Charles River Associates (CRA) Reports Financial Results for the First Quarter Of 2020
Broad-based
Key First-Quarter Fiscal 2020 Highlights
- Revenue grew 19.2% year over year to
$126.2 million . - Utilization was 71%, while quarter-end headcount increased 16.3% year over year.
- Net income, earnings per diluted share, and non-GAAP EBITDA for the first quarter of fiscal 2020 were positively impacted by a foreign currency gain of approximately
$1.4 million related to net gains on foreign denominated transactions and the revaluation of working capital balances, compared with a foreign currency loss of approximately$0.7 million for the first quarter of fiscal 2019. - Net income increased 38.6% year over year to
$6.5 million , or 5.1% of revenue, compared with$4.7 million , or 4.4% of revenue, in the first quarter of fiscal 2019; non-GAAP net income increased 50.5% year over year to$6.8 million , or 5.4% of revenue, compared with$4.5 million , or 4.3% of revenue, in the first quarter of fiscal 2019. - Earnings per diluted share increased 42.9% year over year to
$0.80 ; non-GAAP earnings per diluted share increased 55.6% year over year to$0.84 . - Non-GAAP EBITDA increased 51.5% to
$12.9 million , or 10.2% of revenue, compared with$8.5 million , or 8.0% of revenue, in the first quarter of fiscal 2019. - On a constant currency basis relative to the first quarter of fiscal 2019, revenue would have been higher by
$0.3 million , while GAAP and non-GAAP net income, earnings per diluted share and EBITDA would have been higher by$0.1 million ,$0.02 per diluted share,$0.2 million , respectively. - CRA returned
$5.6 million of capital to its shareholders, consisting of$1.8 million of dividend payments and$3.8 million for share repurchases of approximately 83,000 shares.
Management Commentary
“Our first priority is the health and well-being of our people and providing them with a foundation of stability and safety during this unprecedented time,” said
“Looking at our first quarter financial results, CRA reported the highest quarterly revenue in our history, increasing 19.2% year over year to
Outlook and Financial Guidance
“As our first quarter results demonstrate, our portfolio of services is highly valued by our clients. On a constant currency basis, we grew revenue by 19.5% to
Quarterly Dividend
On
Conference Call Information and Prepared CFO Remarks
CRA will host a conference call today at
In combination with this press release, CRA has posted prepared remarks by its CFO
About
Charles River Associates® is a leading global consulting firm specializing in economic, financial, and management consulting services. 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
NON-GAAP FINANCIAL MEASURES
In this release, CRA has supplemented the presentation of its financial results calculated in accordance with
The adjustments made to the financial measures identified in this release as “non-GAAP” are as follows: for the first quarter of each of fiscal 2020 and fiscal 2019, the adjustments exclude non-cash amounts relating to valuation changes in contingent consideration and related tax effects. This release also presents certain current fiscal period financial measures on a “constant currency” basis in order to isolate the effect that foreign currency exchange rate fluctuations can have on CRA’s financial results. These constant currency measures are determined by recalculating the current fiscal period local currency financial measure using the specified corresponding prior fiscal period’s foreign exchange rates. Finally, this release also presents the non-GAAP financial metric EBITDA.
All of the non-GAAP financial measures referred to above should be considered in conjunction with, and not as a substitute for, the GAAP financial information presented in this release. EBITDA and the financial measures identified in this release as “non-GAAP” are reconciled to their GAAP comparable measures in the financial tables appended to the end of this press release. In evaluating these non-GAAP financial measures, note that the non-GAAP financial measures used by CRA may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
SAFE HARBOR STATEMENT
Statements in this press release concerning our future business, operating results and financial condition, the impact of the COVID-19 pandemic, our ability to effectively provide our services remotely, the impact of exchange rate fluctuations on our financial results, our expectations regarding continued growth, our expectations regarding the payment of any future quarterly dividends and the level and extent of any purchases under our share repurchase program, and statements using the terms “outlook,” “expect,” or similar expressions, are “forward-looking” statements as defined in Section 21 of the Exchange Act. 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 additional factors and uncertainties. Our actual performance and results may differ materially from the performance and results contained in or implied by the forward-looking statements made herein, due to many important factors. These factors include, but are not limited to, the possibility that the demand for our services may decline as a result of changes in general and industry specific economic conditions; the timing of engagements for our services; the effects of competitive services and pricing; our ability to attract and retain key employee or non-employee experts; the inability to integrate and utilize existing consultants and personnel; the decline or reduction in project work or activity; global economic conditions including less stable political and economic environments; the extent and duration of the impact of the COVID-19 pandemic on our operations and results, including the effects on the financial health of our clients, and the impact of the imposition of public health measures and travel, health-related, business and other restrictions; foreign currency exchange rate fluctuations; unanticipated expenses and liabilities; risks inherent in international operations; changes in tax law or accounting standards, rules, and regulations; our ability to collect on forgivable loans should any become due; and professional and other legal liability or settlements. Additional risks and uncertainties are discussed in our periodic filings with the
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
| FOR THE FISCAL QUARTERS ENDED | |||||||||||||
| (IN THOUSANDS, EXCEPT PER SHARE DATA) | |||||||||||||
| Fiscal Quarter Ended | |||||||||||||
2020 |
As a % of Revenue |
2019 |
As a % of Revenue |
||||||||||
| Revenues |
$ |
126,158 |
|
100.0 |
% |
$ |
105,849 |
|
100.0 |
% |
|||
| Cost of services (exclusive of depreciation and amortization) |
|
90,997 |
|
72.1 |
% |
|
73,635 |
|
69.6 |
% |
|||
| Selling, general and administrative expenses |
|
24,123 |
|
19.1 |
% |
|
22,743 |
|
21.5 |
% |
|||
| Depreciation and amortization |
|
2,943 |
|
2.3 |
% |
|
2,616 |
|
2.5 |
% |
|||
| Income from operations |
|
8,095 |
|
6.4 |
% |
|
6,855 |
|
6.5 |
% |
|||
| Interest expense, net |
|
(362 |
) |
-0.3 |
% |
|
(11 |
) |
0.0 |
% |
|||
| Foreign currency gains (losses), net |
|
1,422 |
|
1.1 |
% |
|
(744 |
) |
-0.7 |
% |
|||
| Income before provision for income taxes |
|
9,155 |
|
7.3 |
% |
|
6,100 |
|
5.8 |
% |
|||
| Provision for income taxes |
|
2,687 |
|
2.1 |
% |
|
1,435 |
|
1.4 |
% |
|||
| Net income |
$ |
6,468 |
|
5.1 |
% |
$ |
4,665 |
|
4.4 |
% |
|||
| Net income per share: | |||||||||||||
| Basic |
$ |
0.83 |
|
$ |
0.58 |
|
|||||||
| Diluted |
$ |
0.80 |
|
$ |
0.56 |
|
|||||||
| Weighted average number of shares outstanding: | |||||||||||||
| Basic |
|
7,805 |
|
|
8,015 |
|
|||||||
| Diluted |
|
8,037 |
|
|
8,346 |
|
|||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||
| FOR THE FISCAL QUARTERS ENDED | |||||||||||||
| (IN THOUSANDS, EXCEPT PER SHARE DATA) | |||||||||||||
| Fiscal Quarter Ended | |||||||||||||
2020 |
As a % of Revenue |
2019 |
As a % of Revenue |
||||||||||
| Revenues |
$ |
126,158 |
|
100.0 |
% |
$ |
105,849 |
|
100.0 |
% |
|||
| Net income |
$ |
6,468 |
|
5.1 |
% |
$ |
4,665 |
|
4.4 |
% |
|||
| Adjustments needed to reconcile GAAP net income to non-GAAP net income: | |||||||||||||
| Non-cash valuation change in contingent consideration |
|
430 |
|
0.3 |
% |
|
(217 |
) |
-0.2 |
% |
|||
| Tax effect on adjustments |
|
(117 |
) |
-0.1 |
% |
|
58 |
|
0.1 |
% |
|||
| Non-GAAP net income |
$ |
6,781 |
|
5.4 |
% |
$ |
4,506 |
|
4.3 |
% |
|||
| Non-GAAP net income per share: | |||||||||||||
| Basic |
$ |
0.87 |
|
$ |
0.56 |
|
|||||||
| Diluted |
$ |
0.84 |
|
$ |
0.54 |
|
|||||||
| Weighted average number of shares outstanding: | |||||||||||||
| Basic |
|
7,805 |
|
|
8,015 |
|
|||||||
| Diluted |
|
8,037 |
|
|
8,346 |
|
|||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||
| FOR THE FISCAL QUARTERS ENDED | |||||||||||||
| (IN THOUSANDS) | |||||||||||||
| Fiscal Quarter Ended | |||||||||||||
2020 |
As a % of Revenue |
2019 |
As a % of Revenue |
||||||||||
| Revenues |
$ |
126,158 |
|
100.0 |
% |
$ |
105,849 |
|
100.0 |
% |
|||
| Net income |
$ |
6,468 |
|
5.1 |
% |
$ |
4,665 |
|
4.4 |
% |
|||
| Adjustments needed to reconcile GAAP net income to non-GAAP net income: | |||||||||||||
| Non-cash valuation change in contingent consideration |
|
430 |
|
0.3 |
% |
|
(217 |
) |
-0.2 |
% |
|||
| Tax effect on adjustments |
|
(117 |
) |
-0.1 |
% |
|
58 |
|
0.1 |
% |
|||
| Non-GAAP net income |
$ |
6,781 |
|
5.4 |
% |
$ |
4,506 |
|
4.3 |
% |
|||
| Adjustments needed to reconcile non-GAAP net income to non-GAAP EBITDA: | |||||||||||||
| Interest expense, net |
|
362 |
|
0.3 |
% |
|
11 |
|
0.0 |
% |
|||
| Provision for income taxes |
|
2,804 |
|
2.2 |
% |
|
1,377 |
|
1.3 |
% |
|||
| Depreciation and amortization |
|
2,943 |
|
2.3 |
% |
|
2,616 |
|
2.5 |
% |
|||
| Non-GAAP EBITDA |
$ |
12,890 |
|
10.2 |
% |
$ |
8,510 |
|
8.0 |
% |
|||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| (IN THOUSANDS) | |||||
|
|
|
|
|||
|
2020 |
|
2019 |
|||
| Assets | |||||
| Cash and cash equivalents |
$ |
15,818 |
$ |
25,639 |
|
| Accounts receivable and unbilled services, net |
|
149,263 |
|
144,410 |
|
| Other current assets |
|
26,358 |
|
14,028 |
|
| Total current assets |
|
191,439 |
|
184,077 |
|
| Property and equipment, net |
|
66,626 |
|
61,295 |
|
|
|
93,960 |
|
94,980 |
||
| Right-of-use assets |
|
125,688 |
|
130,173 |
|
| Other assets |
|
72,495 |
|
62,718 |
|
| Total assets |
$ |
550,208 |
$ |
533,243 |
|
| Liabilities and Shareholders’ Equity | |||||
| Accounts payable |
$ |
23,668 |
$ |
26,069 |
|
| Accrued expenses |
|
77,714 |
|
121,301 |
|
| Current portion of lease liabilities |
|
12,432 |
|
12,847 |
|
| Revolving line of credit |
|
70,000 |
|
- |
|
| Other current liabilities |
|
7,509 |
|
11,193 |
|
| Total current liabilities |
|
191,323 |
|
171,410 |
|
| Non-current portion of lease liabilities |
|
144,079 |
|
146,551 |
|
| Other non-current liabilities |
|
18,446 |
|
17,531 |
|
| Total liabilities |
|
353,848 |
|
335,492 |
|
| Total shareholders’ equity |
|
196,360 |
|
197,751 |
|
| Total liabilities and shareholders’ equity |
$ |
550,208 |
$ |
533,243 |
|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (IN THOUSANDS) | ||||||||
|
Fiscal Quarter Ended |
||||||||
|
|
|
|
||||||
|
2020 |
|
2019 |
||||||
| Operating activities: | ||||||||
| Net income |
$ |
6,468 |
|
$ |
4,665 |
|
||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Non-cash items, net |
|
6,314 |
|
|
5,840 |
|
||
| Accounts receivable and unbilled services |
|
(6,829 |
) |
|
(2,924 |
) |
||
| Working capital items, net |
|
(71,328 |
) |
|
(64,148 |
) |
||
| Net cash used in operating activities |
|
(65,375 |
) |
|
(56,567 |
) |
||
| Investing activities: | ||||||||
| Purchases of property and equipment |
|
(7,949 |
) |
|
(774 |
) |
||
| Net cash used in investing activities |
|
(7,949 |
) |
|
(774 |
) |
||
| Financing activities: | ||||||||
| Issuance of common stock, principally stock option exercises |
|
151 |
|
|
1,526 |
|
||
| Borrowings under revolving line of credit |
|
70,000 |
|
|
39,000 |
|
||
| Tax withholding payments reimbursed by shares |
|
(390 |
) |
|
(388 |
) |
||
| Cash paid on dividend equivalents |
|
(40 |
) |
|
(35 |
) |
||
| Cash dividend paid to shareholders |
|
(1,796 |
) |
|
(1,616 |
) |
||
| Repurchases of common stock |
|
(3,810 |
) |
|
(4,349 |
) |
||
| Net cash provided by financing activities |
|
64,115 |
|
|
34,138 |
|
||
| Effect of foreign exchange rates on cash and cash equivalents |
|
(612 |
) |
|
133 |
|
||
| Net decrease in cash and cash equivalents |
|
(9,821 |
) |
|
(23,070 |
) |
||
| Cash and cash equivalents at beginning of period |
|
25,639 |
|
|
38,028 |
|
||
| Cash and cash equivalents at end of period |
$ |
15,818 |
|
$ |
14,958 |
|
||
| Noncash investing and financing activities: | ||||||||
| Purchases of property and equipment not yet paid for |
$ |
370 |
|
$ |
1,906 |
|
||
| Asset retirement obligations |
$ |
155 |
|
$ |
- |
|
||
| Right-of-use assets obtained in exchange for lease obligations |
$ |
- |
|
$ |
713 |
|
||
| Right-of-use assets related to the adoption of ASC 842 |
$ |
- |
|
$ |
82,329 |
|
||
| Lease liabilities related to the adoption of ASC 842 |
$ |
- |
|
$ |
106,765 |
|
||
| Supplemental cash flow information: | ||||||||
| Cash paid for taxes |
$ |
695 |
|
$ |
298 |
|
||
| Cash paid for interest |
$ |
245 |
|
$ |
59 |
|
||
| Cash paid for amounts included in operating lease liabilities |
$ |
5,039 |
|
$ |
4,627 |
|||
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617-425-3505
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617-542-5300
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