performance was described as broad-based, indicating strength across various segments [1]

Core Insights - Charles River Associates reported a strong financial performance for the fiscal third quarter of 2025, with a year-over-year revenue increase of 10.8% to $185.9 million [1] Financial Performance - Revenue for the third quarter reached $185.9 million, reflecting a 10.8% increase compared to the same period last year [1] - The performance was described as broad-based, indicating growth across multiple segments of the business [1]