CRA International,Inc.

Good day, everyone, and welcome to Charles River Associates' second quarter 2020 conference call. Today's call is being recorded. Today's 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. At this time, I would like to turn the call over to Mr. Mahoney for opening remarks. Please go ahead, Dan.

Thank you, Rob. And good morning to everyone joining on the line. I hope everyone is doing well, staying safe and healthy during these unusual times. I would like to remind everyone that the statements made during this conference call, including 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, and actual performance and results may differ materially from those expressed or implied in these statements due to many important factors, including the extent and duration of the impact of the COVID-19 pandemic on our financial condition and results of operations. 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. 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. Let me now turn it over to Paul for his report. Paul?

Thanks, Dan, and good morning, everyone. Thank you for joining us today. Continuing to build on a record fiscal 2019, CRE reported its highest second quarter revenue in our company's history. With balanced contributions across our portfolio of services, we saw growth across both our legal and regulatory and management consulting services as well as in our North American and international operations. Our results were led by double-digit revenue growth year over year in each of our finance, forensic services, and life sciences practices and continued strong contributions from our labor and employment and risk investigations and analytics practices. Even with this success, we continue to face the effects of the ongoing global health crisis. I want to take this opportunity to update you on how CRA is adapting to this new environment. Our first priority is the health and well-being of our people as we continue to address our clients' most important business challenges. We are focused on providing our colleagues with a foundation of stability and safety during this unprecedented time. Although our offices remain open and capable of hosting our colleagues, we have asked everyone to work from home whenever possible. We will return to the office when it is appropriate to do so, as our office experience fosters collaboration, mentorship, and collegiality. We're planning a phased, deliberate return to our offices across our geographies, the timing of which depends on local conditions. Turning to the second quarter, new project originations were down 4% year over year. We remain up 15% for the first half of 2020 relative to the first half of 2019, providing us with a solid foundation for the months ahead. The trend in new project originations continues to be impacted by the decline in M&A activity and delays in the U.S. court system. Global mergers and acquisition activity in dollar terms is down approximately 50% through the second quarter compared to last year, with transactional volume for the second quarter of 2020 dipping to its lowest point since 2004. The decline was steeper in the Americas, with deal activity measured in dollar terms decreasing nearly 70% in the first half of 2020 compared to the same period last year. This represented the lowest M&A activity in the Americas since 1998. In the litigation market during the second quarter, total case filings were down approximately 20% year over year. However, a subset of matters more closely aligned with CRA service offerings saw case filings decline by roughly 10% as the rate of change varied greatly depending on the type of litigation. For example, and I trust case filings in the second quarter increased approximately 10% year-over-year, while intellectual property filings declined approximately 25%. Within the courtroom, case activities remained down. For example, total court judgments during the second quarter were down approximately 25% relative to the second quarter of 2019. This suggests that courtrooms continue to be impacted in their ability to handle normal litigation caseloads. Against this backdrop, I want to congratulate my colleagues for delivering such strong performance in spite of these market headwinds. Shifting gears, I'd like to spend a few minutes on the practices that performed well during the second quarter. First, I want to highlight our finance practice. C.R.A. continues to work on matters arising from the government's investigation of institutions and individuals for alleged spoofing and related manipulative activity in financial markets. In addition, C.R.A.' 's finance practice continues to work on securities litigations, merger related litigations, and international arbitrations. Our forensic services practice continues to experience strong demand from companies that need help responding to alleged Allegations of fraud, cybercrime, misconduct, and noncompliance. During the second quarter, on behalf of one of the nation's largest energy companies, the practice deployed extensive digital forensics and investigative capabilities to investigate allegations that a key employee has been transmitting large quantities of critical infrastructure security and trade secret data to a foreign entity. The practice also continues to conduct Hundreds of cyber incident response matters each quarter across a broad range of industries and geographies. During the second quarter, the risk investigations and analytics team investigated allegations of a complex procurement fraud involving suppliers of a global technology company operating in multiple international jurisdictions, including an investigative review of processes related to supplier onboarding, vetting, and management. We also assisted a global hospitality client with its internal investigation into possible Office of Foreign Asset Control violations in multiple U.S. sanctioned countries. CRA's labor and employment practice continues to be retained in a variety of class or collective actions associated with gender and race ethnicity discrimination allegations, as well as alleged wage and hour violations. During the second quarter, The practice partnered with CRA's competition practice on an increasing number of matters involving unlawful, anti-competitive employment agreements. The practice has also witnessed an uptick in the number of companies undertaking proactive reviews of employment decisions, including compensation and terminations as they pertain to various employee populations. Our life sciences practice remains quite busy For a pharmaceutical company, we're using our analytics capabilities and claims data to help launch a new rare disease product to help the company and physicians to identify possible patients afflicted with this rare disease. During the quarter, the practice was also involved in a major arbitration assessing liability with respect to the exercise of commercially reasonable efforts regarding the development of a cancer therapeutic. Our policy sector continues a mix of pro bono and paid work regarding responses to the coronavirus pandemic. And I would like to thank my colleagues. Again, I'd like to thank my colleagues for delivering such strong performance in the second quarter. Although we are not reinstating guidance, I want to provide some additional information to help with your assessment of our performance going forward. I want to point you to our actual performance through the first six months of fiscal 2020. Combining the revenue and profit growth of the second quarter with our strong Q1 performance on a constant currency basis, we have increased revenues by 15.7% to $250.3 million and non-GAAP EBITDA by 24.2% to $25.1 million, achieving a margin of 10%. Next, we look to our weekly labor billings. As a reminder, this productivity metric represents the dollar value of time incurred by our consultants on client projects. To move from labor billings to net revenue, a number of adjustments are made to account for items such as reimbursable expenses, non-employee consultant billings, fixed price projects, and write-offs. We enjoyed relative consistency of labor billings week to week during the second quarter. Extending the timeframe during the first four weeks of Q3, we have seen average weekly labor billings remain roughly consistent with the average observed for Q2. Of course, going forward, labor billings will fluctuate with demand as well as vacation and holiday schedule. Finally, we turn to our cost structure. Looking ahead to Q3, We expect our cost of services and SG&A, excluding the commissions paid to non-employee experts, on a dollar basis to be similar to the amounts experienced in the second quarter of 2020. Although we're pleased with our performance through the second quarter, we recognize the challenges and uncertainty that accompany the ongoing COVID-19 pandemic. We are proud of the company that we have built, and we remain confident that the people who have driven our success in recent years will continue to drive our performance in the months and years ahead. And now I'll turn the call over to Chad and then Dan for a few additional comments. Chad?