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Charles River Associates (CRAI) Q2 Earnings Beat Estimates

Zacks Equity Research

Charles River Associates CRAI delivered mixed second-quarter 2019 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Non-GAAP earnings of 73 cents per share surpassed the consensus mark by 2 cents and increased 9% year over year. Revenues came in at $110.6 million, which missed the consensus mark by $0.3 million but increased 4.8% year over year.

The year-over-year improvement in results was driven by strength across Financial Economics, Antitrust & Competition Economics, Auctions & Competitive Bidding, Intellectual Property, Forensic Services and Life Sciences practices.

Shares of Charles River have declined 3.4% year to date against the 26.9% rally of the industry it belongs to.

Other Quarterly Details

The company delivered 77% utilization and headcount was up 5.7%. Geographically, revenues from North American and European operations grew 2% and 16% year over year, respectively.

In the quarter, non-GAAP EBITDA increased 8.7% year over year to $11.7 million. Non-GAAP EBITDA margin rose 40 basis points (bps) year over year to 10.6%.

The company exited the second quarter with cash and cash equivalents of 15.6 million compared with $15 million at the end of the prior quarter. It generated $10.5 million of cash from operating activities and capex was 3.1 million.

In the quarter, Charles River returned $8.8 million of capital to shareholders, including $7.2 million for repurchases of roughly 177,000 sharesand $1.6 million of dividend payments.

2019 Guidance

Management reiterated 2019 guidance. On a constant-currency basis relative to fiscal 2018, revenues are expected 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 $439.1 million.

Zacks Rank & Other Stocks to Consider

Currently, CRA International carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the broader Zacks Business Services sector include ICF International ICFI, Accenture ACN and ExlService EXLS, each carrying a Zacks Rank #2.

The long-term expected EPS (three to five years) growth rate for ICF, Accenture and ExlService is 10%, 10.3% and 10.6%, respectively.

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