CRA International,Inc.

Good day, everyone, and welcome to Charles River Associates' fourth quarter and fiscal year 2021 conference call. Please note that today's call is being recorded. 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 Malley, chief financial officer, Dan Mahoney, and Chief Corporate Development Officer, Chad Holmes. At this time, I'd like to turn the call over to Mr. Mahoney for opening remarks. Dan, please go ahead.

Thank you, Rob, and good morning, everyone. 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 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. We have also provided certain quarter-over-quarter percentage changes on an adjusted basis to show those changes as if Q4 of 2020, which had 14 weeks, included the same number of weeks as Q4 of 2021, which had 13 weeks. and reflects a pro rata reduction equal to one week of Q4 2020 results. I will now turn it over to Paul for his report. Paul?

Thanks, Dan, and good morning, everyone. Thank you for joining us today. CRA's fiscal 2021 topped a record-setting fiscal 2020 as revenue increased by 11% to $565.9 million. Capitalizing on this revenue growth, CRA also posted record profits as non-GAAP net income, earnings per diluted share, and EBITDA grew 57 percent, 64 percent, and 35 percent, respectively, compared with fiscal 2020. CRA's revenue growth was balanced geographically, as both our North American and international operations increased by 11 percent. Our expansion was led by legal and regulatory services, which grew by 19 percent year over year. Six practices, specifically our antitrust and competition economics, energy, financial economics, intellectual property, labor and employment, and risk investigations and analytic practices delivered double-digit revenue growth. For the fourth quarter, reported revenue declined 1.9% compared with the fourth quarter of fiscal 2020. As Dan just mentioned, when considering investments year-over-year growth rates, it's important to note that the fourth quarter of fiscal 2020 contained one more week than the fourth quarter of fiscal 2021. After making a one-week pro rata adjustment to the fourth quarter of fiscal 2020, CRA's revenue expanded by 6% in the fourth quarter of fiscal 2021, demonstrating the continued expansion of our business. leading the way with double-digit revenue growth, where our antitrust and competition economics, energy, and risk investigation and analytics practices. For the firm as a whole, headcount increased 3.6% year-over-year, and utilization reached 72% for the fourth quarter. CRA's fourth quarter top-line expansion once again resulted in profits increasing faster than revenues. Non-GAAP net income increased 15%, earnings per diluted share increased 20%, and EBITDA grew 9% year over year. I would now like to spend a few minutes highlighting some of the services provided during the fourth quarter. Within legal and regulatory, our antitrust and competition economics practice recorded its second highest quarterly revenue ever as M&A markets remained strong. Worldwide transaction activity reached $1.5 trillion in the fourth quarter of 2021, marking the sixth consecutive quarter to surpass $1 trillion of deal activity and ranking as the second largest quarter for worldwide M&A activity. Against this backdrop, CRA worked on transactions across a range of industries and geographies. For example, during the fourth quarter, A CRA team presented economic analysis to the Federal Trade Commission in support of a third party concerned about the effects of the Lockheed Martin's proposed $4.4 billion acquisition of Aerojet Rocketdyne would have on innovation and prices. If permitted to proceed, this merger would have eliminated the last independent provider of propulsion, a critical input for guided missiles produced by Lockheed and other defense prime contractors. The CRA team developed and presented to the FTC a vertical merger simulation model of bid competitions for defense and other industries that quantified the foreclosure effects of the combination. On January 25, 2022, the Federal Trade Commission voted 4-0 to challenge the acquisition and three weeks later, Lockheed Martin abandoned the merger. Additionally, colleagues from our European competition practice advised Microsoft and Nuance on Microsoft's $19.7 billion acquisition of Nuance, a global provider of speech recognition AI for the healthcare sector. The European Commission investigated the horizontal overlap between the parties in transcription software, several vertical and conglomerate links between the parties' products, as well as whether access to nuanced data will allow Microsoft to distort competition to the detriment of competing healthcare software providers. On December 21, 2021, the European Commission unconditionally cleared the acquisition, concluding that none of those theories of harm raised competition concerns. Looking more broadly at the legal market, trends in activity levels were mixed. Total case filings during the fourth quarter of 2021 were down 9% year-over-year, which was an acceleration relative to the year-over-year decline of 3% observed in Q3. Within the courtroom, the number of total court judgments during the fourth quarter was up 1% relative to the fourth quarter of 2020. This reflected a significant slowdown from the approximately 20% year-over-year increase observed in Q3. In light of these market conditions, the performance of our legal regulatory services during the fourth quarter is especially noteworthy. The group expanded by 3% year-over-year, or 11% after adjusting for the extra week in the fourth quarter of fiscal 2020. In addition to their merger-related improvements, merger review work, CRA's antitrust and competition economics practice continue to support clients in the context of legal disputes. During the fourth quarter, CRA experts were retained by private parties and regulators on a variety of antitrust investigations, including matters addressing price fixing, monopolization, and merger-related claims. These projects have touched industries as wide-ranging as high-tech, entertainment, transportation, and food and agriculture. Within our labor and employment practice, CRA provided statistical review and analysis of employee interchange associated with ongoing petitions in front of the National Labor Relations Board to establish location-specific collective bargaining units. In another matter, CRA assisted in the review and reconciliation of four years of payroll and timekeeping data to assess unpaid regular rate overtime premium payments, and California meal and rest premium payments related to a recent California Supreme Court decision. CRA's calculation were the basis of individual employee payments and the settlement of the alleged class action matter. In addition to this employer and client work, I'm also extremely excited about the announcement we made earlier this week regarding CRA's acquisition of Welch Consulting. At a time when issues of fair treatment in the workplace are receiving more attention, this transaction approximately doubles the size of our labor and employment practice as Welch Consulting has averaged $15 million of annual revenue over the past three years. The Welch Consulting team consists of approximately 45 consulting and corporate colleagues who share CRA's cultural commitment to exceptional client service. On behalf of everyone at CRA, I want to extend a warm welcome to our new colleagues. During the fourth quarter, the risk investigations and analytics practice executed a range of large multidisciplinary investigative assignments within the United States and abroad, including assisting outside counsel in an internal fraud investigation involving conflict of interest, improper payments to company management, by the company's customers and vendors. A team of data analysts, forensic accountants, and digital and investigative staff collected and analyzed more than 10 years of financial data and conducted detailed transaction testing to identify the size and scope of the improper activity, with results briefed to the U.S. Department of Justice. The practice also assisted plaintiff's counsel in the complex theft of trade secret matter spanning multi-jurisdictions in Asia, Latin America, and the United States. Through the on-ground deployment of investigative resources and the use of sophisticated analytic tools, CRA helped verify potential violations of U.S. court-issued injunctions and provided political context and background to counsel regarding counterparties. The risk investigations and analytics practice continues to establish itself as the go-to provider of due diligence services for banks and underwriters counsel with respect to initial public offerings. Within our management consulting offering, the energy practice continued to grow its core business of advising to the energy industry as well as providing expert opinions in energy disputes. For example, the practice helped the European utility improve operations at its subsidiary in support of a carve-out, provided resource planning services for U.S. utility, and provided testimony in a major case related to gas pipeline acquisition. We also have expanded our offering to support a client and operational improvements at a major water distribution utility. I'm grateful to all my colleagues for their hard work as we helped our clients address their most important challenges. Recapping our record financial performance, CRA reported revenue for fiscal 2021 of $565.9 million, or $559.5 million on a constant currency basis, after adjusting for the $6.4 million of currency tailwinds. Full-year non-GAAP EBITDA was $68.4 million, or $67.7 million on a constant currency basis, after adjusting for $0.7 million of currency tailwinds. Non-GAAP EBITDA margin was unchanged on a constant currency basis at 12.1%. Our fiscal 2021 financial performance demonstrates our continued strength in the marketplace. We will look to build on our trend of broad-based profitable growth in the years ahead. For a full year of fiscal 2022, on a constant currency basis relative to fiscal 2021, we expect revenue in the range of $585 million to $605 million. and non-GAAP EBITDA margin in the range of 10.8% to 11.5%. While we are pleased with CRA's strong performance in 2021, we remain mindful that short-term challenges arising from uncertainties around macroeconomic, business, public health, and political conditions can affect our business. Before I turn the call over to Chad and Dan, I would like to highlight one final item Earlier today, CRA published its inaugural sustainability report. This report formalizes CRA's ESG framework and describes our efforts across four key areas, employee empowerment, community advancement, ESG advisory services, and environmental stewardship. I encourage you to review this report, which is now on our website, and I look forward to providing updates on our progress. With that, I'll turn the call over to Chad and then Dan for a few additional comments. Chad?