Good morning and welcome to Charles River Associates' Second Quarter Fiscal 2017 Conference Call. This call is being recorded. Today's release and prepared remarks from CRA's Chief Financial Officer are posted on the Investor Relations section of CRA's website at crai.com. With us today are CRA's President and Chief Executive Officer, Paul Maleh; and Chief Financial Officer, Chad Holmes. At this time, for opening remarks and introductions, I would like to turn the call to Mr. Holmes. Please go ahead, sir.

Thank you, Cheri. I would like to remind everyone that the statements made during this conference call, including guidance on future non-GAAP revenue and non-GAAP adjusted EBITDA margin for fiscal 2017 or any other statements concerning the future business, operating results and financial condition of CRA, including those using the terms, looking forward, expect, believe, anticipate, continues, estimate, should or similar terms are forward-looking statements as defined in Section 21 of the Exchange Act. Information contained in these forward-looking statements is based on management's current expectations and is inherently uncertain and actual performance and results may differ materially from those expressed or implied in these statements due to many important factors. Additional information regarding these factors is included in today's release and in CRA's periodic reports with the SEC. CRA undertakes no obligation to update any forward-looking statements after the date of this call. Additionally, we will refer to some non-GAAP financial measures on this call, including adjusted EBITDA and certain measures presented on a constant currency basis. Everyone is encouraged to refer to today's release or on our website noted above for a reconciliation of these non-GAAP measures to their GAAP equivalents, including descriptions of the calculations of adjusted EBITDA and the measures presented on a constant currency basis. Let me now turn it over to Paul for his report. Paul?

Thanks, Chad, and good morning, everyone. CRA delivered strong financial results in the second quarter of fiscal 2017, achieving our highest quarterly revenue and adjusted EBITDA in more than eight years. We added more than 100 new consultants year over year, which includes the successful integration of our C1 colleagues, while achieving company-wide utilization of 76%. Our business generated 13.4% year-over-year non-GAAP revenue growth in Q2. These results reflect the continued strength of our portfolio and the successful execution of our strategy to generate broad-based, profitable growth. Our performance was driven by double-digit growth in our Energy, Forensic Services, Life Sciences and Marakon practices, as well as solid contributions from our Antitrust & Competition Economics practice. This performance is especially notable, given that these practices represent more than 75% of CRA's second quarter revenue. As another example of the continued strength across our portfolio, on a constant currency basis, our international operations in the second quarter grew by roughly 9% year-over-year. Our reference to broad-based contributions is an important one. The strong performance we have delivered during the past couple of years is built on contributions across our entire portfolio. Today, we highlight the exceptional performance of the Energy, Forensic Services, Life Sciences and Marakon practices, but during the past 18 months, each of our practices has been referenced at least in two quarterly earnings announcements for their exceptional contributions to CRA's overall results. Our portfolio is working, and I look forward to reporting on our accomplishments in the quarters ahead. Returning to the second quarter, our Antitrust & Competition Economics practice continued to support ongoing and potential mergers in both North America and Europe. In addition, practice experts offered testimony in a number of high-profile litigation matters, including for example, one expert who worked on a large litigation between…

Thanks, Paul. As a reminder, more expansive commentary on our financial results is available on the Investor Relations section of our website. Before we get to your questions, let me provide a few additional metrics related to our second quarter 2017 performance. In terms of headcount, we ended the second quarter with 600 consulting staff, which consisted of 123 officers, 326 other senior staff and 151 junior staff. This is a net increase of 107 consultants, or approximately 22% growth from the 493 total consulting headcount we reported at the end of the second quarter of fiscal 2016. As a reminder, headcount for the second quarter of fiscal 2017 includes consultants who joined as part of the C1 transaction in the first quarter of 2017. Non-GAAP selling, general and administrative expenses as a percent of non-GAAP revenue, excluding the 2.4% attributable to commissions to non-employee experts, was 18.6% for the second quarter of fiscal 2017 compared with 18.1% a year ago. Turning to the balance sheet, DSO at the end of the second quarter was 105 days, compared with 101 days at the end of the second quarter of fiscal 2016. DSO in the second quarter consisted of 67 days of billed and 38 days of unbilled, compared with 68 days of billed and 33 days of unbilled in the second quarter of fiscal 2016. The effective tax rate for the second quarter on a non-GAAP basis was 36.7%, compared with 38.5% on a non-GAAP basis for the second quarter of 2016. The primary reason for the lower effective tax rate stems from recent changes in the treatment of stock-based compensation. For the remainder of fiscal 2017, we expect our non-GAAP effective tax rate to be approximately 40%, resulting in a full-year effective tax rate in the range of 38% to 39%, which could fluctuate due to factors including jurisdictional mix and the accounting for stock-based compensation. We concluded the second quarter of fiscal 2017 with $14.7 million in cash and cash equivalents, having repaid all outstanding borrowings under our line of credit. We remain committed to maximizing long-term value by reinvesting in our business and returning capital through both share repurchases and quarterly dividends. During the quarter, we repurchased approximately 389,000 shares of our common stock for $13.5 million under our existing stock repurchase program. At the end of Q2, we had approximately $15.6 million available under the share repurchase program. In the second quarter, we also paid a quarterly cash dividend of $0.14 per common share, which totaled $1.2 million in aggregate for the quarter. Finally, earlier today, we announced that our Board of Directors declared a quarterly cash dividend of $0.14 per common share, payable on September 15, 2017 to shareholders of record as of August 29, 2017. That concludes my prepared remarks. Cheri, we would now like to open up the line for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Tim McHugh with William Blair & Company. Please state your question.

Hi. Just wanted to ask first on the Antitrust & Competition policy area, which remains very good for you guys. There's been some speculation by others that the uncertainty with the new administration and how they – presidential administration and how they approach kind of or view antitrust issues has caused some softness or some uncertainty at least related to that area? I guess, I'm curious if you're seeing anything that clearly wasn't in this quarter, but I guess, as you look forward and just as you think about that market, is that having any impact on the potential opportunities there?

Good morning, Tim. I guess I would concur with the view that you're citing. We are seeing what I would call a little bit of uncertainty and pause amongst our client base. So the flow and revenue could be potentially higher, but what I can say is we've experienced growth year-over-year in that area, and we're also seeing healthy lead flow in new project originations. I can't really opine as to what the [indiscernible] world would be without the uncertainties created by the new administration, but we're definitely seeing a little more hesitancy in our client base right now.

Okay, and then there's also a comment I think about a long-term kind of engagements. Is that just a series of engagements are you getting into – are you starting to see opportunities where you truly, I guess, kind of contractually get engaged for longer periods of time, which I imagine would give you more visibility, which would be great? But can you just elaborate if that's one-off or if that's kind of a change you're starting to see in the business?

I think we're seeing a little bit of a change. I wouldn't go as far as saying that there is enough shifts to give me a change in longer-term visibility. But many of our practices, Marakon, Life Sciences, Energy, particularly on the strategy side of the house, as they build stronger relationships, are seeing longer-term client projects. So the one I referenced in the script was a project that was a competitive bid, multiple strategy consulting companies were bidding for it, but our Energy practice prevailed. And this gives them a long-term engagement, a wonderful base of revenue for the practice, but also a wonderful way to expand the services that they're providing for that client. So we're excited for the practice much more than the incremental revenue that we maybe getting over the next few years.

Great. Thank you.

Thank you, Tim.

Our next question is from Marc Riddick with Sidoti. Please go ahead.

Hi, good morning.

Good morning, Marc.

So forgive me if you stated this. But I wanted to see if we could get a sense of – with the strong revenue growth, what that mix was like from organic versus acquisition related?

So I didn't break that out specifically. I mean, what I would reference back is, I believe at the time of the C1 acquisition, we provided an estimate of cash revenue basis for C1 of approximately $22 million in fiscal 2016. And I'm happy to report that we've seen an expansion related to the services and the client relationships that we brought over at CRA, but also an expansion from our legacy operations in Life Sciences and also the combination of the two. So C1 was clearly an important contributor, but if you do the simple math, you'll also see that a good part of the expansion was organically driven.

Right, great. That's fine. I wasn't sure if it was broken out, I missed it. One of the other things I wanted to touch on within the acquisition pipeline, certainly, C1 certainly seems to be a very nice acquisition for you. I want to get a sense of maybe what you're seeing in some other practices and maybe sort of how you're feeling about the bid-ask spread at this point?

Sure. I don't have an acquisition strategy, per se. Our goal is always to try to see and do anything we can to strengthen the portfolio as a whole. What I can say is success breeds success. So the success that our practices have been having has created an attractive destination for top talent. So we're getting a lot of inbounds, both in terms of individuals in the secondary market, but also on potential acquisition targets. And we're reviewing those carefully. Nothing is imminent right now on our pipeline. But we're excited at the lead flow of inorganic opportunities that's coming aboard.

So things seem to be going very well on the business development side of things, and you seem to be doing very well there. I was wondering, are there any areas from an operational standpoint that you're looking at weak/improve that are sort of at the top of your priority list at the moment? Are there any particular areas, as far as company-specific issues?

Now, there's still lots of things that keep me up at night, Marc. Growth...

That is a better way of putting it I think.

Yes, that's it. Growth will sometimes create short-term cost pressures on our portfolio. And we see some of that come through in the Q2 results. But I don't see anything or any systematic factors that cause me concern about our long-term profit outlook. There were a few items that weighted down our SG&A expenses in Q2, if you look at our Q2 SG&A relative to prior quarters a year ago. But we can see remedying that in the quarters ahead. So I feel good about the profit-generation capacity of the company and our expectations of cash flows in the medium and long-term.

Last one for me. One of the interesting things that sort of came out of the acquisition was the real estate and expanding the office footprint. I was wondering if you had an initial view as to what you might end up doing with those locations or office-based opportunities. Or what that might bring to the company going forward? Thank you.

Yes, the increased headcount is definitely necessitating us securing additional office space to house our new colleagues. So there are some short-term pressures that come from that. And that's pretty much across our entire geographic portfolio that we're trying to address it. So they're high-class problems to have, but there are still – we're expanding wisely, I would say, on the real estate front. Do you have anything there, Chad on the expenses?

No, I think you hit it right on. There is a cost to growth, but it's a high-class problem. We're happy to have these heads. In the real estate front, we've got to find some new space. And that's what we're doing. You've seen some announcements as we've taken on expanded leases in our geographies, and that's to consolidate operations, so we can bring everyone together.

Okay, great. Thank you very much.

Thank you, Marc. End of Q&A

At this time, we have reached the end of the Q&A session. I will now turn the conference back over to Mr. Maleh for closing or additional remarks.

Again, thanks to everyone for joining us today. We appreciate your time and interest in CRA. We'll be meeting with investors in the coming months, and we look forward to updating you on our progress next quarter. Before I conclude today's call, I want to have a callout to an important member of our team, Jamie, who is dealing with recovery right now from some surgery. Jamie, you got to get well soon because we can't continue to do your work, okay? Okay, so get well, Jamie. With that, that concludes today's call.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.