Q1 2021 CRA International Inc Earnings Call
[music].
Good day, everyone and welcome to Charles River Associates first quarter 2021 earnings conference call.
Today's call is being recorded the company's earning release and prepared remarks from Cra's Chief Financial Officer are posted on the Investor Relations section of Cra's website, and see our AI Dot com.
With us today, our CRA as President and Chief Executive Officer, Paul Malley, Chief Financial Officer, Dan Mahoney, and Chief Corporate Development Officer, Chad Holmes.
At this time I'd like to turn the call over to Mr. Mahoney for opening remarks. Please go ahead Dan.
Thank you, Rob and good morning to everyone and.
Please note that the statements made during this conference call, including guidance on future revenue and non-GAAP EBITDA margin and any other statements concerning the future business operating results or financial condition of CRA, including those statements using the terms expect outlook or similar terms are forward looking statements as defined in section 21 of the Exchange Act.
Information contained in these forward looking statements is based on management's current expectations and is inherently uncertain actual performance and results may differ materially from those expressed or implied in these statements due to many important factors, including the extent and duration of the impact of the COVID-19 pandemic on our financial condition and results of operations.
Information regarding these factors is included in today's release and and Cra's periodic reports, including our most recently filed annual report on form 10-K, and quarterly reports on form 10-Q filed with the SEC CRA.
CRA undertakes no obligation to update any forward looking statements. After the date of this call. Additionally, we will refer to some non-GAAP financial measures and certain measures presented on a constant currency basis on this call everyone.
Everyone is encouraged to refer to today's release and related and CFO remarks for reconciliations of these non-GAAP financial measures to their GAAP comparable measures and descriptions of the calculation of EBITDA and measures presented on a constant currency basis, let.
Let me now turn it over to Paul for his report Paul.
Thanks, Dan and good morning, everyone. Thank you for joining us today.
Hope you are staying safe and healthy the per.
First quarter of fiscal 'twenty, 'twenty, one and demonstrated our resiliency and continued momentum in the business as broad based demand for our services drove CRA strong performance building on our record setting fiscal 2020 Cerro Verde reported the highest quarterly revenue and the company's history increase.
<unk> 16, 1% year over year to $146.5 million fueling this growth was a combination of head count expansion and improved utilization during the first quarter, we welcomed more than 30, new colleagues, increasing quarter and consulting head count.
By four 8% year over year at the same time, we saw utilization increased to 76% from the 71% observed and the first quarter of fiscal 'twenty, and 'twenty and up from 70% and the fourth quarter of 'twenty 'twenty as weekly utilization.
And trended upward over the course of the first quarter.
You raised top line expansion during the first quarter resulted in accelerating profit growth specifically profit measures increased year over year and rates more than double the growth and revenue as non-GAAP net income earnings per diluted share and EBITDA grew year over year.
59% 63 per cent and 38% respectively.
This growth resulted and the highest quarterly levels for each of these three prep profit metrics. It was truly an exceptional quarter from top to bottom.
I would now like to highlight some of the services provided during the quarter within legal and regulatory our antitrust and competition economics practice grew revenue by approximately 30% year over year. The practice establish its new high per quarterly revenue as demand for and I Trust and.
Merchant related services remains strong M&A markets continue to rebound from pandemic lows worldwide M&A activity increased 94% during the first quarter of 2021 compared to year ago levels and represented the strongest first quarter period for M&A.
Since records began and 1980 and.
Against this backdrop CRA worked on transactions across a range of industries and geographies. For example, during the first quarter. The competition practice provided economic advice to you to a U S regulatory agency regarding likely economic effects arising from the merger of <unk>.
And to multinational industrial parts manufacturers and the impact on multi million dollar bid markets. Additionally, colleagues from our European competition practice advised Microsoft and the successful seven and a half billion dollar acquisition of any Max a video game publisher.
Looking more broadly at the legal market total case filings continue to rebound, but have not yet returned to pre pandemic levels for the first quarter of 'twenty 'twenty. One total case filings were down 3% year over year.
Focusing on a subset of litigation matters that are more closely aligned with CRA services case filings were essentially flat compared to the first quarter of 2020 a C.
And more rebound pattern can be C can be seen within the courtroom.
And the number of total court judgments during the first quarter was down approximately 7% relative to the year ago period. This represented improvement from the double digit declines observed during much of 2020, but indicates the Pip pandemics effects continue to limit courtrooms.
And their ability to handle normal litigation case loads.
In light of these market conditions, I'm, especially pleased with the strong growth and our legal and regulatory services for the first quarter every practice within legal and regulatory increased its revenue year over year with double digit growth observed in our antitrust and competition economics financial edge.
<unk> forensic services intellectual property labor and employment and risk investigations and analytics practices.
During the quarter Cra's financial economics practice assisted numerous financial institutions and conducting bias testing of artificial intelligence and machine learning models used to underwrite and price consumer credit across a broad base of markets and products. In addition, the practice.
Divided support to clients and the retail banking space with deposit account transactional analysis and response to state and federal financial regulators.
[noise] Operands X services practice continues to experience strong demand from boards and companies that need help responding to allegations of fraud cyber crime noncompliance and misconduct for example, and connection with information security and cyber crime matters.
On behalf of two international financial services firm. The practice was retained to provide cyber incident response services as well as assistance with cyber insurance claims the.
And the practice is also increasingly being called upon to assist with litigation related to special purpose acquisition companies or specs.
For example, we have been retained on behalf of a former board member of a company that had been acquired by us back and which shortly thereafter discovered widespread embezzlement by management during the first quarter. The intellectual property practice advised on multiple high stakes matters involving patents and trade seek.
Fritz and a variety of forms, including federal and state courts International arbitration tribunals and the U S. International Trade Commission for example, CRA expert provided testimony and a patent infringement matter on behalf of the world's leading provider of breathing circuits used and respiratory.
RFP for critical care patients CRA is analysis of economic damages address supply and demand issues. During a period of significantly increased worldwide demand for the patented breathing circuits during the pandemic.
During the first quarter, the risk investigations and analytics practice continued to perform multi jurisdictional investigative and compliance related assignments in the United States, Brazil, the United Kingdom, and the European Union more broadly the practice executed a large internal investor.
<unk> regarding potential violations of the foreign corrupt practices Act by U S government supplier and multiple foreign jurisdictions.
The team also conducted numerous transaction related due diligence assignments for underwriter counsel related to both traditional and spec ipos.
Next I would like to turn to our management consulting services.
After posting its largest quarterly revenue and the fourth quarter of fiscal 2020. The life Sciences practice was slightly down during the first quarter relative to the year ago period, continuing CRA has long history of helping companies launch life Sciences.
<unk> the practice recently assisted a global manufacturer in the developed and developing our commercialization strategy for our newly acquired hepatitis D treatment are.
Our efforts included conducting foundational research into the hepatitis D market mapping the current treatment approach identifying potential lip business limiting challenges and.
And guiding resource allocation to support a successful launch the practice also recently leverage its commercial strategy expertise for our client involved and a business dispute.
The clients sought to renegotiate the terms of an asset purchase following worst than expected clinical trial outcomes compounded by a challenging commercial environment, resulting from the COVID-19, pandemic CRA developed and independent sales forecast, reflecting the new business realities, which help inform commercially.
<unk> and decisions as well as the renegotiation efforts.
CRA as energy practice continues to drive performance as it integrates the London based team that joined CRA and the second half of 2020 during the first quarter. The practice enjoyed near double digit revenue growth as it continued to support the post post merger integration of two major energy some.
Players and the U K as a result of our work. The program is on track to create one of the largest energy retailers in the U K with a significantly improved cost base. Additionally, CRA supporting a large asset manager with the acquisition of a group of energy assets and Eastern Europe.
I am grateful to all of my colleagues for their hard work as we helped our clients address their most important challenges as we continue to adapt to a COVID-19 altered environment.
As our first quarter demonstrate our portfolio of services is highly valued by our clients. Moreover, we are well positioned to maintain the momentum and the business. During the first quarter. We saw both project lead flow and new project originations increased by more than 25 per cent compared to the first.
Quarter of 2020, which was largely unaffected by the global pandemic, while we remain mindful that uncertainties around global economic business health and political conditions can affect our business. We are raising both our revenue and EBIT guidance to reflect the strong start of the year.
<unk> and the broad based demand across our service portfolio for the full year fiscal 2021 on a constant currency basis relative to fiscal 2020, we now expect revenue and the range of 550 million to $570 million and non-GAAP EBITDA margin.
And the range of 10% to 10, 5%.
Before I turn the call over to Chad and then Dan for a few additional comments I have one top one more topic to cover.
As we announced yesterday I'm excited to welcome <unk> Tam is a CRA <unk> first ever chief inclusion and engagement officer.
And since inception, and 1965 CRA has strived to create a dynamic and inclusive culture. The importance of diversity equity and inclusion cannot be overstated and is as it is essential to fostering and engaged and empowered workforce and her new role Rock Hill will help <unk>.
Great diversity equity and inclusion into everything we do and further align CRA to better serve our clients stakeholders and communities.
And with that I'll turn things over to Chad Chad.
Thanks, Paul.
To provide a few comments about our capital deployment during the quarter.
CRA remains committed to maximizing long term value per share through the prudent deployment of capital.
Given CRA strong cash flow generation, we expect to invest and the business for profitable growth, while simultaneously returning meaningful capital to our shareholders.
Against a challenging economic backdrop CRA continues to generate strong cash flows for the trailing 12 months through the first quarter of fiscal 2021.
<unk> adjusted net cash flows from operations were 101 $7 million or 19, 2% of trailing 12 months revenue. These adjusted net cash flows from operations were 57% higher than the $64 9 million.
<unk> observed a year ago, driven primarily by the growth and our business and reduced SG&A spending.
As Dan will describe in greater detail, we concluded the quarter with $31 $6 million of cash and 40.0 million of borrowings under our revolving credit facility, resulting in a net debt position of $8 $4 million. This compares to the first.
Quarter of 2020, when CRA had $70 million of outstanding borrowings and $15 $8 million of cash for a net debt position of $54 $2 million.
The borrowings during the first quarter were primarily to fund bonus payments, which is consistent with our practice and prior years.
As discussed in previous earnings calls CRA is first quarter is typically a period of lower cash levels as it coincides with the timing of a significant portion of our annual bonus payments. Once bonuses are fully paid in Q2, we typically spend the remainder of the year repaying our borrowings and replenishing.
Our cash balance and.
In addition to the normal bonus cycle. The first quarter of 2021 also saw cash outlays of $14 $9 million for talent and $700000 on capital expenditures. We also returned $11 $7 million of capital to our shareholders during the first quarter.
<unk>, consisting of $2 $1 million of dividend payments and $9 $6 million for share repurchases of approximately 167000 shares at an average price of approximately $58 per share.
Following the end of the first quarter as previously announced we completed the modified Dutch auction and self tender offer that resulted in the repurchase of an additional 337837 shares for $25 million, demonstrating our confidence and our long term outlook and our commitment to <unk>.
Returning capital to shareholders.
And now I'll turn the call over to Dan for a few final comments Dan.
Thanks, Chad and as a reminder, more expansive commentary on our financial results is available on the Investor Relations section of our website under prepared CFO remarks, before we get to questions. Let me provide a few additional metrics related to our performance and the first quarter of fiscal 2021.
In terms of consultant head count we ended the first quarter of fiscal 2021, and 837, which consisted of 145 officers 497.
Other senior staff and 195 Junior staff. This represents a four 8% increase compared with the 799 consultant head count reported at the end of Q1 fiscal 2020.
Non-GAAP selling general and administrative expenses, excluding the two 6% attributable to commissions to non employee experts was 13, 2% of revenue for the first quarter of fiscal 2021, compared with 16, 9% a year ago. This quarter's ratio was positively impacted by the strong revenue for Q1.
And effective management of our overhead. Additionally, traveling and entertainment expenses were significantly lower year over year, primarily due to ongoing travel restrictions and various jurisdictions and work from home policies. We will continue to monitor our discretionary expenses to proactively mitigate the financial impacts related to the pandemic and <unk>.
Efficiently manage our transition back to a more normal operating environment.
The effective tax rate for the first quarter of fiscal 2021 on a non-GAAP basis was 24 five per cent compared with 29, 3% on a non-GAAP basis for the first quarter of fiscal 2020.
The lower rate and the first quarter of 2021 was primarily attributable to a greater benefit arising from the accounting for stock based compensation.
Turning to the balance sheet DSO at the end of the first quarter was 92 days compared with 102 days at the end of the fourth quarter of fiscal 2020, DSO and the first quarter consisted of 52 days of billed and 40 days of Unbilled.
At the end of the first quarter, the company's liquidity remained strong totaling approximately $167 million when taking into account the available capacity on our revolving line of credit and our cash balance looking more closely at the components. During the first quarter, we borrowed $40 million under our revolving credit facility primarily.
To fund annual bonuses, we concluded the first quarter of fiscal 2021, with $31 6 million and cash and cash equivalents with the majority residing internationally.
That concludes our prepared remarks, we will now open the call for questions Rob.
Rob. Please go ahead.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
And confirmation tone will indicate your line is and the question queue. You May press star two and if you'd like to remove your question from the queue. As a reminder for participants using speaker equipment. It is necessary to pick up your handset before pressing the star keys to enter the queue. One moment. Please while we poll for questions.
Our first question comes from Andrew Nicholas with William Blair. Please proceed with your question.
Hi, Good morning, Thanks for taking my questions first one was just on utilization.
I think you mentioned it trending upward throughout the quarter.
Seemingly wouldn't imply near record level utilization and March so with that and mine. How do you think about the upper limit of utilization and and the sustainability of those levels and then there's an offshoot to that how are you considering those factors as you think about hiring expectations through the.
And there are this year.
Thank you Andrew and good morning.
So we saw strong lead flow and new project originations during Q4 and that trend continued during Q1 and.
And with those and <unk>.
Increase the flow of new projects. We also saw the activity of our consultants steadily improve.
Two where I think it's safe to assume that the utilization we observed in March is north of the average of 76% that we reported for the quarter going forward I think steady state and a normal world, we would like to operate CRA and the mid Seventy's on a utilization.
And Mark.
And we think as it goes higher yes, we enjoy a short term boost to profitability when your operating near 80% utilization, but I think you risk jeopardizing the quality of the overall services, you're delivering to clients and also foregoing all the revenue opportunities there.
Exist and the marketplace.
So we are going to continue to strive for the mid 70 utilization. So what does that mean with respect to head count growth.
In 2021.
We are trying to as closely match the demand for the services and the supply that we have to deliver on those services.
And that's a challenge given the uncertainty that we are observing and the overall market.
<unk>.
Expect by year end to have year over year head count growth to be in the mid single digits.
But if we see demand start to continue to rise we will just increase our hiring and the secondary market going forward.
Great. That's helpful and then maybe as a follow up to that.
Is there anything that you can say about the recruiting environment broadly.
Broadly right now obviously it seems like.
There's a lot of opportunity and demand to try and capture and youre leaning into that but how easy is it to bring on new talent right now.
Given what I expect is a pretty competitive market.
I think the market is getting tighter.
Break up my response to your question, Andrew with respect to be higher and we do at the University level, both undergraduate and graduate level students and then what we experience and the secondary market for talent on the University level, we have.
Kept open our university recruiting.
Throughout the year. So we typically focus primarily in the fall months.
But we did that in 2020, but we've kept our university recruiting open all the way through the spring.
Our quality of the candidates, we're getting are still remains very high and the yield.
With respect to the offers were making and the acceptance is we're getting are consistent with what we've enjoyed in years past. So we haven't seen any dimunition.
And that on the secondary market you have to work a little harder.
Because everything is done and the virtual world.
With respect to the recruitment of senior level candidates, but we are still enjoying that success.
Hiring people on that market. It just takes more effort from our human capital Department and from Chad Holmes and his team.
Understood and if you wouldn't mind me squeezing one more and just.
On kind of the differences and growth by geography, or a different market environments.
And the U S versus international and if you could just speak to that and and how youre thinking about.
COVID-19 and some of the different.
On dynamics around recovery between those two regions impacting your business. Thank you.
I think the growth has been pretty balanced across our geographies.
So our legal regulatory services has done.
Well, both on North America, and in Europe, and we found we highlighted some of the cases on the management consulting side.
And particularly our energy practice.
On how it's performed but they both enjoyed double digit revenue growth.
With respect to North America, and the international operations the rate or.
Or the pace for what we all hope is a return to normalcy defers, not just by domestic or international but by every city that we operate in so we're closely monitoring that.
Europe, and particularly the UK may be a little ahead.
North America as to their return to.
To the office, but more to come on that topic.
Alright, great. Thanks.
Thank you Andrew.
Our next our next question comes on the line of Marc Riddick with Sidoti and company. Please proceed with your question.
Yes.
Hi, good morning.
Good morning, Mark.
So clearly very strong results across multiple areas and I did want to sort of touch a little bit on first of all I really appreciated the commentary around a multi.
Multiple areas that we're gaining and wanted to touch a bit on market share gains because clearly that's been taking place and many track.
Practice areas and.
Including M&A related and one is just because you could spend a little bit of time on some of the efforts that are taking place there and maybe what youre seeing and and.
From from competitors that may be allowing the opportunity to gain and such market share and multiple on focus areas simultaneously.
Sure.
And there's a lot of really formidable competitors out there and the legal regulatory space and also on the management consulting space.
It's hard to measure to have a precise estimate of what your market share is.
And the markets for which we operate what I can say.
And if you look at any broad based measures either for demand and our overall industry or for what we can observe from peers in that space I think CRA is growth.
<unk> over an extended window of time exceeds both.
Thus I would say, it's pretty safe to assume that we are taking share.
Both organic from organic expansion and also from the addition of new revenue generating resources. There. So we're pretty pleased with that well in the recruitment and and the execution of our performance we try to just focus on.
On CRA and what we do best I cant really control what our competitors are doing in this space. So when we go on to recruit or.
And we go to sell our services, we focus and we focus on the attributes of this company.
And success has really made that quite easy.
For us and that there's a lot going on both for new individuals' enter and the organization and for legacy individuals that are still enjoying expansion of their portfolios.
Okay, Great and then I was wondering if you could talk a little bit about the B E.
Reduced expenses that you see there as I mentioned and as far as balancing and you know what.
Travel and entertainment costs being down, but certainly we expect them to come back over time. So once you could talk maybe a little bit about first of all the magnitude of it and quantify the traveling and overall entertainment savings I guess, maybe relative to where maybe it would have been or it was a year ago, and then sort of as you begin to.
Later that and do you do you think that there will be much and the way of a difference as to how that sort of going forward or is that sort of something that you'd be kind of working with your customers to kind of day to day in a sense of kind of where and how they want and sort of a function as they go forward.
Sure there's a lot of pieces to that so let me try to break it down and first let me try to introduce a couple of cost benchmarks here.
Pre pandemic, if I looked at SG&A, excluding performance payments.
And it hovered right between 17% to 18% of net revenue.
During the pandemic.
We have operated right and the 13% to 14% of net revenue range. So it is a four to 500 basis point.
On.
Margin enhancement due to the lower SG&A over this period of time.
There's a lot of learnings right a lot of pain, but there also has been a lot of learnings over the past 15 months I think some of those learnings relate to how you can just operate more efficiently.
As an enterprise how you can deliver services to clients more expeditiously.
And more with the more of a cost consciousness. There we hope to take some of these learnings back to the office when that time comes on.
I don't believe CRA will operate at 13% to 14% when we return to the office.
But I do think there are opportunities for margin enhancement the degree by which it's harder to estimate and even harder to estimate the timing.
By which we will return to more steady state levels for the firm, but I do believe there's opportunities for margin enhancement tied to the more efficient delivery of SG&A services.
Okay, Great and then you touched on this a little bit in your prepared remarks, and I was wondering if you could spend a little bit about you made commentary around some.
And some new business wins and do some it work that you're doing around Spacs and I was wondering if you could sort of maybe broaden that a little bit and sort of talk about what that opportunity set may look.
Looks like compared to traditional maybe what the traditional M&A mix might might be for CRA. Thank you.
Sure.
A lot of times with was with respect to what drives our business.
It's oftentimes removed from what the funding source is of these acquisitions and has a lot more to do with the complexity of the mergers or acquisitions being discussed and.
What may gain the eyes of the various regulators. If it is just the accumulation of assets like sometimes you see and the private equity space or sometimes you see now what we're seeing the back capital being used for that normally we will just have.
Uh huh.
Minimal impact for CRA, but as we're starting to see just like not all Ipos go well and not all acquisitions go well, we're starting to see litigation arise and investigations arise out of some of these us back transactions.
But I don't think I wouldn't necessarily tie it to the.
And the vehicle itself, but just more that there is increased activity going on and both the generation of capital and the use of that capital and the market space.
Okay, great. Thank you very much thank you mark.
Our next question comes from Kevin Spanky with Barrington Research Associates. Please proceed with your question.
Hey, good morning.
I wanted to start off by talking about our consultant utilization a bit more.
I think on the last call we.
<unk> talked about you know just assuming.
On fairly gradual increase in utilization as the year progressed so did.
Did utilization.
Step up and the first quarter, maybe a little more quickly than you had originally anticipated.
And just based on the strong demand you're seeing.
Yeah first good morning, Kevin Thanks for the question. So as I mentioned earlier, we saw a strong lead flow and new project originations during Q4 and that trend sort of continued during Q1, New project originations were up a little less and 10% and <unk>.
Q4, but we saw that jumped to more than 25% and Q1.
So that is all positive the uncertainty in this environment is of course, whether the new demand will materialize immediately into project billings.
So we're getting the new cases coming in our project inventory is growing but the uncertainty because of all the courts statistics that we've been fighting now for several quarters is how quickly these new matters translate into new revenue generating projects, what we enjoyed during Q.
One is that many of these matters are quickly moved particularly on the M&A side to revenue generating projects.
And thus we saw just steady improvement from January to February February and March on the utilization front.
Okay got it.
And so.
Can you.
You talked about the project lead flow and and new project originations utilization.
I guess all of these things would be informing you and enabling you to.
And increase your guidance.
For the year after just one quarter and.
But could you maybe talk a little bit about what.
And is giving you the confidence to increase guidance.
And after just one quarter and maybe.
And the kind of visibility you feel like you have.
For the remainder of the year as it progresses.
Sure.
What I can say is for the last several months, we have just seen a steady improvement and our operations.
So one there's been a trend.
I know there could be volatility.
And what we're experiencing but we've seen a steady trend of improvement over six plus months or so at CRA. So that as a positive the other positive is that.
We're talking about a lot of practices and each of these calls which means I'm getting broad based contributions, which should also yield more predictability and what the future may hold it is not one practice.
That is driving performance and any one quarter I think a year ago as.
As an example, we had our competition practice was flat and our life Sciences forensics finance practice had stellar Q1s and fiscal 2020.
Here, we are a year later the portfolio is working with the competition practice growing 30%.
Year over year to its best quarter ever and life Sciences is relatively flat.
I think so.
That is not a new story right we've been growing.
The quarter year over year for five plus years, now and it's because of the quality of the overall portfolio that we're enjoying so that definitely plays into the.
And the decision, making and lastly.
And the project inventory is continuing to grow.
Is it possible that they go dormant and revenue doesn't materialize immediately absolutely absolutely possible, but that is just a timing.
Aspect with respect to the revenue the revenue hasnt disappeared unless the value to the firm Hasnt disappeared and it's just when they will come due but I have not seen and the indicators.
Of those.
Revenue flow going dormant so on.
Now on four months into the quarter into the year, but so far it's been a pretty good four months.
Yeah.
Yes, certainly.
Do you try to build.
And I assume you do but some of the uncertainty around the timing of when leads might materialize into revenue into your guidance and.
And maybe have.
And the lesson that <unk>.
Conservatism a little bit.
And now that you've got more evidence and things moving forward or how are you trying to factor that and uncertain environment and to the outlook.
Providing.
It's more of a feel we have lots of different models that try to estimate the expected revenue flow coming from the leads we're getting and the types of projects we're getting.
But the truth is that the ever bands around those estimates are really quite large.
So you know I could be enjoying one.
$46 five or it could be enjoying 135 six.
And we estimate or is are and can you give me that level of precision.
I am looking much more at the micro factors that we observed during the quarter.
In terms of making these decisions what the trends have been how broad base. The contributions are and whether I've seen and the indicators.
And of slowing performance there.
Okay, that's helpful and.
And I wanted to talk to you about.
Specifically the increase in margin guidance.
It sounds like you haven't yet nailed down.
Some of these efficiency gains that are from the learnings that you.
During the pandemic and you haven't necessarily been able to.
Quantify what those might be so so is the margin guidance and truce my guidance increase is being driven more by.
The higher revenue outlook and the operating leverage that's going to create.
There's a number of factors that go into you know go into that estimation. One we just produced a very strong first quarter that was very profitable, which is clearly going to contribute to the annual numbers are.
That we're expecting for fiscal 2021.
And secondly that a return to normalcy and.
And is probably still you know.
Six plus months out as.
As companies are starting to return this spring and and we could see that increasing over the summer months into the fall.
But there's still a leap from returning to the office to beginning travel and normal business activity.
So I could see SG&A, excluding Perth as a percentage of net revenues still being below considerably below historical levels.
You know.
For the next two or three quarters.
And lastly, the other thing that we're gonna be welcoming a new class.
Incoming consultants.
Consultants during the summer months into the fall, which also drives down utilization a bit as these people become integrated into the firm and as utilization dips. So will profit margins be impacted but this is more of the normal seasonality of our business as opposed to anything permanent.
On the profitability outlook.
With respect to and.
Mailing things down and we have a model of what the.
The SG&A improvements may look like.
But we need to actually.
And put them into play.
And let's see how they work.
As we start traveling again as we start attending conferences and.
And marketing, but more.
More to come on that.
I'm just not comfortable at this stage to give you what I would call and you target SG&A range.
For our operations.
Okay. That's fair that's helpful. I Lastly, I wanted to ask about.
Your goal of returning 50% of cash to shareholders and and how that.
And your plans on how youre going to accomplish that.
Going forward and and just.
You know the.
On your take on the outcome and the Dutch auction tender offer and.
Hum and then also played into that 50% cash return to shareholders.
Sure.
The goal of returning 50% of our adjusted cash flow from operations back to shareholders and.
And as aspirational.
And it's not necessarily something youre going to achieve every single quarter right. The goal is over the long term debt that will be the steady state of capital, giving back to our shareholders.
We're off to a pretty good start.
In fiscal.
Fiscal 2021, we purchased about $10 million.
Of equity repurchase about $10 million of equity during Q1 and as you highlighted also completed a Dutch auction, which brings in house more than 25 $25 million.
And of additional repurchases, so that's up to $35 million if I build in.
On the anticipated dividend payments for the remainder of the year, we're already over $40 million.
And total return and so we'll see how the operations.
Continued to materialize and what other reinvestment opportunities there are.
And to see whether we will increase.
Our repurchase activity later in the year, but it's off to a pretty good start.
Not just with the repurchase but the other important part of the Dutch auction was to make sure we are being heard by our current shareholders and prospective shareholders.
With respect to what we believe the intrinsic value of this enterprises. So we're not there yet still trading at a discount.
But a lot closer than where we were three months ago Kevin.
Yes.
Great Fantastic well and thanks for taking on the questions and again congratulations on the strong results no. Thank you too.
To everyone for the questions and for the support.
And thank you for everyone, who is joining us on today's call. We appreciate your time and interest and CRA, we will be participating and virtual meetings with investors and the coming months.
And we look forward to updating you on our progress on.
On our second quarter call be safe, everyone and with that that concludes today's call. Thank you.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.
Yeah.
Okay.