CRA International (CRAI) Noble Capital Consumer, Communications, Media, and Technology Emerging Growth Equity Conference summary

Business overview and strategy

• Focuses on legal/regulatory consulting (80% of revenue) and management consulting, with antitrust and competition economics as the largest practice, serving major global corporations and law firms.

• Maintains a highly selective hiring process, with only 2% of applicants accepted and over 40% of senior staff holding PhDs; voluntary turnover among top revenue generators is under 10% over five years.

• Consistent client base includes 82 of the Fortune 100 and 97 of the Am Law 100 law firms in the past two years, supporting stable results.

• Growth strategy balances organic expansion and inorganic talent acquisition, with 40%-45% of revenue growth from inorganic pursuits over the past dozen years.

• Investment thesis centers on maximizing long-term value per share, prioritizing reinvestment in talent and business opportunities, and returning capital to shareholders when reinvestment is not optimal.

Financial performance and capital allocation

• Achieved 8%-9% annual top-line growth and faster profit growth over the past 12 years, with every year since 2012 setting new revenue records.

• Despite market-driven volatility in 2023, delivered 6% revenue growth and returned over $40 million to shareholders through share repurchases and dividends.

• Operates with no debt, funding all investments and shareholder returns from internal cash flow; minimal CapEx focused on targeted office expansions.

• Share repurchases are prioritized due to perceived undervaluation, resulting in a 30%-35% reduction in share count over the past decade.

• Shareholder yield has consistently ranged from 6%-8%, with about half of adjusted cash flow from operations returned to shareholders.

Market trends, operational metrics, and outlook

• 2023 saw record leads but slower conversion to revenue-generating projects, causing quarter-to-quarter volatility; Q4 and Q1 2024 showed normalization in conversion rates.

• Consultant utilization ended 2023 at 70%, improved to 73% in Q4 and Q1 2024, with a target in the mid-70s to optimize performance.

• Headcount growth is selective, with expansion planned as utilization approaches targets; retention remains strong due to firm culture and opportunities.

• M&A activity remains sluggish, but overall performance is strong even in a challenging macroeconomic environment.

• Liquidity has improved over the past decade despite share count reduction, and capital allocation decisions are guided by intrinsic value models and market comparisons.