CRA International Reports Third Quarter Fiscal 2006 Financial Results
Business Editors
BOSTON--(BUSINESS WIRE)--Sept. 28, 2006--CRA International, Inc. (Nasdaq: CRAI), a worldwide leader in providing economic, financial, and management consulting services, today reported financial results for its third quarter of fiscal 2006, the sixteen weeks ended September 1, 2006.
Revenue for the third quarter of fiscal 2006 increased 15.7 percent to $107.0 million from $92.5 million for the third quarter of fiscal 2005. Net income for the third quarter of fiscal 2006 was $8.7 million, or $0.71 per diluted share, compared with $7.9 million, or $0.66 per diluted share, in the comparable period last year. Weighted average diluted shares outstanding used to calculate earnings per share in the third quarter of fiscal 2006 were 12.3 million, versus 12.0 million in the third quarter of fiscal 2005.
In fiscal 2006, CRA began to expense stock-based compensation in accordance with Financial Accounting Standards Board Statement No. 123R ("123R"). Included in the Company's third quarter of fiscal 2006 net income and diluted earnings per share amounts were approximately $950,000 and $0.08 per share, respectively, of stock-based compensation.
Revenue for the first three quarters of fiscal 2006 was $263.6 million, an 18.9 percent increase from $221.7 million in the same period a year earlier. Net income for the first three quarters of fiscal 2006 was $21.1 million, a 17.3 percent increase from $18.0 million in the first three quarters of fiscal 2005. Earnings per diluted share were $1.73 in the first three quarters of fiscal 2006, compared with $1.58 in the first three quarters of fiscal 2005. Included in the Company's first three quarters of fiscal 2006 net income and diluted earnings per share amounts were approximately $2.5 million and $0.21 per share, respectively, of stock-based compensation. Weighted average diluted shares outstanding used to calculate earnings per share in the first three quarters of fiscal 2006 were 12.2 million, versus 11.4 million in the first three quarters of fiscal 2005.
Comments on the Third Quarter
"CRA's third-quarter performance reflects strong contributions from a number of our litigation and business consulting practices, resulting in overall revenue growth of nearly 16 percent," said James C. Burrows, CRA International's president and chief executive officer. "The diversity of our revenue base is a significant asset for CRA and enables us to take advantage of the changing dynamics within our functional practices and vertical markets. During the third quarter, we experienced considerable growth in our Competition and Finance practices, as well as in Transfer Pricing, which benefited from the Ballentine Barbera Group ("BBG") acquisition earlier in the quarter. In addition, CRA's share in NeuCo's third-quarter loss was approximately $500,000. The NeuCo loss included a one-time charge attributable to a legal settlement incurred in connection with an acquisition made by NeuCo. As of this quarter, NeuCo is no longer consolidated in our financials."
"We continued to see significant contributions from our international consulting businesses," Burrows said. "Our results in the quarter demonstrate our ongoing success in generating demand for CRA's services on a global basis."
"Utilization in the third quarter of 2006 improved to 76 percent from 74 percent in the year ago period," said Burrows. "In a quarter that is traditionally challenging due to the summer holiday season, we continued to be on track towards our goal of achieving fiscal 2006 utilization of 78 to 80 percent."
Outlook and Financial Guidance
"For the fourth quarter of 2006, we anticipate that global, economic and legal trends will continue to stimulate demand for CRA's broad range of specialized consulting expertise and our recognized staff of elite professionals," Burrows said. "Based on this outlook and current market conditions, we expect continued growth across the majority of our practice areas."
CRA continues to anticipate revenue growth for fiscal 2006 in the range of 18-20 percent. In fiscal 2006, CRA expects a 29-30 cents-per-share impact from stock-based compensation. Based on year-to-date results, CRA anticipates a slightly lower effective tax rate for the year compared to its prior guidance of approximately 42-43 percent. As a result of the expected slightly lower tax rate, CRA anticipates net income for the full year to be slightly above the high end of the previous guidance of $26.5 million to $27.5 million, or $2.18 to $2.27 per diluted share, including the impact of stock-based compensation.
Fiscal 2006 EPS assumes an average diluted share count of 12.2 million shares for the year and assumes a stock price of $46.05 for the remainder of the year, which was derived from the average of the past 10 trading days. Deviations from this stock price will cause earnings per share to vary based on share dilution from CRA's stock options and convertible bonds.
Conference Call/Webcast Information
CRA International will host a conference call this morning at 11:00 a.m. ET to discuss its third-quarter fiscal 2006 financial results. To listen to a live webcast of the conference call, please visit the Investor Relations section of CRA's website, www.crai.com. CRA's third-quarter fiscal 2006 conference call also can be heard live by dialing (913) 981-5542 or (800) 289-0569 prior to the start of the call. A replay of the call also will be available on the Company's website.
About CRA International
Founded in 1965, CRA International is a leading provider of economic and financial expertise and management consulting services. Working with businesses, law firms, accounting firms, and governments, CRA is the preferred consulting firm for complex assignments with pivotal and high-stakes outcomes. The firm is distinguished by a unique combination of credentials: deep vertical experience in a variety of industries; broad horizontal expertise in a range of functional disciplines; and rigorous economic, financial, and market analysis. CRA offers a proven track record of thousands of successful engagements in regulatory and litigation support, business strategy and planning, market and demand forecasting, policy analysis, and engineering and technology management. Headquartered in Boston, the firm has more than a dozen offices within the United States and nine offices in Canada, Europe, the Middle East, and the Asia Pacific region. Detailed information about CRA is available at www.crai.com.
Statements in this press release concerning the future business, operating results, and financial condition of the Company and statements using the terms "anticipates," "believes," "expects," "should," or similar expressions, are "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and 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. Such factors that could cause actual results to differ materially from any forward-looking statements made by the Company include, among others, changes in the Company's effective tax rate, share dilution from the Company's convertible debt offering, the impact of Financial Accounting Standards Board Statement No. 123R and total stock-based compensation, dependence on key personnel, attracting and retaining qualified consultants, dependence on outside experts, utilization rates, factors related to its recent acquisitions, including integration of personnel, clients, offices, and unanticipated expenses and liabilities, risks associated with acquisitions it may make in the future, risks inherent in international operations, the performance of NeuCo, changes in accounting standards, rules and regulations, management of new offices, the potential loss of clients, dependence on growth of the Company's business consulting practice, the ability of the Company to integrate successfully new consultants into its practice, intense competition, risks inherent in litigation, and professional liability. Further information on these and other potential factors that could affect the Company's financial results is included in the Company's filings with the Securities and Exchange Commission. The Company cannot guarantee any future results, levels of activity, performance or achievement. The Company undertakes no obligation to update any of its forward-looking statements after the date of this press release.
CRA's consolidated statements of income and consolidated balance sheets are attached.
CRA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Sixteen Weeks Sixteen Weeks Forty Weeks Forty Weeks
Ended Ended Ended Ended
-------------------------------------------------------
September 1, September 2, September 1, September 2,
2006 2005 2006 2005
------------- ------------- ------------- -------------
Revenues $ 107,001 $ 92,515 $ 263,568 $ 221,674
Costs of
services 68,208 54,893 166,573 131,925
------------- ------------- ------------- -------------
Gross profit 38,793 37,622 96,995 89,749
Selling,
general and
administrative 23,805 23,865 61,926 56,583
------------- ------------- ------------- -------------
Income from
operations 14,988 13,757 35,069 33,166
Interest and
other income
(expense), net 442 (281) 967 (1,417)
------------- ------------- ------------- -------------
Income before
provision for
income taxes
and minority
interest and
effect of
equity
investment in
NeuCo, net 15,430 13,476 36,036 31,749
Provision for
income taxes (6,218) (5,458) (14,575) (13,752)
------------- ------------- ------------- -------------
Income before
minority
interest and
effect of
equity
investment in
NeuCo, net 9,212 8,018 21,461 17,997
Minority
interest and
effect of
equity
investment in
NEUCO, net (496) (132) (355) (3)
------------- ------------- ------------- -------------
Net income $ 8,716 $ 7,886 $ 21,106 $ 17,994
============= ============= ============= =============
Net income per
share:
Basic $ 0.76 $ 0.73 $ 1.85 $ 1.75
============= ============= ============= =============
Diluted $ 0.71 $ 0.66 $ 1.73 $ 1.58
============= ============= ============= =============
Weighted
average number
of shares
outstanding:
Basic 11,529 10,782 11,389 10,308
============= ============= ============= =============
Diluted 12,252 12,010 12,207 11,416
============= ============= ============= =============
CRA INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 1, November 26,
2006 2005
------------ ------------
Assets
Cash and cash equivalents $ 113,213 $ 115,203
Accounts receivable and unbilled, net 104,849 92,842
Other current assets 21,240 18,940
------------ ------------
Total current assets 239,302 226,985
Property and equipment, net 25,156 25,892
Goodwill and intangible assets, net 149,446 122,518
Other assets 13,481 12,150
------------ ------------
Total assets $ 427,385 $ 387,545
============ ============
Liabilities and stockholders' equity
Current liabilities $ 82,706 $ 78,603
Long-term liabilities 99,045 104,322
------------ ------------
Total liabilities 181,751 182,925
Total shareholders' equity 245,634 204,620
------------ ------------
Total liabilities and shareholders' equity $ 427,385 $ 387,545
============ ============
CONTACT: CRA International Wayne Mackie, 617-425-3740 Vice President, Chief Financial Officer or Sharon Merrill Associates, Inc. Jim Buckley, 617-542-5300 Executive Vice President SOURCE: CRA International, Inc.