After two consecutive quarters of miss,
CRA International Inc.
) recently reported third quarter 2012 adjusted earnings of 27
cents per share, which topped the Zacks Consensus Estimates by a
penny. However, the reported earnings fell short of the year-ago
quarter earnings of 31 cents per share.
However, on a GAAP basis, the company recorded net loss of 7
cents per share, significantly lower than the year-ago earnings
of 34 cents per share.
Adjusted total revenue tumbled 7.0% on a year-over-year basis to
$64.7 million. During the quarter, utilization rate was 67%, down
from 70% in the last quarter.
The company's core business, Litigation and Regulatory business,
despite the general industry set-backs, continues to deliver
better results backed by solid performance of Intellectual
Property, Competition and Labor & Employment practices.
Additionally, demand for Management Consulting businesses is also
improving driven by the Marakon practice.
CRA International witnessed an expansion of 110 basis points
(bps) in adjusted gross margin to 34.4% due to the closing of two
underperforming businesses and restructuring of certain
underperforming practice areas as well. Moreover, adjusted
operating margin also enhanced 220 bps sequentially to 8.1%,
benefiting from the continuous trimming of SG&A expenses.
As of September 29, 2012, cash and cash equivalents and
short-term investments were $42.3 million compared with $76.1
million as of December 31, 2011. Shareholders' equity at the end
of the quarter was $265.5 million compared with $268.4 million in
CRA International estimates an annualized cost of service savings
of approximately $17 million from consulting staff reductions and
a decrease of $8 to $10 million on an annual basis in net
revenue. Additionally, the company remains on track to curtail
its SG&A expenses and generate annualized savings of
approximately $8 million.
Based on its restructuring initiatives, CRA International remains
on track to achieve double-digit growth in adjusted operating
margin in the fourth quarter of 2012. Additionally, the company
anticipates its profitability to improve $15 to $17 million on an
annualized basis, once activities like consulting staff
reductions, repositioning of select underperforming practices and
lowering of SG&A costs are fully executed.
The company reported better-than-expected third quarter results
and also completed the majority of its planned restructuring
activities in the quarter. The consulting firm is also
undertaking additional restructuring initiatives which will
further boost its profitability and performance in the next
quarter as well as in the next year. Thus, overall management
outlook for the coming period remains optimistic. Hence, we
expect estimates to go up in the coming days. The Zacks Consensus
Estimates for 2012 and 2013 are pegged at 86 cents and $1.43,
One of CRA International's prime competitors,
FTI Consulting Inc.
) will release its third quarter earnings on November 8, 2012.
CRA INTL INC (CRAI): Free Stock Analysis
FTI CONSULTING (FCN): Free Stock Analysis
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