Charles River Associates (CRA) Announces Second Quarter 2013 Financial Results
Charles River Associates (CRA) Announces Second Quarter 2013 Financial Results
Company Positioned for Stronger Second Half Fiscal 2013 Performance
BOSTON--(BUSINESS WIRE)-- Charles River Associates (NAS: CRAI) , a worldwide leader in providing management, economic and financial consulting services, today announced financial results for the fiscal second quarter ended June 29, 2013.
Revenue for the second quarter of fiscal 2013 was $65.2 million, compared with $67.8 million for the fiscal second quarter ended June 30, 2012. Non-GAAP revenue for the second quarter of fiscal 2013 was $64.1 million, compared with $66.3 million for the second quarter of fiscal 2012.
Net income for the second quarter of fiscal 2013 was $1.4 million, or $0.14 per diluted share. This compares with net income for the second quarter of fiscal 2012 of $0.7 million, or $0.07 per diluted share. Non-GAAP net income for the second quarter of fiscal 2013 was $1.5 million, or $0.15 per diluted share, compared with $2.1 million, or $0.20 per diluted share, for the second quarter of fiscal 2012.
With the recent increase in the Company's use of forgivable loans as a recruitment and retention tool for key revenue generators, cash flow measures for the Company's business have become even more relevant. Accordingly, for the first time the Company has included the calculation of "Adjusted EBITDA." For the second quarter of fiscal 2013, the Adjusted EBITDA based on GAAP and non-GAAP results was $8.8 million and $8.9 million, respectively, or 13.5% and 13.8% of revenues, respectively. For the second quarter of fiscal 2012, the Adjusted EBITDA based on GAAP and non-GAAP results was $7.9 million and $7.8 million, respectively, or 11.6% and 11.8% of revenues, respectively.
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 second quarters of fiscal 2013 and fiscal 2012 is provided in the financial tables at the end of this release.
Financial Results Comments
"During the second quarter of fiscal 2013, we experienced mixed results within our portfolio," said Paul Maleh, CRA's President and Chief Executive Officer. "The strong performance of some practices was offset by softness in other areas of the portfolio. The Antitrust & Competition Economics and Life Sciences practices grew sequentially and year-over-year during the second quarter. Utilization and revenue in our Antitrust & Competition Economics practice improved during the latter part of the quarter, reflecting organic growth and increasing contributions from the new senior-level consultants we welcomed to CRA in prior months. Improved performance in Life Sciences was driven by new engagements across both management consulting and litigation consulting. The Labor & Employment practice also delivered solid results during the quarter."
"The gains we achieved during the quarter were partially offset by the performances from our Finance and Marakon practices. Although both practices started the quarter slowly, they experienced improvements in project backlog that have continued into the third quarter, positioning the practices for a stronger second half of fiscal 2013."
"We continued to effectively manage our SG&A expenses and cost structure during the quarter. CRA's non-GAAP SG&A for the second quarter of fiscal 2013, after adjusting for commissions to non-employee experts, decreased by $2.0 million to 19.6% of revenue compared to 21.9% for the second quarter of last year."
"To support CRA's focus on organic growth and the recruitment and retention of key revenue generators, during the first two quarters of 2013 we issued approximately $38.0 million in forgivable loans to employees and non-employee experts for future service. The Consolidated Statement of Cash Flows shows a use of $26.7 million in year to date cash flows from operations. This includes the $38.0 million in forgivable loans, and $26.6 million of bonus payments to employees that were paid during the first half of fiscal 2013. Excluding the forgivable loans, cash flow from operations year to date would have been approximately $11.3 million. Forgivable loan amortization in the second quarter of 2013 was approximately $3.2 million compared with approximately $1.5 million in the second quarter of 2012. The second quarter of 2013 increase in the amortization of forgivable loans has driven the increase in Adjusted EBITDA compared with the second quarter of fiscal 2012."
"Looking ahead, we are focused on delivering broad-based revenue growth across our portfolio. Although the market has been slow to turn around and the M&A environment remains sluggish, certain areas of our portfolio continue to perform well. CRA experienced an improvement in project activity during the latter part of the second quarter and a related pickup in utilization, including areas that experienced some softness during the quarter. We are encouraged by the quality of the new engagements we are winning across the organization. Our anticipated revenue growth, coupled with the SG&A decrease we achieved, is expected to improve our performance," concluded Maleh.
Conference Call Information and Prepared CFO Remarks
CRA will host a conference call this morning at 9:00 a.m. ET to discuss its second-quarter 2013 financial results. To listen to a live webcast of the call, please visit the "Investor Relations" section of the Company's website at http://www.crai.com. To listen to the call via telephone, dial (877) 709-8155 or (201) 689-8881. Interested parties unable to participate in the live call may access an archived version of the webcast on CRA's website for up to one year.
In combination with this press release, CRA is providing prepared remarks by its CFO Wayne Mackie 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. 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 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 certain restructuring costs, certain non-cash expenses, and the results of the Company's NeuCo subsidiary 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 second quarter of fiscal 2013, the Company has excluded NeuCo's results, and for the second quarter of fiscal 2012, the Company has excluded certain restructuring costs and NeuCo's results. Also, in calculating "Adjusted EBITDA," the Company has excluded the following non-cash expenses: depreciation and amortization, share-based compensation expenses, and amortization of forgivable loans.
Statements in this press release concerning the future business, operating results, tax rates, and financial condition of the Company, the anticipated, expected or intended impact of the Company's key hires and expense management initiatives, and statements using the terms "anticipates," "believes," "expects," "should," "prospects," "target," "on track," "optimistic," "remaining positive," "hope," "opportunities," "positioned," 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 performance or results to differ materially from any forward-looking statements made by the Company include, among others, the Company's restructuring costs and attributable annual cost savings, changes in the Company's effective tax rate, share dilution from the Company's stock-based compensation, dependence on key personnel, attracting, recruiting and retaining qualified consultants, dependence on outside experts, utilization rates, completing acquisitions and factors related to its completed acquisitions, including integration of personnel, clients and offices, and unanticipated expenses and liabilities, the risk of impairment write downs to the Company's intangible assets, including goodwill, if the Company's enterprise value declines below certain levels, 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, changes in the law that affect the Company's practice areas, management of new offices, the potential loss of clients, the ability of customers to terminate the Company's engagements on short notice, dependence on the growth of the Company's management consulting practice, the unpredictable nature of litigation-related projects, the ability of the Company to integrate successfully new consultants into its practice, the Company's ability to collect on forgivable loans should any become due, general economic conditions, 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 periodic 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 INTERNATIONAL, INC.|
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS INCLUDING A RECONCILIATION TO NON-GAAP RESULTS|
|FOR THE QUARTER ENDED JUNE 29, 2013 COMPARED TO THE QUARTER ENDED JUNE 30, 2012|
|(In thousands, except per share data)|
|Quarter Ended June 29, 2013||Quarter Ended June 30, 2012|
|Adjustments to||Adjustments to||Non-GAAP|
|GAAP||% of||GAAP Results||Non-GAAP||% of||GAAP||% of||GAAP Results||GAAP Results||Non-GAAP||% of|
|Results||Revenues||(NeuCo) (1)||Results||Revenues||Results||Revenues||(Restructuring) (2)||(NeuCo) (1)||Results||Revenues|
|Costs of services||45,042||69.1||%||303||44,739||69.8||%||45,448||67.0||%||-||339||45,109||68.0||%|
|Selling, general and administrative expenses||15,380||23.6||%||875||14,505||22.6||%||16,924||25.0||%||226||882||15,816||23.8||%|
|Depreciation and amortization||1,611||2.5||%||1||1,610||2.5||%||2,633||3.9||%||1,145||1||1,487||2.2||%|
|Income (loss) from operations||3,170||4.9||%||(58||)||3,228||5.0||%||2,808||4.1||%||(1,371||)||271||3,908||5.9||%|
|Interest and other income (expense), net||198||0.3||%||(14||)||212||0.3||%||(113||)||-0.2||%||-||(40||)||(73||)||-0.1||%|
|Income (loss) before (provision) benefit for income taxes||3,368||5.2||%||(72||)||3,440||5.4||%||2,695||4.0||%||(1,371||)||231||3,835||5.8||%|
|(Provision) benefit for income taxes||(2,017||)||-3.1||%||(60||)||(1,957||)||-3.1||%||(1,922||)||-2.8||%||(151||)||(60||)||(1,711||)||-2.6||%|
|Net income (loss)||1,351||2.1||%||(132||)||1,483||2.3||%||773||1.1||%||(1,522||)||171||2,124||3.2||%|
|Net (income) loss attributable to noncontrolling interest, net of tax||58||0.1||%||58||-||0.0||%||(54||)||-0.1||%||-||(54||)||-||0.0||%|
|Net income (loss) attributable to CRA International, Inc.||$||1,409||2.2||%||$||(74||)||$||1,483||2.3||%||$||719||1.1||%||$||(1,522||)||$||117||$||2,124||3.2||%|
|Net income per share attributable to CRA International, Inc.:|
|Weighted average number of shares outstanding:|
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