Good morning, everyone. It's now 10:00 A.M. here on the East Coast, and we're ready to begin our next presentation. My name's Marc Riddick. I'm Senior Analyst with Sidoti & Company, and I thank you for joining the Sidoti Small-Cap Virtual Conference. Next presentation is coming from Charles River Associates. The ticker is CRAI. Joining us today is Paul Maleh, Chairman and Chief Executive Officer, Chad Holmes, Chief Corporate Development Officer, and Eric Nierenberg, Chief Financial Officer. Before we begin, just a reminder, we will have time for Q&A following prepared remarks. If you would like to ask a question or submit one, feel free to do so at any time. There's no need to wait till the end. Just click on the prompt at the bottom of your screen. With that, we can turn the call over to Charles River. Good morning, gentlemen.
Good morning, and thank you, Marc. Good morning, everyone. My name is Paul Maleh. I'm President, CEO, and Chairman of Charles River Associates. I've been at CRA for 37 years. I grew up in this organization. I think I've held practically every title during my tenure, and I care very deeply about this organization. I'm very proud of our accomplishments. Hopefully, during today's speed dating session, you can see some of the reasons why I'm proud. CRA intends to be the trusted partner clients turn to for clarity in their most complex and consequential decisions. At the same time, being a community where exceptional people grow, lead, and pursue work that demands their best. That is the hallmark and the foundation of everything we do at CRA. We are a multinational consultancy with more than 20 offices across eight countries.
Our services span across two lines of business, the first and largest being legal and regulatory consulting, represents roughly about 80% of our revenue, and management consulting represents the remainder, the remainder of 20% of our revenue. If you're going to be a successful consulting company, everything starts with your ability to recruit the best and brightest. I think we have done a pretty exceptional job at CRA doing just that. We recruit the best and brightest and provide them an environment in which to flourish. I'm proud of so many firm accomplishments, and the statistics on this page speak to some of those accomplishments. One of the statistics I want to talk to you a little bit about is the statistic in the upper right-hand corner, because I think it highlights the fact that we have created that environment for really wonderful people to excel.
The statistic reads less than 5% voluntary turnover among top revenue-generating employees over the past five years. So what do we mean by that? Every year, I present to our board of directors a list of the top 30 revenue generators at CRA. We go over the composition of the top 30, where they are geographically, where they are across our practices and whatnot. I present this list every year. As you can imagine, people go in and out of the top 30 list. If I look at the union of those top 30 lists over the past five years, it is roughly 55- 60 of my colleagues. So when we say less than 5% voluntary turnover, that's not 5% per annum. That's less than 5% in total, which means less than three people have left CRA in the past five years.
Not just people, but individuals that can pretty much go anywhere they want and most likely get a premium in their demands for the move. They are electing to stay at CRA, and having that strong a foundation enables us to grow. That means the vast majority of our investment dollars and talent create revenue growth. We talked about the two main lines of business. These are our practices at CRA. I will try to give you a few statistics here. Management Consulting is made of Life Sciences, the Energy practice, and Marakon. All the other practices listed here are in Legal and Regulatory Services. Our Antitrust & Competition Economics practice makes up the largest practice at CRA, representing roughly 45% of total firm revenue.
The combination of Antitrust & Competition Economics, Forensic Services, and Life Sciences, we call those sort of the big three, and they make up roughly 75% of our revenue. The one thing I will share with you is no matter how you slice and dice this group, they are all contributing to our growth and prosperity. You may not be familiar with Charles River Associates, but I am pretty sure you are familiar with our clients. This chart represents some of the logos of our clients that are in the Fortune 100 companies. In the past two years, we have worked with 88 of the Fortune 100 companies. If I showed you this chart from last year, what is the number? Roughly 86. If I showed it to you from two years ago, what is it? 87, 88, and so on.
What it represents is that clients come to CRA time and time again for their most consequential and complex decisions. We are not on subscriptions with these clients. We do not have annuity contracts. They come with discrete needs and discrete projects, but yet they are coming to CRA time and time again. It is this deep client base that enables us to produce the financial results that we have enjoyed over the last decade plus. We talked about the Fortune 100 companies. In the legal regulatory space, oftentimes law firms retain CRA on behalf of these Fortune 100 companies. In the past two years, we have partnered with 98 of the top 100 law firms. Practically every single major law firm in the world goes to CRA for particular needs and projects. We work very hard to maintain this kind of client penetration.
The good news is that our client base is very large and growing. Thus, CRA does not need to go outside of its core competencies or its core client relationships to grow. Let me see. Did I skip something? I apologize. Lost a little track here. When you hire the best people and you work on clients' most consequential projects, you produce really impressive financial results on that. Here it shows you what our financial results are to the first half of 2026, what they were in 2025, what they were in the last five years. If I showed you what they were in the last 10 years, what you are going to see is we have pretty consistently grown around 9%-10% a year top line, and been able to grow revenue profits at an even faster rate to that.
We are growing and growing profitably and creating value for our shareholders because, and should I say, all of this growth is funded by cash from internal operations. We have achieved this growth with no debt. Not just we have achieved the growth with no debt, we were able to fund our talent investments and our growth investments and still have substantive capital to return back to our shareholders, as can be seen in the last two columns. In the last five years, we have repurchased over $180 million of stock at an average price of $110. In addition, we also have a dividend that has been growing quite handsomely for the past almost decade plus on this. Stock repurchases make up roughly 80% of our capital redistributions to shareholders, and the cash dividend, the remaining piece. Our investment thesis is really quite simple.
We are here to maximize CRA's long-term value per share. If you break down that objective, it really gives you an insight as to what guides our management decision-making. Everyone on the management team at CRA, we are value-based decision makers. We will invest in value-creating growth and return all excess capital back to our shareholders. History has shown that we are able to grow at that 9%, 10% top-line growth and return roughly half of our adjusted cash flow from ops back to our shareholders, thus the per share ending on our objective. Given the time constraints here, I am not going to go through every one of these AI points, and we could spend the entire conference talking about the opportunities, challenges that exist in an AI growing world. I am going to try to focus on two main points here.
First, CRA sees AI as both a demand amplifier and productivity enhancer. We generally believe, and we believe our accumulating evidence that demonstrate that AI strengthens positions of firms like CRA with deep expertise, strong governance, and established credibility. The other thing I want to add is we have not observed any facts to date to indicate anything to the contrary that is in that blue box there, that being AI is a demand amplifier and productivity enhancer. In fact, for probably almost the past year now, CRA has seen lead flow opportunity coming into the firm at rates of growth that I have never observed during my tenure with it. If anything, the AI is creating more complexity for our clients, more complex decision-making, and it is actually presenting CRA with more opportunities.
The productivity side of it is we are able to provide our clients with even greater value because we can be more efficient in the delivery of those services. Here is a little snapshot of our revenue and our EBITDA over the past five years. When you look at it, even on the GAAP reported numbers of revenue and EBITDA, margins are pretty good. They show that they are growing here, and that goes to we grow, and we grow profitably. The piece that I want to highlight for people listening to this presentation is there is a very large non-cash amortization charge that flows through our P&L but is not excluded or is actually expensed when we estimate EBITDA. This forgivable loan amortization is not part of the D&A that is added back when estimating EBITDA. What is this forgivable loan amortization?
A large part of our inorganic growth comes from talent investments, bringing on new streams of revenue into the firm. When these new streams of revenue are brick-and-mortar entities, the accounting treatment is really quite simple. Sometimes the new streams of revenue are prominent individuals with very large books of business or prominent group hires from competing firms and institutions that we would like to add to our portfolio. These individuals still require purchase price consideration. When you give them a purchase price consideration, the accounting rules do not let you put that purchase price into the goodwill on your balance sheet. It flows through your income statement. So the purchase price is given to those individuals, and that the amortization, given what the term of the contract is, creates a non-cash expense. That last line is that non-cash amortization of forgivable loan.
That is the non-cash expense that flows through our income statement. The SEC says that I can show you the non-cash expense, I can put it right near EBITDA, but I cannot add them together for you. The sum of those two figures, plus a couple other little adjustments, really address what capital is available to management to distribute both for talent investments and redistribution to our shareholders. The other thing I would say is that if you add the two together, it gives you a better read of the true cash-generating profitability of the firm through time. The other thing I would highlight is 2026 has been our highest profit year as measured by EBITDA plus the non-cash amortization for it.
The other thing that is another piece of evidence, we present EBITDA, we present the non-cash amortization, cannot add them together, but the SEC does allow us to present an adjusted net cash flow from operations. This is truly the cash available to management for reinvestment into business and/or redistribution to our shareholder base. What you see is the ratio of EBITDA to the adjusted net cash flow from operation is around 112%. So every dollar of EBITDA, we are producing $1.12 of cash flow to it. The next set of slides, what they do is they just summarize for you or try to demonstrate that this is not smoke and mirrors, because in the period of 2021 through 2025, we had no debt. We have no debt. Everything, all the capital outlays were funded from cash from operations. What you are going to see is it foots, right?
Simple sources and uses here. The uses of our capital, 46% has been in talent investments, the majority of that being for incremental revenue streams. Little less than half is redistribution to our shareholders, and about 6% is CapEx. Okay? We are not a capital-intensive firm. The CapEx is really for some leasehold improvements we may have to do for computers and whatnot, but a very small capital outlay year in and year out. On talent investments, you see that the talent that is summarized there has generated more than $240 million of incremental revenue. The other talent investments is sometimes you need to invest in maintenance capital. Sometimes you need to renew senior revenue-generating colleagues after their term contract is done.
Every investment we make, whether it's for an incremental stream of revenue or whether it's a renewal, is captured in our estimates of the IRR on these investments. We earn in the mid-teens 14%-16% on all talent investment dollars that CRA makes. The other part, the CapEx, we touched upon, I won't go much deeper here. Then the redistribution of the capital to our shareholders. We have been very aggressive purchasers of our share. Why is that? Because our shares are significantly undervalued. As long as they are significantly undervalued, I'm going to buy as many shares as possible. The track record has shown that our valuations are pretty accurate. Meaning, the intrinsic valuations that we're having of CRA. So until the market catches up, we're going to be aggressive purchasers of those shares.
What you see is we also have significantly reduced our share count. Just the last five years, we reduced our share count by more than 15%. If I look at the last decade plus, it's closer to a 30% reduction of shares outstanding. Here just shows you the decline over the last five years for the share count. So Marc, I think this is probably as good a stopping point as there is here. I will turn it to you to see if there's any questions I could try to address.
Thank you very much, Paul. As a reminder, if you would like to submit any questions, just click on the Q&A prompt at the bottom of your screen. Paul, I wanted to start with some of the drivers that you're seeing on demand, because it seems as though certainly revenue growth continues to be quite strong through the year, and we've seen quite a lot of activity there, and each year you're not exactly dealing with an easy comp, right? I wanted to touch a little bit on some of the catalysts that you're seeing. Generally, we talk quite a bit about M&A activity. Maybe we can start there, and maybe not just the volume of M&A, but the size and complexity of the deals that are out there seem to lend themselves to positive results for the company. Maybe you could talk a little bit about that.
Sure. Thanks for giving me a plug on the revenue growth. CRA has had eight consecutive years of record top-line growth. We are very proud of this accomplishment because we have demonstrated our resiliency across a number of micro and macro shocks. We are still delivering the results of strong top-line profitable growth. I will begin with that. The other thing I would say is a lot of our direct competitors, or individuals who provide similar services, are privately held. It is very difficult for us to measure whether we are growing with the market or taking share. We do our best to look for indicators to give us such that. One such indicator is if I look at Lex Machina as an example that provides various case filings in the legal regulatory space.
In 2026, for those case filings that overlap with CRA services, Lex Machina's new case filings were up about 6%. CRA's revenue to date is up over 13%, and our lead flow and new project origination is north of that. We have been growing faster than the market, which we are very proud of. There has been a lot of drivers. I think, one, large law firm growth continues to be quite robust. We are enjoying a little bit of that tailwind. Marc highlighted M&A activity has enjoyed a resurgence over the past two years. Even though the M&A activity has enjoyed the resurgence, you are not getting the level of scrutiny, like say, in the prior administration. This is a more deal-friendly administration in the U.S., but it is not rubber-stamping deals.
They are looking for solution sets of combinations of firms as opposed to the previous administration just thought that all combinations were preemptively non-competitive with it. A lot more deals and a lot more deal making and still require significant assistance from firms like Charles River Associates. Our Antitrust & Competition Economics practice, I won't quibble, but I would be very hard-pressed, or my clients would be very hard-pressed to say CRA is not number one or 1A in this space. Globally, it holds that kind of prominence for it. In addition to the federal reviews here in the States, Europe has maintained its very strong regulatory oversight.
The other thing we are seeing, as an example for what you saw during the Paramount merger deliberations here, is that, in addition to the federal oversight, you are finding states are entering the review process of whether deals are potentially harmful to our consumers. All of these factors are giving CRA opportunities to add value to our clients.
Excellent. One of the things you touched a little bit on strength internationally. That was one of the things that jumped out when you reported 2Q results. Maybe you could talk a little bit about some of the drivers that you are seeing there and some of the, or maybe some of the other practice areas that have been quite strong recently.
Yeah. Our international revenue is predominantly made up of our Antitrust & Competition Economics practice over in Europe. That unit by itself is over $100 million, and our Life Sciences practice. I wish I can point to a lot of drivers, but those two units are just doing exceptionally well. It is hard for me to point to anything other than getting a larger share of our clients' wallet. I think the growth in that region is really limited by our ability to hire top quality colleagues, and we have been hiring very aggressively there, and will continue to look to hire very aggressively. But the regulatory position of the various governments in the European Union and the U.K. has not really shifted. They remain very consumer friendly in their oversight of competition.
Great. We did have one of the questions that came in, and it is asking, which is along those lines. Maybe talk a little bit about the competitive environment for adding talent, adding leading talent to the firm, and then maybe how your compensation, whether it is signing bonuses or the like, has shifted over the years. Then maybe just a general overview of how you are feeling about the talent availability currently.
Sure. Two big buckets of talent pools that I will try to touch on is, one, the talent that we get from undergraduate institutions who are coming in as junior consultants at CRA. That remains robust and that remains to be a buyer's market. With that said, anytime you are trying to recruit the best and brightest, there is always competition for that talent, but we have not seen the pricing on that talent to have changed significantly over the past year. With it, same, I would say, for the graduate level hires that we are making, both for master's MBA level candidates and PhD level candidates. I still think it is a buyer's market right now, as there has been some retreat by some of the historically dominant buyers of PhDs, namely the universities and governments entity, and even the tech companies have pulled back a little bit.
We're working hard and trying to take advantage of the fact that there may be a surplus, or at least at this time, of this top talent. On the revenue generating front, to get top quality revenue generators, it's always going to be very competitive. It's competitive because of the institutions they're at want to keep them, and all the other firms want to try to recruit them away. You need to compete on the economics of the offer, but you also need to compete on the environment and the prospect of whether they can do better at your institution. Our data shows that the price or the purchase price of such talent has not changed meaningfully over the past, say, three years on that.
Excellent. One of the things that you touched on in the AI slide was around with the demand amplifiers. Maybe you could talk a little bit about one of the, if there was an area or two that has maybe been stronger than maybe you expected or folks may have expected, and maybe sort of where we are in the early innings of seeing that demand growth, whether that's from a regulatory standpoint or a strategic consulting standpoint. What sort of kicked in maybe a little quicker than maybe you would have thought maybe a couple of years ago?
Well, relative to a couple of years ago, I spent quite a bit of time talking about the legal regulatory markets here. The one thing that has created a huge tailwind here is for our Energy practice. The electric utility industry has historically been rather methodical and slow-moving on its investments, just because aggregate demand for energy hasn't grown significantly, say, in the past decade. All of a sudden, over the last two, three years, things are moving at light speed, with the introduction of the data centers and for power and distribution reliability. So you're having significant investments being made, and where you put the data centers, how you negotiate the rates on those data centers, how the utilities will provide the service to them, how they will protect the consumer. It's just given this plethora of consulting opportunity.
We are working on behalf of the large tech companies as they strategize of where to put these data centers and how best to negotiate that. We're working on the power authorities and more often than both of those other two, on behalf of the utilities on it. That doesn't seem that it's going to be going away anytime soon. If I were to say, what is the largest surge or direct impact on one of our practices, it's clearly the Energy practice.
Excellent. Well, we're at the end of our time together, so I do, first of all, want to thank you for joining us and thank all of our participants and, Paul, leave it with a couple of moments for any closing remarks you may have.
No. No closing remarks. It's fall up in Boston. No one else will really appreciate it as much, but we're, Red Sox are going to be heading into the playoffs, and hopefully the Patriots can get some kind of a win streak together. If we have this thing again in February, hopefully I could be wearing a Patriots celebratory jersey. So thank you everyone. I appreciate your time.
Thank you very much, Paul. Thank you everybody for joining us.