EX-99.2 3 craiq1-20258xkexx992xcfore.htm EX-99.2

Exhibit 99.2

CHARLES RIVER ASSOCIATES (CRA)

FIRST QUARTER FISCAL YEAR 2025

EARNINGS ANNOUNCEMENT

PREPARED CFO REMARKS

CRA is providing these prepared remarks by interim CFO Chad Holmes in combination with its press release. These remarks are offered to provide the investment community with additional information on CRA’s financial results prior to the start of the conference call.

As previously announced, the conference call will be held May 1, 2025 at 10:00 a.m. ET. These prepared remarks will not be read on the call.

Q1 Fiscal 2025 Summary (Quarter ended March 29, 2025)

•Revenue: $181.9 million

•Net income: $18.0 million, or 9.9% of revenue; non-GAAP net income: $15.3 million, or 8.4% of revenue

•Net income per diluted share: $2.62; non-GAAP net income per diluted share: $2.22

•Operating margin: 14.0%; non-GAAP operating margin: 11.8%

•Non-GAAP EBITDA: $24.8 million, or 13.6% of revenue

•Effective tax rate: 27.0%; non-GAAP effective tax rate 27.2%

•Utilization: 76%

•Consultant headcount at the end of Q1 of fiscal 2025: 947, which consists of 156 officers, 566 other senior staff and 225 junior staff

•Cash and cash equivalents: $25.6 million at March 29, 2025

•Revolving credit facility borrowing capacity: $161.1 million at March 29, 2025

Revenue

For Q1 of fiscal 2025, revenue was $181.9 million, compared with revenue of $171.8 million for Q1 of fiscal 2024.

Headcount

The following table outlines CRA’s consultant headcount at the end of the stated quarters:

						Q1 2025						Q4 2024						Q3 2024						Q2 2024						Q1 2024
Officers						156						151						156						157						158
Other Senior Staff						566						552						560						531						544
Junior Staff						225						243						262						280						295
Total						947						946						978						968						997

Utilization

For Q1 of fiscal 2025, companywide utilization was 76%, compared with 73% for Q1 of fiscal 2024.

Client Reimbursables

For Q1 of fiscal 2025, client reimbursables were $16.5 million, or 9.1% of revenue, compared with $17.1 million, or 9.9% of revenue, for Q1 of fiscal 2024.

Selling, General and Administrative (SG&A) Expenses

For Q1 of fiscal 2025, SG&A expenses were $32.5 million, or 17.9% of revenue, compared with $30.5 million, or 17.8% of revenue, for Q1 of fiscal 2024. Commissions to non-employee experts are included in SG&A expenses. These commissions represented

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approximately 2.0% of revenue for Q1 of fiscal 2025 and 2.1% for Q1 of fiscal 2024, respectively. Excluding these commissions, SG&A expenses were 15.9% of revenue for Q1 of fiscal 2025, compared with 15.6% in Q1 of fiscal 2024.

						Fiscal Quarter Ended
$ in 000’s						March 29, 2025						As a % of Revenue						March 30, 2024						As a % of Revenue
SG&A expenses						$	32,538					17.9		%				$	30,499					17.8		%
Less: commissions to non-employee experts						3,681						2.0		%				3,671						2.1		%
SG&A expenses excluding commissions						$	28,857					15.9		%				$	26,828					15.6		%

Depreciation & Amortization

For Q1 of fiscal 2025, depreciation and amortization expenses amounted to $3.4 million, or 1.9% of revenue, compared with $2.8 million, or 1.6% of revenue, for Q1 of fiscal 2024.

Forgivable Loan Amortization

For Q1 of fiscal 2025, forgivable loan amortization was $3.7 million, or 2.0% of revenue, compared with $8.7 million, or 5.1% of revenue, for Q1 of fiscal 2024.

Share-Based Compensation Expense

For Q1 of fiscal 2025, share-based compensation expense was approximately $1.4 million, or 0.8% of revenue, compared with $1.0 million, or 0.6% of revenue, for Q1 of fiscal 2024.

Operating Income

For Q1 of fiscal 2025, operating income was $25.5 million, or 14.0% of revenue, compared with operating income of $19.6 million, or 11.4% of revenue, for Q1 of fiscal 2024. Non-GAAP operating income was $21.4 million, or 11.8% of revenue, for Q1 of fiscal 2025, compared with $19.6 million, or 11.4% of revenue, for Q1 of fiscal 2024.

						Fiscal Quarter Ended
$ in 000’s						March 29, 2025						As a % of Revenue						March 30, 2024						As a % of Revenue
Income from operations						$	25,548					14.0		%				$	19,618					11.4		%
Adjustments needed to reconcile GAAP income from operations to non-GAAP income from operations:
Restructuring and other (1)						(4,170)						(2.3)		%				—						—		%
Non-GAAP income from operations						$	21,378					11.8		%				$	19,618					11.4		%
(1) Includes $1.2 million of restructuring charges, net of the reversal of $5.4 million of non-cash charges associated with a previously recorded performance award.

Interest Income (Expense), net

For Q1 of fiscal 2025, net interest expense was $0.4 million, or 0.2% of revenue, compared with net interest expense of $0.5 million, or 0.3% of revenue, for Q1 of fiscal 2024.

Foreign Currency Gains (Losses), net

For Q1 of fiscal 2025, net foreign currency losses were $0.5 million, or 0.3% of revenue, compared with net foreign currency losses of $0.1 million, or 0.1% of revenue, for Q1 of fiscal 2024.

Foreign currency gains (losses), net, is comprised of net gains and losses on foreign denominated transactions and the revaluation of working capital balances.

Income Taxes

The following table outlines CRA’s income tax provision recorded and the resulting effective tax rates:

						GAAP												Non-GAAP
						Fiscal Quarter Ended												Fiscal Quarter Ended
$ in 000’s						March 29, 2025						March 30, 2024						March 29, 2025						March 30, 2024
Tax Provision						$	6,643					$	5,321					$	5,696					$	5,356
Effective Tax Rate						27.0		%				28.0		%				27.2		%				28.0		%

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						Fiscal Quarter Ended
$ in 000’s						March 29, 2025						As a % of Revenue						March 30, 2024						As a % of Revenue
Income before provision for income taxes						$	24,645					13.6		%				$	19,012					11.1		%
Adjustments needed to reconcile GAAP income before provision for income taxes to non-GAAP income before provision for income taxes
Restructuring and other (1)						(4,170)						(2.3)		%				—						—		%
Foreign currency (gains) losses, net						474						0.3		%				142						0.1		%
Non-GAAP income before provision for income taxes						$	20,949					11.5		%				$	19,154					11.1		%
GAAP provision for income taxes						$	6,643											$	5,321
Tax effect on non-GAAP adjustments						(947)												35
Non-GAAP provision for income taxes						$	5,696											$	5,356
(1) Includes $1.2 million of restructuring charges, net of the reversal of $5.4 million of non-cash charges associated with a previously recorded performance award.

Net Income

For Q1 of fiscal 2025, net income was $18.0 million, or 9.9% of revenue, or $2.62 per diluted share, compared with net income of $13.7 million, or 8.0% of revenue, or $1.95 per diluted share, for Q1 of fiscal 2024. Non-GAAP net income for Q1 of fiscal 2025 was $15.3 million, or 8.4% of revenue, or $2.22 per diluted share, compared with $13.8 million, or 8.0% of revenue, or $1.96 per diluted share, for Q1 of fiscal 2024.

Non-GAAP EBITDA

For Q1 of fiscal 2025, non-GAAP EBITDA was $24.8 million, or 13.6% of revenue, compared with $22.4 million, or 13.0% of revenue, for Q1 of fiscal 2024.

Constant Currency Basis

For Q1 of fiscal 2025, revenue was $181.9 million, and net income was $18.0 million, or 9.9% of revenue, or $2.62 per diluted share. On a constant currency basis relative to Q1 of fiscal 2024, Q1 of fiscal 2025 revenue would have been higher by $0.4 million to $182.3 million, GAAP net income would have been lower by $0.1 million to $17.9 million, or 9.8% of revenue, and earnings per diluted share would have decreased by $0.01 to $2.61 per diluted share.

For Q1 of fiscal 2025, revenue was $181.9 million, and non-GAAP net income was $15.3 million, or 8.4% of revenue, or $2.22 per diluted share. On a constant currency basis relative to Q1 of fiscal 2024, Q1 of fiscal 2025 revenue would have been higher by $0.4 million to $182.3 million, non-GAAP net income would have been lower by $0.1 million at $15.2 million, or 8.3% of revenue, non-GAAP earnings per diluted share would have decreased by $0.01 to $2.21 per diluted share, and non-GAAP EBITDA would have been lower by $0.1 million to $24.7 million, or 13.5% of revenue.

A description of the process for calculating the measures presented on a constant currency basis is contained under the heading “Non-GAAP Financial Measures” below.

Key Balance Sheet Metrics

Billed and unbilled receivables at March 29, 2025 were $223.3 million, compared with $209.3 million at March 30, 2024. Current liabilities at March 29, 2025 were $270.5 million, compared with $236.8 million at March 30, 2024.

Total Days Sales Outstanding, or DSO, for Q1 of fiscal 2025 was 107 days, consisting of 65 days of billed and 42 days of unbilled. This compares with 106 days reported for Q1 of fiscal 2024, consisting of 69 days of billed and 37 days of unbilled.

Cash and Cash Flow

Cash and cash equivalents was $25.6 million at March 29, 2025, compared with $37.1 million at March 30, 2024.

Net cash used in operating activities for Q1 of fiscal 2025 was $80.0 million, compared with net cash used in operating activities of $63.1 million for Q1 of fiscal 2024.

As of March 29, 2025, outstanding borrowings under CRA’s revolving credit facility amounted to $85.0 million. At March 30, 2024, outstanding borrowings under CRA’s revolving credit facility amounted to $70.0 million.

Capital expenditures totaled $1.0 million for Q1 of fiscal 2025, compared with $0.7 million for Q1 of fiscal 2024.

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CRA did not repurchase any shares under the share repurchase program during Q1 of fiscal 2025. CRA repurchased approximately 66,000 shares of common stock during Q1 of fiscal 2024 for $9.2 million,

A quarterly cash dividend of $0.49 per common share, for total dividends and dividend equivalents of $3.5 million, was paid in Q1 of fiscal 2025, compared with a quarterly cash dividend of $0.42 per common share, for total dividends and dividend equivalents of $3.1 million paid in Q1 of fiscal 2024.

GAAP Condensed Consolidated Statement of Cash Flows

CRA has derived the condensed consolidated statement of cash flow data for the years ended December 28, 2024 and December 30, 2023 from its audited financial statements appearing on Form 10-K for the fiscal year ended December 28, 2024, filed with the Securities and Exchange Commission on February 20, 2025. The condensed consolidated statement of cash flow data for the second and third quarters of fiscal year 2023 and the first, second, and third quarters of fiscal year 2024 have been derived from CRA’s unaudited financial statements appearing on Form 10-Q for each of the respective fiscal quarters as well as the consolidated statements of cash flows appearing on Form 10-K for the fiscal years ended December 28, 2024 and December 30, 2023 and have been prepared on the same basis as CRA’s audited financial statements.

GAAP Condensed Consolidated Statement of Cash Flows						LTM						Q1						Q4						Q3						Q2
($ in 000’s)						Q1 2025						2025						2024						2024						2024
Net cash provided by (used in) operating activities						$	32,821					$	(79,994)					$	79,424					$	31,584					$	1,807
Net cash used in investing activities						(18,367)						(974)						(10,591)						(2,986)						(3,816)
Net cash provided by (used in) financing activities						(25,851)						79,058						(64,629)						(29,927)						(10,353)
Effect of foreign exchange rates on cash and cash equivalents						(127)						797						(1,974)						1,161						(111)
Net increase (decrease) in cash and cash equivalents						$	(11,524)					$	(1,113)					$	2,230					$	(168)					$	(12,473)
Cash and cash equivalents at beginning of period						37,122						26,711						24,481						24,649						37,122
Cash and cash equivalents at end of period						$	25,598					$	25,598					$	26,711					$	24,481					$	24,649

GAAP Condensed Consolidated Statement of Cash Flows						LTM						Q1						Q4						Q3						Q2
($ in 000’s)						Q1 2024						2024						2023						2023						2023
Net cash provided by (used in) operating activities						$	67,043					$	(63,080)					$	60,099					$	64,952					$	5,072
Net cash used in investing activities						(2,541)						(730)						(358)						(733)						(720)
Net cash provided by (used in) financing activities						(63,278)						56,052						(43,092)						(50,574)						(25,664)
Effect of foreign exchange rates on cash and cash equivalents						379						(706)						1,333						(312)						64
Net increase (decrease) in cash and cash equivalents						$	1,603					$	(8,464)					$	17,982					$	13,333					$	(21,248)
Cash and cash equivalents at beginning of period						35,519						45,586						27,604						14,271						35,519
Cash and cash equivalents at end of period						$	37,122					$	37,122					$	45,586					$	27,604					$	14,271

Adjusted Net Cash Flows from Operations

Below are the quarterly and last twelve-month reconciliations of GAAP net cash provided by (used in) operating activities for each of the periods presented to non-GAAP adjusted net cash flows from operations. The reconciling items are forgivable loan advances and repayments for each period, which are reported as a component of GAAP net cash provided by (used in) operating activities, along with other non-recurring cash items.

Adjusted Net Cash Flows from Operations						LTM						Q1						Q4						Q3						Q2
($ in 000’s)						Q1 2025						2025						2024						2024						2024
GAAP net cash provided by (used in) operating activities						$	32,821					$	(79,994)					$	79,424					$	31,584					$	1,807
Forgivable loan advances						67,675						27,431						7,106						14,258						18,880
Forgivable loan repayments						(3,361)						(600)						(2,473)						—						(288)
Adjusted net cash flows from operations						$	97,135					$	(53,163)					$	84,057					$	45,842					$	20,399
Net revenue						$	697,476					$	181,851					$	176,435					$	167,748					$	171,442
GAAP net cash provided by (used in) operating activities as a percentage of net revenue						4.7		%				(44.0)		%				45.0		%				18.8		%				1.1		%
Adjusted net cash flows from operations as a percentage of net revenue						13.9		%				(29.2)		%				47.6		%				27.3		%				11.9		%

    

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Adjusted Net Cash Flows from Operations						LTM						Q1						Q4						Q3						Q2
($ in 000’s)						Q1 2024						2024						2023						2023						2023
GAAP net cash provided by (used in) operating activities						$	67,043					$	(63,080)					$	60,099					$	64,952					$	5,072
Forgivable loan advances						11,750						5,250						2,000						3,750						750
Forgivable loan repayments						(1,200)						—						(1,200)						—						—
Adjusted net cash flows from operations						$	77,593					$	(57,830)					$	60,899					$	68,702					$	5,822
Net revenue						$	642,920					$	171,789					$	161,613					$	147,553					$	161,965
GAAP net cash provided by (used in) operating activities as a percentage of net revenue						10.4		%				(36.7)		%				37.2		%				44.0		%				3.1		%
Adjusted net cash flows from operations as a percentage of net revenue						12.1		%				(33.7)		%				37.7		%				46.6		%				3.6		%

NON-GAAP FINANCIAL MEASURES

In these remarks, CRA has supplemented the presentation of its financial results calculated in accordance with U.S. generally accepted accounting principles or “GAAP” with the following financial measures that were not calculated in accordance with GAAP: non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP EBITDA, non-GAAP income from operations (and non-GAAP operating margin), non-GAAP provision for income taxes (and non-GAAP effective tax rate), SG&A expenses excluding commissions and adjusted net cash flows from operations. CRA believes that these non-GAAP financial measures are important to management and investors because these measures supplement the understanding of CRA’s ongoing operating results, financial condition and cash flows. Non-GAAP adjusted net cash flows from operations is used by management to assess CRA’s ability to fund items such as the acquisition of talent, office expansions, debt repayment and distributions to shareholders. In addition, non-GAAP net income and non-GAAP EBITDA are used by CRA in its budgeting process, and the non-GAAP adjustments described below are made to the performance measures for some of CRA’s performance-based compensation.

As used herein, CRA defines non-GAAP EBITDA as net income before interest expense (net), provision for income taxes, and depreciation and amortization further adjusted for the impact of certain items that we do not consider indicative of its core operating performance, such as non-cash amounts relating to valuation changes in contingent consideration, acquisition-related costs, foreign currency (gains) losses, net, restructuring costs and related tax effects. Non-GAAP net income, non-GAAP income from operations and non-GAAP provision for income taxes also exclude non-cash amounts relating to valuation changes in contingent consideration, acquisition-related costs, foreign currency (gains) losses, net, restructuring costs and related tax effects. The adjustments made to non-GAAP adjusted net cash flows from operations add back forgivable loan issuances, net of repayments, along with other non-recurring cash items. These remarks also present certain current fiscal period financial measures on a “constant currency” basis in order to isolate the effect that foreign currency exchange rate fluctuations can have on CRA’s financial results. These constant currency measures are determined by recalculating the current fiscal period local currency financial measure using the specified corresponding prior fiscal period’s foreign exchange rates.

All of the non-GAAP financial measures referred to above should be considered in conjunction with, and not as a substitute for, the GAAP financial information presented in these remarks. EBITDA and the financial measures identified in these remarks as “non-GAAP” are reconciled to their GAAP comparable measures either in these remarks or in the attached financial tables. In evaluating these non-GAAP financial measures, note that the non-GAAP financial measures used by CRA may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

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CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE FISCAL QUARTERS ENDED

MARCH 29, 2025 COMPARED TO MARCH 30, 2024

(IN THOUSANDS, EXCEPT PER SHARE DATA)

			Fiscal Quarter Ended
			March 29, 2025						As a % of Revenue						March 30, 2024						As a % of Revenue
Revenues			$	181,851					100.0		%				$	171,789					100.0		%
Costs of services (exclusive of depreciation and amortization)			120,354						66.2		%				118,880						69.2		%
Selling, general and administrative expenses			32,538						17.9		%				30,499						17.8		%
Depreciation and amortization			3,411						1.9		%				2,792						1.6		%
Income from operations			25,548						14.0		%				19,618						11.4		%
Interest expense, net			(429)						-0.2		%				(464)						-0.3		%
Foreign currency gains (losses), net			(474)						-0.3		%				(142)						-0.1		%
Income before provision for income taxes			24,645						13.6		%				19,012						11.1		%
Provision for income taxes			6,643						3.7		%				5,321						3.1		%
Net income			$	18,002					9.9		%				$	13,691					8.0		%
Net income per share:
Basic			$	2.65											$	1.97
Diluted			$	2.62											$	1.95
Weighted average number of shares outstanding:
Basic			6,775												6,926
Diluted			6,862												7,011

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CRA INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE FISCAL QUARTERS ENDED

MARCH 29, 2025 COMPARED TO MARCH 30, 2024

(IN THOUSANDS, EXCEPT PER SHARE DATA)

			Fiscal Quarter Ended
			March 29, 2025						As a % of Revenue						March 30, 2024						As a % of Revenue
Revenues			$	181,851					100.0		%				$	171,789					100.0		%
Net income			$	18,002					9.9		%				$	13,691					8.0		%
Adjustments needed to reconcile GAAP net income to non-GAAP net income:
Restructuring and other (1)			(4,170)						-2.3		%				—						—		%
Foreign currency (gains) losses, net			474						0.3		%				142						0.1		%
Tax effect on adjustments			947						0.5		%				(35)						—		%
Non-GAAP net income			$	15,253					8.4		%				$	13,798					8.0		%
Non-GAAP net income per share:
Basic			$	2.25											$	1.99
Diluted			$	2.22											$	1.96
Weighted average number of shares outstanding:
Basic			6,775												6,926
Diluted			6,862												7,011
(1) Includes $1.2 million of restructuring charges, net of the reversal of $5.4 million of non-cash charges associated with a previously recorded performance award.

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CRA INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE FISCAL QUARTERS ENDED

MARCH 29, 2025 COMPARED TO MARCH 30, 2024

(IN THOUSANDS)

			Fiscal Quarter Ended
			March 29, 2025						As a % of  Revenue						March 30, 2024						As a % of  Revenue
Revenues			$	181,851					100.0		%				$	171,789					100.0		%
Net income			$	18,002					9.9		%				$	13,691					8.0		%
Adjustments needed to reconcile GAAP net income to non-GAAP net income:
Restructuring and other (1)			(4,170)						-2.3		%				—						—		%
Foreign currency (gains) losses, net			474						0.3		%				142						0.1		%
Tax effect on adjustments			947						0.5		%				(35)						—		%
Non-GAAP net income			$	15,253					8.4		%				$	13,798					8.0		%
Adjustments needed to reconcile non-GAAP net income to non-GAAP EBITDA:
Interest expense, net			429						0.2		%				464						0.3		%
Provision for income taxes			5,696						3.1		%				5,356						3.1		%
Depreciation and amortization			3,411						1.9		%				2,792						1.6		%
Non-GAAP EBITDA			$	24,789					13.6		%				$	22,410					13.0		%
(1) Includes $1.2 million of restructuring charges, net of the reversal of $5.4 million of non-cash charges associated with a previously recorded performance award.

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CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

			March 29, 2025						December 28, 2024
Assets
Cash and cash equivalents			$	25,598					$	26,711
Accounts receivable and unbilled services, net			223,251						219,548
Other current assets			29,271						23,104
Total current assets			278,120						269,363
Property and equipment, net			42,785						45,205
Goodwill and intangible assets, net			100,973						100,953
Right-of-use assets			78,653						81,157
Other assets			89,911						74,761
Total assets			$	590,442					$	571,439
Liabilities and Shareholders’ Equity
Accounts payable			$	19,703					$	28,155
Accrued expenses			134,439						181,413
Current portion of lease liabilities			18,986						18,696
Revolving line of credit			85,000						—
Other current liabilities			12,375						23,045
Total current liabilities			270,503						251,309
Non-current portion of lease liabilities			80,954						84,541
Other non-current liabilities			11,666						23,516
Total liabilities			363,123						359,366
Total shareholders’ equity			227,319						212,073
Total liabilities and shareholders’ equity			$	590,442					$	571,439

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CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

			Fiscal Year-to-Date Period Ended
			March 29, 2025						March 30, 2024
Operating activities:
Net income			$	18,002					$	13,691
Adjustments to reconcile net income to net cash used in operating activities:
Non-cash items, net			8,112						7,694
Accounts receivable and unbilled services			(2,746)						(11,094)
Working capital items, net			(103,362)						(73,371)
Net cash used in operating activities			(79,994)						(63,080)
Investing activities:
Purchases of property and equipment, net			(974)						(730)
Net cash used in investing activities			(974)						(730)
Financing activities:
Borrowings under revolving line of credit			90,000						70,000
Repayments under revolving line of credit			(5,000)						—
Tax withholding payments reimbursed by shares			(2,454)						(1,631)
Cash dividends paid			(3,488)						(3,075)
Repurchase of common stock			—						(9,242)
Net cash provided by financing activities			79,058						56,052
Effect of foreign exchange rates on cash and cash equivalents			797						(706)
Net decrease in cash and cash equivalents			(1,113)						(8,464)
Cash and cash equivalents at beginning of period			26,711						45,586
Cash and cash equivalents at end of period			$	25,598					$	37,122
Noncash investing and financing activities:
Increase (decrease) in accounts payable and accrued expenses for property and equipment			$	(596)					$	454
Excise tax on share repurchases			$	39					$	(65)
Right-of-use assets obtained in exchange for lease obligations			$	701					$	1,955
Supplemental cash flow information:
Cash paid for taxes			$	3,181					$	1,534
Cash paid for interest			$	131					$	91
Cash paid for amounts included in operating lease liabilities			$	5,714					$	5,569

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