News Release Details

Company Delivers Strong Fourth Quarter Performance and Outstanding Annual Growth in Profits

BOSTON--(BUSINESS WIRE)--Feb. 19, 2015-- Charles River Associates (NASDAQ: CRAI), a worldwide leader in providing economic, financial, and management consulting services, today announced financial results for the fiscal fourth quarter and year ended January 3, 2015. “CRA concluded fiscal 2014 with another strong quarter of performance,” said Paul Maleh, CRA’s President and Chief Executive Officer. “We continued to experience broad-based demand for our services, and on a full-year non-GAAP basis our portfolio performed exceptionally well with Litigation and Regulatory revenue growing by 9.2% and Management Consulting revenue increasing by 16.2% as compared to fiscal 2013. This annual growth contributed to a fiscal 2014 non-GAAP Adjusted EBITDA margin of 16.5%, our highest full-year margin since 2006.”

Revenue for the fourth quarter of fiscal 2014 increased to $78.5 million, compared with $75.7 million for the fiscal fourth quarter ended December 28, 2013. Non-GAAP revenue for the fourth quarter of fiscal 2014 increased to $77.4 million, compared with $74.3 million for the fourth quarter of fiscal 2013.

Net income for the fourth quarter of fiscal 2014 was $3.4 million, or $0.36 per diluted share, compared with $3.7 million, or $0.37 per diluted share, for the fourth quarter of fiscal 2013. Non-GAAP net income for the fourth quarter of fiscal 2014 was $3.5 million, or $0.37 per diluted share, compared with $3.7 million, or $0.37 per diluted share, for the fourth quarter of fiscal 2013.

Adjusted EBITDA for the fourth quarter of fiscal 2014 was $12.5 million, or 16.0% of revenue, compared with $11.9 million, or 15.8% of revenue, for the fourth quarter of fiscal 2013. On a non-GAAP basis, Adjusted EBITDA for the fourth quarter of fiscal 2014 was $12.6 million, or 16.3% of revenue, compared with $11.9 million, or 16.0% of revenue, for the fourth quarter of fiscal 2013.

A complete reconciliation between revenue, net income and net income per diluted share, and the calculation of Adjusted EBITDA, on a GAAP and non-GAAP basis, for the fourth quarters of fiscal 2014 and fiscal 2013, and for the full 2014 and 2013 fiscal years, are provided in the financial tables at the end of this release.

Management Comments

“For the full year fiscal 2014, CRA delivered non-GAAP revenue growth of 10.3% and non-GAAP income from operations grew at nearly three times that rate, at 28.5%,” said Maleh. “We drove revenue growth principally through organic expansion and achieved companywide utilization of 76% for fiscal 2014.”

“On a non-GAAP basis, revenue for the fourth quarter increased 4.2% in fiscal 2014 over a year ago, led by solid contributions across our portfolio and double-digit growth in our Finance, Life Sciences, and Energy practices,” Maleh said. “Project lead flow throughout the organization remains strong and the conversion rate for revenue generating projects continues to strengthen.”

“Our consulting productivity continued to drive the fourth quarter non-GAAP gross profit as a percent of revenue to 31.5% in fiscal 2014 from 31.0% a year ago,” said Maleh. “For the full fiscal year, non-GAAP gross profit as a percent of revenue was 31.7% in fiscal 2014 compared with 31.3% in fiscal 2013.”

“Fourth quarter non-GAAP selling, general and administrative (SG&A) expenses as a percent of revenue, excluding commissions to non-employee experts, increased to 19.2% in fiscal 2014 from 18.6% a year ago, primarily due to the heavy holiday calendar that fell during the fourth quarter of 2014,” said Maleh. “For the full fiscal year, non-GAAP SG&A expenses as a percent of revenue, excluding commissions to non-employee experts, was 18.7% in fiscal 2014 compared with 19.0% in fiscal 2013. The annual improvements in gross margin and SG&A drove non-GAAP income from operations as a percent of revenue to 7.9% in fiscal 2014 compared with 6.7% in fiscal 2013.”

“We concluded the year with cash and cash equivalents of $48.2 million, up from $44.7 million at the end of the third quarter of fiscal 2014. Cash flow from operations was $30.2 million for fiscal 2014. Cash generated by operations was reinvested into the business for staff development, recruiting, and infrastructure improvements, as well as for share repurchases. During the fourth quarter, we repurchased approximately 440,000 shares of common stock for $12.8 million, bringing the total fiscal 2014 repurchased shares amount to approximately 971,500 shares of common stock for $25.5 million,” Maleh said.

Outlook and Financial Guidance

“CRA’s results in 2014 have positioned the Company for continued success in fiscal 2015. CRA introduces full-year fiscal 2015 non-GAAP revenue guidance in the range of $312 million to $320 million, with revenue growth anticipated to be more weighted toward the latter half of the year as new hires join the Company through our normal recruiting efforts. With respect to profitability, as we pursue top-line growth, CRA expects full-year fiscal 2015 non-GAAP Adjusted EBITDA margin in the range of 16.3% to 16.7%,” concluded Maleh.

Conference Call Information and Prepared CFO Remarks

CRA will host a conference call this morning at 10:00 a.m. ET to discuss its fourth-quarter and full-year 2014 financial results. To listen to the live call, please visit the “Investor Relations” section of the Company’s website at http://www.crai.com, or dial (877) 709-8155 or (201) 689-8881. An archived version of the webcast will be available on CRA’s website for one year.

In combination with this press release, CRA has posted prepared remarks by its CFO Chad Holmes under “Conference Call Materials” in the investor relations section on the Company’s website at http://www.crai.com. These remarks are offered to provide the investment community with additional background on CRA’s financial results prior to the start of the conference call.

About Charles River Associates (CRA)

Charles River Associates® is a global consulting firm specializing in litigation, regulatory, and financial consulting, and management consulting. CRA advises clients on economic and financial matters pertaining to litigation and regulatory proceedings, and guides corporations through critical business strategy and performance-related issues. Since 1965, clients have engaged CRA for its unique combination of functional expertise and industry knowledge, and for its objective solutions to complex problems. Headquartered in Boston, CRA has offices throughout the world and is celebrating its 50^th year anniversary in 2015. Detailed information about Charles River Associates, a registered trade name of CRA International, Inc., is available at http://www.crai.com.

NON-GAAP FINANCIAL MEASURES

In addition to reporting its financial results in accordance with U.S. generally accepted accounting principles, or GAAP, the Company has also provided in this release non-GAAP financial information. The Company believes that the use of non-GAAP measures in addition to GAAP measures is an additional useful method of evaluating its results of operations. The Company believes that presenting its financial results excluding the results of the Company’s NeuCo subsidiary, excluding commissions to non-employee experts from SG&A, and including a presentation of Adjusted EBITDA, is important to investors and management because it is more indicative of the Company’s ongoing operating results and financial condition. These non-GAAP financial measures should be considered in conjunction with, but not as a substitute for, the financial information presented in accordance with GAAP, and the expected results calculated in accordance with GAAP and reconciliations to those expected results should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Specifically, for the fourth quarters of fiscal 2014 and fiscal 2013, for the full 2014 and 2013 fiscal years, and for the full 2015 fiscal year financial guidance, the Company has excluded NeuCo’s results. Also, in calculating “Adjusted EBITDA” from income (loss) from operations, the Company has excluded the following non-cash expenses: depreciation and amortization, share-based compensation expenses, and amortization of forgivable loans.

SAFE HARBOR STATEMENT

Statements in this press release concerning our future business, operating results and financial condition, including statements regarding our position for continued success, our conversion rate strengthening, or containing any guidance regarding our future revenues, profits or other financial measures, and statements using the terms “expect” or similar expressions, are “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and various underlying assumptions. Although we believe there is a reasonable basis for these statements and assumptions, and these statements are expressed in good faith, these statements are subject to a number of factors and uncertainties. Information contained in these forward-looking statements is inherently uncertain, and actual performance and results may differ materially due to many important factors. Our actual non-GAAP revenue and non-GAAP Adjusted EBITDA margin in 2015 could differ materially from the guidance presented herein as a result of, among other things, the loss of key employee consultants or non-employee experts; their failure to generate engagements for us; our inability to attract or hire qualified consultants or to utilize existing consultants; the unpredictable nature of litigation-related projects; dependence on the growth of our management consulting practice; the potential loss of clients; changes in the law that affect our practice areas; the demand environment; global economic conditions; intense competition; and the timing of and amount of new hires. In addition to these factors, other factors that could cause actual performance or results to differ materially from any forward-looking statements include, among others, our restructuring costs and attributable annual cost savings, changes in our effective tax rate, share dilution from our stock-based compensation, completing acquisitions and factors related to our completed acquisitions, including integration of personnel, clients and offices and unanticipated expenses and liabilities, the risk of impairment write downs to our intangible assets, including goodwill, if our enterprise value declines below certain levels, risks associated with acquisitions we may make in the future, risks inherent in international operations, the performance of our NeuCo subsidiary, changes in accounting standards, rules and regulations, management of new offices, the ability of customers to terminate engagements with us on short notice, our ability to integrate successfully new consultants into our practice, our ability to collect on forgivable loans should any become due, general economic conditions, foreign exchange rate fluctuations, risks inherent in litigation, and professional liability. Further information on these and other potential factors that could affect our financial results is included in our periodic filings with the Securities and Exchange Commission, including risks under the heading “Risk Factors.” We cannot guarantee any future results, levels of activity, performance or achievement. We undertake no obligation to update any forward-looking statements after the date of this press release, and we do not intend to do so.

Source: Charles River Associates

Charles River Associates
Chad Holmes, 312-377-2322
Chief Financial Officer
or
Sharon Merrill Associates, Inc.
Jamie Bernard, 617-542-5300
Senior Associate