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]

Summary of CRA International Conference Call Company Overview - **Company Name**: CRA International, Inc. (Charles River Associates) - **Industry**: Consulting, focusing on economic, financial, and strategic expertise - **Market Position**: Leading global consulting firm serving law firms, corporations, accounting firms, and governments [1][2] Core Business Segments - **Revenue Composition**: - Legal and regulatory consulting: approximately 80% of total revenue - Traditional management consulting: approximately 20% of total revenue [3][4] - **Key Practices**: - Antitrust and competition economics: about 45% of total revenue - Life sciences and forensic services: together make up roughly 70% to 75% of total revenue [5] Financial Performance - **Stock Performance**: - Stock price has increased almost tenfold over the past 10 years, trading above $190 recently [3][9] - **Revenue Growth**: - Consistent revenue growth of around 8% over the past five years - Midpoint revenue guidance for 2025 indicates continued growth [10][11] - **Profitability**: - Adjusted EBITDA is a key profitability measure, with a focus on cash flow management [11][12] - **Shareholder Returns**: - Aims to return approximately 50% of adjusted cash flows to shareholders, primarily through stock repurchases [8][15] - Dividends have increased from $0.14 per share in 2016 to $0.49 per share in 2025 [15] Talent and Workforce - **Employee Retention**: - Less than 10% voluntary turnover among top revenue generators over the past five years [4] - **Talent Acquisition**: - Significant investment in talent acquisition and maintenance, with $185 million spent leading to a revenue increase of $230 million [13][14] Market Dynamics - **Regulatory Environment**: - Minimal direct impacts from regulatory uncertainties, with some contracts paused but not significantly affecting productivity [18] - **Competitive Landscape**: - No new major competitors identified; existing competitors remain the same with some changes in trade names and structures [23] Future Outlook - **Growth Expectations**: - Positive outlook for the second half of 2025, with expectations of continued strong performance [24] - **M&A Activity**: - Open to mergers and acquisitions that align with existing service lines and geographies, with a full pipeline of opportunities [25] Additional Insights - **Client Base**: - Worked with 85 of the Fortune 100 companies and 98 of the top 100 law firms in the past two years [6][7] - **Inorganic Growth**: - Future inorganic growth will focus on adding depth to existing practices rather than expanding the breadth of services [17] This summary encapsulates the key points discussed during the CRA International conference call, highlighting the company's performance, market position, and strategic outlook.

Core Viewpoint - CRA International (CRAI) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Impact - Changes in a company's future earnings potential, reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements [3]. - Institutional investors utilize earnings estimates to calculate the fair value of a company's shares, leading to buying or selling actions that affect stock prices [3]. Business Improvement Indicators - The rising earnings estimates for CRA indicate an improvement in the company's underlying business, which is expected to positively influence its stock price [4]. Importance of Earnings Estimate Revisions - Tracking earnings estimate revisions can be beneficial for investment decisions, and the Zacks Rank system effectively utilizes this information [5]. - The Zacks Rank system classifies stocks based on earnings estimates and has a strong track record, with Zacks Rank 1 stocks averaging a +25% annual return since 1988 [6]. Specific Earnings Estimates for CRA - For the fiscal year ending December 2025, CRA is expected to earn $8.04 per share, unchanged from the previous year, with a 0.5% increase in the Zacks Consensus Estimate over the past three months [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of "buy" and "sell" ratings across its universe of over 4,000 stocks, with only the top 20% receiving higher ratings [8][9]. - The upgrade of CRA to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for near-term price movement [9].

Summary of CRA International Conference Call - September 17, 2025 Company Overview - CRA International (NasdaqGS: CRAI) is celebrating its 60th anniversary in 2025, founded in 1965 by professors from Harvard and MIT to provide academic quality research to the business world [1][2] - The company operates primarily in two segments: legal and regulatory (approximately 80% of revenue) and management consulting (approximately 20% of revenue) [2][5] - CRA has over 20 offices in 10 countries, with 80% of revenue coming from North America and 20% from international markets [3] Financial Performance - CRA has experienced consistent revenue growth of approximately 8% to 10% annually over the last 15 years [6] - Profitability has grown at an even faster rate, with no debt and operations fully financed through internal cash flow [7] - The company has returned nearly $200 million to shareholders over the past five years, reducing share count by 13% [13][14] - The average price of share repurchases over the last five years was $88, with current trading over $200, indicating strong intrinsic value [8] Shareholder Returns - CRA initiated a dividend in 2016, which has since tripled to $0.49 per share, contributing to an attractive shareholder yield of approximately 6% [15][16] - The company aims to maximize long-term value per share and has a history of effective capital redistribution [8][12] Market Position and Strategy - CRA has worked with 85 of the Fortune 100 companies and 98 of the top 100 law firms in the past two years, indicating strong client retention and repeat business [5][6] - The firm focuses on high-value services and has not expanded into subscription-based revenue models, believing that quality service provides resilience against economic shocks [21][22] - CRA differentiates itself from larger global firms and specialized boutiques by maintaining a focus on its core competencies at the intersection of economics and regulation [27][29] Industry Dynamics - The regulatory environment remains complex, creating opportunities for CRA to assist clients in navigating these challenges [19] - The company anticipates a potential increase in M&A activity as capital becomes cheaper, although there are other complicating factors in executing large deals [30][31] Key Challenges and Opportunities - CRA is adapting to changing client needs and expanding service depth while maintaining its core focus [19][21] - The firm has not experienced direct impacts from regulatory inquiries but is aware of potential budget reductions from regulatory bodies [24] - Pricing power remains strong, with annual price increases of 2% to 4% without significant pushback from clients [25][26] Conclusion - CRA International is well-positioned for continued growth, with a strong focus on quality service, effective capital management, and a commitment to shareholder returns, despite the complexities of the current regulatory and economic environment [17][31]

Core Insights - Cra International (CRAI) reported record GAAP revenue of $186.9 million and non-GAAP EPS of $1.88 for Q2 FY2025, exceeding Wall Street expectations [1][2] - Net income (GAAP) increased by 85.4% year over year to $12.1 million, driven by strong demand across key practices [1][2] Financial Performance - GAAP revenue rose 9.0% from Q2 FY2024, with significant contributions from various service lines, particularly Antitrust & Competition Economics and Energy practices [5][6] - Non-GAAP EBITDA was $23.3 million, reflecting a 4.5% increase from the previous year [2] - Operating margin (GAAP) improved to 10.6%, up from 6.6% in Q2 FY2024, while non-GAAP EBITDA margin narrowed by 0.6 percentage points to 12.4% [7] Business Overview - Cra International specializes in consulting services related to economics, finance, and management, focusing on complex legal and regulatory matters [3] - The firm has a strong repeat client base and a highly educated team, with about 75% of senior consultants holding advanced degrees [4] Growth Drivers - The company is targeting long-term growth through diversified service offerings and a broad international reach, which helps mitigate risks from market fluctuations [4] - Strong client demand was evident across multiple practices, with notable growth in Antitrust, Energy, Intellectual Property, and Labor & Employment consulting [5][6] Shareholder Returns - The company returned $46.6 million to shareholders, including $43.2 million in share repurchases and $3.4 million in dividends, announcing a new quarterly dividend of $0.49 per share [8] Future Outlook - Management raised FY2025 revenue guidance to $730 million to $745 million, reflecting strong first-half performance [9] - Key issues to monitor include headcount trends, as consultant numbers declined by 3.2% year over year, despite high utilization rates [10]

Group 1: CRA International, Inc. (CRAI) Q2 2025 Results - CRAI reported adjusted EPS of $1.88, exceeding the Zacks Consensus Estimate by 2.7% and reflecting a year-over-year increase of 2.7% [1][9] - Revenues reached $186.9 million, surpassing the consensus mark by 4% and showing a 9% increase from the previous year [1][9] - The company achieved a utilization rate of 76%, despite a 3.2% decrease in headcount year-over-year [2] Group 2: Financial Metrics - Non-GAAP EBITDA rose 4.4% year-over-year to $23.3 million, with the non-GAAP EBITDA margin improving by 60 basis points to 12.4% [2][9] - CRAI ended Q2 with cash and cash equivalents of $19.5 million, down from $26.7 million at the end of Q4 2024, while generating $74 million from operating activities [3] Group 3: 2025 Outlook - CRAI raised its 2025 constant-currency revenue guidance to a range of $730 million to $745 million, compared to the previous range of $715 million to $735 million [4] - The Zacks Consensus Estimate for 2025 revenue is $723.2 million, with an expected non-GAAP EBITDA margin of 12.3% to 13% [4]

Financial Data and Key Metrics Changes - Revenue in the second quarter increased by 9% year over year to $186.9 million, with non-GAAP net income, EPS, and EBITDA surpassing the record-setting 2024 by 6%, 8%, and 8% respectively [5][6][14] - Year-to-date revenue on a constant currency basis reached $367.6 million, with non-GAAP EBITDA of $47.7 million resulting in a margin of 13% [13][14] - The company is raising its revenue guidance for the full fiscal year 2025 to a range of $730 million to $745 million, compared to the previous range of $715 million to $735 million [14] Business Line Data and Key Metrics Changes - Seven of the eleven practices experienced year-over-year growth, with antitrust and competition economics, energy, intellectual property, and labor and employment practices each posting double-digit revenue growth [5][6] - Revenue from legal and regulatory services increased by nearly 11%, supported by a significant rise in total case filings and court judgments [7] - The energy practice continues to see strong demand, particularly in utilities, driven by changes in federal renewable incentives and increased electricity demand from data centers [11][12] Market Data and Key Metrics Changes - Worldwide M&A activity reached nearly $2 trillion during 2025, an increase of 33% compared to the previous year, marking the strongest opening period for deal-making since 2022 [8] - The antitrust and competition economics practice achieved its highest quarterly revenue, reflecting strong demand in both North America and internationally [27] Company Strategy and Development Direction - The company is focused on maximizing long-term value per share and is committed to strategic priorities, as evidenced by recent leadership promotions aimed at enhancing corporate support for high-value strategic initiatives [19][46] - The company is cautious about pursuing larger acquisitions unless they align with long-term strategic goals, emphasizing a focus on strategic fit rather than chasing revenue [43] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the company's future, citing strong lead flow activity and continuity in delivering profitable revenue growth [25] - There is awareness of potential disruptions from geopolitical factors, but overall visibility into the business remains stable [25] Other Important Information - The company concluded the quarter with $19.4 million in cash and $120 million in borrowings, resulting in a net debt of $100.6 million [17] - During the second quarter, the company returned $46.6 million to shareholders through dividends and share repurchases [18] Q&A Session Summary Question: Drivers behind the guidance raise and visibility levels - Management highlighted strong performance in 2025 and continuity from fiscal 2024, with no significant changes in visibility despite potential geopolitical disruptions [24][25] Question: Changes in M&A regulatory needs and deal sizes - The antitrust practice reported strong demand, with no noticeable shifts in deal sizes or complexity, and continued engagement in large prominent matters [27][28] Question: Pricing environment and rate increases - Rate increases for fiscal 2025 have been successfully implemented, with clients continuing to demand value alongside efficiency in service delivery [31][32] Question: Share repurchase activity timing - Most share repurchase activity occurred in Q2, with a significant portion executed in the latter part of the quarter [34] Question: Energy practice scaling and inorganic growth - The energy practice is focusing on internal growth and skill set enhancement, with ongoing exploration for strategic acquisitions [42][43] Question: Management appointments and their purpose - New roles aim to enhance corporate support for strategic initiatives, raising the value of services provided to consulting colleagues [46] Question: Hiring trends and college recruitment - The company is welcoming over 100 recent graduates, maintaining a typical hiring class size while focusing on growth in specific practices [48][50]