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]

CRA International, Inc. (NASDAQ:CRAI) Q4 2024 Earnings Conference Call February 20, 2025 10:00 AM ET Company Participants Paul Maleh - Chairman, President, CEO Daniel Mahoney - EVP, CFO and Treasurer Chad Holmes - EVP and Chief Corporate Development Officer Conference Call Participants Marc Riddick - Sidoti & Company Kevin Steinke - Barrington Research Andrew Nicholas - William Blair Operator And good day, everyone, and welcome to CRA International, Inc.'s Fourth Quarter 2024 Conference Call. Please note th ...

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]

Core Viewpoint - Charles River Associates (CRAI) has experienced significant stock growth of 80.8% over the past year, outperforming the consulting services industry which saw a 4.6% increase [1]. Group 1: Company Performance and Market Position - CRAI has established a strong reputation for delivering high-quality analytical and strategic consulting services across various industries, positioning itself well in the consulting and research services sector [2]. - The company benefits from increasing demand for specialized advisory services in a complex global marketplace, which enhances its growth potential [2][3]. - CRAI's focus on innovation and client-centered solutions, along with its ability to attract top talent, positions it for significant growth as industries face rapid technological advancements and regulatory complexities [3]. Group 2: Talent and Workforce - CRAI's success is heavily reliant on its ability to acquire and retain talent, with nearly 75% of its senior consultants holding advanced degrees, including doctorates [4]. - In 2023, CRAI employed a total of 1,004 consulting staff, consisting of 156 officers, 527 senior staff, and 321 junior staff [4]. - The company collaborates with independent experts from top academic institutions, enhancing its capability to address complex client needs and generating new business opportunities [5]. Group 3: Financial Performance and Shareholder Returns - CRAI has consistently increased its dividend payouts, with payments rising from $8.29 million in fiscal 2021 to $10.8 million in 2023, and the dividend per share increasing from $1.04 in 2021 to $1.44 in 2023 [6]. - Share repurchase activity has varied, with $44.9 million repurchased in 2021, $27.6 million in 2022, and $24.8 million in 2023, reflecting the company's commitment to long-term value creation for investors [7]. - CRAI's shares have surged 87% over the past year, indicating strong market confidence in the company's long-term prospects [7]. Group 4: Industry Comparisons - CRAI currently holds a Zacks Rank of 2 (Buy), indicating positive market sentiment [8]. - Other top-ranked stocks in the broader Zacks Business Services sector include AppLovin (Zacks Rank 1) and Booz Allen Hamilton (Zacks Rank 2), with AppLovin showing a long-term earnings growth expectation of 20% [8][9].

Core Viewpoint - The article compares two companies, CRA International (CRAI) and Equifax (EFX), in the Consulting Services sector, highlighting CRAI as the more attractive option for value investors based on various valuation metrics and earnings estimate revisions [4][9]. Valuation Metrics - CRAI holds a Value grade of B, while EFX has a Value grade of D, indicating that CRAI is considered more undervalued [3]. - CRAI has a P/B ratio of 6.26 compared to EFX's P/B ratio of 6.57, suggesting CRAI is relatively more favorable in terms of market value versus book value [6]. - CRAI's forward P/E ratio is 26.41, significantly lower than EFX's forward P/E of 35.90, indicating that CRAI may be undervalued relative to its earnings potential [8]. - The PEG ratio for CRAI is 1.65, while EFX has a PEG ratio of 3.24, further supporting the notion that CRAI is a better value investment considering its expected earnings growth [8]. Earnings Estimate Revisions - CRAI has a Zacks Rank of 2 (Buy), while EFX has a Zacks Rank of 3 (Hold), indicating that CRAI is experiencing more positive earnings estimate revisions, which is a favorable sign for investors [7].

Group 1 - CRA International (NASDAQ: CRAI), operating as Charles River Associates, has been a leading performer in the Research and Consulting Services industry for several years [1] - The company offers specialized services in various areas, contributing to its strong market position [1] Group 2 - Joseph Jones, a professor at The University of Southern Mississippi, has over fifteen years of experience in market study, focusing on portfolio construction from a dividend growth investor's perspective [1]