CRA International Inc (CRAI) 2023 Q3 法說會逐字稿

Good day, everyone, and welcome to Charles River Associates Third Quarter 2023 Conference Call. Please note that today's call is being recorded.

大家好，歡迎參加 Charles River Associates 2023 年第三季電話會議。請注意，今天的通話正在錄音。

The company's earnings release and prepared remarks from CRA's Chief Financial Officer are posted on the Investor Relations section of CRA's website at crai.com. With us today are CRA's President and Chief Executive Officer; Paul Maleh; Chief Financial Officer, Dan Mahoney; and Chief Corporate Development Officer, Chad Holmes.

該公司的盈利報告以及 CRA 首席財務官準備好的講話均發佈在 CRA 網站 crai.com 的投資者關係部分。今天與我們在一起的有 CRA 總裁兼執行長；保羅·馬雷；財務長丹·馬奧尼；和首席企業發展長查德霍姆斯。

And at this time, I would like to turn the call over to Mr. Mahoney for his opening remarks. Thank you. Dan, please go ahead.

現在，我想將電話轉交給馬奧尼先生，讓他致開幕詞。謝謝。丹，請繼續。

Thank you, John, and good morning, everyone.

謝謝約翰，大家早安。

Please note that the statements made during this conference call, including guidance on future revenue and non-GAAP EBITDA margin and any other statements concerning the future business, operating results or financial condition of CRA, including those statements using the terms expect, outlook or similar terms are forward-looking statements as defined in Section 21 of the Exchange Act. Information contained in these forward-looking statements is based on management's current expectations and is inherently uncertain. Actual performance and results may differ materially from those expressed or implied in these statements due to many important factors, including the level of demand for our services as a result of changes in general and industry-specific economic conditions. Additional information regarding these factors is included in today's release and in CRA's periodic reports, including our most recently filed annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC. CRA undertakes no obligation to update any forward-looking statements after the date of this call.

請注意，本次電話會議期間所做的聲明，包括關於未來收入和非公認會計原則EBITDA 利潤率的指導，以及有關CRA 未來業務、經營業績或財務狀況的任何其他聲明，包括使用預期、展望或類似術語的聲明術語是《交易法》第 21 條中定義的前瞻性陳述。這些前瞻性陳述中包含的資訊是基於管理階層目前的預期，本質上具有不確定性。由於許多重要因素，包括由於總體和行業特定經濟狀況的變化而導致對我們服務的需求水平，實際績效和結果可能與這些聲明中明示或暗示的結果存在重大差異。有關這些因素的更多資​​訊包含在今天的新聞稿和 CRA 的定期報告中，包括我們最近向 SEC 提交的 10-K 表年度報告和 10-Q 表季度報告。 CRA 不承擔在本次電話會議之後更新任何前瞻性陳述的義務。

Additionally, we will refer to some non-GAAP financial measures and certain measures presented on a constant currency basis on this call. Everyone is encouraged to refer to today's release and related CFO remarks for reconciliations of these non-GAAP financial measures to their GAAP comparable measures and descriptions of the calculation of EBITDA and measures presented on a constant currency basis.

此外，我們將在本次電話會議上參考一些非公認會計準則財務指標和以固定匯率計算的某些指標。我們鼓勵大家參考今天的新聞稿和相關財務長的講話，以了解這些非公認會計原則財務指標與其公認會計原則可比指標的對賬，以及 EBITDA 計算和按固定貨幣計算的指標的說明。

I will now turn it over to Paul for his report. Paul?

我現在將其交給保羅作報告。保羅？

Thanks, Dan, and good morning, everyone. Thank you for joining us today.

謝謝丹，大家早安。感謝您今天加入我們。

Against the backdrop of macroeconomic uncertainties, we achieved $147.6 million in revenue in the third quarter, a decline up 0.6% relative to the third quarter of fiscal 2022. The lack of revenue growth for the company was an unusual departure from the prior 2 quarters in which CRA established new quarterly highs for revenue as well as from CRA's long history of delivering revenue growth and profit expansion. In each of the past 5 fiscal years, we have established new record highs in revenue, while our profitability measured by non-GAAP EBITDA, net income and EPS increased at multiples of our revenue growth over the same period.

在宏觀經濟不確定的背景下，我們第三季度實現收入 1.476 億美元，較 2022 財年第三季度下降 0.6%。該公司收入增長乏力，與 2022 財年前兩個季度的情況不同尋常。CRA創下了季度收入新高，這也得益於CRA 長期以來實現收入成長和利潤擴張的歷史。在過去5個財年中，我們的收入均創下歷史新高，而以非公認會計準則EBITDA、淨利潤和每股收益衡量的盈利能力則以同期收入增長的倍數增長。

The strength of the business and its ability to generate strong cash flows has allowed CRA to invest in value-creating growth and to return substantial capital to shareholders. Our efforts have resulted in a balanced growth portfolio in terms of services offered, geography and contributions from organic and inorganic pursuits. Moreover, our competitive position remains strong, and we see many growth opportunities resident in the markets we serve. As such, we will continue to execute on our plan with the objective of maximizing CRA's long-term value per share.

業務實力及其產生強勁現金流的能力使 CRA 能夠投資於創造價值的成長並向股東返還大量資本。我們的努力在所提供的服務、地理位置以及有機和無機追求的貢獻方面實現了平衡的成長組合。此外，我們的競爭地位仍然強勁，我們看到我們所服務的市場存在許多成長機會。因此，我們將繼續執行我們的計劃，目標是最大化 CRA 的長期每股價值。

While our portfolio of services has demonstrated a history of exceptional performance, the third quarter of fiscal 2023 represented a speed bump on our journey. Utilization came in below historical levels at 66% due to 2 main factors: higher consultant head count and lower new project originations. I will discuss both factors in greater detail.

雖然我們的服務組合歷來表現出色，但 2023 財年第三季是我們旅程中的一個減速帶。由於兩個主要因素，利用率低於 66% 的歷史水準：顧問人數增加和新專案啟動減少。我將更詳細地討論這兩個因素。

Similar to our experience in the first and second quarters of fiscal 2023, we continue to experience surprisingly low attrition rates. As a consequence, our third quarter consultant head count surged 11.3% year-over-year. Our year-to-date attrition in 2023 is historically low, falling even below the rates we experienced in 2020 when COVID-related lockdowns and economic uncertainty significantly limited employee movements.

與我們在 2023 財年第一季和第二季的經驗類似，我們的員工流動率仍然低得驚人。因此，我們第三季的顧問人數年增 11.3%。 2023 年迄今為止，我們的員工流失率處於歷史低位，甚至低於 2020 年的水平，當時與新冠病毒相關的封鎖和經濟不確定性嚴重限制了員工流動。

We are pleased with the team we have assembled, but we remain focused on balancing the supply of labor against the demand for our services. By the end of the year, we forecast consulting head count to increase by mid to high single-digit percentage points year-over-year. Any further alignment, if necessary, will be realized through disciplined management of hiring and attrition.

我們對我們組建的團隊感到滿意，但我們仍然專注於平衡勞動力供應與服務需求。到今年年底，我們預計諮詢人員數量將比去年同期增加中高個位數百分點。如有必要，任何進一步的調整都將透過嚴格的招募和減員管理來實現。

On the demand side, our project lead flow has always served as a good barometer of future expansion in our business. For example, during the periods, from fiscal 2018 through fiscal 2022, project lead flow grew by approximately 10% per year, while revenue grew by approximately 9% per year. For the third quarter of fiscal 2023, our projected lead flow increased by 10% year-over-year. This marks the fourth consecutive quarter of double-digit growth in CRA's project lead flow.

在需求方面，我們的專案鉛流一直是我們未來業務擴張的良好晴雨表。例如，從 2018 財年到 2022 財年期間，專案鉛流量每年增長約 10%，而收入每年增長約 9%。對於 2023 財年第三季度，我們預計鉛流量將年增 10%。這標誌著 CRA 項目鉛流量連續第四個季度實現兩位數成長。

While the lead flow was strong during the third quarter, the conversion rates of those leads into new revenue-producing assignments continue to fall below expectations. As a result, during the third quarter, our new project originations declined 3% year-over-year. Based on an examination of lead composition, we see little evidence that we are losing projects more frequently to competitors. Instead, it appears clients are delaying the start of new projects. We believe that project lead flow remains a good indicator of strong demand for our services in the long run even if the conversion into projects is disrupted in the short term by economic uncertainty.

儘管第三季的潛在客戶流量強勁，但這些潛在客戶轉化為新的創收任務的轉換率繼續低於預期。因此，第三季我們的新專案啟動量年減了 3%。根據對主要成分的檢查，我們幾乎看不到任何證據表明我們更頻繁地將項目輸給競爭對手。相反，客戶似乎正在推遲新專案的啟動。我們相信，從長遠來看，專案主導流量仍然是對我們服務的強勁需求的良好指標，即使專案轉換在短期內因經濟不確定性而受到干擾。

Turning to results at the practice level. I was pleased that 6 of our 11 practices expanded year-over-year. And two of our largest practices, Forensic Services and Life Sciences, delivering double-digit revenue growth. We also generated double-digit revenue growth from our international operations. Our management consulting services grew 14.5% year-over-year, with our Energy and Life Sciences practices driving the expansion.

轉向實踐層面的結果。我很高興我們的 11 個業務中有 6 個業務逐年擴大。我們最大的兩個業務，法醫服務和生命科學，實現了兩位數的收入成長。我們的國際業務也實現了兩位數的收入成長。我們的管理諮詢服務年增 14.5%，能源和生命科學業務推動了這項擴張。

In the third quarter, CRA's Energy practice continued to support utilities, independent system operators, advanced energy technology companies and investors on engagements emerging from the energy transition. For example, CRA is working with Bermuda Electric Company (sic) [Bermuda Electric Light Company] on its integrated resource plan which will consider how the island could decarbonize away from fuel oil. For the utility Ameren Illinois, CRA recently completed an engagement to evaluate whether the company should trade and operate in a different wholesale market as a result of the energy transition. Finally, an advanced nuclear reactor developer, CRA assisted the company's leadership with the development of a commercialization strategy for North American power markets.

第三季度，CRA 的能源業務繼續支持公用事業公司、獨立系統營運商、先進能源技術公司和投資者參與能源轉型。例如，CRA 正在與百慕達電力公司 (原文如此) [百慕達電燈公司] 合作制定綜合資源計劃，該計劃將考慮該島如何擺脫燃油的脫碳。對於伊利諾伊州公用事業公司 Ameren，CRA 最近完成了一項評估，該公司是否應因能源轉型而在不同的批發市場進行貿易和營運。最後，先進核反應器開發商 CRA 協助公司領導層制定北美電力市場的商業化策略。

Our life sciences work and strategy and policy consulting provides a unique perspective on competition issues in the life sciences industry. For example, in the third quarter, the practice assisted with the successful defense of Amgen's acquisition of Verizon, a transaction that the FTC and some states had sued to prevent. With respect to strategy consulting, we continue to perform considerable work in the areas of oncology with more recent projects focused on the opportunity for antibody drug conjugates in the treatment of cancer.

我們的生命科學工作以及策略和政策諮詢為生命科學產業的競爭問題提供了獨特的視角。例如，在第三季度，這種做法幫助安進收購 Verizon 的交易獲得成功辯護，聯邦貿易委員會和一些州已起訴阻止交易。在策略諮詢方面，我們繼續在腫瘤學領域進行大量工作，最近的計畫重點在於抗體藥物偶聯物在癌症治療中的機會。

Revenue in the third quarter from CRA's legal and regulatory services declined 5% against the backdrop of mix trends within the legal market. Total case filings in the third quarter were up 15% year-over-year, while the number of court judgments declined 2% year-over-year.

在法律市場混合趨勢的背景下，第三季 CRA 法律和監管服務的收入下降了 5%。第三季立案總數較去年同期增加15%，而法院判決數量較去年同期下降2%。

Within our legal regulatory services, 4 practices grew during the quarter. Our Forensic Services practice led the way in year-over-year revenue growth and was joined by the Financial Economics, intellectual Property and Labor & Employment practices.

在我們的法律監管服務中，本季有 4 項業務有所成長。我們的法證服務業務在收入年增率方面處於領先地位，金融經濟學、智慧財產權以及勞工和就業業務也加入其中。

The Forensic Services practice continues to be called upon to leverage its deep digital and expert witness competencies to investigate various kinds of misconduct. For example, on behalf of one of the world's largest producers of electronic devices, we were retained to investigate and one of our experts expect to testify, regarding the alleged theft of confidential information by departing employees and related claims of spoliation of evidence. Driven in part by a resurgence in ransomware attacks, our forensic services practice is regularly called on to help investigate and remediate cyber incident response matters. In a number of cases, data was stolen not only from clients directly, but from third-party service providers such as file transfer services that had been marked as secure.

法證服務實踐繼續被要求利用其深厚的數字和專家證人能力來調查各種不當行為。例如，代表世界上最大的電子設備生產商之一，我們受邀對離職員工涉嫌竊取機密資訊以及相關證據被破壞的指控進行調查，我們的一位專家希望出庭作證。在勒索軟體攻擊死灰復燃的某種程度上，我們的法證服務實務經常被要求協助調查和補救網路事件回應問題。在許多情況下，資料不僅直接從客戶那裡被盜，而且還從第三方服務提供者被盜，例如被標記為安全的文件傳輸服務。

Our clients who found themselves in precisely this situation was a publicly traded leader in cloud-based human resources and payroll systems. They called on CRA to help swiftly determine which of their hundreds of corporate clients had their data compromised to identify which employees of those corporate clients needed to be notified and to assess whether the threat actor had left behind any back doors that could potentially be exploited in the future.

我們的客戶正是處於這種情況，他們是基於雲端的人力資源和薪資系統領域的上市領導者。他們呼籲 CRA 協助迅速確定數百家企業客戶中哪些企業客戶的資料遭到洩露，以確定需要通知這些企業客戶的哪些員工，並評估威脅行為者是否留下了任何可能被利用的後門。未來。

CRA's Intellectual Property practice continues to advise on multiple high-stakes litigation, arbitration and valuation matters covering a broad range of industries, including cloud computing, consumer electronics, electric vehicles, software, financial services and robotics. For example, a CRA expert provided economic analysis and testimony in a commercial arbitration between a major fast food chain and a provider of online ordering systems. The practice has also seen an increase in work related to international trade commissions, investigations in which complaints seek to block the unlawful importation of products found to infringe U.S. intellectual property rights.

CRA 的智慧財產權業務繼續就多項高風險訴訟、仲裁和估值事宜提供諮詢，涵蓋雲端運算、消費性電子產品、電動車、軟體、金融服務和機器人等眾多行業。例如，一位 CRA 專家在一家大型快餐連鎖店與一家線上訂購系統提供商之間的商業仲裁中提供了經濟分析和證詞。這種做法也增加了與國際貿易委員會相關的工作，這些調查旨在阻止非法進口被發現侵犯美國智慧財產權的產品。

CRA's Financial Economics practice is working with the social media platform to analyze fairness risk for a range of machine learning predictive models used in marketing third-party financial products to users. The analysis is assisting the client and its legal counsel and evaluating the risk of inadvertent discriminatory effects of the models. Similarly, CRA performed a fair lending analysis for a large bank across a range of consumer and small business portfolios. The analysis is directed at helping the client to understand and to monitor the risk of legal discrimination in the underwriting, pricing and servicing of loans and helping the client to develop its internal capabilities to monitor fair lending risk on an ongoing basis.

CRA 的金融經濟學實踐正在與社交媒體平台合作，分析用於向用戶行銷第三方金融產品的一系列機器學習預測模型的公平風險。該分析正在協助客戶及其法律顧問，並評估模型無意中產生歧視性影響的風險。同樣，CRA 對一家大型銀行的一系列消費者和小型企業投資組合進行了公平貸款分析。該分析旨在幫助客戶了解和監控貸款承銷、定價和服務方面的法律歧視風險，並幫助客戶發展其內部能力以持續監控公平貸款風險。

The Labor & Employment practice continues to be a leading resource for clients facing complex employment issues and seeking proactive employment advice. During the third quarter, CRA experts were engaged across industries, including finance, energy and leisure as a critical partner for clients entering mediation and early case assessments on multiple California state wage and hour claims, federal Fair Labor Standards Act clauses and Title VII discrimination claims. For example, the practice supported the expert testimony of Professor Jonathan Guryan in a matter involving alleged adverse treatment with criminal background checks. Additionally, CRA experts are regularly retained to assist companies in auditing pay practices to ensure regulatory compliance as well as internal pay equity, identifying potential payment corrections and pay equity adjustments.

勞工與就業業務仍然是面臨複雜就業問題並尋求積極就業建議的客戶的領先資源。第三季度，CRA 專家參與了金融、能源和休閒等多個行業，作為客戶就多個加州工資和工時索賠、聯邦公平勞動標準法條款和第七章歧視索賠進行調解和早期案件評估的重要合作夥伴。例如，該做法支持了喬納森·古里安教授在涉及涉嫌不良待遇和犯罪背景調查的案件中的專家證詞。此外，CRA 專家會定期聘請協助公司審計薪酬實踐，以確保監管合規性和內部薪酬公平，識別潛在的薪酬更正和薪酬公平調整。

Finally, I would like to discuss CRA's Antitrust & Competition Economics practice, which remains the premier provider of merger and antitrust-related consulting services. After posting record quarterly revenue in each of the past 2 quarters and 4 of the past 6 quarters since the start of fiscal 2022, the practice was down slightly during the third quarter relative to year-ago period. This performance was consistent with the headwinds affecting the broader M&A landscape. Worldwide M&A activity totaled $2 trillion during the first 9 months of 2023, a dramatic decrease of 27% compared to year-ago levels and the slowest first 9-month period for dealmaking since 2013. The third quarter of 2023 decreased 16% compared with the second quarter of 2023 and marked the slowest third quarter for worldwide dealmaking since 2012.

最後，我想談談 CRA 的反壟斷與競爭經濟學業務，它仍然是併購和反壟斷相關諮詢服務的主要提供者。自 2022 財年開始以來，過去 2 個季度和過去 6 個季度中有 4 個季度的季度收入均創歷史新高，但第三季度的業績較去年同期略有下降。這一表現與影響更廣泛併購格局的不利因素是一致的。 2023 年前 9 個月，全球併購活動總額達 2 兆美元，較去年同期大幅下降 27%，是 2013 年以來交易最慢的前 9 個月。2023 年第三季較去年同期下降 16% 2023年第二季是2012 年以來全球交易最慢的第三季。

Turning to our full year guidance. Through the first 3 quarters of fiscal 2023, on a constant currency basis relative to fiscal 2022, CRA generated total revenue of $463.8 million and non-GAAP EBITDA of $50 million, achieving a margin of 10.8%. These results incorporate at constant currency adjustments which contributed $1.4 million to revenue and $800,000 to EBITDA.

轉向我們的全年指導。 2023 財年前三個季度，相較於 2022 財年，以固定匯率計算，CRA 總營收為 4.638 億美元，非 GAAP EBITDA 為 5,000 萬美元，利潤率為 10.8%。這些結果以恆定匯率調整計算，為收入貢獻了 140 萬美元，為 EBITDA 貢獻了 80 萬美元。

Given our results to date and the lingering uncertainty across the broader market, we are reducing our revenue and profit guidance for the year. For full year fiscal 2023 on a constant currency basis relative to fiscal 2022, we expect revenue in the range of $610 million to $620 million and non-GAAP EBITDA margin in the range of 10.3% to 10.7%. This updated guidance takes into account the market's current expectations of future exchange rates for the U.S. dollar, which on a constant currency basis may shave $1.7 million from our reported revenue and approximately $300,000 from our reported EBITDA during the fourth quarter of fiscal 2023.

鑑於我們迄今為止的業績以及整個市場揮之不去的不確定性，我們正在降低今年的收入和利潤指引。相對於 2022 財年，以固定匯率計算，2023 財年全年營收預計在 6.1 億至 6.2 億美元之間，非 GAAP EBITDA 利潤率在 10.3% 至 10.7% 之間。這項更新後的指引考慮了市場目前對美元未來匯率的預期，在固定匯率基礎上，2023 財年第四季我們報告的營收可能會減少170 萬美元，報告的EBITDA 可能會減少約30 萬美元。

With that, I'll turn the call over to Chad and then to Dan for a few additional comments. Chad?

接下來，我會將電話轉給 Chad，然後轉給 Dan，徵求一些補充意見。查德?

Thanks, Paul. Hello, everyone. I want to update you on our capital deployment during the quarter.

謝謝，保羅。大家好。我想向您介紹本季資本部署的最新情況。

We concluded the quarter with $27.6 million of cash and $32 million of borrowings under our revolving credit facility, resulting in a net debt of $4.4 million. These figures reflect $48 million of payments during the quarter to reduce our borrowings under our revolving credit facility.

本季末，我們擁有 2,760 萬美元的現金和 3,200 萬美元的循環信貸額度借款，淨債務為 440 萬美元。這些數字反映了本季為減少循環信貸安排下的借款而支付的 4,800 萬美元。

The third quarter of 2023 also saw cash outlays for talent investments of $3.8 million. We spent $700,000 on capital expenditures, bringing our year-to-date total to $2 million.

2023 年第三季人才投資的現金支出為 380 萬美元。我們花了 70 萬美元的資本支出，使今年迄今的資本支出總額達到 200 萬美元。

Demonstrating our confidence in the quality of the business and reflecting our commitment to returning capital to shareholders, earlier today, we announced a 17% increase in our quarterly cash dividend from $0.36 to $0.42 per common share. This dividend will be payable on December 8, 2023, to shareholders of record as of November 28, 2023.

今天早些時候，我們宣布將季度現金股利從每股普通股 0.36 美元增加到 0.42 美元，這表明了我們對業務品質的信心並反映了我們向股東返還資本的承諾。該股將於2023年12月8日支付給截至2023年11月28日在冊的股東。

Year-to-date, we have returned $31.4 million to our shareholders, consisting of $7.8 million of dividend payments and $23.6 million for share repurchases. We currently have $19.3 million available under our share repurchase program.

今年迄今，我們已向股東返還 3,140 萬美元，其中包括 780 萬美元的股息支付和 2,360 萬美元的股票回購。目前，我們的股票回購計畫有 1,930 萬美元可用。

With that, I'll turn the call over to Dan for a few final comments. Dan?

至此，我會將電話轉給 Dan，徵求一些最後的意見。擔？

Thanks, Chad. As a reminder, more expansive commentary on our financial results is available on the Investor Relations section of our website under prepared CFO remarks.

謝謝，查德。謹此提醒，我們網站投資者關係部分的財務長評論下方提供了有關我們財務表現的更廣泛的評論。

Before we get to questions, let me provide a few additional metrics related to our performance in the third quarter of fiscal 2023. In terms of consultant head count, we ended the quarter at 1,014 consisting of 155 officers, 529 other senior staff and 330 junior staff. This represents an 11.3% increase compared with the 911 consultant head count reported at the end of Q3 fiscal 2022.

在回答問題之前，讓我提供一些與我們2023 財年第三季業績相關的其他指標。就顧問人數而言，本季結束時我們有1,014 名管理人員，其中包括155 名官員、529 名其他高級員工和330 名初級員工職員。與 2022 財年第三季末報告的 911 顧問人數相比，增加了 11.3%。

Non-GAAP selling, general and administrative expenses, excluding the 2.4% attributable to commissions to nonemployee experts, was 16.5% of revenue for the third quarter of fiscal 2023 compared with 15.8% a year ago. This quarter's ratio was primarily impacted by an increase in travel and entertainment expenses and higher other operating expenses.

非公認會計準則銷售、一般及管理費用（不包括非僱員專家佣金的 2.4%）佔 2023 財年第三季營收的 16.5%，而去年同期為 15.8%。本季的比率主要受到旅行和娛樂費用增加以及其他營運費用增加的影響。

The effective tax rate for the third quarter of fiscal 2023 on a non-GAAP basis was 18% compared with 25.9% on a non-GAAP basis for the third quarter of fiscal 2022. The current quarter tax rate was positively impacted by the release of a reserve in a foreign jurisdiction.

以非公認會計準則計算，2023 財年第三季的有效稅率為 18%，而以非公認會計準則計算，2022 財年第三季的有效稅率為 25.9%。外國司法管轄區的儲備金。

Turning to the balance sheet. DSO at the end of the third quarter was 114 days compared with 115 days at the end of the second quarter of fiscal 2023. DSO in the third quarter consisted of 72 days of billed and 42 days of unbilled.

轉向資產負債表。第三季末的 DSO 為 114 天，而 2023 財年第二季末的 DSO 為 115 天。第三季的 DSO 包括 72 天的計費天和 42 天的未計費天。

We concluded the third quarter of fiscal 2023 with $27.6 million in cash and cash equivalents and a further $163.5 million of available capacity on our line of credit for total liquidity of $191.1 million.

截至 2023 財年第三季度，我們的現金和現金等價物為 2,760 萬美元，信貸額度還有 1.635 億美元的可用容量，流動性總額為 1.911 億美元。

That concludes our prepared remarks. Before we turn the call over for questions, Paul has one final announcement. Paul?

我們準備好的演講到此結束。在我們轉交提問之前，保羅有一個最後的聲明。保羅？

Thanks, Dan. Based on feedback from investors over the past year and questions regarding the markets in which we operate, we will host an Investor Day on Wednesday, November 29, at the Fairmont Copley Plaza Hotel in Boston to discuss our business strategy and the industry trends in greater depth. We will have a number of colleagues joining us to highlight and provide more details on our practices, including Antitrust & Competition Economics, Forensic Services and Life Sciences.

謝謝，丹。根據過去一年投資者的反饋以及有關我們經營所在市場的問題，我們將於11 月29 日星期三在波士頓費爾蒙科普利廣場酒店舉辦投資者日活動，討論我們的業務戰略和更大範圍的行業趨勢。深度。我們將有許多同事加入我們，重點介紹並提供有關我們實踐的更多細節，包括反壟斷與競爭經濟學、法證服務和生命科學。

We will provide registration and webcast information soon and look forward to seeing many of you at this event.

我們很快就會提供註冊和網路廣播訊息，並期待在本次活動中見到你們。

John, we would now like to open up the call for questions.

約翰，我們現在開始提問。

(Operator Instructions) And the first question comes from the line of Andrew Nicholas with William Blair.

（操作員說明）第一個問題來自安德魯·尼古拉斯和威廉·布萊爾的線路。

I wanted to start with utilization, a bit of an aberration from your historical trends and down sequentially. I was hoping you could unpack that a little bit. I would imagine you have some new grads that come in, pressuring that utilization. You talked about some lower conversion rates, higher attrition. Is there any way, whether it's kind of qualitatively or quantitatively, to break that down a bit. And then relatedly, if you have any thoughts on the expected time line for recovery to kind of the historical rates that you've shown in the low to mid-70s.

我想從利用率開始，與歷史趨勢有一點偏差，然後依次下降。我希望你能稍微解開它。我想你們會有一些新畢業生進來，對利用率施加壓力。您談到了較低的轉換率和較高的流失率。有沒有什麼方法，無論是定性或定量，可以稍微分解。與此相關的是，如果您對恢復到 70 年代低至中期的歷史利率的預期時間線有任何想法。

Sure. First of all, thanks for the question, Andrew. Throughout the year, as we've commented, our attrition rates have been at historically low levels. Because of that, we have been slowly increasing our consulting head count beyond what we initially expected at the beginning of the year. We have some excess capacity on the consulting side of the house with or without the revenue slowdown that we experienced in Q3. But it is the type of excess capacity that we believe through normal operating procedures at CRA we could get on top of, say, sometime by the end of Q2 of fiscal 2024. So that will take care of itself.

當然。首先，謝謝你的提問，安德魯。正如我們所評論的，我們的員工流動率全年一直處於歷史低點。因此，我們一直在緩慢增加諮詢人員數量，超出了我們年初的最初預期。無論是否經歷了第三季的營收放緩，我們在諮詢方面都存在一些過剩產能。但我們相信，透過 CRA 的正常運作程序，我們可以在 2024 財年第二季末的某個時候解決這種產能過剩問題。因此，這種情況會自行解決。

Clearly, if revenue materializes at a faster rate, that all moves up a bit, which we will all welcome. But right now, given the head-fake that I've had during Q1 of '23, Q2 of '23 and now into the third quarter, I'm a little uncertain on how quickly normal revenue flows will materialize. So I'm probably looking towards the middle of 2024 to get something I feel a bit more comfortable with, Andrew.

顯然，如果收入以更快的速度實現，那麼一切都會有所上升，這是我們都歡迎的。但現在，考慮到我在 23 年第一季、23 年第二季以及現在進入第三季的經歷，我有點不確定正常收入流將多快實現。所以我可能希望在 2024 年中期得到一些讓我感覺更舒服的東西，Andrew。

No, that's super helpful and understand that a lot of these things are difficult to predict that far out. I guess for my follow-up question, really strong growth internationally, which would obviously imply a little bit slower growth domestically. I'm just kind of curious, is it just lumpiness that would describe the differences by region? Or is there anything going on in any of these end markets that would lead you to believe that international will continue to outperform U.S. or vice versa in the coming months and quarters?

不，這非常有幫助，而且了解很多事情很難預測那麼遠。我想對於我的後續問題，國際成長確實強勁，這顯然意味著國內成長會稍微放緩。我只是有點好奇，是否只是用塊狀來描述不同地區的差異？或者，這些終端市場中是否發生了任何事情，讓您相信在未來幾個月和幾個季度，國際市場的表現將繼續優於美國市場，反之亦然？

No, I don't think there's anything overriding that I would say international should outperform North American operations going forward. As we began the third quarter of 2023, July was a really strong quarter. We were up about 6% company-wide. August gave us a bit of a head-fake. It was a very soft quarter in which we saw existing matters slow or have delays in the work. We saw new project opportunities not convert to new revenue-generating projects. In the month of August, we saw an improvement in September but not enough to offset that trough that we experienced in August. That slowness or that general trend existed across our portfolio, both across services and geographically.

不，我不認為有什麼重要的事情可以證明國際業務未來的表現應該優於北美業務。當 2023 年第三季開始時，7 月是一個非常強勁的季度。我們全公司的股價上漲了約 6%。奧古斯特給了我們一點假象。這是一個非常疲軟的季度，我們發現現有事務進展緩慢或工作延誤。我們看到新的專案機會並未轉化為新的創收專案。在八月份，我們看到了九月份的改善，但不足以抵消我們在八月經歷的低潮。這種緩慢或整體趨勢存在於我們的投資組合中，無論是在服務領域還是在地理位置上。

And maybe that leads me to one last question, if I could sneak it in. Is your expectation for fourth quarter that it's more like September? Or is there some expectation of improvement or for it to look more like August? I'm kind of trying to understand where we sit in terms of conservatism and guidance.

也許這讓我想到最後一個問題，我是否可以偷偷地問一下。您對第四季的預期是否更像是九月？或者是否有一些改進的預期，或者看起來更像八月？我試著去了解我們在保守主義和指導方面的立場。

Yes. Given how accurate my expectations have been of late, no, we are expecting more of a September-looking month going forward than in August month. August, quite frankly, over the past decade, I haven't seen many periods that encompass everything we saw in the month of August. So I think that's an aberration, hopefully not famous last words. And so far, we were pleased with the improvement in the month of September, and we're pleased with the way we began the fourth quarter.

是的。考慮到我最近的預期有多準確，不，我們對未來 9 月的預期比 8 月的預期要多。坦白說，在過去的十年中，我還沒有看到很多涵蓋我們在八月所看到的一切的時期。所以我認為這是一種失常，希望不是著名的遺言。到目前為止，我們對 9 月的改善感到滿意，我們對第四季度開始的方式感到滿意。

And the next question comes from the line of Kevin Steinke with Barrington Research.

下一個問題來自 Barrington Research 的 Kevin Steinke。

I Wanted to just start off by digging a little bit more into what changed since your last call that led to the changed revenue and margin outlook for the full year. It sounds like perhaps the conversion rate into new projects was less than you might have expected and attrition was lower than that you expected. Are those the 2 main contributing factors to the change in the outlook?

我想先深入了解自您上次通話以來發生的變化導致全年收入和利潤前景發生變化。聽起來也許新專案的轉換率低於您的預期，且人員流失也低於您的預期。這些是導致前景變化的兩個主要因素嗎？

The attrition, we saw it coming, right? We've been talking about low attrition rates throughout fiscal 2023. So the fact that they didn't reverse-course in the third quarter was not as much of a surprise but still resulted in excess consultant capacity. What was generally a surprise is the drop of our conversion of new business opportunities to revenue-generating projects. If I compare the conversion rates that we were enjoying throughout the history of CRA, we were down about 20% on those conversions on that. So we weren't getting any new projects coming in. New projects are essential, particularly to try to get our new consulting staff busy on a more expeditious manner. So it was the conversion that I think led the disappointing results.

我們預見了人員流失，對嗎？我們一直在談論整個 2023 財年的低流失率。因此，他們在第三季度沒有扭轉局面這一事實並不令人意外，但仍然導致顧問能力過剩。普遍令人驚訝的是，我們將新商機轉化為創收項目的數量有所下降。如果我比較 CRA 歷史上我們所享有的轉換率，我們的轉換率下降了約 20%。所以我們沒有收到任何新項目。新項目是必不可少的，特別是為了讓我們的新諮詢人員以更迅速的方式忙碌。所以我認為正是這種轉變導致了令人失望的結果。

Okay. Understood. And your comments about August and September, that implies then that the conversion rate has picked up a bit in September. Is that correct?

好的。明白了。您對 8 月和 9 月的評論，這意味著 9 月的轉換率有所回升。那是對的嗎？

The conversion rate into September and the first few weeks we have in October has improved from what we observed in August. But I think it's important to also note is still below, say, our experiences over the last decade, excluding 2023. They are just operating at a lower level. And with no clear explanation from our part as to why that's happening, we are not entering into new markets. We are not trying to introduce ourselves to new client bases. They are the same services that we have always offered. And for the most part, with the same people.

9 月和 10 月前幾週的轉換率比我們在 8 月觀察到的有所提高。但我認為還需要注意的是，仍然低於我們過去十年（不包括 2023 年）的經驗。它們只是在較低水平上運行。由於我們沒有明確解釋為什麼會發生這種情況，因此我們不會進入新市場。我們並不是想向新的客戶群介​​紹自己。它們與我們一直提供的服務相同。而且大多數情況下，都是同一個人。

So the kind of drop in the conversion rate is frustrating, but we're riding that storm. And even with that kind of volatility, 9 months into this year, we're still up 4% on revenue. The profitability levels are near our historic highs that we achieved in 2021 and 2022. So could be worse, but by all means, Kevin, we're a bit frustrated with where the revenue came out, particularly with the head-fake that we experienced in the month of August.

因此，轉換率的下降令人沮喪，但我們正在經歷這場風暴。即使有這種波動，今年 9 個月以來，我們的收入仍然成長了 4%。獲利水準接近我們在 2021 年和 2022 年實現的歷史高點。所以可能會更糟，但無論如何，凱文，我們對收入的結果有點沮喪，特別是我們經歷過的造假在八月份。

Okay. That's fair. So that's interesting because that kind of leads into my next question. You mentioned that there's no real clear explanation for the slowdown in conversion rates. I think you might have mentioned that it's fairly broad-based, across practices and geographies. Is that correct? And then you haven't been able to tie it to anything like perhaps M&A transactions being delayed? Or I mean maybe that's a part of it but no clear trends or themes behind the conversion rate slowdown, I guess.

好的。這還算公平。這很有趣，因為這引出了我的下一個問題。您提到對於轉換率下降沒有真正明確的解釋。我想您可能已經提到，它的基礎相當廣泛，跨越實踐和地理。那是對的嗎？然後您無法將其與併購交易延遲之類的事情聯繫起來？或者我的意思是，也許這是其中的一部分，但我猜轉換率放緩背後沒有明確的趨勢或主題。

It is broad-based. The other thing we can note that I made reference to, to some of my prepared remarks, the asset is intact, meaning there's been no departure of any kind of key revenue generators at CRA that would lead to the kind of quarter we just experienced. With respect to the impact of M&A activity, we get calls on several M&A opportunities. We clear conflicts, and then we do not see the case proceed, period. By that, I mean, either we don't get a call back on it after we clear the conflict or we do not see any kind of announcement of the deal in the broader press for that. So clearly, the slowdown in M&A is one part of it, but I think it goes beyond that headwind.

它基礎廣泛。我們可以注意到的另一件事是，我提到了我準備好的一些言論，該資產完好無損，這意味著CRA 沒有任何類型的主要收入來源的離開，而不會導致我們剛剛經歷的那種季度。關於併購活動的影響，我們接到了一些關於併購機會的電話。我們清除了衝突，然後我們就看不到案件的進展，就這樣。我的意思是，要么我們在解決衝突後沒有收到回電，要么我們沒有在更廣泛的媒體上看到任何形式的交易公告。顯然，併購放緩是其中的一部分，但我認為它超出了這一阻力。

Okay. That's helpful commentary. But obviously, as you mentioned there, the asset is intact, really, you're not losing market share. You still perform quite well on a relative basis year-to-date. And so that's all just an indication of the business is in good shape for the long term. I think that's evidenced by the dividend increase you announced. So maybe just talk about that dividend increase and how it perhaps relates to your long-term confidence in the business and the long-term demand outlook.

好的。這是很有幫助的評論。但顯然，正如您所提到的，資產完好無損，實際上，您並沒有失去市場份額。年初至今，相對而言，你的表現仍然相當不錯。因此，這只是表明該業務的長期狀況良好。我認為您宣布的股息增加就證明了這一點。因此，也許只是談論股息的增加，以及它與您對業務的長期信心和長期需求前景有何關係。

The dividend increase, I think, aligns with our commitment to return substantial capital back to our shareholders. The dominant form of those redistributions of capital to our shareholders have been through share repurchases, which have accounted for roughly 75% to 80% of total distributions over the last several years. So the dividend, we're not significantly changing those proportions with the increase on the dividend. Clearly, it talks about our confidence in the overall stability and viability of the asset going forward. But I don't believe this signals a shift in the distribution of shares between share repurchases and dividend payments.

我認為，股利的增加符合我們向股東返還大量資本的承諾。向股東進行資本再分配的主要形式是透過股票回購，在過去幾年中，股票回購約佔總分配的 75% 至 80%。因此，對於股息，我們不會隨著股息的增加而顯著改變這些比例。顯然，它表達了我們對資產未來整體穩定性和生存能力的信心。但我不認為這標誌著股票回購和股利支付之間的股票分配發生了變化。

The next question comes from the line of Marc Riddick with Sidoti.

下一個問題來自馬克·里迪克和西多蒂的台詞。

I wanted to sort of first, I guess, maybe go over, are there any sort of large projects or anything that we should be thinking about that maybe ended during the quarter? Or was there anything lumpy as far as major projects to sort of think about it from a timing perspective?

我想，我首先想問一下，是否有任何大型專案或任何我們應該考慮的可能在本季結束的專案？或者說，就重大專案而言，是否存在需要從時間角度考慮的問題？

We didn't have any major projects and there was the U.S. approval of the Microsoft tech division matter on that. So that's the only thing of note. We had a couple of larger projects go on a temporary pencils-down request on those matters. We have since restarted the consulting efforts on those cases. So those did improve to be permanent on a go-forward basis. We got the request pencils-down on a couple of cases in the month of August, but our consulting teams are back at it.

我們沒有任何重大項目，美國也批准了微軟技術部門的相關事宜。所以這是唯一值得注意的事情。我們有幾個較大的項目正在對這些問題提出臨時的書面請求。此後，我們重新啟動了這些案件的諮詢工作。因此，這些確實在未來的基礎上得到了改善，成為永久性的。我們在八月收到了幾個案例的請求，但我們的諮詢團隊已經重新開始處理。

Okay. And I just wonder if you could share some thoughts as to maybe what you're seeing on things that are sort of -- we talked a bit on the M&A side of things. I just wanted you talk a little bit about maybe what you're seeing as far as things or demand that's driven from sort of regulatory moves and whether or not any sort of government delays or anything like that you think are having an effect on what you're seeing?

好的。我只是想知道你是否可以分享一些你所看到的想法——我們在併購方面談了一些。我只是想讓你談談你所看到的事情或需求，這些事情或需求是由某種監管舉措驅動的，以及你認為任何類型的政府延誤或類似的事情是否會對你的事情產生影響。看到了嗎？

Yes, there clearly have been an impact from government delays, if we did have a government shutdown in terms of the amount of surplus capital they have to run their important cases post shutdown. We haven't had to deal with that as of yet. But the overall regulatory temperature, I don't think has cooled at all both here in the States and abroad. It's the same type of market opportunities that we've been enjoying for the last couple of years right now.

是的，政府的延誤顯然會產生影響，如果我們確實政府關門，那麼他們必須在關門後處理重要案件的剩餘資本數量。到目前為止我們還沒有必要處理這個問題。但我認為美國和國外的整體監管溫度根本沒有降溫。這與我們過去幾年一直享受的市場機會相同。

Great. And then I would imagine that the long-term view of things such as AI-driven regulation and the like haven't changed. But as far as this maybe just some of the things that you're seeing now versus maybe earlier in the year, are you seeing anything different than necessarily what you're expecting? Or how maybe we should be thinking about the pace of those types of projects?

偉大的。然後我想，對人工智慧驅動的監管等事物的長期看法並沒有改變。但就這可能只是你現在看到的一些事情與今年早些時候的情況相比，你看到的東西是否與你預期的有所不同？或者我們應該如何考慮這些類型項目的節奏？

No, I wouldn't say our view has changed in terms of what the impact of technology or AI specifically will have on our business. There's been lots of technological changes that we have dealt with at CRA for many years now. Many of them have resulted in improved efficiencies and higher-quality services delivered to clients. And we're excited about the opportunity in that maybe this provides another step forward for CRA across those spectrum. Our main concern with respect to this technology, or AI specifically, is maintaining the confidentiality and privacy of the information we are allowed to work with.

不，我不會說我們對於科技或人工智慧對我們業務的具體影響的看法已經改變。多年來，我們在 CRA 經歷了許多技術變革。其中許多都提高了效率並為客戶提供了更高品質的服務。我們對這個機會感到很興奮，因為也許這為 CRA 在這些領域邁出了又一步。我們對這項技術（特別是人工智慧）的主要關注點是維護我們可以使用的資訊的機密性和隱私性。

Great. And then I was wondering if you could talk a little bit about the pricing environment. I mean it certainly seems as though nothing has gotten any less expensive. But I was wondering if you could talk a little bit about maybe the pricing dynamics that you're seeing and what you were expecting maybe going into next year.

偉大的。然後我想知道您是否可以談談定價環境。我的意思是，看起來似乎沒有什麼東西變得更便宜了。但我想知道您是否可以談談您所看到的定價動態以及您對明年的預期。

Sure. We're not seeing any kind of shift on the pricing environment. The rate increases that we had put in effect at the beginning of '23 are sticking in large part. The long-run projects are also being adopted on new projects. The write-off and reserves that we incur on a quarter-to-quarter basis, those haven't shifted. So that's all good news. Clients are being much more active in their management of their budgets. So we're having to do a better job, increasing information flow, making sure our clients are not surprised and, most importantly, continuing to deliver the exceptional quality that clients have come to expect.

當然。我們沒有看到定價環境有任何變化。我們在 23 年初實施的利率上調在很大程度上得到了維持。長期項目也正在被新項目採用。我們按季度進行的沖銷和準備金並未發生變化。這都是好消息。客戶在預算管理方面變得更加積極主動。因此，我們必須做得更好，增加資訊流，確保我們的客戶不會感到驚訝，最重要的是，繼續提供客戶所期望的卓越品質。

And one more question, if I may. Is there sort of an expectation that we're just maybe in a bit of a period of elongated sales cycles? Or would that be client caution that you're seeing? Or are you expecting sort of a reversion to the mean there going forward?

如果可以的話，還有一個問題。是否有一種預期，我們可能正處於銷售週期延長的時期？或者您看到的是客戶警告？或者您預期未來會回歸均值？

Yes, I'm hesitating because part of the reason that we had the Q3 results that we did, part of the reason of the lower guidance is because there's just more uncertainty right now. I thought Q2 was a step forward back towards the mean that CRA has grown accustomed to, then all of a sudden, I have Q3, which is a downward shock on that volatility trend. So I am a bit uncertain. I don't believe there's anything broader in our marketplace to suggest that we are entering a new mean. But exactly when we return to sort of business as usual is a bit uncertain right now. So we're just trying to be very aggressive in our pursuit of opportunities, in the way we deliver the engagements and the rest should take care of itself with the passage of time.

是的，我很猶豫，因為我們獲得第三季業績的部分原因是，指引較低的部分原因是因為現在有更多的不確定性。我認為第二季度是朝著 CRA 已經習慣的平均值向前邁出的一步，然後突然之間，我有了第三季度，這是對波動性趨勢的向下衝擊。所以我有點不確定。我不認為我們的市場有任何更廣泛的東西表明我們正在進入一種新的方式。但我們具體什麼時候恢復正常，目前還不確定。因此，我們只是努力以非常積極的方式去追求機會，以我們交付約定的方式，其餘的應該隨著時間的推移而自然而然地發生。

At this time, we have reached the end of the Q&A session. And I will now turn the conference back over to Mr. Maleh for any closing or additional remarks.

此時，我們的問答環節已經結束了。現在，我將把會議轉回給馬雷先生，讓他發表閉幕詞或補充演講。

Again, thanks to everyone for joining us today. We appreciate your time and interest in CRA. We look forward to seeing you at our upcoming Investor Day and providing an update on our progress on our fourth quarter call early next year. With that, that concludes today's call. Thank you, everybody.

再次感謝大家今天加入我們。感謝您花時間關注 CRA。我們期待在即將到來的投資者日見到您，並在明年初的第四季度電話會議上提供最新進展。今天的電話會議到此結束。謝謝大家。

That concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。