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Charles River Associates' (CRAI) Earnings Beat Estimates in Q4

Zacks Equity Research

Charles River Associates (CRAI) delivered solid fourth-quarter 2018 results, with earnings and revenues surpassing the Zacks Consensus Estimate.

Non-GAAP earnings of 84 cents per share outpaced the consensus mark by 22 cents and increased 20% year over year. Revenues came in at $108.8 million, which beat the consensus mark by roughly $6 million and increased 12.1% year over year on an entirely organic basis.

Notably, the company reported double-digit year-over-year revenue growth in each of the trailing nine quarters. During the quarter, Charles River achieved company-wide utilization of 76% and headcounts increase of 9% year over year.

Shares of Charles River have gained 4.9% year to date compared with 13.7% rise of the industry it belongs to.

 

Quarter Details

In terms of services offered, legal and regulatory as well as management consulting delivered solid results. This impressive performance can be attributed to double-digit year-over-year growth in Finance, Energy, Forensic Services, and Life Sciences practices. Solid contributions came from Antitrust & Competition Economics practice. Geographically, revenues from North American and European operations grew 9% and 26% year over year, respectively.

Charles River Associates Revenue (TTM)

Charles River Associates Revenue (TTM) | Charles River Associates Quote

In the reported quarter, non-GAAP EBITDA increased 28.9% year over year to $11.5 million. Non-GAAP EBITDA margin expanded 140 basis points (bps) year over year to 10.6%.

The company exited the fourth quarter with cash and cash equivalents of $38 million compared with $11.9 million at the end of the prior quarter. Notably, the company generated $44.6 million of cash in operating activities and spent 2.1 million in capex.

Dividend and Share Repurchase

In the quarter, Charles River returned $9.3 million of capital to shareholders, including $7.5 million for share repurchases of roughly 163,000 shares and $1.8 million of dividend payments.

Concurrent with the earnings release, the company announced a quarterly cash dividend of 20 cents per share, payable on Mar 22, 2019 to shareholders of record as of Mar 12, 2019. The company has expanded its share repurchase program by $20 million in addition to the $1.6 million remaining under its existing program.

2019 Guidance

On a constant-currency basis relative to fiscal 2018, the company expects revenues in the range of $430-$445 million and non-GAAP EBITDA margin in the range of 9.2-10.2%. The Zacks Consensus estimate for 2019 revenues is pegged at $428.9 million.

Zacks Rank & Other Key Picks

Charles River currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

A few other top-ranked stocks in the broader Zacks Business Services sector are Omnicom (OMC), Robert Half (RHI) and Automatic Data Processing (ADP), all carrying a Zacks Rank #2 (Buy). Long-term expected EPS (three to five years) growth rate for Omnicom, Robert Half and Automatic Data Processing is 6.9%, 8.4% and 12.8%, respectively.

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