Charles River Associates (CRA) Announces First-Quarter 2013 Financial Results
Company Remains Positive on Annual Performance Despite Slow Start to 2013
Revenue for the first quarter of fiscal 2013 was
Net income for the first quarter of fiscal 2013 was
The effective tax rate for the first quarter of fiscal 2013 was 16.0% compared with 86.6% (due to international losses) for the first quarter of fiscal 2012. The non-GAAP effective tax rate for the first quarter of fiscal 2013 was 13.3% compared with 76.8% for the first quarter of fiscal 2012. The primary reasons for the low effective tax rates for the first quarter of fiscal 2013 were a tax benefit associated with a favorable resolution of a tax matter and international profitability sheltered by net operating losses. More normalized effective tax rates are expected over the remainder of fiscal 2013.
A complete reconciliation between revenue, net income, net income per diluted share, provision for income taxes, and SG&A, on a GAAP and non-GAAP basis, for the first quarters of fiscal 2013 and fiscal 2012 is provided in the financial tables at the end of this release.
Financial Results Comments
“We are disappointed with the start to the year; however, we believe the fundamentals of our business are solid and we remain positive about our prospects going forward,” said
“The Finance practice, historically a consistent and solid performer, experienced the simultaneous slowdown of several ongoing litigation engagements. Life Sciences and Marakon are prone to the quarterly variability often characterized by the boutique management consulting sector, but as in fiscal 2012, we expect our
“We remain on track with our expense management initiatives. Non-GAAP SG&A, after adjusting for payments to non-employee experts, decreased by
“We are pleased to announce that we closed yesterday on an expanded and improved revolving credit facility. This facility is for
Outlook
“Looking ahead, despite our slow start to the year and a weaker than expected M&A environment in the first quarter, we remain optimistic with respect to CRA’s annual performance for fiscal 2013. We have a more robust service offering than a year ago and an exceptional team of professionals to deliver upon it. We are focused on driving profitable organic growth and realizing the full contributions from our new colleagues as we move beyond their integration,” concluded Maleh.
Conference Call Information and Prepared CFO Remarks
CRA will host a conference call this morning at
In combination with this press release, CRA is providing prepared remarks by its CFO
About
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
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, 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 first quarter of fiscal 2013, the Company has excluded NeuCo’s results, and for the first quarter of fiscal 2012, the Company has excluded certain restructuring costs and NeuCo’s results.
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,” 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, 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
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CRA INTERNATIONAL, INC. |
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| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS INCLUDING A RECONCILIATION TO NON-GAAP RESULTS | ||||||||||||||||||||||||||||||||||||||||
| FOR THE QUARTER ENDED MARCH 30, 2013 COMPARED TO THE QUARTER ENDED MARCH 31, 2012 | ||||||||||||||||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||
| Quarter Ended March 30, 2013 | Quarter Ended March 31, 2012 | |||||||||||||||||||||||||||||||||||||||
| GAAP | Adjustments to | Non-GAAP | GAAP | 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 | ||||||||||||||||||||||||||||||
| Revenues | $ | 63,130 | 100.0 | % | $ | 1,101 | $ | 62,029 | 100.0 | % | $ | 69,132 | 100.0 | % | $ | - | $ | 1,179 | $ | 67,953 | 100.0 | % | ||||||||||||||||||
| Costs of services | 42,015 | 66.6 | % | 366 | 41,649 | 67.1 | % | 46,487 | 67.2 | % | - | 343 | 46,144 | 67.9 | % | |||||||||||||||||||||||||
| Gross profit | 21,115 | 33.4 | % | 735 | 20,380 | 32.9 | % | 22,645 | 32.8 | % | - | 836 | 21,809 | 32.1 | % | |||||||||||||||||||||||||
| Selling, general and administrative expenses | 15,800 | 25.0 | % | 899 | 14,901 | 24.0 | % | 17,867 | 25.8 | % | 545 | 921 | 16,401 | 24.1 | % | |||||||||||||||||||||||||
| Depreciation and amortization | 1,541 | 2.4 | % | 1 | 1,540 | 2.5 | % | 1,472 | 2.1 | % | - | 1 | 1,471 | 2.2 | % | |||||||||||||||||||||||||
| Income (loss) from operations | 3,774 | 6.0 | % | (165 | ) | 3,939 | 6.4 | % | 3,306 | 4.8 | % | (545 | ) | (86 | ) | 3,937 | 5.8 | % | ||||||||||||||||||||||
| Interest and other expense, net | (397 | ) | -0.6 | % | (20 | ) | (377 | ) | -0.6 | % | (53 | ) | -0.1 | % | - | (42 | ) | (11 | ) | 0.0 | % | |||||||||||||||||||
| Income (loss) before (provision) benefit for income taxes | 3,377 | 5.3 | % | (185 | ) | 3,562 | 5.7 | % | 3,253 | 4.7 | % | (545 | ) | (128 | ) | 3,926 | 5.8 | % | ||||||||||||||||||||||
| (Provision) benefit for income taxes | (542 | ) | -0.9 | % | (70 | ) | (472 | ) | -0.8 | % | (2,817 | ) | -4.1 | % | 195 | 5 | (3,017 | ) | -4.4 | % | ||||||||||||||||||||
| Net income (loss) | 2,835 | 4.5 | % | (255 | ) | 3,090 | 5.0 | % | 436 | 0.6 | % | (350 | ) | (123 | ) | 909 | 1.3 | % | ||||||||||||||||||||||
| Net loss attributable to noncontrolling interest, net of tax | 134 | 0.2 | % | 134 | - | 0.0 | % | 83 | 0.1 | % | - | 83 | - | 0.0 | % | |||||||||||||||||||||||||
| Net income (loss) attributable to CRA International, Inc. | $ | 2,969 | 4.7 | % | $ | (121 | ) | $ | 3,090 | 5.0 | % | $ | 519 | 0.8 | % | $ | (350 | ) | $ | (40 | ) | $ | 909 | 1.3 | % | |||||||||||||||
| Net income per share attributable to CRA International, Inc.: | ||||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.30 | $ | 0.31 | $ | 0.05 | $ | 0.09 | ||||||||||||||||||||||||||||||||
| Diluted | $ | 0.29 | $ | 0.31 | $ | 0.05 | $ | 0.09 | ||||||||||||||||||||||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||||||||||||||||||||||||||
| Basic | 9,994 | 9,994 | 10,316 | 10,316 | ||||||||||||||||||||||||||||||||||||
| Diluted | 10,084 | 10,084 | 10,493 | 10,493 | ||||||||||||||||||||||||||||||||||||
| (1) These adjustments include activity related to NeuCo in the Company's GAAP results. | ||||||||||||||||||||||||||||||||||||||||
| (2) During the quarter ended March 31, 2012, the Company incurred pre-tax expenses of $0.5 million and related income tax effect of $0.2 million principally associated with vacant leased office space. | ||||||||||||||||||||||||||||||||||||||||
| CRA INTERNATIONAL, INC. | ||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands) | ||||||
| March 30, | December 29, | |||||
| 2013 | 2012 | |||||
| Assets | ||||||
| Cash and cash equivalents | $ | 30,590 | $ | 55,451 | ||
| Accounts receivable and unbilled, net | 79,120 | 77,270 | ||||
| Other current assets | 33,617 | 38,956 | ||||
| Total current assets | 143,327 | 171,677 | ||||
| Property and equipment, net | 17,868 | 17,980 | ||||
| Goodwill and intangible assets, net | 80,942 | 72,599 | ||||
| Other assets | 64,213 | 29,754 | ||||
| Total assets | $ | 306,350 | $ | 292,010 | ||
| Liabilities and shareholders’ equity | ||||||
| Current liabilities | $ | 82,419 | $ | 69,210 | ||
| Long-term liabilities | 9,823 | 10,566 | ||||
| Total liabilities | 92,242 | 79,776 | ||||
| Total shareholders’ equity | 214,108 | 212,234 | ||||
| Total liabilities and shareholders’ equity | $ | 306,350 | $ | 292,010 | ||
Source:
Charles River Associates
Wayne D. Mackie, 617-425-3740
Executive Vice President, CFO
or
Sharon Merrill Associates, Inc.
Dennis Walsh, 617-542-5300
Vice President