CRA(CRAI) - 2024 Q4 - Annual Report

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$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$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$125.1 million for fiscal 2024 from $115.1 million for fiscal 2023[170]. Revenue Sources and Risks - The company derived approximately 18$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].