CRA International Expands in Mid East. - Analyst Blog

Expanding its presence in the Middle East, on Tuesday, CRA International Inc. (CRAI) announced that it has opened its office in Riyadh, Saudi Arabia, second in the region after opening the first one in Bahrain in 2005. The company’s management team in the region comprises of consultants from the Global Industrial Consulting as well as Energy and Environment Practices.

 

CRA International’s legal, regulatory and business consulting services have gained a vast exposure in the Middle East region through its clients who are spread across the region including Jordan, Bahrain, Qatar, the United Arab Emirates (UAE), Oman , Saudi Arabia and Kuwait .

 

The region also provides CRA International with a diverse group of clients along with the opportunities to offer its services to different sectors that include chemicals, utilities, oil and gas. This is due to the fact that the Middle East area’s strength lies primarily in these key areas. Conversely, the company will be able to access enormous operating synergies and enhance its clientele base that had otherwise reached saturation due to stumbling economies of the U.S. and Europe.

 

Additionally, CRA International’s expansion in Middle East will also help it boost its international operations that were substantially impacted by the sluggish performance of its global business consulting practice and resulted in achieving a utilization rate of merely 60% during the fourth quarter of 2009.

 

Further, the announcement came at a time when FTI Consulting Inc. (FCN) announced the acquisition of Baker Tilly Hong Kong Business Recovery Ltd. on Apr 1, in order to expand its operations in Asia. CRA International seems to be keeping pace with its peers’ strategy of expansion.

 

 

CRA International reported operating earnings of $0.5 million or 4 cents per share for the fiscal first quarter of 2010 ended Feb 19, 2010, which substantially fell short of the Zacks Consensus Estimate of 27 cents and from 18 cents reported in the year-ago period.

 

Although reasonable activity has been witnessed in litigation, regulatory and financial consulting related areas, these are yet to convert into any accretion in top-and bottom-line results. However, CRA International continues to gain leverage through a healthy operating cash flow and a strong balance sheet with considerable cash resources that can help the company shore up its growth initiatives.

 

Going ahead, CRA International anticipates total headcount reduction of 47 positions, including 36 from consulting operations. These actions are expected to result in a restructuring charge of $4.9-$5.5 million and approximately $8.9 million in annualized savings in the second quarter of fiscal 2010.

 

While overall visibility remains misty, given the current volatile market trends, we believe that the company’s initiatives will help in generating positive results in the long term although the near-term outlook remains cautious.

 

On Tuesday, the shares of CRA International closed at $23.55, down 0.8%, on the Nasdaq Stock Exchange.