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.

• Growth is driven by both organic expansion and strategic talent acquisitions, with inorganic pursuits accounting for 40%-45% of revenue growth over the past decade.

• Investment thesis centers on maximizing long-term value per share, prioritizing reinvestment in talent and business growth when opportunities arise.

• Operates with no debt, funding all investments and shareholder returns from internal cash flow.

Financial performance and capital allocation

• Achieved consistent top-line growth of 8%-9% annually over the past 12 years, with record revenues in 2022, 2023, and Q1 2024.

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

• Shareholder yield has remained in the 6%-8% range, with a 30%-35% reduction in share count over the last decade.

• Capital allocation is balanced between reinvestment in the business and shareholder returns, with minimal CapEx and a focus on share repurchases when undervalued.

• Liquidity has improved over the past decade, even as share count declined, due to increased trading value and strong performance.

Market trends and operational outlook

• 2023 saw strong business leads but slower conversion to revenue projects, causing profit volatility; Q4 2023 and Q1 2024 saw a return to historical conversion rates.

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

• 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 performance is strong despite macroeconomic uncertainty; further improvement expected as conditions normalize.

• Leadership remains bullish on future growth, emphasizing value creation and focus on core strengths.