Q4 2024 CRA International Inc Earnings Call
Speaker Change: [music].
Good day, everyone and welcome to Charles River Associates fourth quarter 2024 conference call.
Please note that today's call is being recorded.
The company's earnings release and prepared remarks from Cra's Chief Financial Officer are posted on the Investor Relations section of Cra's website at sea or AI Dot com.
Speaker Change: Today, our Cra's, President and Chief Executive Officer, Paul Omalley, Chief Financial Officer, Dan Mahoney, and Chief Corporate Development Officer, Chad Holmes at this time I'd like to turn the conference over to Mr. Mahoney for opening remarks, Dan. Please go ahead.
Speaker Change: Thank you, Rob and good morning, everyone.
Speaker Change: Please note that the statements made during this conference call, including guidance on future revenue and non-GAAP EBIT margin along with 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.
Speaker Change: Information contained in these forward looking statements is based on management's current expectations. It is inherently uncertain actual performance and results may differ materially from those expressed or implied in these statements due to many factors many important factors, including the level of demand for our services as a result of changes in general and industry specific economic.
Speaker Change: Conditions.
Speaker Change: Additional information regarding these factors is included in today's release and in 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 undertakes no obligation to update any forward looking statements. After the date of this call. Additionally, we will refer.
Speaker Change: To some non-GAAP financial measures and certain measures presented on a constant currency basis on this call everyone is encouraged to refer to today's release and related 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.
Paul Omalley: Now I'll turn it over to Paul for his report Paul.
Paul Omalley: Thanks, Dan and good morning, everyone. Thank you for joining us today.
Paul Omalley: Revenue for fiscal 'twenty 'twenty four it increased by 10, 2% to 687 $4 million, marking CRA seventh consecutive year of record annual revenue legal and regulatory services led this growth with a 12% increase year over year for fiscal 'twenty 'twenty four.
Paul Omalley: For fixed practices grew their top lines with five antitrust and competition economics energy financial economics, intellectual property and risk investigations and analytics delivering double digit revenue growth relative to fiscal 2023 CRA also posted.
Paul Omalley: Record profits for the year as net income earnings per diluted share and EBITDA, each grew faster than revenue and at rates of more than 20% year over year in the fourth quarter, our portfolio strength drove an increase in revenue of nine 2% compared with the fourth.
Paul Omalley: Order of fiscal 2023, resulting in the best quarterly revenue in the company's history.
North American and international operations, both contributed to the quarter's revenue growth, increasing seven 8% and 15, 7% respectively.
Paul Omalley: For the fourth quarter seven of Cra's 11 practices grew their top lines with three energy finance and it and intellectual property delivering double digit revenue growth relative to the fourth quarter of fiscal 'twenty to 'twenty three.
The growth of our sales pipeline supported this record Q4 revenue with conversion rates at customary levels, we drove expansion across both our project lead flow and new project originations, which increased five 5% and seven 5% respectively.
Paul Omalley: Relative to the fourth quarter of 'twenty to 'twenty three we ended the quarter with a consulting head count of 946 and firm wide utilization of 78% in the fourth quarter compared to 73% reported for the Q4 last year the strong utilization helped.
Paul Omalley: Our top line expansion generate quarterly profits that grew at even faster rates with non-GAAP net income earnings per diluted share and EBITDA, increasing year over year by 21, 2%, 24.5% and 28, 4% respectively.
Paul Omalley: I'd now like to spend a few minutes highlighting the markets for our services and some of the projects delivered to our clients during the fourth quarter revenue in the fourth quarter from Cra's legal and regulatory services increased approximately 7%, which surpassed growth rates observed in the broader legal market total.
Paul Omalley: Case filings in the fourth quarter were up 1% year over year, while the number of total court judgments increased 2% within our legal and regulatory services, the finance and intellectual property practices led the way each delivering quarterly revenue growth of more than 20% year over.
Paul Omalley: A year in addition, our <unk>.
Paul Omalley: Antitrust and competition economics, labor and employment and risk investigations and analytics practices expanded revenue year over year.
Paul Omalley: During the quarter Cra's antitrust and competition economics practice worked on merger transactions across a range of industries and geographies. For example, CRA experts assisted Novo holdings and its acquisition of Cadillac <unk>, our contract development and manufacturing organization as well as new.
Paul Omalley: Nor discs subsequent acquisition of three Cadillac manufacturing sites from Novo holdings. The CRA team supported the transaction in both the United States and Europe with the European Commission unconditionally clearing the transaction and finding that the proposed transaction would not hampered.
Paul Omalley: Arrivals access to fill finish processing capacity in the market are critical end stage manufacturing element within the pharmaceutical industry. Furthermore series CRA was retained by waste management, Inc. To advise on its $7 billion acquisition of Stericycle, a leading provider.
Paul Omalley: <unk> of regulated medical waste compliance services and secure information destruction services CRA provided economic assistance to waste management on the competition and regulatory compliance aspects of the acquisition of valley.
Paul Omalley: Are you waiting potential competitive concerns and effects of the acquisition in the United States and Canada. The U S Department of Justice declined to issue a second request and the parties received approvals from the Canadian competition Bureau.
Paul Omalley: During the fourth quarter, our finance practice continued to be active in high profile litigation and arbitration disputes, including matters involving tax controversies criminal sentencing Securities litigation and adversarial actions in bankruptcy crypto currency disputes and valuation.
Paul Omalley: Matters for example, CRA expert testified in an arbitration concerning the market condition for an IPO of the shares of a European midstream oil and gas company. Following the CRA experts testimony the panel of arbiters Declot denied the claim its demand for over 3 billion.
Paul Omalley: And damages.
Speaker Change: Intellectual property practice advised on multiple high Stakes litigation matters, covering a broad range of industries and legal forms for example, and the artificial intelligence technology sector. A CRE expert was retained by a major technology company to evaluate the plaintiffs claim damage.
Speaker Change: Is stemming from the alleged copyright infringement and trade secret misappropriation related to three dimensional digital models used for machine vision research.
Speaker Change: CRA expert provided testimony related to reasonable royalties avoided development cost and the lack of harm to the plaintiffs business, resulting from the alleged juice and another IP matter to other CRA Vice presidents provided expert reports and testimony on economic and damages issues in them.
Speaker Change: Multi jurisdictional patent dispute between two leading consumer product companies Cra's clients one of the top innovators in the home appliance sector secured a favorable global settlement that was supported by the CRA experts opinion provided in in Federal District Court and two the international too.
Speaker Change: <unk> Commission during Q4, the labor and employment practice supported multiple experts who were retained to opine on a diverse set of labor issues. For example, CRA experts opined in a class action complaint.
Speaker Change: Complaint alleging multiple violations of California labor code through the analysis of terabytes of data reporting.
Speaker Change: Employees behavior when recording their work time, the CRA team demonstrated that idiosyncratic variations and employees' time, keeping choices, including those of the named plaintiffs made a class wide analysis inappropriate.
Speaker Change: In addition to providing expert testimony series practice experts continued to be valued partners for clients and early stage assessments and mediation assistance for both discrimination and wage and hour litigation matters.
Speaker Change: The risk investigations and analytics practice continues to focus on executing complex multi disciplinary investigative and analytic assignments. For example, during the fourth quarter. The practice performed in depth due diligence on multiple bidders related to the anticipated sale are very.
Speaker Change: These assets by a large multinational corporation. The matter is ongoing and includes a detailed review of state and federal litigation with a focus on fraud false claims and personal injury matters. Additionally, with input from customers and employees. The CRA team is analyzing the financials.
Speaker Change: Status regulatory filings media and social media relating to each bidders management and operational effectiveness within our management consulting offering the energy practice delivered strong performance during the quarter across the diverse range of services. The team collaborated with multiple <unk>.
Speaker Change: Electric utilities to support generational planning aimed at accommodating load growth from data centers. This work demands.
Speaker Change: Deep expertise in electricity markets energy policy procurement strategies and rate design. Additionally, the practice played a significant role in major energy transactions, such as supporting a prospective buyer of a large electric transmission portfolio in North America.
Speaker Change: In Cra's life Sciences practice, we continue to expand our efforts with respect to early stage assets recently, completing a nine month project for a pharmaceutical company reviewing 22 therapeutic areas in nine countries to identify attractive opportunities for investment the work on early stage asked.
Speaker Change: That's often leads to further work on clinical development strategy engagements such as a recent project focus on European payers and key oncologists regarding the optimal regulatory label pivotal trial expectations and access potential for for the novel Prada.
Speaker Change: In the fight against cancer due to our experience working with pharmaceutical companies. We are often asked to provide expert testimony and opine on agreements in the industry, including a recent retention regarding the definition of product sales and associated inductions and our licensing dispute overall.
Speaker Change: I'm grateful to all of my colleagues for their hard work during the fourth quarter and throughout the year as we helped our clients address their most important challenges our fiscal 'twenty 'twenty four financial performance demonstrates our success in the marketplace and we are looking to continue our trend of broad.
Speaker Change: <unk> profitable growth in the years ahead for full year fiscal 2025 on a constant currency basis relative to fiscal 'twenty 'twenty four we expect revenue in the range of $715 million to 735 million and non-GAAP EBITDA margin in the range of <unk>.
Speaker Change: 0.1% to 13.0%, while we're pleased with Cra's strong performance in 2024, we remain mindful that uncertain global macroeconomic business and political conditions can affect our business with that I will turn the call over to Chad and then to Dan for a few.
Speaker Change: Additional comments Chad.
Chad Holmes: Thanks, Paul Hello, everyone.
Chad Holmes: I want to update you on our capital deployment during the quarter.
Chad Holmes: CRA continues to generate strong cash flows.
Chad Holmes: Demonstrating the strength of our operations and the quality of our revenue Cra's fiscal 'twenty 'twenty four adjusted net cash flows from operations increased 13% year over year to $92.5 million stated another way during fiscal 'twenty 'twenty four CRA.
Chad Holmes: Converted 102% of its non-GAAP EBIT da into adjusted net cash flows from operations. This strong performance matches. The average conversion rate of EBITDA into net cash flows from operations delivered over the past three years.
Chad Holmes: These cash flows represents a discretionary pool of capital used to fund reinvestment in the business and distributions to shareholders I would not I will now detail, how we allocated our capital during the fourth quarter.
Chad Holmes: We repaid $60 million of our net borrowings under our revolving line of credit to bring our year end outstanding debt to zero as we have done in prior years, our cash balance increased during the quarter by $2.2 million to end the year at $26 7 million.
Chad Holmes: Dollars.
Chad Holmes: The fourth quarter of 'twenty 'twenty four also saw net cashless cash outlays for talent investments of $4 $6 million, we spent $10 $6 million on capital expenditures, bringing our year to date total to $16 $6 million for fiscal 'twenty.
Chad Holmes: 25, we expect lower spending on capital expenditures in the range of $5 million to $6 million.
Chad Holmes: We returned $3 $4 million to our shareholders during the fourth quarter consisting of dividend payments for.
Chad Holmes: For the full year, we returned a total of $45 $6 million to our shareholders through a combination of share repurchases and quarterly dividends.
Chad Holmes: Mount represents 49% of Cra's 'twenty 'twenty four adjusted net cash flows from operations and is consistent with our with our ongoing aim of returning half of our adjusted cash flows from operations to shareholders.
Chad Holmes: Since stating this aim at the beginning of fiscal 'twenty 'twenty. One we have returned to shareholders, 53% of Cra's aggregate adjusted net cash flows from operations.
Chad Holmes: Specifically over this four year period, we have returned a total of $178 million to our shareholders consisting of $41 million of dividend payments and $137 million of share repurchases at an average price of $96 per.
Chad Holmes: Sure.
Chad Holmes: As announced earlier today Cra's board of directors authorized an expansion to our existing share repurchase program of $45 million with this expansion. We now have approximately $58 $1 million available under our share repurchase program.
Chad Holmes: Taken together our capital allocation decisions demonstrate continued confidence in CRA as long term prospects as we look to invest in the business for profitable growth while at the same time, returning substantive capital to our shareholders all with the aim of maximizing Cra's law.
Chad Holmes: Long term value per share.
Chad Holmes: With that I will turn the call over to Dan for a few final comments Dan.
Dan Mahoney: Thanks, Chad as a reminder, more expansive commentary on our financial results is available in 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 in the fourth quarter of fiscal 2024.
Dan Mahoney: In terms of consulting head count we ended the year at 946, consisting of 151 officers 552, other senior staff and 243 Junior staff. This represents a five 8% decrease compared with the 1000 and for consulting head count reported at the end of fiscal 2023.
Dan Mahoney: non-GAAP selling general and administrative expenses, excluding the 1.8% attributable to commissions to non employee experts was 15, 9% of revenue for the fourth quarter of fiscal 2024, compared with 16, 1% a year ago for the full year fiscal 'twenty 'twenty four the ratio was 16, 1% compared with.
Dan Mahoney: 16, 2% for full year fiscal 2023.
Dan Mahoney: The effective tax rate for the fourth quarter of fiscal 2024 on a non-GAAP basis was 39% compared with 26, 1% on a non-GAAP basis for the fourth quarter of fiscal 2023, the higher rate in the fourth quarter of 2024 was largely attributable to the impact of the remeasurement of our deferred.
Dan Mahoney: Current year deferred tax assets as a result of changes in tax laws and a decrease in the tax benefit related to share based compensation.
Dan Mahoney: Turning to the balance sheet DSO at the end of the fourth quarter was 106 days compared with 122 days at the end of the third quarter of fiscal 2024 DSO in the fourth quarter consisted of 76 days of billed and 30 days of Unbilled. We concluded the fourth quarter of fiscal 2024 with $26 seven.
Dan Mahoney: And cash and cash equivalents and a further $196 million of available capacity on our line of credit for total liquidity of $222 $7 million.
Dan Mahoney: That concludes our prepared remarks, we will now open the call for questions. Rob. Please go ahead.
Speaker Change: Thank you at this time, we'll be conducting a question and answer session.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Formation Callaway indicate your line is in the question queue you.
Speaker Change: You May press star two if you'd like to remove your question from the Q1 moment. Please while we poll for questions.
Speaker Change: Okay.
Speaker Change: Our first question comes from Marc Riddick with Sidoti <unk> Company. Please proceed with your question.
Marc Riddick: Hey, good morning.
Speaker Change: Hey, good morning, Mark.
Speaker Change: So I wanted to touch on a few things first of all thanks for all the detail provided in his prepared remarks and in the materials as well I just wanted to sort of get into a little bit of the thoughts around the the the high utilization level that you experienced in the fourth quarter.
Speaker Change: And and how you're thinking about that going forward.
Speaker Change: And particularly maybe how that might play into that head count and our expectations for 'twenty five.
Speaker Change: Sure.
Speaker Change: <unk>.
Speaker Change: We are constantly trying.
Speaker Change: To match the supply of demand.
Speaker Change: Supply and the demand for our services. So that's not a 2024 phenomenon.
Speaker Change: In 2024, well, we took an action.
Speaker Change: To try to correct. What we saw is some excess capacity in some parts of the business.
Speaker Change: That doesn't mean that there was an overall staff reduction across the portfolio. These are targeted actions meant.
Speaker Change: To get the most benefit from the hard work of my colleagues and their revenue generation.
Speaker Change: So I wanted to put that out there. The other thing that we've seen in the past few years legal and regulatory is growing at a faster rate than our management consulting services. The reason that is relevant is legal and regulatory operates at a higher utilization point than management consult.
Speaker Change: <unk>.
Speaker Change: On average so if leaving on leg, if legal and regulatory is making up a larger part of the portfolio.
Speaker Change: Utilization.
Speaker Change: That we report will inch up.
So part of it is we had a busy Q4, absolutely but the other part of the 78% is just that legal and regulatory is just making up a larger piece of the portfolio. Thus you see a natural increase in that percentage going forward.
Speaker Change: Again, when I think of medium to long term head count growth should roughly be equal to revenue growth that hasnt changed.
Speaker Change: They'll think that is the key driver to our growth in the short run you get impacts from any kind of market disruptions.
Speaker Change: And any impact on any.
Speaker Change: Now kind of optimization actions that we may take.
Speaker Change: Okay. I appreciate that thank you I was wondering if you could talk a little bit about I mean, it's I guess a standard question does your but wondering if you could speak to maybe any thoughts or or anything that you've seen thus far with the new administration. If there's any particular areas that are that you've seen.
Move one way or another over the last several weeks that that maybe we should be thinking about.
Speaker Change: Sure I think it's too early to call a clearly what what are we six weeks or less into the new year, even less into the new administration.
Speaker Change: So I think myself a lot of market observers are trying to see where we get some clarity as to what is the underlying objective of many of these actions.
Speaker Change: As an example, we saw that M&A transactions in the month of January we're.
Speaker Change: We're at a gondola.
Speaker Change: A 10 year low for that month that is not your broader expectations in the market.
Speaker Change: So I don't think that's necessarily a new expectation point I just think we're all trying to see where you know the administration's objectives are you know shake out here.
Speaker Change: Okay, and then one of the things that was sort of but that sort of caught my eye was the commentary around.
Speaker Change: Obviously, a broad based areas.
Speaker Change: Of growth, but it was sort of curious as to if there was any particular timing aspect or or whether or not that the gains that you saw were consistent throughout the fourth quarter or or if there was any sort of pick up at the very end of the quarter.
Speaker Change: All of Q4 was a strong quarter right I can't say that we started off weak in October and a gradually picked up I think we had a strong December.
Speaker Change: On that front.
Speaker Change: But it wasn't markedly different than the rate that we observed in October and November.
Speaker Change: Okay, great. Thank you very much.
Mark: Thank you Mark.
Speaker Change: Our next question comes from Kevin Spanky with Barrington Research. Please proceed with your question.
Kevin Spanky: Hey, good morning, everyone.
Speaker Change: Good morning, Kevin.
Speaker Change: Hey, I wanted to start out by asking about.
Speaker Change: The outlook for 2025.
Speaker Change: A solid outlook for for revenue growth in 2025.
Speaker Change: And just wondering how.
Speaker Change: Maybe youre thinking about.
Speaker Change: Your various practices contributing to that to that outlook.
Speaker Change: Specifically.
Speaker Change: So the larger practices like antitrust and competition economics, and in life Sciences, which I.
Speaker Change: I note that you you called out the life Science grew grew in the fourth quarter. So.
Speaker Change: Just wondering how all the various practices.
Speaker Change: <unk> are contributing to the build up to 2025 guidance.
Speaker Change: Yeah.
Speaker Change: Sure well. Thank you for noticing that the guidance provided for 2025 is rather strong.
Speaker Change: I think it's rather strong for a few reasons one we.
Speaker Change: We're not basing that on easy Comparables.
Speaker Change: We're talking about our fiscal 2024.
Speaker Change: To all time highs across the board.
Speaker Change: Whether it's on revenue whether it's on profitability.
Speaker Change: And also the broad based contributions of the entire portfolio. So that's a hard thing to build on.
Speaker Change: And we think the portfolio provides us the opportunity for really solid growth.
Speaker Change: And profitable growth at that Ah I really would like to see.
Speaker Change: Practices other than competition.
They just Ben just a steady contributor and an exceptional contributor quarter after quarter year after year.
Speaker Change: They are the best entity in the marketplace.
Speaker Change: I would love to see the other parts of that portfolio.
Speaker Change: I'll try to close the gap on those growth rates and competition and it's only one quarter, but we started seeing that in Q4.
Speaker Change: Right, we didn't competition didn't grow double digits in Q4, but they still grew five 6%.
Speaker Change: And that's pretty hard to do when you're delivering all time highest quarter after quarter.
Speaker Change: So I would love to see our the.
Speaker Change: The other parts of the legal regulatory practice grow that's a you know at a little faster rate that's embedded in that forecast.
Speaker Change: And I would love to see the growth opportunities that we have resident in life Sciences and in the energy practice come to fruition.
Speaker Change: Okay. Thank you for the comments there.
Speaker Change: And in terms of the.
Speaker Change: The margin guidance for fiscal 2025.
Speaker Change:
Speaker Change: non-GAAP non.
Speaker Change: The non-GAAP EBITDA margin guidance of 12 or 13, 4%.
Speaker Change: Comparing to I believe 13, 2%.
Speaker Change: <unk>.
Fiscal 2024, maybe just talk about the puts and takes there.
Speaker Change: Youre thinking about.
Speaker Change: Q4 related that that margin outlook for 2025.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: What I'm excited about on the profit margin is that we have been making gains on our rate of profitability over the last handful of years and anytime you make these kind of large gains are my biggest concern is are you going to give any of it back that is.
Speaker Change: A lot to do with your cost management, but it also has a lot to do with the composition of your portfolio.
Speaker Change: Because sometimes growth comes.
Speaker Change: It comes at the cost of lower profits.
Speaker Change: Growth in revenue comes at the cost of lower profits. So the fact that we've been able to drive the kind of revenue growth rates that we've delivered and at the same time continuing to deliver all time highs on dollar profits and rates our profit.
Speaker Change: I feel pretty good about and what we put forth for guidance and our 2025 is roughly the same guidance range that we put forth at the beginning of the year.
Speaker Change: All are at the last guidance range the update.
Speaker Change: 2024.
Speaker Change: So I'm not planning to give it back.
Speaker Change: Whether we are ready to take a step above the 13% threshold that we achieved in 'twenty four I'm not ready to take that leap, but I feel pretty good about the profit generating capacity of our company.
Speaker Change: Okay. Good.
Speaker Change: And.
Speaker Change: I know it was asked earlier just about.
Speaker Change: In relation to.
Speaker Change: The Trump administration and regulatory enforcement, but.
Speaker Change: It wouldn't appear to be the case from the fourth quarter results and the.
Speaker Change: 2025 outlook, but.
Speaker Change: So some of the <unk>.
Speaker Change: <unk>.
Speaker Change: Fifth in the landscape in terms of tariffs et cetera are you.
Seeing any of that.
Speaker Change: Sort of hesitancy among customers to move forward or.
Speaker Change:
What's.
Speaker Change: Have you picked any of that up I guess.
Speaker Change: From yeah clients, yes business as usual.
Speaker Change: Again, I think it's a little a little too early.
Speaker Change: To declare defeat or declare a victory.
Speaker Change: Clearly I looked a little carefully when I saw the M&A statistics for the month of January.
Speaker Change: We're pretty low.
Speaker Change: But again overall expectations in the marketplace of that pick up.
Speaker Change: Usually uncertainty will delay expenditures.
Speaker Change: We've seen that happen before I haven't experienced that to date, but again I'm only you know about a month into the new administration only.
Speaker Change: Only about six weeks into the new year, So I don't know.
Speaker Change: You know what direction, we're going to go into.
Speaker Change: With respect to government impact on the economy for the quarters ahead.
Yeah.
Speaker Change: Okay fair enough.
Speaker Change: And.
Speaker Change: As we again just following up on utilization.
Speaker Change: Yes is that legal and regulatory.
Speaker Change: A piece of the business.
Speaker Change: Can you just to grow faster.
Speaker Change: Should we still think about mid Seventy's is the appropriate utilization rate.
Could it be could it be a bit higher.
Speaker Change: How do you think about that.
Speaker Change: Yeah, I think we definitely have the opportunity to go a little higher than the mid seventies again I'm not you always don't Wanna started trend on one or two data points are in terms of the quarterly results that we enjoyed.
Speaker Change: During fiscal 2024, but that opportunity definitely exists what are the potential risks outside of the overall demand environment.
Speaker Change: One possibility and that's why I'm not ready to change that overall tar.
Speaker Change: Target of mid Seventy's is I really hope life Sciences and management consulting.
Speaker Change: Start to grow at faster rates going forward right things arent linear our legal and regulatory doesn't always grow at the same pace as management consulting they oscillate.
So I would gladly take a pickup in the growth rate a management consulting relative to litigation services.
Speaker Change: And have utilization drop a couple of.
Speaker Change: Basis points.
Speaker Change: Okay, and then lastly, just.
Can you.
Speaker Change: Discuss just the overall market for talent.
Speaker Change: For Charles River Associates.
Speaker Change: Hum.
Speaker Change: You're continuing your ability to attract talent.
Speaker Change: You know what the pipeline looks like.
Speaker Change: Hum.
Speaker Change: Is it still relatively soft.
Speaker Change: In terms of the junior consultants side in terms of.
Speaker Change: We were able to bring in people there and whats the senior talent.
Speaker Change: When I look as well look like as well sure.
Speaker Change: So I.
Speaker Change: I will I will try to break it up into two buckets, what I would call more of our consultants that help on the delivery of the services and those consultants that help on the revenue generation.
Speaker Change: The portfolio on the delivery of the services, yes, we are still seeing a very strong retention rates across the.
Speaker Change: Portfolio.
Speaker Change: So I think that means that we may have a turnover at lower levels say relative to historical norms.
Speaker Change: So that means it's going to be a buyer's market, but it also means you need to hire wisely.
Speaker Change: In terms of placing that capacity in the right places and you also need to you know always.
Speaker Change: Test, whether the staff can be fungible and used across your services at that so I'm feeling pretty good on the delivery capacity aspect on the revenue generating capacity as I know, it's not news to you or anyone there's a lot of disruption happening.
Speaker Change: In our marketplace right now, particularly in around the services of legal regulatory Ah you're.
Speaker Change: Your you know you play the dual role of trying to provide an attractive home for your existing colleagues and also trying to communicate why that environment is great for respective lateral hires are we're doing both we're doing both and the goal.
Speaker Change: At the end of the year is to be a net positive on that pursuit.
Speaker Change: So you know.
Speaker Change: There are great opportunities our pipeline of opportunities is rather full but having great staff also means that other firms are doing their best to try to recruit them to their organization.
Speaker Change: Okay.
Speaker Change: Alright, well again, congratulations on the strong fourth quarter results I will turn it back over thank you.
Thank you Kevin.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Andrew Nicholas with William Blair. Please proceed with your question.
Andrew Nicholas: Hi, good morning.
Speaker Change: Thanks for taking good morning, Andrew.
Andrew Nicholas: Yeah, Good morning, Paul.
Andrew Nicholas: I wanted to pose the threat of that last response, a little bit more.
Andrew Nicholas: Sure, obviously quite a bit of news here this week.
Andrew Nicholas: A competitor of Yours has also talked quite a bit about some of the changes going on within the antitrust and competition economics right the market broadly here.
Andrew Nicholas: Start the year can.
Andrew Nicholas: Can you talk a little bit about kind of what you're expecting for your antitrust.
Andrew Nicholas: Retention in particular, how much.
Andrew Nicholas: Are you baking that into your outlook or 425% is there.
Andrew Nicholas: Potential downside to that outlook.
Andrew Nicholas: If more.
Andrew Nicholas: If there is net.
Andrew Nicholas: Outflows, if you will as opposed to the net positive.
Andrew Nicholas: Dynamic that you are targeting.
Andrew Nicholas: Yeah. So what we've incorporated into the outlook Andrew are things that we know about at this point in time I haven't done any kind of probability adjustment of where I'm gonna be net net.
Andrew Nicholas: By the end of the year, if our track record is any indication.
Andrew Nicholas: I think we're going to be a net positive.
Andrew Nicholas: But we got some work to do like I said both on.
Andrew Nicholas: Now the retention of our legacy colleagues and also the recruitment of laterals. There. So a lot more to come in in the months ahead Ah.
Andrew Nicholas: I was told long ago when.
Speaker Change: When I thought I was going to get a raise from my boss and I said, you know I got a call from a you know from a competitor and I thought he is gonna be throwing money at me in the comment I got back so Paul I'm going to be much more concerned.
Andrew Nicholas: When youre not getting calls from from.
Andrew Nicholas: <unk> and that has always stuck with me.
Andrew Nicholas: Accumulating the kind of colleagues we have at CRA means that every competitor including.
Andrew Nicholas: This spin off.
Andrew Nicholas: You know, Matt are going to look to CRA Ah to try to bolster their portfolio, that's not a surprise its not a surprise as it exhausting absolutely, but what you want to try to do is use your strength in the market to bet at the end of the day being a net positive from the disc.
Andrew Nicholas: <unk>, that's being created right now.
Andrew Nicholas: But.
Andrew Nicholas: The guidance range includes my best expectations as of this time.
Speaker Change: That's super helpful. I think a great way to frame it and maybe.
Andrew Nicholas: Just a related follow up.
Andrew Nicholas: Is that same expectation or your best guess does that also reflect some.
Andrew Nicholas: Increased count to keep people.
Andrew Nicholas: Some of those.
Andrew Nicholas: Of that talent maybe take.
Speaker Change: Similar to the one in your example, okay. Yeah. Thank you ma'am, yes, yes.
Andrew Nicholas: <unk>.
Speaker Change: But just to put a bow on on my response to that.
Speaker Change: It does result of surprise surprise when there is competition for talent use it usually the employees benefit from that from higher wages.
Speaker Change: And that is happening I think that is happening at CRA and across many of our competitors the margin range that I put forth incorporates again.
Speaker Change: To the best of my knowledge, all of those new comp arrangements and comp expectations.
Paul Omalley: Very helpful. Thanks, Paul.
Andrew Nicholas: Thank you Andrew.
Paul Omalley: Yeah.
Speaker Change: We have reached the end of our question and answer session I will now turn the call back over to Mr. Maui for any closing or additional comments.
Speaker Change: Again, thanks to everyone for joining us today, we appreciate your time and interest in CRA, we will be participating in virtual meetings with investors in the coming months and we look forward to updating you on our progress on our first quarter call. This concludes today's call. Thank you.
Speaker Change: Okay.
Speaker Change: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.