Cra International,inc. · NASDAQ:CRAI
Cra International,inc — Charles River Associates — Investor Day (November 2023)
64 slides from Cra International,inc's investor day presentation, Nov 29, 2023
Slide 1: Charles River Associates Investor Day
Charles River Associates Investor Day November 29, 2023 This presentation is subject to and should be read in conjunction with the disclaimers and other statements contained under the heading “Safe Harbor Disclaimer.”
Slide 2: Safe Harbor Disclaimer
Safe Harbor Disclaimer Statements included in this presentation which are not historical in nature, including those concerning the company’s future business, operating and financial condition, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-
Slide 3: Today's Agenda
Today’s Agenda 11:30am – 12:30pm Registration and Lunch 12:30 – 1:00pm Introductory Remarks Paul Maleh 1:00 – 2:00pm Competition Practice Margaret Sanderson, Laila Haider, Peter Boberg 2:00 – 2:10pm Break 2:10 – 2:55pm Forensics Practice Kris Swanson, Dan Roffman 2:55 – 3:40pm Life Sciences Practice
Slide 4: Introductory Remarks
Introductory Remarks Paul Maleh Chairman of the Board, President and CEO 4
Slide 5: A Leading Global Consulting Firm
A Leading Global Consulting Firm For over 50 years, Charles River Associates (CRA) has been a premier consulting firm. In 1965, our founders envisioned a company that would bring the developing technology of academia, especially in the then-burgeoning area of quantitative methods in economics, to th
Slide 6: Investment Thesis
Investment Thesis We are committed to being the firm of choice for our clients as they address their most important litigation, regulatory, and strategic challenges, as well as for our employees as they seek a fulfilling and exciting place to work Leading experts in their Management team with strong
Slide 7: We Are Delivering Growth While Returning Capital to Shareholders
We Are Delivering Growth While Returning Capital to Shareholders Revenue Headcount EPS Stock Cash Growth* Growth Growth* Repurchases Dividends Fiscal 2023 4% 4% on a constant 11% utilization of 69% -12% -20% on a constant $24M average price of $8M Q3 YTD currency basis** currency basis** $111.23 per
Slide 8: Consistently Strong Performance Reflects the Quality of Portfolio and Breadth of Contributors
Consistently Strong Performance Reflects the Quality of Portfolio and Breadth of Contributors Revenue $700 $615 $591 $600 $566 $508 $500 $451 $418 (millions) $400 $300 $200 $100 $0 2018 2019 2020 2021 2022 Est. 2023* Against challenging comparisons, CRA has achieved record-breaking revenue in each o
Slide 9: Project Lead Flow Has Served as a Good Barometer of Future Expansion in the Business
Project Lead Flow Has Served as a Good Barometer of Future Expansion in the Business 175 158 150 147 125 100 75 Revenue Index Lead Flow Index 50 2018 2019 2020 2021 2022 Est. 2023* Conversion 61% 64% 67% 70% 67% 59% Ratio *Estimated 2023: Revenue represents the midpoint of CRA’s annual financial gui
Slide 10: Consultant attrition in fiscal 2023 is historically low
Consultant attrition in fiscal 2023 is historically low, falling below rates experienced during COVID-related lockdowns Attrition Rates of Consultant Headcount CRA has welcomed nearly 200 new consulting 25% colleagues during the first three quarters of fiscal 2023. 21% 20% 20% Approximately 60% of n
Slide 11: Solving Complex Problems with High Value-Added Expertise
Solving Complex Problems with High Value-Added Expertise Each of our practices Antitrust & Competition ` Labor & Employment is highly regarded, Financial and our consultants Economics are recognized for Auctions & Competitive Life Sciences their creative and Bidding multidisciplinary Forensic Servic
Slide 12: Competition Practice
Competition Practice Margaret Peter Boberg Laila Haider Sanderson Vice President Vice President Vice President, Practice Leader of Antitrust and Competition Economics 12
Slide 13: Topics
Topics • Today’s global expert offering • Breakdown of cases between mergers and litigation • Merger activity levels – US enforcement trends – US Merger Guidelines proposed amendments – EU and UK enforcement trends • Litigation activity levels • Competition practice growth through 2023 • Destination
Slide 14: Today's global offering
Today’s global offering London CRA’s Antitrust and Competition Economics 51 practice is a leader in providing economic analysis, advice, and testimony for antitrust and merger cases worldwide. Our 64 work as competition experts 37 relies on rigorous theoretical Oakland 167 Salt Lake City Brussels an
Slide 15: Our work is divided between mergers and litigation
Our work is divided between mergers and litigation Distribution of Revenue by Project Sourcer 100% 90% 80% Fraction of sourced Net Revenue 70% 60% 50% 40% 30% 20% 10% 0% 2018 2019 2020 2021 2022 2023* Litigation Merger / Regulatory * 2023 net revenue by project type estimated by assuming the year-to
Slide 16: Merger transactions are down but enforcers are active
Merger transactions are down but enforcers are active Global Announced Merger & Acquisitions $6,000 60,000 $5,000 50,000 Number of Announced Deals Aggregate Deal Value ($B) $4,000 40,000 $3,000 30,000 $2,000 20,000 $1,000 10,000 $0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 First 9 Mon
Slide 17: 2023 DAMITT statistics for the United States
2023 DAMITT* statistics for the United States • US Agency investigations – Total merger investigations down but fraction challenged is up • From 2011-2020, the fraction of significant transactions that were litigated or abandoned rarely exceeded 30%. • In 2021, 37% of significant transactions were l
Slide 18: US 2010 Horizontal Merger Guidelines provided 'safe harbor' for many mergers
US 2010 Horizontal Merger Guidelines provided ‘safe harbor’ for many mergers 18
Slide 19: Proposed US Merger Guidelines eliminate 'safe harbor' threshold
Proposed US Merger Guidelines eliminate ‘safe harbor’ threshold bringing more deals under agency review Structural Presumption if Combined Share > 30% 19
Slide 20: Evolution of US Merger Guideline 'safe harbor' thresholds
Evolution of US Merger Guideline ‘safe harbor’ thresholds 1992 Guidelines 2010 Guidelines Draft Guidelines 20
Slide 21: Impact of US enforcement on our merger work
Impact of US enforcement on our merger work • US Agencies are: – Issuing more “Second Requests.” – Seeking more information on more issues. They are rarely narrowing the scope of their request, as was done in the past. • Demand for assistance responding to Second Requests has increased significantly
Slide 22: 2023 DAMITT Statistics - Europe
2023 DAMITT* Statistics - Europe • EU merger investigations – Total merger investigations down with fraction of Phase I remedy cases also down – In 2022, there were 18 significant EU merger investigations • 2 prohibitions, 2 Phase II remedies, 10 Phase I remedies, 4 abandoned – 2023Q1-Q3 had 10 conc
Slide 23: UK merger 'intervention rate' over time
UK merger “intervention rate” over time 80% 70% 60% 50% 40% 30% 20% 10% 0% 2003/04 2006/07 2009/10 2012/13 2015/16 2018/19 2021/22 23
Slide 24: Antitrust litigation in the US
Antitrust litigation in the US • CRA experts are retained to testify about economic issues in litigation matters involving alleged anticompetitive conduct. – Economic analysis and testimony are a regular feature in antitrust litigation and often lie at the heart of the proceeding • We provide econom
Slide 25: Antitrust class action litigation in the United States
Antitrust class action litigation in the United States • Number of federal consolidated antitrust class actions has varied widely in the last 14 years – A dramatic increase in filings in 2019 and 2020 compared to earlier and later years. – Total cases filed in 2022 was below the average number of fi
Slide 26: Annual variation in antitrust class action filings
Annual variation in antitrust class action filings Federal Consolidated Antitrust Class Action Filings by Year 250 200 Number of Consolidated Filings 150 100 50 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: 2022 Antitrust Annual Report: Class Actions in Federal Cour
Slide 27: Annual variation in antitrust class settlement amounts
Annual variation in antitrust class settlement amounts Settlement Amount by Year Settlements Total $32.2B from 2009-2022 $6.0 $5.0 Total Settlement Amounts ($B) $4.0 $3.0 $2.0 $1.0 $0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: 2022 Antitrust Annual Report: Class
Slide 28: Practice revenue growth has been solid throughout changing market landscape
Practice revenue growth has been solid throughout changing market landscape Competition Practice Net Revenue, 2019-2023 Net Revenue ($M) 2019 2020 2021 2022 2023* * 2023 net revenue estimated by annualizing YTD Q3 practice net revenue. 28
Slide 29: Effective delivery to clients requires ability to rapidly scale teams
Effective delivery to clients requires ability to rapidly scale teams to support experts • We are hired for the largest, more complex, cases because of our scale and skill set • Complex cases require large distributed teams – CRA team of 44 economists worked on a merger across multiple jurisdictions
Slide 30: Our staff helps us recruit experts and expand their business
Our staff helps us recruit experts and expand their business • Since 2019, we have recruited 10 vice presidents to Competition from rival consultancies • Our “why join CRA” is built around our staff – We have the staff needed to respond to small and large client projects – We have staff technical ex
Slide 31: We continue to invest in the people and resources necessary to serve our clients
We continue to invest in the people and resources necessary to serve our clients • The increase in data created and collected by our ultimate clients has changed the scale of computational resources required to store and conduct economic analyses – CRA has and will continue to invest in the expertis
Slide 32: Break
Break CRA‘ tharles River Ass¢ ciates
Slide 33: Forensic Services Practice
Forensic Services Practice Kristofer Daniel Roffman Swanson Vice President Vice President and Practice Leader, Forensic Services 33
Slide 34: Forensic Services Practice
Forensic Services Practice Growing Rapidly… and Just Getting Started! 34
Slide 35: Forensic Services Practice Overview
Forensic Services Practice Overview CRA’s Forensic Services Practice helps companies respond to allegations of fraud, cybercrime, misconduct and non-compliance – often in moments of crisis. We deliver deep and timely insights by deploying cross- trained teams of experienced forensic professionals. A
Slide 36: Looking backward
Looking backward Currently: 122 colleagues, based primarily in Boston, NY, DC, Chicago, and Dallas, plus subcontractors and forensic technology factor inputs, and ability to seamlessly leverage staff from other practices when needed 27% 84% 85% CAGR – Net Revenue Headcount Growth Average Utilization
Slide 37: Exemplar Accolades for Practice and Colleagues
Exemplar Accolades for Practice and Colleagues: A Testament to Excellence Practice National Law Journal: top three Forensic Accounting Providers in America Global Investigations Review: top 10 investigative consultancies from around the world Chambers: received rankings in its “Litigation Support” a
Slide 38: Robust Client Roster
Robust Client Roster, including: 38
Slide 39: Growing my professional career: Dan Roffman
Growing my professional career: Dan Roffman Background • Joined CRA in May 2021 • Testifying expert in digital forensics Growth at CRA • Was a top producer at prior firm… • But doubled the size of my practice since joining CRA (just over two years ago) Impact • Larger, higher profile cases • Increas
Slide 40: Growing my professional career: Dan Roffman (continued)
Growing my professional career: Dan Roffman (continued) How CRA has helped me accelerate my growth and impact: Investing in my continued leadership development and integration through: • Immediate and ongoing executive coaching • Significant training/certification support for me and staff • Regular
Slide 41: Market Is Huge
Market Is Huge The markets for each of our core competency pillars are huge… and projected to grow substantially: Forensic Accounting Cyber Digital Forensic eDiscovery Services $18.67 billion market Services $14.1 billion market $5.13 billion market size in size in 2021, projected $6.1 billion m
Slide 42: Key Drivers of Increasing Demand: A Trifecta
Key Drivers of Increasing Demand: A Trifecta Increasing sophistication and activity levels of cyber threat actors 1 2 Fears of recession and economic headwinds expected to exacerbate broad range of misconduct from employees/vendors/customers/ 3 business partners (trade secret theft, accounting irreg
Slide 43: Drivers of Increasing Demand
Drivers of Increasing Demand 1 Increasing sophistication, creativity and threat activity levels of cyber threat actors and other wrongdoers Recent headlines: • “Ransomware Comes Back in Vogue for Cybercriminals: Insurers say ransom-related claims rose sharply in the first half of 2023,” Oct. 17, 202
Slide 44: Drivers of Increasing Demand (continued)
Drivers of Increasing Demand (continued) 2 Continued fears of recession and economic headwinds expected to exacerbate broad range of misconduct (trade secret theft, financial reporting, etc.), enabled by continued remote work and BYOD trends • “Fired Root CMO Accused of Stealing Millions Spends ‘Lav
Slide 45: Drivers of Increasing Demand (continued)
Drivers of Increasing Demand (continued) 3 Unprecedented expectations by regulators. For example: • M&A: DOJ publishes M&A safe harbor for discovering non-compliance within 6 months of acquisition, self-reporting within 12 (https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-ann
Slide 46: Looking Forward: Investment Focus
Looking Forward: Investment Focus Our growth and success rely upon our continued investment in key areas: Strategic Talent Acquisition and Active Integration • Recruit current and potential “rainmakers” who have the capacity to continue to grow - focusing on our major office geographies, then contin
Slide 47: Life Sciences Practice
Life Sciences Practice Gregory K. Bell Angela De Martini Group Vice President Vice President and and Life Sciences Strategy Sector Co-Lead Practice Leader 47
Slide 48: Scientific innovation continues to drive commercial innovation and consulting opportunities
Scientific innovation continues to drive commercial innovation and consulting opportunities Issues in Life Science Technology platforms Combinations Access & Policy • mRNA, RNAi, rAAV GTx • Immuno-oncology • Big, social issues - Personalization Alzheimer’s disease Product as a portfolio • Health equ
Slide 49: Our practice today consists of sectors: strategy, policy and litigation
Our practice today consists of 3 sectors: strategy, policy and litigation, each supporting a range of clients operating in the life science space Our practice Strategy (~70-80% of practice) Helping clients understand their markets and optimize brand and portfolio performance Strategy Policy Litigati
Slide 50: Engaged in industry growth areas, our business mirrors overall industry trends
Engaged in industry growth areas and equipped with broad capabilities, our business mirrors overall industry trends CRA Life Science business by therapy area Nephrology Transplant Surgery Dermatology Medtech 50
Slide 51: As scientific breakthroughs unfold, business questions are also evolving
As scientific breakthroughs unfold, the landscape of business questions we are asked to answer is also evolving Scientific innovation, e.g.: Business questions, e.g.: PAST Small molecules and biologics • Small molecules • How can customers be best reached? • Monoclonal antibodies • How can payer for
Slide 52: ~2,500 ongoing clinical trials for therapies utilizing advanced modalities
There are currently ~2,500 ongoing clinical trials for therapies utilizing advanced modalities, each with unique challenges in commercialization 52
Slide 53: CRA wins in the market based on sector expertise, cross-functional teaming, and global support
CRA wins in the market based on sector expertise, cross-functional teaming, and ability to support global clients Deep knowledge of the market context in which our clients need to operate Our strategies are optimized for local market structures and conditions Understanding stakeholders in the Key In
Slide 54: Strong cross functional expertise is necessary to support clients launching advanced therapies
Strong cross functional expertise is necessary to support clients launching advanced therapies Case study (2020-2023) Client situation CRA engagement ✓ 2020 – CRA supported the global marketing in informing the product’s positioning ✓ 2020/2021 – CRA worked with the global market access and pricing
Slide 55: Understanding local healthcare ecosystems is necessary to support international growth
Understanding local healthcare ecosystems and market dynamics is necessary to support client international growth Case study (2021 and 2023) Client situation CRA engagement CRA was engaged by the international leadership team to assist in devising strategies to support growth outside the United Stat
Slide 56: Our global policy team helps clients understand the evolving policy environment
Our global policy team helps clients understand the evolving policy environment, set agendas, and shape the public discourse Response Market Shaping • Analysing global, • Building stakeholder regional, and national engagement policy challenges • Supporting commercial priorities Anticipation Internal
Slide 57: Characterising the benefits of personalised medicines
Characterising the benefits of personalised medicines Our client was seeking to develop an evidence base to support the contribution of personalised medicines to patients, healthcare systems and society more broadly, and identify hurdles and enablers to the development and adoption of personalised m
Slide 58: The expert witness team provides analysis and testimony in a variety of litigation matters
The expert witness team provides analysis and testimony in a variety of litigation matters for Life Sciences companies Commercial Disputes Competition • Launch commercialization • Market definition • Breach of contract • Assessment of market power • Co-development, co-marketing, • Patent settlement
Slide 59: We invest in innovation as a platform for engaging our clients
We invest in innovation as a platform for engaging our clients and partnering with them as they transform the life science industry Illustrative areas of focus: Lab 1: Rare Disease Sustainable commercialization, patient finding, adaptive clinical trial design Lab 2: Oncology Precision medicine, cell
Slide 60: Growth opportunities in Life Sciences
Growth opportunities in Life Sciences R&D strategy for commercialization • Medical Affairs BD assessments Key accounts • General counsel’s office Expertise • Litigation • Policy • Regulatory Asia 60
Slide 61: Concluding Remarks
Concluding Remarks Paul Maleh Chairman of the Board, President and CEO 61
Slide 62: Appendix
Appendix Supplemental Financial Disclosures 62
Slide 63: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 63
Slide 64: Investor Relations
Investor Relations Follow Us www.facebook.com/ www.instagram.com/ www.crai.com CharlesRiverAssociates charlesriverassociates www.youtube.com/ www.Linkedin.com/company/ CharlesRiverAssociates charles-river-associates Charles River Associates 200 Clarendon Street Boston, MA 02116 investor@crai.com 64
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