Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 5.9% year over year to $171.4 million, marking the highest first half revenue in the company's history.
- Non-GAAP net income, earnings per diluted share, and EBITDA increased by 26.4%, 28.9%, and 18.5%, respectively.
- Five practices, including antitrust & competition economics and life sciences, showed year-over-year growth.
- Project lead flow increased by 11% year over year, with new project originations growing by 18%.
- The company increased its revenue and profit guidance for the full year fiscal 2024, reflecting strong performance.
Negative Points
- Consultant headcount decreased slightly by 0.3% compared to the previous year, indicating potential challenges in staffing.
- Non-GAAP selling, general, and administrative expenses increased, impacted by higher travel and labor costs.
- The company had to undertake optimization actions due to persistent pockets of overcapacity in select practices.
- Net debt stood at $62.4 million, with borrowings primarily used for bonus payments and talent investments.
- The effective tax rate remained high at 29.4% on a non-GAAP basis for the second quarter of fiscal 2024.
Q & A Highlights
Q: Can you discuss the reconfiguration of the team and how it relates to the increased full-year guidance, particularly regarding headcount and utilization?
A: Paul Maleh, CEO, explained that the reconfiguration was necessary due to persistent pockets of overcapacity despite high retention rates. The goal is to maintain mid-70s utilization. The guidance reflects the savings from these actions, and the company continues to hire and grow revenue.
Q: How are new project originations and lead conversions performing, and what are the expectations moving forward?
A: Paul Maleh noted that lead conversions have returned to historical norms, with a low-60s% conversion rate. This stability is expected to continue, supported by strong lead flow and consistent project origination growth.
Q: What is the impact of the regulatory landscape on CRA's business, and are there any anticipated changes?
A: Paul Maleh stated that regulatory oversight remains strong in both the U.S. and Europe, with no signs of easing. The company is monitoring potential changes in administration but expects regulatory pressures to persist.
Q: Can you elaborate on the margin guidance and whether this year's profitability is sustainable?
A: Paul Maleh highlighted that the margin improvement is a continuation of strong performance, with no one-time factors in 2024. The company has expanded margins by 250 basis points since 2019 and aims to maintain profitable growth.
Q: How is the antitrust business performing, particularly between M&A and non-M&A-related work?
A: Paul Maleh noted that while M&A activity has shown signs of life, the practice remains more heavily weighted towards antitrust litigation. The company is observing market conditions and interest rate changes for future activity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
