Good morning, everyone. It's now 10:45 A.M. here on the East Coast, and we're ready to begin our next presentation. My name is Mark Riddick, Senior Analyst with Sidoti & Company, and I thank you for joining the Sidoti December Small Cap Virtual Conference. Our next presenting company is Charles River Associates, ticker CRAI. And joining us today is Paul Maleh, Chairman and CEO, Chad Holmes, Chief Corporate Development Officer, and Dan Mahoney, Chief Financial Officer. Now, before we begin, just a reminder: at the bottom of your screen, you'll see a QA prompt. You can click on that to submit questions. We will have room for Q&A following prepared remarks, but you won't need to wait until the end. You can submit your questions at any point during our time together. And with that, we can turn the call over to CRAI.
Good morning, gentlemen. Thank you for joining us.
Thank you, Mark, and good morning, everyone. I'm Paul Maleh, President and CEO. I've been at CRAI for 35 years, so clearly, I think this is a special organization with incredible people. And my objective during today's presentation is to share with you enough just to make you intrigued, maybe to look a little deeper into this company. So let me get going. CRAI was founded back in 1965 by some professors from Harvard and MIT. And as the story goes, the river is what connected the two universities together, and thus Charles River Associates was born. The mission of the firm back in 1965 was to bring quantitative methods and economics to the business world to help leaders make more informed decisions. That mission still applies today. It has been our guiding light and the foundation by which we set our strategies.
CRAI operates in two main lines of business: legal and regulatory consulting, which is probably a bit more foreign to many of you, and that makes up about 80% of our revenue, and management consulting makes up the remaining 20% there. So, as with any professional services firm, our people is what makes us unique on that, and there's a couple of statistics on this slide that I want to call your attention to. One, this is a very highly credentialed group of individuals. You know, if I were to apply today, even with the success I've had in the firm, I don't think my resume would get over the stack there. The majority of my senior colleagues, about 41%, over 40% have PhDs, the majority of them in economics, but we have individuals in the pure sciences, chemistry, biology, even some medical doctors.
CRAI accepts less than 2% of our applicants, and these applicants are from the best universities across the world. One statistic that sometimes gets brushed over that I'm most proud of is the one in the far right-hand corner, which is less than 10% voluntary turnover among our top revenue generators. So, every year, I present to the board our top 30 revenue generators, and I share with them what practices they're from, what compensation they're being paid. And if I look over the past five years, the union of that list is probably somewhere between 50 and 60 individuals. Okay? Over that five-year period of time, we have had less than five individuals, less than 10% voluntary turnover, not 10% annually, 10% in total. And the reason I highlight that is these individuals can go anywhere they want. They have valuable books of business.
They're respected in their marketplace and can go anywhere they want, but they are choosing to stay at CRAI. I don't take this privilege lightly. We work hard on creating an environment for really bright people to do amazing things and finding ways to incentivize and reward them for their contributions. We talked about the two lines of business earlier. If they cut the practices that make up our energy practice, go in descending order here of size, life sciences is our largest practice, energy practice, which consults to primarily electric utilities, our Marakon practice, and our auctions and competitive bidding practice. That makes up roughly 20% of the firm's total revenue. The largest practice at CRAI is our antitrust and competition economics practice, which makes up roughly 40%-45% of total CRAI revenue.
You'll be hard-pressed to see any kind of major merger being discussed in the press that CRAI isn't working for one of the parties involved, either the merging parties or the regulatory bodies. Also, in a part of our time here in which there's lots of antitrust investigations happening here in the United States, happening in Europe on that, and we also have been one of the primary providers for services helping companies and regulators assess these allegations on that. Even though you may not have heard of CRAI, you definitely have heard of our clients, so here is just some logos of companies that we've worked with in the last two years, so just in the last two years, we've worked with 82 of the Fortune 100 companies on that. If I go to the top 100 law firms in the world, it's even more impressive than that.
It's 97 of the top 100 law firms. What is amazing about both the Fortune 100 companies and the top law firms is we are not an annuity-based business. We do not have subscriptions that clients buy into. We are on a project-by-project basis. And these clients come to CRAI time and time again. If I showed you this slide from three, four years ago, you would see the same kind of statistic: 98 of the top 100 law firms, 85 of the Fortune 100 companies. So we are a go-to provider for companies when they face their most difficult challenges on that. And that kind of client depth has led to some pretty impressive financial results on that. So here's another one of these slides. It shows you year-to-date 2024. It shows you fiscal 2023, and then the previous five years on that.
I think the amazing thing about CRAI is if I continue to add longer time periods, you would see the same relative statistics, whether it's the last five years, last 10 years, last 15 years. The fact is we have been growing the top line at CRAI somewhere in the tune of 8%, 9% a year and have been able to grow profits at an even faster rate, and we're doing this 100% financed by cash flow from operations. We have no debt. We have no debt, and since we've been able to grow and grow attractively, we've been able to also return a substantive amount of our capital back to our shareholders. A number of years ago, we stated an aim to return about half of our adjusted cash flow from ops back to our shareholders.
And the dominant form of those redistributions have been stock repurchases, make up roughly about 80% of our total return of capital, and dividends, the remaining 20%. On the stock repurchases, the one thing you see in the little notation underneath the total dollars redistributed is the average share price. We're not buying shares because we have excess capital. We're buying shares because our stocks represent a good investment opportunity. We have done a good job closing the gap between the intrinsic valuation at CRAI and the prevailing stock price at CRAI, but a gap still exists. And that is the basis by which we make our investment decisions. If you look at the previous five years, average purchase price $70. In 2023, the average price was $106.
Even in 2024, I remember in the beginning of the year when talking to the board, there was discussion about, "Paul, are you still comfortable with what you believe the intrinsic valuation is?" and we said emphatically, "Absolutely," and what you see at the time, which was sort of all-time high prices, the average purchase price was $162. Just nine months into the year or so, a little more than that, I guess now, it's a pretty impressive return already. We're trading above $190, so the average purchase price of $162 has provided a nice return to the organization. The dividends we initiated back in 2016, and the main reason we initiated it, just to get more eyes on the stock. I want more people evaluating this stock, and that is the means by which we close any kind of valuation gap. Our investment thesis is really quite simple.
Let's maximize CRAI's long-term value per share. We are value-based decision-makers. When we outlay capital, it is always with a value orientation. That means we're looking at multiple periods ahead, and we have conviction in the strategy, and the true art is in the implementation, not the strategy itself, and I think we've done a very effective job at creating value on an aggregate basis and also creating value on a per-share basis through our reduction of our shares outstanding. More to come on that reduction on it. This is just an illustration of that growth rate. If you go back in time, you're going to see that CAGR right around that 8%, 9%. If I look at the midpoint of my annual guidance for 2024, that line's going to continue pretty much on pace, so we are proud of the consistency that we've achieved in our growth.
It's not because of easy comp, as that blue box indicates. We're just talking about record years year after year, not just record years in revenue, but most often record years in profitability. And I think that speaks to the quality of the asset. Consistency comes because you have a high-quality asset that clients seek you out and value on it. So here's one of these nuances that maybe is partial explanation of why we may have a gap in our value between the intrinsic value and prevailing stock price. CRAI grows in one of two ways. We grow organically. We grow inorganically. Oftentimes, when you do a traditional M&A deal, the accounting for that M&A deal is really quite straightforward.
The goodwill associated with the acquisition will most likely fall onto your balance sheet, and all you see on the impact of the income statement is the incremental revenue and the profits. Easy. What about if the inorganic growth is recruiting a prominent individual with a large book of business or a group hire from an organization that is bringing those same kind of benefits? They require the same kind of upfront capital, but the accounting rules are different on how we account for the capital outlay for those individuals. The revenue and the costs are accounted in the same way, but the capital outlay changes. So let's assume Chad is one of the world-renowned experts, has a $10 million book of business, and we pay $5 million for that book. And we give him a forgivable loan over five years.
That means every year we will forgive 20% of the outstanding balance for that. So far, there's an outlay of $5 million, but the complication here is that $2 million, the 20% of the five that is forgiven every year, is recorded as a non-cash amortization charge. Okay? It is not captured by EBITDA. This is a separate non-cash charge that falls in our cost of sales. We used to provide an adjusted EBITDA figure because we thought it is the most informative of our profit measures. SEC didn't like that that much and said, "I could present EBITDA. I could present the non-cash amortization of these forgivable loans to you. I could even put them on the same page. I just can't add them for you." But if you want to look at comparability of our profits levels through time, the adjusted EBITDA measure is the most informative.
It is the way the executive officers are compensated when the board measures our performance relative to budget using an Adjusted EBITDA measure. It's the way that our lenders look at our borrowing capacity. So this isn't just an investment presentation creation. This is one of the measures by which we drive this company. Just to show you that this isn't a creation, this isn't just smoke and mirrors. I look at the total capital pie that we have at CRAI over the past five years, and I already told you I have no debt. I have a line of credit that I access for working capital, but we are a 100% equity-financed organization on it. Okay, so our uses of capital are about 45, 45% for talent and redistribution to shareholders. You see that CapEx is really rather small on that.
So if I go through, again, on the talent investments, we do capital outlays. We've spent about $175 million in the last five years for talent investments, and that has brought us more than $200 million of incremental revenue to it. So real cash outlays and real benefits coming to the firm with that. Historically, our split on growth rate is about 60/40, one-thirds, two-thirds, with the 60% being organic growth and the 40% being inorganic growth. You definitely need a robust organic engine to be successful in your inorganic pursuits. For the capital outlays, again, pretty minimal. The capital outlay that we most often do is with respect to offices. Sometimes it also requires some outlays for computer and network-type investments.
But historically, it has been pretty small, and one could feel pretty confident that going forward, it's going to be pretty small relative to the total cash outlays on it. And then finally, the redistribution of the capital to that. We have returned a substantive amount of capital back, and that has resulted in a substantive reduction in our shares outstanding. In just the last five years, we've reduced our share count by 13%. You go back a decade, that share count reduction is between 30% and 35% on it at a very attractive price of $70 per share. We think there's some more headway there for us to make a good reduction of the share count. With respect to the dividend, it was initiated in Q4 2016. We just announced another increase in this past Q3 earnings call, and that is up to $0.49 a share now.
So more than tripling that dividend per share since we started there. And the shareholder yield is quite attractive, roughly at about 7% relative to our average market cap with it. And again, the key takeaway are not the sub-bullets to the right, but more the fact that we're using this capital, and it's 100% funded by the cash from operations. Unless you make the adjustment on our income statement, on our cash flow statement for these forgivable loans or the forgivable loan amortization, this will not foot with it. So I just wanted to demonstrate the cash generating capacity that is indicated by the Adjusted EBITDA is real. So I think, Mark, I'm going to stop there. We'll see if we have any questions that I'm happy to take on from our listeners. Thank you very much.
As a reminder, if you'd like to submit a question, just feel free to click on the QA button at the bottom of your screen there. Paul, I wanted to start. I think the timing of when you reported the 3Q results was pre-election. So I guess we should start with maybe the top-of-mind question that a lot of investors have, is maybe you could talk maybe a little bit about your thoughts around the election results or what that may mean from a standpoint of regulatory activity, potential M&A, things of that nature, and then maybe what the experiences were in the first Trump administration. Sure. CRA, like everyone else, is trying to read tea leaves. Let me preface this by saying I don't know exactly what is going to happen. We have a prior Trump administration as a case study.
It is still uncertain whether those same frameworks are going to be applied to this new administration. We would expect to see higher GDP growth. That's typically very good for consultants. We would expect to see more mergers being announced, maybe with less regulatory scrutiny. So net net, we're still waiting to see what the impact is on, say, CRA's antitrust and competition economics business. Maybe there will be fewer mergers objected to, but there are more mergers. That's what I'm trying to say. So what we make money on is when clients are seeking our assistance, not necessarily on the rate of mergers being objected to. So that is a wait and see. The other thing is, are you going to see the same level of enforcement for companies the regulatory agencies are concerned about potential antitrust abuses or harm to the consumer on that?
In the prior administration, you saw the Trump administration still be pretty, they enforced these antitrust provisions, particularly in the tech sector here. We see Europe has continued their strong antitrust stance. That doesn't seem to be changing, so how much this administration will deviate from the standard set in Europe is also one of these questions, but we think we're pretty well positioned, which is the other reason I always talk about very long-term performance, not just in the past year or the past three years, but the past five, past ten, past fifteen. We've been able to weather any kind of change in the macro environment while still providing that value to our clients, and we do have some questions that have come in, one of which I'm going to weave into one of the things that's on the slide here too.
One of the questions that came in is if you could talk a little bit about the headcount, what headcount growth has looked like recently, what it might look like going forward. And then maybe you could sort of layer on your thoughts around utilization and sort of comfort levels and ranges and that sort of thing. Yep. Yep. So a couple of things. Let me start with what I would say medium to long-term. Headcount growth medium to long-term should be roughly mid-single digits, right? You need to always be bringing in new talent, new ideas into the organization. Historically, that's where we've grown somewhere in the mid-single digits. We've received a number of questions over the past few quarters because of what appears to be flat headcount growth through Q3 on it.
So the first thing I would say is exiting fiscal 2023 because of some of the macro volatility. We had some ups and downs quarter to quarter in fiscal 2023, which resulted in a year-end utilization of roughly 70%. So we thought there is room to drive revenue and profit growth by increasing utilization, which we've done in 2024, increasing that back to the mid-70s with that. We took an action in Q2 to reduce some excess capacity in a couple of practices, primarily a life sciences practice, which has been enjoying really strong retention rates and really much stronger than our expectations. So we started accumulating capacity in areas that didn't match up with the growth. So we didn't think normal operations could correct it. And thus, we took that targeted action.
If you adjust for the Q2 action, the growth rate year-to-date Q3 was roughly 3%-4% for the firm as a whole. So we're still growing. We have not abandoned the need to grow headcount. We're just trying to measure the productivity of that headcount with the aggregate number of colleagues we have at CRA. Okay. Excellent. And then we do have a question, a couple of questions that touch, oh, I'm sorry. I'm sorry. I thought I heard something there. We do have a couple of questions here that touch on the pricing dynamic. Maybe you could talk a little bit about the pricing power of CRAI, as well as the competitive environment and how you think about the pricing environment with yourselves as well as competitors. Sure. Sure. I can't really speak as much to the competitors.
I have more than enough to do than just worrying about CRA. So CRA is not cheap in terms of our bill rates. And that's fine as long as you have a commensurate level of value you're providing to your clients. So we always try to focus on, are we providing the highest level of value to the clients that are seeking out our support? That is not a new objective in 2024. That has always been our objective. On average, our bill rate increase over medium-long term has been roughly 2%-3% per annum. Are there years in which we are able to enjoy 4%-5% headcount bill rate growth? Yes. But that is not as common.
We look more closely to the bill rate changes of the law firms, to the Am Law 100 law firms as an indicator of the market's willingness to accept our increase than to our competitors. Because on a competitor basis, it's the value issue that complicates the comparisons. Okay. And then you did have a guidance update when you provided 3Q results for revenue range as well as the EBITDA margin. Maybe you could talk a little bit. One of the questions here is talking a little bit about some of the key assumptions that may be underlying that guide. Yeah. It starts with we've had three fantastic quarters. I don't know how many of those individual quarters were record quarters in and of themselves. I would like to say all three, but please put an asterisk by that with that. And the profit have followed suit with that.
So we're thrilled with what CRA's year-to-date performance is. That's key input number one. Key input number two is we're seeing very attractive levels of business opportunities coming into CRA that also have a nice year-over-year growth rate that we talk about on our earnings call. We're seeing our ability to convert those business leads into revenue-generating projects to be consistent with conversion rates that we've had in years prior. So both what we've put in the bank in terms of the first three quarters and outlook that we are able to observe with the business input activity, we felt pretty good about raising our revenue guidance and also the profit guidance on that front. Great. And then we do have a couple of minutes remaining. One of the questions is around some of the practice areas from a revenue growth perspective.
Maybe you could talk a little bit about some of the practice areas that have seen particularly strong demand and some that might be a little slower up to this point. Yeah. We try to highlight the practices that had exceptional quarters. I'm doing a disservice to the practices I highlight and the practices I don't highlight on the quarters. Why is that? Because I have a portfolio for a reason. In that, oftentimes, I have a practice having a great quarter, one practice not having a stronger quarter. But in aggregate, the firm is able to deliver these strong results. It's not an indication that the practice is struggling. It's just all my practices have some natural volatility quarter to quarter on that front.
So I just want to put that out there in that if I have a practice that's part of our portfolio, it's because I think they're going to contribute to growth and value moving forward, period. I don't have any cash cows that I'm just trying to milk until they go by the wayside. I'm bullish on the entire portfolio. Practices that we've been enjoying highlighting in 2024, antitrust and competition continues to be the foundational practice for CRA. They're doing exceptional things both here in North America and in Europe. We've talked a lot about our energy practice, which has seen wonderful growth on their consulting services to utilities. We remain bullish there. We've enjoyed a wonderful injection of new colleagues in our intellectual property practice in 2024. And I think that establishes a wonderful foundation for growth in the quarters and years ahead. Excellent.
And that actually brings us to a perfect place to end our time together this morning. So I want to thank all of our participants and thank Charles River for joining us. For everyone, have a wonderful and productive remainder of the day. Thank you so much.
Thank you, everyone. I appreciate it.