CRA(CRAI) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - CRA's fiscal 2020 revenue increased by 13% compared to fiscal 2019, with non-GAAP net income, earnings per diluted share, and EBITDA growing by 8%, 11%, and 15% respectively [4][6] - In Q4 2020, CRA experienced a 15% year-over-year revenue growth, with non-GAAP net income, earnings per diluted share, and EBITDA growing by 22%, 23%, and 24% respectively [5][6] - For the full year, CRA's revenue on a constant currency basis was $507.9 million, exceeding guidance of $498 million to $504 million [13][14] Business Line Data and Key Metrics Changes - Legal and regulatory services grew by 15%, while management consulting increased by 7% in fiscal 2020 [4] - All practices within CRA experienced revenue growth year-over-year, with notable double-digit growth in Antitrust & Competition Economics, Financial Economics, Forensic Services, Intellectual Property, Labor & Employment, and Risk, Investigations & Analytic Practices [7][9] Market Data and Key Metrics Changes - North American operations grew by 14%, while international operations increased by 7% in fiscal 2020 [4] - Worldwide deal-making during the second half of 2020 increased by 90% compared to the first half, marking the strongest second half for deal-making since 1980 [7] Company Strategy and Development Direction - CRA aims to maximize long-term value per share through prudent capital deployment, with plans to return half of adjusted net cash flow from operations to shareholders while investing in growth [15][18] - The company is focused on improving efficiency in delivering corporate services and enhancing margins in the future [26][32] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the recovery of M&A activity and the reopening of court systems, assuming no resurgence of pandemic conditions [28][29] - The company expects to gradually return to normal operations in the second half of fiscal 2021, with a focus on maintaining strong performance despite ongoing uncertainties [28][32] Other Important Information - CRA's adjusted net cash provided by operating activities was $97.1 million, representing 19.1% of fiscal 2020 revenue, a 57% increase from the previous year [16] - The company ended fiscal 2020 with $45.7 million in cash and cash equivalents, having paid down $38 million of its revolving line of credit [21][17] Q&A Session Summary Question: Can you speak to project sizes in the Antitrust Practice? - Management indicated that average project sizes in the Antitrust & Competition Economics practice were consistent with previous periods, with no significant changes noted in Q4 [24] Question: Do you expect permanent changes to the cost structure post-pandemic? - Management believes there are opportunities for efficiency improvements and margin enhancement, with a potential reduction in SG&A expenses [25][26] Question: How much did the pandemic slow down CRA's performance in 2020? - Management acknowledged the challenges but credited the team's ability to generate new business and maintain a strong backlog, resulting in double-digit revenue growth [31] Question: What are the expectations for utilization recovery in 2021? - Management anticipates a gradual recovery in utilization levels throughout 2021, with a return to historical levels expected within 12 to 18 months [33] Question: How does CRA view its real estate strategy long-term? - Management emphasized the importance of in-office collaboration and plans to utilize existing space more efficiently rather than reducing real estate costs [35] Question: What is the competitive landscape like internationally? - Management noted that CRA faces strong competition but is seeing success across both U.S. and international markets, particularly in M&A activity [42] Question: Are courts becoming more efficient in handling cases? - Management has not observed significant improvements in court efficiency but noted an increase in case filings, indicating growing demand [44]