CRA International, Inc. — Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022 (52 weeks), compared with fiscal 2021 ended January 1, 2022 (52 weeks). The request metadata says “2021 Q4,” but the supplied filing is the 2022 annual report; confirm the intended period.
Business context
CRA is a global consulting firm providing litigation, regulatory, financial, and management consulting services. Revenue is primarily generated from employee consultants’ billable hours and rates. No client represented more than 5% of revenue in fiscal 2022, 2021, or 2020.
Financial results and liquidity
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $590.9 million | $565.9 million | +4.4% |
| Income from operations | $58.7 million | $55.7 million | +5.4% |
| Operating margin | 9.9% | 9.8% | +0.1 percentage point |
| Net income | $43.6 million | $41.7 million | +4.7% |
| Diluted EPS | $5.91 | $5.45 | +8.4% |
| Cash from operations | $25.1 million | $75.7 million | Down $50.6 million |
Net margin was 7.4% in both years. Utilization rose to 75% from 74%; billable hours increased 4.3%, and consultant headcount grew by 78. Fixed-price revenue fell to 19% of revenue from 24%, while time-and-materials revenue increased to 81% from 76%. International revenue remained approximately 20% of total; U.K. revenue was $89.2 million, about 15% of total.
Cash and cash equivalents were $31.4 million at year-end, down $34.7 million. Working capital was $31.7 million. Operating cash flow was pressured principally by a $30.3 million increase in accounts receivable and unbilled services and a $10.6 million increase in forgivable loans. Investing activities used $18.2 million, including $14.4 million net consideration for acquisitions and $3.8 million of capital expenditures. Financing activities used $39.0 million, including $27.6 million of share repurchases and $9.6 million of dividends.
There were no revolving-credit borrowings outstanding at year-end; $195.6 million was available after letters of credit. The refinanced facility provides up to $250 million, matures August 19, 2027, and was covenant-compliant at year-end. Lease liabilities totaled $122.0 million. The filing states cash, operating cash flow, and available credit should cover anticipated needs for at least 12 months.
Material changes, outlook, and risks
- Revenue growth and improved utilization were accompanied by operating-margin expansion, but SG&A rose 13.1% to $110.1 million, faster than revenue, due to compensation, travel, software, training, rent, and professional-service costs.
- The effective tax rate increased to 25.8% from 23.2%, primarily because of a lower tax benefit from share-based compensation.
- CRA acquired Welch Consulting in February 2022, adding 45 colleagues, and bioStrategies Group in November, adding 17 colleagues. The bSG acquisition was not significant to consolidated results for the year.
- Management provided no specific revenue or earnings guidance. It said COVID-19 did not materially adversely affect fiscal 2022 results, but noted continued uncertainty and that results may not indicate future performance. Inflation had not materially affected results to date.
- Key risks include retaining and recruiting consultants and non-employee experts; maintaining bill rates and utilization; engagement cancellations and client collections; competition; cybersecurity and confidentiality; fixed-price cost-estimation and margin risk; economic, regulatory, geopolitical, and currency volatility; and acquisition integration. A 10% foreign-exchange movement was estimated to affect fiscal 2022 pretax income by approximately $4.3 million.
- The auditor identified fixed-price revenue estimates of costs to complete as a critical audit matter. The filing reports no material pending legal proceeding, while noting ordinary-course legal actions and that outcomes are inherently uncertain.
Investor verification priorities
- Confirm the intended reporting period: the supplied document is FY2022, not a 2021 Q4 filing.
- Assess the quality and collectability of the increased receivables and unbilled services, and the factors behind the cash-flow decline.
- Review utilization, hiring and compensation trends, and whether higher SG&A costs persist.
- Examine fixed-price project estimates and acquisition performance, particularly Welch Consulting and bSG.
- Verify capital-allocation assumptions, including continued repurchases and dividends, against cash generation and credit-facility covenants.
The auditor issued an unqualified opinion on the financial statements and internal control over financial reporting.