CRA International,Inc.

Good day, everyone, and welcome to Charles River Associates' fourth quarter and fiscal year 2022 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 his opening remarks. Dan, please go ahead.

Thank you, Rob. 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 level of demand for our services as a result of changes in general and industry-specific economic conditions. 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 and descriptions of the calculation of EBITDA and measures presented on a constant currency basis. 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 once again set financial highs as fiscal 2022 topped a record-setting fiscal 2021. Revenue increased by 4.4 percent to $590.9 million. This marked the fifth consecutive year in which CRA established a new record for annual revenue. Over this five-year period of time, as revenue increased by 60 percent, we expanded non-GAAP EBITDA, net income, and earnings per diluted share by 120%, 167%, and 211% respectively. Capitalizing on the revenue growth in fiscal 2022, CRA posted record profits for the year with non-GAAP net income, earnings per diluted share, and EBITDA, each growing faster than revenue. We achieved this performance despite strong currency headwinds associated with the U.S. dollar that shaved $12.6 million or 2.2% year over year growth from our reported revenue on a constant currency basis. CRA's revenue growth for fiscal 2022 was balanced geographically as our North American operations increased by 4% and international operations grew by 5%. Our expansion was led by legal and regulatory services which grew by 8% year over year. Eight of CRA's practices grew their top line with four practices, antitrust and competition economics, intellectual property, labor and employment, and risk investigations and analytics, delivering double-digit revenue growth in fiscal 2022. For the fourth quarter, we continue to see broad-based strength across our portfolio, reported revenue increased 7.6% compared with the fourth quarter of fiscal 2021. Currency headwinds reduced revenue by $4.4 million, or 3.3% year-over-year growth on a constant currency basis. Geographically, we saw balanced contributions from our North American and international operations, which grew fourth quarter revenue year-over-year by 8.2%, and 5.4% respectively. Leading the way with double-digit revenue growth in the fourth quarter were six practices, auctions and competitive bidding, finance, financial economics, intellectual property, labor and employment, and risk investigations and analytics. In addition, our antitrust and competition economics and life sciences practices also expanded revenue year over year, which is impressive given the strong currency headwinds that CRA's largest global practices faced during the fourth quarter. I would now like to spend a few minutes highlighting some of the services provided during the fourth quarter. Approximately one-fifth of CRA's revenue in a given quarter is linked to M&A activity, principally arising from our antitrust and competition economics practice. Worldwide M&A activity totaled $3.6 trillion in 2022, a decrease of 37% compared to 2021, and the largest year-over-year percentage decline since 2001. That decline was particularly acute in the second half of the year. Transaction activity declined 33% in the second half of 2022 compared to the first half, representing the largest second-half percentage drop since records began in 1980. Amid this backdrop, our antitrust and competition economics practice experienced a slowdown in lead flow of merger-related opportunities in the fourth quarter of 2022 relative to a year ago. Yet, in aggregate, the practice saw overall project lead flow growth, including both merger-related and non-merger-related opportunities expanded by more than 15% in the fourth quarter relative to a year ago, partially fueling the practice's increase in revenue year over year. During the fourth quarter, CRA's antitrust and competition economics practice worked on transactions across a range of industries and geographies. For example, a CRA team supported the merging parties in the acquisition of lease plan by ALD, a subsidiary of Societe Generale. The deal involved overlaps in vehicle leasing industry and associated leasing services in 25 effective countries. The CRA team of economists prepared analysis of competition in vehicle leasing across the affected countries in support of merger control filings and remedy preparation. Following the market test of the proposed remedies, The European Commission concluded that the transaction would no longer raise competition concerns. This decision followed previous unconditional clearance by several national competition authorities, including the UK's Competition and Market Authority and the Mexican Competition Authority. In addition to their merger review work, CRA's antitrust and competition economics practice continued to support clients in legal disputes. During the fourth quarter, CRA experts prepared and delivered expert reports and testimony in antitrust class actions and in international disputes that highlight the intersection of intellectual property and antitrust issues. Looking more broadly, revenue from CRA's legal and regulatory services during the fourth quarter increased 12% year over year, despite mixed trends in the legal market. Within the broader legal market, total case filings during the fourth quarter of 2022 were up 3% year over year. Within the courtroom, the number of total court judgments during the fourth quarter was down 6% relative to the fourth quarter of 2021. The finance practice was active in all of its core areas during the fourth quarter. Specifically, the practice was engaged in various insurance matters, including numerous matters related to the lapse provision of the State of California's Insurance Code. The practice also continued its work on matters related to alleged spoofing in certain financial markets, as well as various international matters, including international arbitrations and securities fraud matters with assets or disputes in Europe and Latin America. A significant portion of the work from the financial economics practice during the fourth quarter involved assisting multiple mortgage lenders in their responses to regulatory investigations into suspected redlining. Equal access to credit is a major policy focus of federal consumer financial protection regulators, and CRA assisted clients by performing extensive analysis of their geographic lending patterns and benchmarking them against other lenders in the market. The team also assisted the client's legal counsel in formulating responses to the regulator's inquiries. The intellectual property practice advised on multiple high-stakes litigation, arbitration, and valuation matters during the quarter. In a patent infringement matter, CRA was retained by the federal government and two of its contractors, to evaluate damages arising from the alleged infringement of patented technology related to the alignment of images from soldiers' night vision goggles with thermal images from their weapon sites. CRE reviewed extensive evidence and prepared analysis that demonstrates the plaintiff's claim damages significantly exceeded the value of the technological innovations allegedly distributed by the patents in suit. The intellectual property practice also consulted on economic issues and multiple investigations at the U.S. International Trade Commission and provided expert testimony in an ITC hearing involving floor cleaning devices. CRA's labor and employment practice was engaged during the quarter across a variety of industries, including finance, healthcare, legal, and technology to help clients navigate annual performance and compensation decisions. CRA's work assists clients in their efforts to promote internal equity among employee groups. The practice continues to be a critical partner for clients entering mediation on various lawsuits arising from California's wage and hour laws and the Federal Fair Labor Standards Act. CRA's deep expertise in employment matters led to multiple experts being retained on actions brought by individuals, classes, or collectives, and the Equal Employment Opportunity Commission. For example, on behalf of an academic medical center alleged to have violated the Age Discrimination and Employment Act and the Americans with Disability Act, CRA was retained to provide economic and statistical analysis of the center's policies. The risk investigations and analytics practice continues to focus on executing matters, multidisciplinary, investigative and analytic assignments. During the fourth quarter, a team of forensic accounting, investigative and analytic professionals continued work on a fraud in the financial services industry related to asset misappropriation of hundreds of millions of dollars that stretched across multiple international jurisdictions, over several years. The team reviewed and analyzed hundreds of thousands of financial records, emails, and other supporting documentation, undertook a flow of funds analysis, and prepared a factual report. Within our management consulting offering, the auctions and competitive bidding practice during the fourth quarter managed 13 global dairy trade events, six natural fiber exchange wool auctions, and five electricity procurement auctions for clients in Ohio and Pennsylvania. In the fourth quarter, our dairy trade marketplace achieved the milestone of transacting more than $33 billion cumulatively in over 300 trading events since the GDT marketplace was established. Additionally, the team managed requests for proposal processes for a range of electric utility clients in the United States. CRA's electric utility RFPs support the development of over 3 gigawatts of generating capacity, including renewable resources, energy storage, and thermal resources. Commercialization and product launch strategy remain the mainstays of our strategy consulting work in CRA's life sciences practice. In the last quarter, we continued our client work in the expanding area of oncology, both We also were active across other therapeutic categories. For example, our life sciences practice has been working with a pharmaceutical manufacturer on the pricing and market access for a new antifungal drug. We are building our strategic recommendations on a foundation of market research with hospitals, physicians, and health plans, analysis of place patient and physician-level data, and econometric modeling. In addition to the practice's important work, I'm also extremely excited by the announcement we made in late November regarding CRA's acquisition of Biostrategies Group. Our 17 new colleagues from Biostrategies are focused on developing commercial strategies for healthcare products and technologies. Based in Chicago, this group strengthens the geographic map of our life sciences practice and better positioned CRA to serve clients in the Midwest. On behalf of everyone at CRA, I want to extend a warm welcome to our new colleagues. Overall, I'm grateful to all my colleagues for their hard work during the fourth quarter and throughout the year as we helped our clients address their most important challenges. Recapping our record financial performance, CRA reported revenue for fiscal 2022 of $590.9 million or $603.5 million on a constant currency basis after adjusting for $12.6 million of currency headwinds. Full-year non-GAAP EBITDA was $72.9 million and or 75.3% on a constant currency basis after adjusting for $2.4 million of currency headwinds. Non-GAAP EBITDA margin was 12.5% on a constant currency basis. Our fiscal 2022 performance demonstrates CRA's continued strength in the marketplace. We have invested in new generating talent and increased our consulting headcounts. We also continue to replenish our sales pipeline with project lead flow in the fourth quarter, increasing by roughly 17% year over year. All of this positions us well for 2023 and beyond as we look to extend our trend of broad-based profitable growth. Before I provide our financial guidance for fiscal 2023, I want to comment on a refinement to our approach for the coming year that was referenced in this morning's earnings announcement. Since 2016, we have provided financial guidance on a constant currency basis to highlight the operating performance that we as management can control. We believe that this approach provides transparency and comparability when evaluating CRA's reported financial performance. Reflecting on our investor communications and financial results over the past several years, Starting with the first quarter of 2023, we will be modifying our presentation of non-GAAP EBITDA to exclude the non-operating effects of both gains and losses arising from foreign currencies. Under this revised definition, CRA's non-GAAP EBITDA margin on a constant currency basis was 12.2% for each of fiscal years 2021 and 2022. With this as a backdrop for full year fiscal 2023 on a constant currency basis relative to fiscal 2022, we expect revenue in the range of $615 million to $640 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 2022, We remain mindful that short-term challenges arising from uncertainties around macroeconomic, business, public health, and political conditions can affect our business. With that, I'll turn the call over to Chad and then Dan for a few additional comments. Chad?