On this page of StockholderLetter.com we present the latest annual shareholder letter from CRA INTERNATIONAL, INC. — ticker symbol CRAI. Reading current and past CRAI letters to shareholders can bring important insights into the investment thesis.
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5/31/2024 Letter Continued (Full PDF)
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5/26/2023 CRAI Stockholder Letter
• More "Business Services & Equipment" Category Stockholder Letters
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CRAI Benford's Law Stock Score = 98
5/31/2024 Letter Continued (Full PDF)
•
5/26/2023 CRAI Stockholder Letter•
More "Business Services & Equipment" Category Stockholder Letters•
CRAI Benford's Law Stock Score = 98CRAI Shareholder/Stockholder Letter Transcript:
Annual Report 2023 World Headquarters 200 Clarendon Street Boston, Massachusetts 02116-5092 +1-617-425-3000 tel www.crai.com 002CSNEB67 Charles River Associates Charles River Associates is a leading global consulting firm specializing in economic, financial, and management consulting services. 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. Headquartered in Boston, CRA has offices throughout the world. Charles River Associates is a registered trade name of CRA International, Inc. Dear Fellow Shareholders: I am pleased to report that CRA once again exhibited tremendous strength and resiliency during fiscal 2023, a year characterized by macroeconomic disruptions that included bank failures, interest rate volatility, a slowdown in M&A transaction activity, and geopolitical crises. Despite these challenges, CRA once again set a new financial high as fiscal 2023 revenue grew by 5.6% to $624.0 million, topping what had been a record-setting fiscal 2022 and marking the sixth consecutive year in which CRA set a record for annual revenue. The record revenue notwithstanding, CRA did experience some uncharacteristic volatility in fiscal 2023. The conversion of project lead flow dipped below historical norms while employee retention was unusually high, reaching rates not seen since the COVID-related lockdowns. These factors especially impacted our third quarter, causing revenue growth to slow and margins to shrink. In the face of this unexpected weakness, CRA s long history of strong performance gave our management team the confidence to stay the course. Our conviction in the quality of the business was quickly validated as the fourth quarter delivered a strong conclusion to the year, with revenue increasing by 11.5% year over year and profits growing at even faster rates. The resiliency of our results reflects the strength of our client relationships. CRA remains the firm of choice for companies facing their most important legal, regulatory, and strategic challenges. As summarized in Exhibit 1 below, CRA s market-leading position has driven our success over both the short term and the long run. Exhibit 1: Selected Operating and Capital Metrics Revenue Growth Fiscal Q4 2023** Fiscal 2023 11% 6% Headcount Growth EPS Growth* 7% 19% 7% -5% 46% 101% utilization of 73% 49% utilization of 72% Cash Dividends $8M $3M $31M $11M $135M $43M average price of $93 per share utilization of 70% Fiscal Years 2019-2023 Stock Repurchases average price of $106 per share average price of $70 per share *Presented on a non-GAAP basis.1 | **Growth rates are calculated on a year-over-year basis. 1 With respect to each non-GAAP financial measure presented in this letter, the comparable GAAP financial measure and a reconciliation of it to the non-GAAP financial measure are presented on the page following this letter. Operating Performance As noted, fiscal 2023 was punctuated by an unexpected third-quarter slowdown in new project originations at a time of higher-than-expected headcount, resulting in an unusual departure from CRA s long history of delivering revenue and profit expansion. These conditions proved brief, as performance bounced back in the fourth quarter. With conversion rates improving and as consultant headcount better aligned with our expectations, firm-wide utilization surged to 73% in the fourth quarter from the 66% reported in the prior quarter. For the full year, CRA achieved utilization of 70%, while welcoming more than 200 new consulting colleagues to the team. These additions pushed year-end headcount to 1,004, which represented a 6.9% increase year over year and the tenth consecutive increase in CRA s year-end consulting headcount. Exhibit 2 summarizes our consulting headcount and utilization over the past five years. Exhibit 2: Consulting Headcount and Utilization 100% 1,250 90% 1,000 75% 69% 75% 74% 80% 70% 70% 60% 750 50% 500 779 831 939 861 1,004 40% 30% 20% 250 10% 0% 0 2019 2020 2021 Year-End Headcount 2022 2023 Utilization CRA once again established a new high for annual revenue, which increased 5.6% to $624.0 million. CRA s revenue growth for the year was balanced geographically, as our North American operations expanded by 5.3% and international operations grew by 6.9%. For fiscal 2023, seven of CRA s 11 practices expanded their top lines, with two practices Forensic Services and Labor & Employment delivering double-digit revenue growth relative to fiscal 2022. Exhibit 3 summarizes our revenue over the past five years.