CRA International,Inc.

Good day, everyone, and welcome to Charles River Associates' first quarter 2021 earnings conference call. Today's call is being recorded. The company's earning 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. Please go ahead, Dan.

Thank you, Rob, and good morning to 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 at 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 in descriptions of the calculation of EBITDA in 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. I hope you are staying safe and healthy. The first quarter of fiscal 2021 demonstrated our resiliency and continued momentum in the business as broad-based demand for our services drove CRA's strong performance. Building on a record-setting fiscal 2020, CRA reported the highest quarterly revenue in the company's history, increasing 16.1% year-over-year to $146.5 million. Fueling this growth was a combination of headcount expansion and improved utilizations. During the first quarter, we welcomed more than 30 new colleagues, increasing quarter end consulting headcount by 4.8% year over year. At the same time, we saw utilization increase to 76% from the 71% observed in the first quarter of fiscal 2020 and up from 70% in the fourth quarter of 2020, as weekly utilization trended upward over the course of the first quarter. CRA's top-line expansion during the first quarter resulted in accelerating profit growth. Specifically, profit measures increased year-over-year at rates more than double the growth in revenue as non-GAAP net income, earnings per diluted share, and EBITDA grew year-over-year by 59%, 63%, and 38%, respectively. This growth resulted in the highest quarterly levels for each of these three profit metrics. It was truly an exceptional quarter from top to bottom. I would now like to highlight some of the services provided during the quarter. Within legal and regulatory, our antitrust and competition economics practice grew revenue by approximately 30% year over year. The practice established its new high for quarterly revenue as demand for antitrust and merger-related services remained strong. M&A markets continued to rebound from pandemic lows. Worldwide M&A activity increased 94% during the first quarter of 2021 compared to year-ago levels and represented the strongest first quarter period for M&A since records began in 1980. Against this backdrop, CRA worked on transactions across a range of industries and geographies. For example, during the first quarter, the competition practice provided economic advice to a U.S. regulatory agency regarding likely economic effects arising from the merger of two multinational industrial parts manufacturers and the impact on multimillion-dollar bid markets. Additionally, Colleagues from our European competition practice advised Microsoft in a successful $7.5 billion acquisition of ZeniMax, a video game publisher. Looking more broadly at the legal market, total case filings continue to rebound but have not yet returned to pre-pandemic levels. For the first quarter of 2021, total case filings were down 3% year-over-year. Focusing on a subset of litigation matters that are more closely aligned with CRA services, case filings were essentially flat compared to the first quarter of 2020. A similar rebound pattern can be seen within the courtroom. The number of total court judgments during the first quarter was down approximately 7% relative to the year-ago period. This represented improvements from the double digit declines observed during much of 2020, but indicates that the pandemic's effects continue to limit courtrooms and their ability to handle normal litigation caseloads. In light of these market conditions, I'm especially pleased with a strong growth in our legal and regulatory services. For the first quarter, every practice within legal and regulatory increased its revenue year over year, with double-digit growth observed in our antitrust and competition economics, financial economics, forensic services, intellectual property, labor and employment, and risk investigations and analytics practices. During the quarter, CRA's financial economics practice assisted numerous financial institutions in conducting bias testing of artificial intelligence and machine learning models used to underwrite and price consumer credit across a broad base of markets and products. In addition, the practice provided support to clients in the retail banking space with deposit account transactional analysis in response to state and federal financial regulators. Our forensic services practice continues to experience strong demand from boards and companies that need help responding to allegations of fraud, cybercrime, noncompliance, and misconduct. For example, in connection with information security and cybercrime matters, on behalf of two international financial services firms, the practice was retained to provide cyber incident response services as well as assistance with cyber insurance claims. The practice is also increasingly being called upon to assist with litigation related to special purpose acquisition companies or SPACs. For example, we have been retained on behalf of a former board member of a company that had been acquired by a SPAC and which shortly thereafter discovered widespread embezzlement by management. During the first quarter, the intellectual property practice advised on multiple high stakes matters involving patents and trade secrets in a variety of forms, including federal and state courts, international arbitration tribunals, and the U.S. International Trade Commission. For example, a CRA expert provided testimony in a patent infringement matter on behalf of the world's leading provider of breathing circuits used in respiratory therapy for critical care patients. CRA's analysis of economic damages addressed supply and demand issues during a period of significantly increased worldwide demand for the patented breathing circuits during the pandemic. During the first quarter, the risk investigations and analytics practice continued to perform multi-jurisdictional investigative and compliance-related assignments in the United States, Brazil, the United Kingdom, and the European Union. More broadly, the practice executed a large internal investigation regarding potential violations of the Foreign Corrupt Practices Act by a U.S. government supplier in multiple foreign jurisdictions. The team also conducted numerous transaction related due diligence assignments for underwriter councils related to both traditional and SPAC IPOs. Next, I would like to turn to our management consulting services. After posting its largest quarterly revenue in the fourth quarter of fiscal 2020, the life sciences practice was slightly down during the first quarter relative to the year-ago period. Continuing CRA's long history of helping companies launch life sciences products, the practice recently assisted a global manufacturer in developing a commercialization strategy for a newly acquired hepatitis D treatment. Our efforts included conducting foundational research into the hepatitis D market, mapping the current treatment approach, identifying potential business limiting challenges, and guiding resource allocation to support a successful launch. The practice also recently leveraged its commercial strategy expertise for a client involved in a business dispute. The client sought to renegotiate the terms of an asset purchase following worse-than-expected clinical trial outcomes, compounded by a challenging commercial environment, resulting from the COVID-19 pandemic. CRA developed an independent sales forecast reflecting the new business realities, which helped inform commercialization decisions as well as the renegotiation efforts. CRA's energy practice continues to drive performance as it integrates the London-based team that joined CRA in the second half of 2020. During the first quarter, the practice enjoyed near double-digit revenue growth as it continued to support the post-merger integration of two major energy suppliers in the UK. As a result of our work, the program is on track to create one of the largest energy retailers in the UK with a significantly improved cost base. Additionally, CRA is supporting a large asset manager with the acquisition of a group of energy assets in Eastern Europe. I'm grateful to all of my colleagues for their hard work as we helped our clients address their most important challenges as we continue to adapt to a COVID-19 altered environment. As our first quarter demonstrate, our portfolio of services is highly valued by our clients. Moreover, we are well positioned to maintain the momentum in the business. During the first quarter, we saw both project lead flow and new project originations increase by more than 25%, compared to the first quarter of 2020, which was largely unaffected by the global pandemic. While we remain mindful that uncertainties around global economic, business, health, and political conditions can affect our business, we are raising both our revenue and EBITDA guidance to reflect the strong start of the year and the broad-based demand across our service portfolio. For the full year fiscal 2021 on a constant currency basis relative to fiscal 2020, we now expect revenue in the range of $550 million to $570 million and non-GAAP EBITDA margin in the range of 10.0% to 10.5%. Before I turn the call over to Chad and then Dan for a few additional comments, I have one more topic to cover. As we announced yesterday, I'm excited to welcome Raquel Tamez as CRA's first ever Chief Inclusion and Engagement Officer. Since its inception in 1965, CRA has strived to create a dynamic and inclusive culture. The importance of diversity, equity, and inclusion cannot be overstated as it is essential to fostering an engaged and empowered workforce. In her new role, Raquel will help integrate diversity, equity, and inclusion into everything we do and further align CRA to better serve our clients, stakeholders, and communities. And with that, I'll turn things over to Chad. Chad?