CRA(CRAI) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - CRA International reported a record second quarter revenue of $250.3 million, representing a 15.7% increase year-over-year [22] - Non-GAAP EBITDA increased by 24.2% to $25.1 million, achieving a margin of 10% [22] - Consultant headcount at the end of the quarter was 802, a net increase of three compared to the previous quarter [28] - Non-GAAP selling, general and administrative expenses as a percentage of revenue decreased to 15% from 18.6% year-over-year [28] - The effective tax rate on a non-GAAP basis was 24.8%, down from 29.6% in the same quarter last year [29] Business Line Data and Key Metrics Changes - Double-digit revenue growth year-over-year was observed in Finance, Forensic Services, and Life Sciences practices [8] - Labor & Employment and risk investigations and analytics practices also contributed strongly to revenue [8] - New project originations were down 4% year-over-year, but up 15% for the first half of 2020 compared to the same period in 2019 [11] Market Data and Key Metrics Changes - Global M&A activity decreased by approximately 50% year-over-year, with the Americas experiencing a nearly 70% decline [12] - Total case filings in the litigation market were down approximately 20% year-over-year, with a 10% decline in cases closely aligned with CRA's services [12] - Antitrust case filings increased by approximately 10% year-over-year, while Intellectual Property filings declined by approximately 25% [13] Company Strategy and Development Direction - The company is focused on adapting to the ongoing global health crisis while prioritizing the health and well-being of its employees [9] - CRA continues to invest in its service portfolio with a long-term perspective, particularly in high-performing practices [38] - The company is planning a phased return to office work, depending on local conditions [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the COVID-19 pandemic but expressed confidence in the company's ability to navigate these challenges [24] - The company is not reinstating guidance but provided insights into performance metrics to assist in future assessments [21] - Management highlighted the strong performance of various practices despite market headwinds [14] Other Important Information - Adjusted net cash provided by operating activities was $78.8 million, a 46% increase year-over-year [25] - Capital expenditures for the second quarter were approximately $5.6 million, primarily for office build-outs [26] - A quarterly cash dividend of $0.23 per common share was declared, payable on September 14, 2020 [27] Q&A Session Summary Question: Consistency in weekly labor billings - Management clarified that relative consistency refers to dollar levels achieved in the first four weeks of Q3 compared to Q2 [34] Question: Performance of specific practices - Management noted that several practices are experiencing growth, not contraction, and highlighted the exceptional performance of various service lines [35] Question: Trends in Antitrust & Competition Economics practice - Management indicated that while the practice has been impacted by M&A deal flow, there are signs of building strength with occasional mergers and increased antitrust work [37] Question: Hiring plans for the third quarter - Management stated that there would be little sequential growth in consultant headcount from Q2 to Q3, with more hires expected in Q4 and Q1 [40]