CRA(CRAI) - 2024 Q4 - Earnings Call Transcript

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]