CRA International, Inc. (NASDAQ:CRAI) Q2 2023 Earnings Call Transcript

Paul Maleh: I think the ability to identify, attract and hire talent has been pretty consistent with what we’ve seen in prior quarters. What is not consistent with what we’ve seen in prior quarters is sort of the lower voluntary attrition rates we typically observe during Q2, Q3 and into the second half of the year. That is running closer to more historic lows for – and thus yielding a bit higher headcount than we otherwise would have anticipated. So we’re happy to have our colleagues here. We’re doing our best to make the most productive use of all this talent we have, but I think it will take care of itself as Dan noted, in terms of our expectations of headcount growth by the end of the year.

Kevin Steinke: Okay. Thanks for the insight and congratulations on the solid results. I’ll turn it over.

Paul Maleh: Thank you, Kevin.

Operator: Our next question is from Marc Riddick with Sidoti & Company. Please proceed with your question.

Marc Riddick: Good morning.

Paul Maleh: Good morning, Marc.

Marc Riddick: So I wanted to start with the – first of all, thanks for all the detail and the color that you’re seeing here. So why don’t you talk a little bit about the utilization pick up. Certainly, it’s up from first quarter. I was wanting to talk a little bit about the pace of that. Did that just improve sequentially through the quarter? Was there any lumpiness there? It seems as though there’s – certainly, there’s drivers for that, but I wanted to get your thoughts on the improved utilization.

Paul Maleh: We definitely saw an improvement in overall demand for our services during the quarter, and it was pretty steady throughout the quarter. Utilization is, of course, influenced by that improvement in demand, but it’s also influenced by the growth of headcount as we welcomed a lot of new colleagues during the second quarter. So one, the demand has sort of upward pressure on utilization, but all the new colleagues coming aboard, particularly as we get them integrated and staffed on projects has a downward pressure on the utilization. But again, over the second half heading into ’24, I think that should take care of itself to get our utilization back to more historical patterns.

Marc Riddick: Great. I was wondering if you could – and I know you gave a lot of details as to what you’re seeing, but I was curious as to what you’re thinking about or seeing with the court filings and judgments and those pacings and how that plays into your thoughts for the remainder of the year?

Paul Maleh: We saw roughly mid-single-digit growth year-over-year on the number of new cases and the number of court judgments being produced during the quarter. So a modest expansion, which I’m sure is helping some of that new lead flow that we’re observing.

Marc Riddick: Then I wanted to shift gears and – certainly, there’s a lot of benefits as far as the top line growth that you’ve already shared. I was wondering if you could talk a little bit about some of the opportunities that you’re seeing with some of the upside internationally and some of the driving forces there?

Paul Maleh: Sure. I always hesitate to try to give answers about opportunities and upside just because of the continued strength of the performance, if I do say so myself. We’ve been delivering strong performance quarter after quarter, record levels of performance for a number of our practices. So I don’t know whether anything is a surprise or upside pop, but just more excellent execution by my colleagues throughout the service portfolio. We still believe the overall regulatory environment, both here in North America and in Europe, is very supportive of continued growth in our litigation side of the house. There’s a lot of discussion about clean energy and new generating capacity, which our Energy practice has been at the middle of – advising clients how best to structure their portfolios.