I thank you for joining us at the Sidoti June Small Cap Virtual Conference. Joining us today is Charles River Associates, ticker CRAI, and leading our presentation today is Paul Maleh, Chairman and CEO; Chad Holmes, Chief Corporate Development Officer; and Dan Mahoney, Chief Financial Officer. Now, as a reminder, before we begin, we will have time at the end for Q&A following the prepared remarks, but you do not need to wait until the end. Just click on the Q&A button. Feel free to submit those at any time during our time together. And with that, we can turn the call over to Paul. Paul, thank you very much. Good morning, and thank you for joining us.
No, thank you, Mark, and good morning, everyone. Hopefully, no one takes offense at me not wearing a tie or a jacket. I really didn't have anything better to wear than my Celtics jersey today. So I'm sure all of you are rooting for the Celts tonight, and if this presentation goes poorly, I'm happy to talk about the matchup that will happen at 8:30 P.M. this evening. So I wanted to take you through a handful of slides that highlight CRA, what we do for our clients, what we do for our shareholders, and why we're excited about where the company is and the opportunities that lie ahead. As many of you have probably heard, CRA has two main lines of business, one that we call legal and regulatory, and the other that we call management consulting services.
The Management Consulting Services we'll probably spend less time talking about, because it's something that is more familiar with the people listening in today. Our Management Consulting Services, like all of our practices, lie at the intersection of regulation and economics. The two largest practices we have there are our Life Sciences practice, which does the majority of their work on behalf of pharmaceutical and biotechnology companies, and our Energy practice that does the majority of its work, both here in the States and in Europe, on behalf of electric utilities. The Legal and Regulatory, we will talk more about that, as we get into these slides here. On it. So it's hard when you talk about a professional services firm, to begin anywhere other than our people. My colleagues are a group of very highly credentialed individuals.
We go to great lengths to recruit the best and brightest to CRA, which you can see in the middle box there, that if CRA were a university, we would be the most selective university in the world. We are getting applicants from the most prestigious universities around the world, and we only accept roughly about 2% of those applicants. Getting the best and brightest is only step one to ensuring success as a professional services firm. You also have to create an environment for these really bright, talented people to flourish. The upper right-hand box is something that we highlight in that we looked at the top revenue generators at CRA.
It's a list that I present to our board of directors every year of our top 25 revenue generators, and over a 5-year period of time, the union of that list is probably about 50, 55 individuals, for it. Over that 5-year window of time, we have lost less than 10%, on voluntary turnover of that union of 55 people. That's not 10% annually, that's less than 10% in total, so we're talking about 3, 4 individuals, over that window of time. Why am I highlighting this? Because if you are a large revenue generator, in an expert-based firm like CRA, your book of business is largely portable, right?
Chances are that these individuals can go to a competitor and move their book and get a premium on that move to go to that company, but they're electing to stay at CRA. We don't take this for granted. It's an effort that is ongoing, but I'm quite proud at the overall retention that we enjoy at CRA. We talked earlier about Legal and Regulatory. If you exclude Life Sciences, Marakon, Auctions and Competitive Bidding, and Energy, the rest of the practices there all make up Legal and Regulatory. The largest practice at CRA, CRA, our Antitrust and Competition Economics practice, makes up roughly 40%-45% of the entire firm. So it is by far the largest practice at CRA and probably the most prominent brand at CRA.
You're gonna be hard-pressed to see a merger being discussed, in the press that we are not working for one of the parties, whether it's the merging parties, an intervener, or the government entity, that is reviewing that merger. CRA is that player. Also, the antitrust and competition economics practice has been a go-to provider of antitrust services. It's over the last several years, of not more than a decade, both in Europe and here in the States. There are several large technology-based companies that have garnered significant regulatory pressure by the various bodies. The CRA has played a prominent role assisting these companies navigate these investigations for it. Even though many people may not have heard of CRA, I'm sure you've heard of the companies that we're working for.
Even when I talk about work in the legal regulatory arena, we, the intermediary who oftentimes retains us, are the law firms on behalf of these companies. Just in the past 2 years, not over our history, just in the past 2 years, CRA has worked with 82 of the Fortune 100 companies. Even though we don't have annuity-based contracts with these parties, they are repeat clients of CRA, in terms of repeat, from one engagement to another, from 1 year to another. We're very proud of this portfolio.
If you go to the law firms that retain us, that number is even more impressive, where 97 of the Am Law 100 law firms are coming to CRA for their most pressing matters, and again, that's 97 of 100 in just the past 2 years. So we are a prominent player in the space. The strength of our talent, the depth of our client relationships, has created, if I do say so myself, really extraordinary financial performance over an extended window of time. This starts with a, you know, window of time from 2019 to 2023. If I brought you back another 5 years, the rates of growth on both revenue and profits would probably be very similar. We've been performing exceptionally well for about the past 12 years or so.
So you see revenue growth, being very attractive. You see profits, over, you know, the majority of these windows and growing at a faster rate than revenue. And in addition to the growth of revenue and profitability, we're returning substantive amount of capital back to our shareholders. We, over the past decade or so, we probably reduced our share count by about 35%. And reduction of share count by itself doesn't create value for our shareholders. It's the combination of reducing that share count while also driving the value of the business that makes it a rewarding proposition. And you can see we've been pretty successful at that, even over short windows of time.
Whether you wanna look at the 2019 to 2023 window, our average share price repurchase price was $70 a share. 2023, right? A year ago, average price, 106. Even just this past Q1 that we just completed a couple of months ago, where, you know, at the time, $140 was at the all-time high. We purchased those shares because we believed in the intrinsic valuation of the firm, and that belief has turned out to be fairly accurate, where we have continued to enjoy some nice price appreciation. In addition to the stock repurchases, we also provide dividend payments to our shareholders.
The split between stock repurchases and cash dividends is probably about 75%, 25%, in terms of the total dollars allocated to our shareholders on that. Our investment thesis is really quite simple. It's to maximize CRA's long-term value per share. We are not capital constrained. In fact, we operate with no debt at CRA. We are 100% funded by cash from operations. Our first priority would be to reinvest in the business, look at what opportunities there are for organic growth, to look at for opportunities for lateral hires and inorganic pursuits. And what we have found, the growth rate that we have enjoyed now for an extended window of time, is not consuming the cash generated by this business. So we return any unused capital back to our shareholders.
We have an aim to return about half of our adjusted cash flow from ops back to our shareholders and reinvest the rest back in the business. That formula has produced about an 8%-9% top-line growth for the past decade plus on that. Here you can just see the revenue growth in just the past 5 years. We're off to a good start in Q1 of 2024. Each of these years represented all-time highs. So when you're looking at growth rates for CRA, they're not based on easy comparables. Every year has been a record year, and I'm excited to say I don't think we're anywhere near our ceiling of opportunity.
One other item, and it's—I'm not gonna take too much time on it, but the reported profitability of CRA, or at least ones that you can observe on our income statement, whether revenue or EBITDA, is somewhat the profit levels are somewhat depressed because of the inclusion of this non-cash amortization of forgivable loans. Forgivable loans are a vehicle that we use in talent acquisitions, for it. So it is a cash outlay at the time of the talent acquisition, but the non-cash charge still flows through our P&L. So when we look at our true profitability at CRA, we look at the addition of both EBITDA and non-cash amortization of forgivable loans. We used to report a figure called Adjusted EBITDA. The SEC wasn't too fond of that and asked us to stop.
They said, I can share with you both components, but I just can't add them together. So when looking at our profitability, take a look at the combination, to get a true sense of the cash-generating capacity of CRA, on that. We go through about a half a dozen slides here that try to demonstrate, well, what have we done with our capital, okay? And what we've done with our capital, folks, because we have no debt. We access a line of credit during the year, as a working capital vehicle, but what you see is, after accessing that line of credit in Q1 and Q2, in the past, you know, decade plus, we've ended the year, at a zero debt balance. So it is a working capital vehicle.
And the reason we show this is that this non-cash amortization that is flowing through our P&L is not just smoke and mirrors. The only way you're able to foot the outlay of capital, for use of talent, for use of redistribution to shareholders and some CapEx, is by making that adjustment that I talked about. And what you see here is the rough splits that we described earlier, is that you know, the majority of capital is going either to talent or back to shareholders. We're not an asset-heavy firm. Our assets are our people, and thus, the annual CapEx is pretty minimal, at the firm. I'm not gonna go through all of these. This is the share count, reduction that we're talking about.
As long as I'm seeing our intrinsic valuation at or, less than the prevailing stock price, I'm gonna be a purchaser of our shares. It has been a really good investment for CRA, and it has been a really good investment for our shareholders. With that, Mark, I'm gonna stop my directed comments, see if there's any questions that have come in. If not, we could always talk about tonight's matchup.
Thank you very much. So as a reminder, if you would like to submit a question, feel free to just click on the QA button at the bottom of your screen. We do have a few that are already in, so we can start there. One question is around the utilization levels. Maybe you could talk a little bit about that, and maybe sort of how that's flowed over the last few quarters, and maybe a little differentiation around different business lines, if possible.
Sure. Sure. So our target utilization is mid-70s. It's been a level that we aim for. It's been a level that we've achieved for the past decade plus. Clearly, there's some volatility quarter to quarter, but if you look at the annual utilization of this firm for the past decade, it's right around 74%-76%. We target that rate just because of the composition of our portfolio, and also in order to maintain the highest level of quality and creativity in our services, but also give our consultants the opportunity to pursue the revenue opportunities present in the marketplace. In 2023, both because of the choppiness of demand that we were observing, and also record-low attrition rates, our utilization bounced around, and we ended the year with a utilization right around 70%.
That is not our happy place. So we are trying, doing our best to try to match the supply and demand for our services to try to get back to that mid-seventies utilization. In Q4 of 2023 and Q1 of 2024, we made some good, you know, headway to trying to resume that mid-seventies utilization. In large part, you tend to see the legal and regulatory practices operate at higher rates of utilization than the management consulting practices, on that. But again, we're operating as a portfolio, and the mid-seventies is the average of all of our services.
Excellent. And then the next question is around the catalyst and demand drivers, and maybe you can talk a little bit about those and across the key areas of your business.
Yeah. On the legal regulatory side, we're really quite happy with what the overall demand drivers are. Regulatory pressures, both here in the States and abroad, have been heightened. Companies are facing increased scrutiny by the various regulatory bodies, and fortunate for CRA that we are one of the go-to providers to help these companies navigate these inquiries on that. That has been the case for the last several years, and indications are that that's not going away anytime soon. The other demand driver that we've been delivering pretty good performance in the past, you know, two, three years, without really large assistance from mergers and acquisitions. There's been talk every year, "Hey, this is the year we expect to see M&A pick up." And we go by 2022, we heard that.
2023, we heard that. And, you know, we heard that in beginning of 2024, but we're still sort of bouncing around a 10-year low on that level of activity. So I see that as a potential tailwind to CRA as those kind of opportunities emerge. We are seeing some tightening of the belt, particularly in the pharma biotech space by our ultimate clients that we've been navigating through. But that, if I were to say in terms of a headwind, that is really the only headwind that we've been experiencing across our portfolio.
Excellent. Our next question, and we have quite a few, is: If you could sort of talk about the opportunities for the expansion or diversification of service offerings that you're seeing today.
Yeah. Let me start with the latter part of the question. I'm not looking to diversify my services. I like my portfolio. I think there's a lot of green space in that portfolio, and I think I have the highest probability of success by staying true to what we do best. So I don't need to expand in order to deliver the results that our shareholders have come to expect from CRA. So we're gonna stay within the pack of services that we currently have, and I don't expect to see much difference in performance going forward.
We're trying to add depth to that portfolio, and as I tell my colleagues, I'll tell you guys the same thing, "If you're part of our portfolio of services, I'm looking to reinvest in that service, add depth to our various lines of business." Sometimes those opportunities are not always readily available. So we're looking hard. Chad is still sleeping a couple hours at night, so hopefully we can continue to unearth these opportunities and make our portfolio even stronger.
Great. And then we do have a question around the pricing dynamic. Maybe you could talk a little bit about the pricing, how, what you're seeing there at CRA, and then maybe, if you have any general thoughts as to what you're seeing with the pricing in the industry.
Sure. We've been able to raise our prices in the ballpark of 3%-4% in any given year. On the legal regulatory side, we clearly look at what the law firms are doing in terms of their rate increases. There are some years in which we're able to raise our prices a bit more aggressively, but you always need to make sure that people aren't talking about prices when they talk about CRA, they're talking about value delivered. And we think we have done a nice job balancing that. We haven't received any rejection on our price increases. Clients, of course, are demanding value, and I think we deliver that, and thus, the prices are sticking.
So the rate increases that we put into 2023 are largely embedded in the performance that you saw in Q4, in Q3, Q4 of 2023, and also Q1 of 2024. The rate increases for 2024, which are in the 3%-4% range, again, we'll start seeing more of that benefit as the quarters go, because a lot of these rate increases come to fruition largely through new projects brought into CRA.
Excellent. Our next question is around the competitive environment. Maybe you could touch a little bit on some of your key peers and maybe differentiation among sort of the peer group that you work with?
Sure. I'll start by saying I've been at CRA for 35 years. So to say that I know that I'm knowledgeable about the operations of our competitors, I'm not. I observe what a lot of you are observing. With that said, our focus is trying to be the best CRA we can be. I think we have done a good job on our performance relative to financial metrics that we can observe in the marketplace. We track growth of segments of various companies that report. We track growth with privately held statistics that we can gather. And what I can say is, over an extended window of time, we have grown faster than the peers that we can observe. We're pleased with that, but again, it's trying to drive CRA to be the best that it can be.
There's a lot of very formidable competitors out there, both in the legal regulatory space, and also in the management consulting space. There's also a number of privately held shops that provide very good services to our prospective clients. So, I think we are holding our own. It's really hard to track market share in the kind of business we're doing, but I think we get more than our fair share of opportunities.
Okay, great, and then one of the questions in the queue is around head count, given the demand environment. Maybe you can sort of first, before you answer sort of where you think it's going, maybe you can talk a little bit about sort of what you've done more recently, and then sort of what your thoughts are for going forward.
Sure. Head count is clearly a driver of top-line growth, okay? You can't avoid that. But ending the year of 2023 with a utilization of 70%, and our target being mid-70s, means that I have a lot of opportunity for revenue growth within the head count I currently have. I wanna get utilization back to that mid-70s. Again, Q4 and Q1, step in the right direction. Once we get back to our steady state utilization figure, I think what you can expect is head count to largely mirror, or top- or revenue growth to largely mirror head count expansion, but I'm not gonna get too far ahead of the demand environment right now.
Okay, great, and then I think one of the questions that we've probably gotten, I guess maybe sort of big picture-wise, and maybe this sort of ties into the demand driver question from before, was around political concerns and the like. Paul, you've obviously seen these things before. Can you talk a little bit about maybe any differentiation as far as the upcoming election, and how you're sort of viewing what your opportunities are?
Yeah, and I know this is not a very, I'm not answering your question, but it's complicated, right? Typically, you would think of when the Democrats come into office, for the U.S. presidency, you would think of an environment of increased regulatory scrutiny, and with Republicans coming into office, you see more, business-friendly laws on it. The past eight years haven't necessarily followed that traditional suit.
Right.
Okay? We saw some, you know, pretty strict enforcement during President Trump's presidency, and some of that maybe increased during President Biden's presidency. So the idea that it's gonna shift markedly, no matter who becomes president, is really up in the air. The other reason I think I would say that I don't expect it to shift markedly is that the rest of the world hasn't eased up on the regulatory pressures and investigations into a lot of these firms. So given the fact we operate in a global market, it's a little harder for the U.S. to stand in isolation relative to these other regulatory bodies. So I'm expecting more of the same going forward, irrespective of who takes office.
Okay, great. Now, we technically have reached the end of our prepared time today, but I, I would be remiss if I did not ask this one question that's in the queue. Have the Celtics ever blown a 2-0 lead in a series?
I don't believe they've blown... I thought it was 2-1 in 2022.
Okay. Historically, I actually couldn't tell you the answer to that-
Yeah
... but I just, I would be remiss if I didn't ask, so I just wanna make sure, you know-
Yeah
... that we-
You know-
... that we cover it-
We're gonna have my-
Full service shop here.
We're gonna have my Chicago-based colleague trying to jump in there and throw in all negative facts. It's a good record. It's a good record, Paul. 43 and 1, historically. Yeah, for the Celtics. Okay, so it's a good team. I know there's a lot of people out there that aren't fans of Boston sports, but the composition of this team, they're just a likable group of players. And I can't say that for all of the Boston teams, so it's been a really fun, it's been a fun year. Hopefully, we can get two more wins. And if so, you'll probably see this jersey again at the next Sidoti conference, so.
Sounds, sounds good. I'll hold you to that.
Yeah.
Well, I wanna thank you all for joining us today.
Thank you.
... and all of our, participants, and everybody, have a wonderful and productive remainder of the day.
Thank you, everyone.
Thank you. Take care. Bye.