CRA INTERNATIONAL, INC. Q3 FY2024 earnings call

• CRA achieved record Q3 2024 revenue of $167.7 million, up 13.7% y-o-y; first 3 quarters of fiscal 2024 are the highest revenue quarters in company history. • Consultant utilization improved to 76% y-o-y despite slight headcount decrease; project lead flow increased 8% y-o-y with strong conversion rates. • Legal and regulatory services grew nearly 20% y-o-y, outpacing broader legal market trends. • Highlighted projects: Antitrust & Competition Economics on M&A and antitrust inquiries; Energy on transmission planning and integrated resource plans; Financial Economics on model validation and litigation; Intellectual Property on patent litigation; Risk Investigations and Analytics on multidisciplinary investigations. • Capital deployment: Ended Q3 with $24.5 million cash, $60 million borrowings (net debt $35.5 million); net cash outlays for talent investments ($14.3 million) and capital expenditures ($3 million); full-year capital expenditures expected $16-17 million; $2.9 million dividends paid in Q3, with a 17% dividend increase announced.

CRA's revenue increased 13.7% year-over-year to $167.7 million in Q3 2024, a record Q3 performance. Legal and regulatory services grew nearly 20% year-over-year. The Antitrust & Competition Economics practice saw revenue grow nearly 30% year-over-year, with the first 3 quarters of fiscal 2024 being the highest in its history. The Energy practice benefited from hiring senior resources and supported transmission planning and integrated resource plans. The Financial Economics practice provided model validation and fair lending testing services, and assisted in litigation. The Intellectual Property practice worked on notable litigation engagements. The Risk Investigations and Analytics practice was retained on multidisciplinary investigations. The Life Sciences practice declined modestly year-over-year but continued work on client opportunity assessments.

• Reaffirmed full-year fiscal 2024 revenue guidance: $670 million to $685 million. • Reaffirmed non-GAAP EBITDA margin guidance: 12.2% to 13.0%. • Full-year capital expenditures expected to be $16-17 million. • Dividend increased 17% from $0.42 to $0.49 per common share, payable December 13, 2024, to shareholders of record as of November 26, 2024.

• Forward-looking statements are inherently uncertain due to factors like general and industry-specific economic conditions affecting demand for services. • Volatility in the labor market could impact attrition rates and hiring plans.

Q: On talent and headcount, update on trajectory.

A: Headcount adjusted, utilization up to 76%, legal/regulatory growing faster, no restrictions on headcount expansion in the quarters ahead.

Q: Management consulting demand.

A: Life Sciences in stabilization phase with sawtooth performance; Energy in strong growth with aggressive hiring.

Q: Antitrust commentary.

A: Antitrust & Competition Economics practice growing due to large, long-lived projects and pipeline replenishment, growing 30% in one quarter.

Q: Lead flow and conversion.

A: Lead flow up 8% y-o-y, conversion back to historical norms of ~2/3.

Q: Attrition trends.

A: Voluntary attrition still low, CRA remains a destination for top consulting talent.

Q: U.S. election impact on regulatory environment.

A: Well-positioned to adjust to client needs regardless of administration change, with strength in service portfolio to adapt.