CRAI Beats on Q1 Earnings and Revs - Analyst Blog

Management services provider CRA International Inc. CRAI reported adjusted net income of $3.5 million or 35 cents per share versus $3.1 million or 31 cents per share in the year-earlier quarter, comfortably beating the Zacks Consensus Estimate of 28 cents. The increase in net income was driven by broad-based contributions from both Litigation/Regulatory and Management Consulting segments.

For the reported quarter, GAAP net income stood at $3.4 million or 34 cents per share versus $3.0 million or 29 cents per share in the year-ago quarter.

Quarter Highlights

Revenues for first-quarter 2014 increased to $76.2 million from $63.1 million in the prior-year quarter. Quarterly revenues beat the Zacks Consensus Estimate of $68 million as well.

Healthy year-over-year revenue growth and profitability were attributable to solid performances in both North America and Europe. Its business areas such as Antitrust and Competition Economics, Financial Economics, Life Sciences, Marakon and Transfer Pricing recorded revenue growth of over 20% each.

Company-wide utilization improved to 78% in first-quarter 2014 from 67% in the year-ago period.

Adjusted gross profit improved to $23.6 million from $20.4 million in the year-ago quarter. After excluding the effects of its subsidiary NeuCo's operations, adjusted selling, general and administrative expenses decreased to 21.6% of revenues from 24.0% in first-quarter 2013 due to sustained cost control initiatives.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) on a non-GAAP basis were $12.1 million in the reported quarter compared with $8.7 million in the year-ago quarter, driven by top line growth as well as a more streamlined cost structure.

Financial Position
    
At quarter end, cash and cash equivalents were $32.5 million compared with $51.3 million on Dec 28, 2013. The decrease in cash reserves was primarily due to $30 million bonus paid to employees. Long-term liabilities stood at $7.8 million at the end of the quarter.

The company recorded capital expenditures of around $0.4 million in the reported quarter, compared with $1.2 million in the prior-year period.

Share Repurchase

CRA International has a share repurchase program in place of up to $15.0 million, which it will finance with available cash and purchase of shares either in the open market or in privately negotiated transactions. During the quarter, the company repurchased around 96,000 shares of common stock worth approximately $2.1 million.

Outlook

CRA International is encouraged by the strong momentum in its operations. Going forward, the company expects an improved cost structure and broad-based profitable growth and attractive margins. However, macroeconomic pressures remain a cause of concern if they translate to a negative trend in client spending patterns. Through most of 2014, the company anticipates healthy lead flow activity and strong project conversions.

CRA International currently has a Zacks Rank #3 (Hold). Stocks that look promising and are worth a look in the industry include Bureau Veritas SA (BVRDF), Accenture plc ACN and Corporate Executive Board Co. CEB, each carrying a Zacks Rank #2 (Buy).