CRA?s Fourth-Quarter Earnings: A Strong Finish with Some Currency Headwinds

February 27, 2020 - by Matt Levine

BOSTON, February 27, 2020 ? Charles River Associates (NASDAQ: CRAI) just reported its financial results for the fourth quarter and full-year of 2019, and the numbers have a certain zing to them. Revenue climbed 9.7% year-over-year to a robust $119.3 million. However, not all that glitters is gold; the company faced some turbulence due to a foreign currency loss that took a bite out of its net income.

The Numbers: Revenue Growth Meets Currency Loss

CRA's earnings per diluted share (EPS) took a bit of a hit, decreasing 27.2% year-over-year to $0.59. The EPS consensus had anticipated a stronger showing, and the earnings surprise here might leave investors with mixed feelings. The net income decreased significantly, down 30.6% to $4.8 million, which is just 4.0% of revenue.

Despite these setbacks, the company?s overall revenue forecast remains optimistic. The fiscal 2020 guidance suggests growth of between 10% and 13% on a constant currency basis. So, while the currency markets might have played a villainous role this quarter, the long-term outlook seems brighter than a summer's day.

Key Highlights and Trends

Let?s break down some key figures that paint a more colorful picture:

Utilization rates hovered at a respectable 72%, while headcount swelled by 13.4% year-over-year, indicating that CRA is investing in its future.
Non-GAAP net income decreased to $6.2 million, or 5.2% of revenue, from $7.1 million, or 6.5%, the previous year. A small step back, but a step nonetheless.
The company made dividend payments totaling $2.0 million during the quarter, which is always a nice icing on the cake for shareholders.

Looking Ahead: A Bright Horizon?

With strong demand for consulting services and a commitment to expanding its workforce, CRA appears well-positioned to capitalize on future opportunities. The revenue growth across North America and Europe, combined with a strategic focus on sectors like Finance and Labor & Employment, suggests that the company may have weathered the storm of currency fluctuations.

As CRA expands its share repurchase authorization by $20 million, it signals confidence in its own valuation and a commitment to returning value to shareholders, even amidst the choppy waters of global currency markets.