CRA International Inc.
) continued its bad run with its second quarter 2012 also falling
way below the estimates. The company reported adjusted earnings of
20 cents per share in the second quarter of 2012, notably lower
than the Zacks Consensus Estimate of 31 cents per share and
the year-ago quarter earnings of 48 cents per share.
Net earnings per share on a GAAP basis were 7 cents, significantly
lower than the year-ago level of 40 cents per share. The results
were lower-than-expected due to poor performance of management
Adjusted total revenue fell 19.2% on a year-over-year basis to
$67.8 million. The lackluster top-line results were attributed to
discouraging performance of Management Consulting businesses. As a
result of soft management consulting business, utilization rate
plunged to 70% from 74% in the second quarter of 2011, but were up
sequentially from 68%.
However, the company's core business, Litigation and Regulatory
business, continues to remain firm based on strong lead flow and
steady start-ups of new projects. Performance in the International
market also improved with revenue contribution for the quarter
increasing to 25% from 20% in the last quarter.
CRA International witnessed a drop of 100 basis points (bps) in
adjusted gross margin to 32.0%, while adjusted operating margin
contracted 470 bps to 5.9%, based on higher expenses and slower
As of June 30, 2012, cash and cash equivalents and short-term
investments were $41.8 million compared with $76.1 million as of
December 31, 2011. Shareholders' equity at the end of the quarter
was $266.6 million compared with $268.4 million in the year-ago
To boost its performance and improve profitability, the company is
undertaking restructuring actions. Presently, the company is
closing its two underperforming businesses and plans to reposition
other underperforming practice areas as well. CRA International
estimates an annualized cost savings of approximately $17 million
from these restructuring actions. Additionally, the company remains
on track to curtail its SG&A expenses and generate annualized
savings of approximately $8 million.
Based on restructuring initiatives, CRA International anticipates
to achieve double-digit growth in adjusted operating margin by the
fourth quarter of 2012.
Though the company is undertaking restructuring initiatives and
Litigation consulting related business continues to perform
remarkably, we expect the estimates to go down based on poor
quarterly results, weak management consulting business and the
ongoing economic uncertainty in Europe. The Zacks Consensus
Estimates for 2012 and 2013 are pegged at $1.30 and $1.65,
One of CRA International's prime competitors,
FTI Consulting Inc
) will release its second quarter earnings on August 1, 2012.
CRA INTL INC (CRAI): Free Stock Analysis Report
FTI CONSULTING (FCN): Free Stock Analysis
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