CRA Intl Q2 2026 Earnings Call: Complete Transcript

CRA Intl (NASDAQ: CRAI ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This content is powered APIs. 8% year-over-year increase, with strong contributions across practices and geographic regions.

3%, respectively. 0% for full-year 2026, citing a strong sales pipeline and market conditions. CRA's Antitrust & Competition Economics practice posted a record sixth consecutive quarter, driven by global M&A activity, while Forensic Services and Risk, Investigations and Analytics practices grew over 20% year-over-year. 9% revenue increase, with notable growth in the Life Sciences and Energy practices.

4 million to shareholders through dividends and share repurchases and expanded its credit facility to $400 million to support future growth. Management highlighted the integration and successful ramp-up of nearly 30 new vice presidents in 2025, contributing to the overall growth trajectory. Full Transcript Rob, Investor Relations Good day everyone and welcome to Charles River Associates second quarter 2026 conference call. Please note that today's call is being recorded.

com. With us today are CRA Intl's President and Chief Executive Officer Paul Malley, Chief Financial Officer Eric Nirenberg, and Chief Corporate Development Officer Chad Holmes. At this time I'd like to turn the call over to Dr. Nirenberg for opening remarks.

Eric, please go ahead. Eric Nirenberg, Chief Financial Officer 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 Intl, 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 Intl'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 Intl undertakes no obligation to update these forward-looking statements after the date of this call to reflect new information or developments.

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 Maleh, Chief Executive Officer Thanks, Eric, and good morning, everyone.

Thank you for joining us today. 8 million in the second quarter. 8% and the highest quarterly revenue in CRA's history. Broad-based contributions once again characterized CRA's financial performance, reflecting both the quality and the depth of the portfolio.

Eight practices grew year over year, representing 95% of the company's total revenue for the second quarter. Six practices—Energy, Finance, Forensic Services, Intellectual Property, Life Sciences, and Risk, Investigations and Analytics—posted double-digit revenue growth, while the Antitrust & Competition Economics practice established a new high for quarterly revenue. 9%, respectively. 3%, respectively.

3% compared to the second quarter of 2025, while consultant utilization ticked up to 77% versus 76% in the second quarter of 2025. The increases in overall consultant headcount and utilization were supported by the continued replenishing of our sales pipeline. Average weekly project lead flow and new project originations remained strong, with each metric showing double-digit growth relative to the second quarter of 2025. 1%.

This growth was supported by trends in the broader legal market, as total case filings and total court judgments increased 11% and 5%, respectively, compared to the second quarter of 2025. 85 trillion during the first half of 2026, an increase of 50% compared to year-ago levels and making it the strongest opening period for dealmaking since such records began in 1980. 6 trillion, an increase of 31% compared to the first quarter of this year, surpassing $1 trillion for the fourth consecutive quarter and making it the largest quarter of worldwide M&A activity on record.

Against this backdrop, CRA's Antitrust & Competition Economics practice posted its sixth straight record quarter, capitalizing on ongoing merger-related activity and continued demand for antitrust services during the quarter. During the quarter, CRA was retained by Fivetran, the data foundation for AI, to advise on its merger with dbt Labs, the creator of dbt (data build tool) and the leader in standards for AI-ready structured data. The CRA team provided economic assistance to Fivetran on the competition and regulatory compliance aspects of the transaction, including in the United States.

The parties announced the completion of their merger on June 1, 2026, which brings together two category-defining platforms to advance a new era of trusted, open data infrastructure for AI at scale. Our Finance practice continued to be active in complex commercial disputes and investigations during the quarter. In bankruptcy matters, we were active in disputes involving liability management transactions. In one such matter, the Serta Simmons Bedding litigation had a court ruling on July 7 awarding more than $400 million in damages and prejudgment interest to CRA's clients.

In its ruling, the court specifically relied on the testimony of CRA Senior Consultant Marty Murray, calling her analysis more persuasive than the opposing expert. The implications of the Serta ruling have been discussed widely in the press, including multiple articles in The Wall Street Journal, Bloomberg, Law360, and elsewhere. In Q2, CRA's Forensic Services practice grew over 20% year over year and established a new high for quarterly revenue while responding to numerous types of crisis management events experienced by our clients.

For example, when over 8,000 universities experienced an outage with Canvas software during a critical week of exams, our team was rapidly deployed to respond and review the information at risk to assist with getting the software back online. Elsewhere, CRA's Intellectual Property practice advised on multiple high-stakes litigation and valuation matters covering a broad range of industry and legal forums. For example, CRA was engaged by a global smartphone manufacturer facing patent infringement claims in the Eastern District of Texas. The matter involved Wi—Fi and cellular handoff features on the smartphone.

In question, CRA's engagement team performed multiple analyses to rebut the plaintiff's damages claim at trial. The jury rejected the plaintiff's claim of more than $100 million and awarded just $3 million, consistent with CRA's expert opinion at trial. In another matter, a CRA expert testified in high-stakes international arbitration involving a patent dispute between two leading telecommunications firms. The arbitration panel awarded the royalty rate that CRA's expert opined, saving the client millions of dollars.

During the second quarter, the Risk, Investigations and Analytics practice worked on a number of large investigative, advisory, and damage-related expert assignments as revenue grew more than 20% year over year. For example, the CRA team investigated and will serve as forensic accounting experts in a civil litigation regarding a fraudulent misrepresentation claim in the private aviation sector. As part of the assignment, the team performed document review, investigative research, and analyzed bank account records and financial documentation to trace the flow of funds and substantiate the existence of alleged payments and liabilities owed.

The team also investigated the defendant's representations related to assets sold to plaintiffs. Turning to our management consulting services, both the Energy and Life Sciences practices delivered revenue growth in excess of 20% year over year. CRA's Energy practice continued to achieve strong results across a diverse range of clients, including utilities, private equity investors, electric system operators, and large energy consumers.

During the second quarter, the practice advised the executive leadership team of one of the nation's largest utilities on the development of its Utility of the Future strategy, addressing the growth of distributed energy resources, rapidly increasing demand from data centers, and opportunities for new utility products and services. The practice was also selected by PJM, the electric system operator serving the Mid-Atlantic and portions of the Midwest, for a multi-year engagement to develop enhanced data center load forecasts as unprecedented demand growth creates new challenges for system planning and investment.

In parallel, CRA's Energy practice continued to advise data center developers and operators on siting, power procurement, and development strategies across the United States, while helping other large energy consumers navigate increasingly complex and rapidly evolving energy markets. In our Life Sciences practice, we continued to help our clients build their strategies across the life cycle at both the franchise and product level. For one large pharmaceutical multinational, we have been working with their R&D team to help find new opportunities in a broad disease category.

CRA's efforts leverage industry-specific AI tools to analyze markets and innovation dynamics, portfolio positions, and recent licensing and acquisition activity to identify potential areas of focus. For another large pharmaceutical multinational, we are continuing to support their global launch strategy for a potential blockbuster oncology product. CRA's work focused on branded value propositions and message testing for healthcare professionals and patients. Overall, I'm grateful to all of my colleagues for the hard work during the second quarter in helping our clients address their most important challenges.

To start fiscal 2026, the start of fiscal 2026 represents the best first half of revenue and non-GAAP EBITDA in CRA's history. 2%. Given our strong first-half results and healthy pipeline, we are increasing our annual revenue guidance and reaffirming our profit margin guidance for full-year 2026 on a constant currency basis. 0%.

This new revenue guidance compares with the prior range of $785 million to $805 million. 5 million and CRA's reported annual EBITDA by less than $250,000 in fiscal 2026. This implies that the constant currency adjustment for the second half of fiscal 2026 will increase reported revenue by approximately $500,000 and reported EBITDA by $100,000. As previously reported, non-cash forgivable loan amortization, which is reflected as an expense when presenting EBITDA metrics, is expected to increase in fiscal 2026 by approximately $15 million, reflecting investments in talent to drive profitable growth.

Non-cash forgivable loan amortization increased by more than $9 million in the first half of this year relative to the first half of fiscal 2025, implying an increase of slightly more than $5 million is expected during the second half of fiscal 2026 relative to the second half of fiscal 2025. Finally, as a reminder, fiscal 2026 returns to CRA's typical 52-week year, whereas fiscal 2025 contained an extra week in the fourth quarter and resulted in a 53-week year. We continue to be encouraged by the strong start to the year, supportive market trends, and continued replenishing of our sales pipeline.

However, we remain mindful that evolving geopolitical, global macroeconomic, and business conditions can affect our business. With that, I'll turn the call over to Chad and then Eric for a few additional comments. Eric Nirenberg, Chief Financial Officer Thanks, Chad. Hello everyone.

I want to update you on our capital and capital deployment during the quarter. 6 million. The borrowings were used to manage working capital needs during the first two quarters, including the funding of annual bonus payments as we have done in prior years in addition to the normal bonus cycle. 6 million for traditional capital expenditures.

8 million for repurchases of approximately 193,000 shares at an average price of $144 per share. 3 million repurchasing a total of 309,000 shares at an average price of $160 per share. This reflects the longstanding confidence of the Board and the management team in the cash generating ability of the business and their belief that the company's fundamental value exceeds the prevailing stock price. 6 million available under our share repurchase program.

3 million of available capacity on our line of credit in place at quarter’s end. Earlier today we announced an increase and extension to CRA's existing credit facility as it approached the final year before maturity. The expanded facility will run for five years with an aggregate principal amount of up to $400 million, consisting of a $75 million term loan and a $325 million revolving credit facility, which includes a seasonal flex that provides CRA with the option to reduce the facility by $75 million during periods when working capital demands are lower.

The expanded facility replaces CRA's existing credit facility, which was scheduled to mature in August of 2027, and reflects both CRA's growth since the prior facility was established in 2022 and management's bullish views on CRA's prospects in the years ahead. With that, I'll turn the call over to Eric for a few final comments. Thanks, Chad. As a reminder, more expansive commentary on our financial results is available on the Investor Relations section of our website under Prepared CFO Remarks.

Before we get to questions, let me provide a few additional metrics related to our performance in the second quarter of fiscal 2026. In terms of consultant headcount, we ended the quarter at 968, consisting of 161 officers, 581 other senior staff, and 226 junior staff. 3% year-over-year increase from the 937 consultant headcount reported at the end of Q2 fiscal 2025. 3% a year ago.

0% on a non-GAAP basis for the second quarter of fiscal 2025. The increase is primarily due to an increase in non-deductible executive compensation partially offset by a remeasurement of deferred tax assets related to changes in current-year state apportionment. We expect the effective tax rate to be in the range of 33% to 34%, resulting in a full-year tax rate range of 32% to 33%.