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CRA International, Inc. (CRAI)
F2Q08 Earnings Call
June 5, 2008 9:00 am ET
Jim Burrows - President and Chief Executive Officer
Wayne Mackey - Executive Vice President and Chief Financial Officer
Randy Hugen - Piper Jaffray
Timothy McHugh - William Blair & Company
Andrew Fones - UBS
James Janesky - Stifel, Nicolaus & Co.
Good day, and welcome everyone to CRA International's second quarter fiscal 2008 conference call. (Operator Instructions)
Previous Statements by CRAI
» CRA International, Inc. Q4 2008 (Qtr End 11/29/08) Earnings Call Transcript
» CRA International F1Q08 (Qtr End 02/29/08) Earnings Call Transcript
» CRA International F4Q07 (Qtr End 11/24/07) Earnings Call Transcript
Thank you, [Doug].
Statements made during this conference call concerning the future business, operating results, estimated cost savings and financial condition of the company and statements using the terms anticipates, believes, expects, should or similar expressions are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and are subject to a number of factors and uncertainties.
Information contained in these forward-looking statements is inherently uncertain, and actual performance and results may differ materially due to many important factors. Such factors that could cause actual results to differ materially from any forward-looking statements made by the company include, among others, the company's restructuring costs and attributable annual cost savings, changes in the company's effective tax rate, share dilution from the company's convertible debt offering and stock options, dependence on key personnel, attracting and retaining qualified consultants, dependence on outside experts, utilization rates, factors related to its recent acquisitions, including integration of personnel, clients, offices and unanticipated expenses and liabilities, risks associated with acquisitions it makes in the future, risks inherent in international operations, performance of NeuCo, changes in accounting standards, rules and regulations, changes in the law that affect the practice areas, management of new offices, potential loss of clients, dependence on the growth of the company's Business Consulting practice, the unpredictable nature of litigation-related projects, the ability of the company to integrate successfully new consultants into its practices, intense competition, risks inherent in litigation and professional liability.
Further information on these and other potential factors that could affect the company's financial results is included in the company's filings with the Securities and Exchange Commission. The company cannot guarantee any future results, levels of activity, performance or achievement. The company undertakes no obligation to update any of its forward-looking statements after the date of this call.
Thanks, Wayne, and thank you, everyone, for joining us today. I apologize if I don't come across clearly. I have laryngitis, and I will try to get through the call as best I can and [because I think] I can.
But first I would encourage everyone to refer to today's news release for a full reconciliation of GAAP net income and earnings per share to non-GAAP net income and earnings per share.
As outlined in today's news release, [inaudible] revenue for the second quarter of 2008 was $93.8 million, an increase of 6% over the second quarter of 2007.
As previously announced, we exited or divested a number of lines of business during the first half of fiscal 2008, including the majority of our Asia Pacific operation and certain specialized Forensic-related practices in London. The 2008 second quarter results include less than a full quarter of revenues from these lines of business as compared to the second quarter of 2007. That did have a full quarter of revenue.
Our overall revenue growth during the quarter was fueled by our Litigation and Applied Economics platform, which offset declines in our Finance and Business Facility platforms. In particular, within Litigation and Applied Economics we saw notable increases in our Competition and Intellectual Property practices as part of the divestiture of our competition business in Australia and New Zealand as well as continued growth in our Labor and Employment practice.
Within our Finance platform we saw increased activity in Subprime and Credit Crisis Investigation and Litigation work, however this positive trend was offset by a slowdown in work coming from our Forensics practice, which was affected by the timing of projects and the divesture of certain non-core pieces of the business in the U.K. and Australia.
Within Business Consulting, our Chemicals and Petroleum practice went below second quarter 2007 levels while we continue to work on replacing projects in the Middle East. Revenues in the C&P practice did recover significantly from the sequential first quarter. The North America practice continues to be strong, with most of the increase in revenues coming from Europe and the Middle East. Performance for the other Business Consulting practices was mixed, with some up and some down.
With respect to the bottom line results, I am very encouraged by the early returns on our strategic cost-cutting initiatives which we talked about in last quarter's conference call. These initiatives were focused on better balancing the size of our work force and resources and the demands of the markets in which we operate, with the ultimate goal of reducing overhead costs, increasing our utilization rate, and improving margins of profitability. Steps in the plan include reducing our work force, consolidating or closing some of our offices, divesting some of our underperforming practices, and eliminating other expenses based on an evaluation of our current administrative practices and infrastructure.
Based on a thorough review of our entire client base, we implemented a work force reduction [inaudible] to address underperforming areas. We have better aligned our resources with current market demand, and this improvement is becoming evident in our results.