Good day, everyone and welcome to Charles River Associates' Second Quarter Fiscal 2015 Conference Call. Today's call is being recorded. Today's news release and prepared remarks from the company's Chief Financial Officer are posted on the Investor Relations section of CRA's website. With us today are CRA's President and Chief Executive Officer, Mr. Paul Maleh and Chief Financial Officer, Mr. Chad Holmes. At this time, I would like to turn the call over to Mr. Holmes for opening remarks. Please go ahead, sir.

Thank you, Manny. I would like to remind everyone that the statements made during this conference call concerning the future business, operating results and financial condition of the company, including those identified in our earnings release and statements regarding guidance or hiring activity or using the terms focus, expect, outlook, position, anticipate, believe and 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 the 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 earnings release and in the company's periodic reports with the SEC. The company 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 earnings release for a full reconciliation of these non-GAAP items to their GAAP equivalents, as well as the calculation of adjusted EBITDA based on GAAP and non-GAAP results and a description of the process for calculating 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. Q2 fiscal 2015 marked a special time for CRA. 50 years ago on June 1, 1965, was a formal start of our business. We celebrated last month. We joined employees in the New York City office to ring the opening bell for NASDAQ. Colleagues celebrated from other offices as we recognized the people, past and present who have contributed to this milestone. Also during June, we hosted a very successful client appreciation event in New York City at the New Whitney Museum of American Art. This event brought together approximately 450 clients and friends of the firm as well as members from across the areas practices and geographies. Moving on to CRA's Q2 fiscal 2015 performance, we're pleased with the quarter's results and the progress we're making in executing our growth strategy, overcoming continued currency pressure, we achieved the following results. Non-GAAP quarterly revenue of $75.6 million in Q2 of 2015 on a constant currency basis relative to Q2 of 2014, non-GAAP revenue would have increased by approximately $1.9 million to $77.5 million, non-GAAP gross profit of $25.3 million or 33.5% of revenue. On a constant currency basis relative to Q2 of 2014, non-GAAP gross profit as a percent of revenue would have decreased slightly to 33.4%. Non-GAAP adjusted EBITDA of $12.8 million or 16.9% of revenue on a constant currency basis relative to Q2 of 2014, non-GAAP adjusted EBITDA would have increased by approximately $500,000 to $13.2 million or 17% of revenue. Non-GAAP net income was $3.5 million or $0.38 per diluted share on a constant currency basis relative to Q2 of 2014, non-GAAP net income would have increased by approximately $200,000 to $3.7 million or by approximately $0.02 per diluted share to $0.40 per diluted share. We've positioned the company for growth…

Thanks Paul. As a reminder, more extensive commentary on our financial result is available on the Investor Relation section of our website. So that we can get to your questions, let me cover just a few key metrics. First of all second quarter non-GAAP gross profit as a percent of revenue increased to 33.5% in fiscal 2015 from 32.0% a year ago. This improvement was largely driven by the rate of reimbursable expenses, which equaled 9.8% of revenue during Q2 of 2015 compared with 11.2% of revenue a year ago. Non-GAAP selling, general and administrative expenses as a percent of revenue, excluding commissions to non-employee experts was 20.9% of revenue compared with 18.0% a year ago. The increase in SG&A was due to non-recurring real estate expenditures as we transition to new office space in Boston this summer and Washington DC later this year. We also incurred heightened marketing and recruiting related fees during the quarter. Building on Paul’s comments, we ended the quarter with 447 consulting staff, which consisted of 342 senior staff and 105 junior staff. This is a net decline of 14 consultants from the 461 we reported at the end of Q1 of fiscal 2015. This decrease is largely attributable to the timing differences of when junior staffs leave to return to school relative to when new junior staff hires arrive. The effective tax rate for the second quarter of 2015 on a non-GAAP basis was 38.5% compared with 49.3% for the second quarter of fiscal '14 driven by the favorable geographical mix of earnings as well as the benefit from the release of valuation allowances. Turning to the balance sheet, our DSO at the end of the second quarter was 102 days compared with 100 days at the end of the first quarter of 2015.…

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question is from David Gold of Sidoti. Please go ahead.

Hi good morning. I was hoping to delve a little bit more into the planned headcount addition and where we are in the process? It sounds like I think the word you used Paul was committed hires of 8% to 10%, so I just want to be sure I fully understand that. And then two, where we sat at the end of the quarter was a little lower maybe than certainly than when we would have thought giving commentary earlier in the year and so curious if there is much happening there by way of attrition or if it's just being more difficult to hire maybe than you had anticipated?

Okay. So let me try to start with the beginning set of questions and work my way down your list. The 8% to 10% growth over the quarter end of 447, the way I got 8% to 10% growth is we have a list of people that have committed to CRA. We have mains, we have start dates of when those individuals have joined CRA. The main reason for the range is it's always difficult to try to estimate precisely the level of attrition in any given period of time. So thus we believe with the new individuals joining us, that we'll be able to increase heads by the end of Q3 in the 8% to 10% range. We're in the market and we would be thrilled if we're able to go north of that figure, but we feel comfortable with that range at this time. With respect to, are we having difficulty in the marketplace, we've had some timing challenges as we've discussed during Q4 and Q1 on the hires, but quite frankly things have gone pretty much according to plan of where we thought we would be at this stage of the year where we could not provide additional information during the Q1 call. It was really the uncertainty around the level of attrition in terms of our analysts and associates going back to graduate school. Many of them don't get noticed until April and May and thus don't communicate to us. Their decision to go back to graduate school, so that's why I couldn’t give you and the shareholder a more accurate estimate of quarter headcount at the end of Q2 and Q3. So we're pleased. We've been successful on campus. We've been successful in the secondary market and our pipeline looks pretty rich right now with really qualified candidates. So we're hopeful for some positive happenings in the quarters ahead.

Got you. Okay. And then on the 8% to 10%, can you give a sense for what that looks like even if it's just not exact numbers but percentage wise, the waiting.

The waiting is going to be more heavily weighted to the juniors just because of…

This was college hiring time.

Correct, correct. So we'll improve our leverage on an hold on, I am giving you the exact split just because of the uncertainty between the attrition rates, but it is more heavily weighted to campus recruits, but with that said, we also had a successful recruiting year, recruiting MBAs and PhDs from campus recruiting and also had some nice hits and we highlighted a few of those on the officer ranks in terms of lateral hires.

Sure and actually with that, would you have handy the number maybe at quarter end for the seniors versus juniors?

Sure, for the quarter ended 2015, I think Chad may have cited this. I think we ended the quarter at 447 total, the junior composition is 105 and the senior staff which would include the officers is 342.

Perfect, one other just as we think about the remainder of the year and cash position and repurchases, presumably you've been quite active in the past presumably with shares at a higher level here, should just curious as to thinking on a go-forward basis.

As long as our price is trading where it's trading and our outlook is where it is, we're going to be active re-purchasers of our shares. The timing of those repurchases are of course impacted by other capital requirements that we have both in terms of reinvesting in our professions, recruiting new professionals and also the real estate that Chad has outlined to you on that. But we have not become bearish in terms of our shares and I think our actions over the last year and half address that quite loudly.

Perfect. Thank you so much.

Thank you.

Thank you. The next question is from Joseph Foresi of Janney. Please go ahead.

Hi. I was wondering if you could identify us with a hiring that's taking place. What particular skill sets are most attractive to you at this point and what you're focused on?

You're really smart people. It's sort of a flipped answer, but for as long as I've been at CRA what we're trying to do is we're trying to create an environment for smart people to do special things. So first and foremost we look there, the predominant share of our in terms of academic nature happens to be in the field of economics, but we have people in the sciences and biology, I have history majors, I have math majors and a whole array of different PhD and natural level expertise. So our core expertise is always going to be economics, finance and strategy and the educational background does vary amongst our professionals.

Got it. So I guess maybe to ask it a different way, what particular end market if you would, do you feel like most of these hires will go into or is this spread across the Board?

I think if you look at the distribution of our revenue right now across our practices and our lines of business, it's pretty proportional to that distribution. So I think I touched upon that competition has continued its outstanding performance and they will get a very large share of the incoming hires. We're thrilled about that because we think we're leaving money on the table with respect to opportunities. The other large recipients are going to be our finance and Marakon practices, but really every practice is going to have slots of new talent, but the top three practices I would say are competition, finance and Marakon.

Got it. Okay. And then how should we think about utilization over the long term particularly when these new hires start? Any thoughts, I know you've given sort of a general directional color around utilization, but I am just wondering what your thoughts would be?

I think long term our goal is always to try to run this corporation in the mid 70s. I think it's a good mix of productivity and also enables us to actively get out in the marketplace. When we're introducing the kinds of new hires that we're talking about in Q3, there is definitely going to be a little volatility through the integration of those staff, getting them oriented, getting them on new projects, but we believe medium to long term, we will be right back at utilization rates over the mid 70s. So we're going to try to make this as efficient a transition as possible, but I think we're going to be welcoming 50 new, 50 or 60 new colleagues during Q3 and clearly not everyone starts at 100% utilization on their first day.

Okay. And so just real quickly, how long do you think that ramp is six months usually with the new hire?

I would really hope it's faster than that. If I look at the transition in the past, this is a large influx. So I would hope by the end of our quarter, end of Q3 that people are pretty much integrated into their practices and working effectively on projects for clients.

Okay. Thank you.

Thank you.

Thank you. [Operator Instructions] The next question is from Tim McHugh of William Blair. Please go ahead.

Thanks. Just some numbers question maybe to start. The $1.8 million of additional rent expenses is that the I guess the excess expense because you're double occupying space this year. So in other words I guess with continuance exchange because of the New York space, but that's kind of -- should go away at some point, or is that a structural step-up because you're taking on bigger space at these things.

Tim, this is Chad. It's not a structural step-up, it's exactly the way you described it first. It's a doubling of rents that is for a finite period that does end. It's ending in Boston this quarter, New York begins now and will end in the first quarter of 2016.

But will end in the first quarter of '16.

Yes.

Okay. All right. And how do we think I guess qualitatively you got asked about time to ramp on the new consultants, but what about from a margin perspective as we think about this I guess how much of an impact would you expect naturally as they just don't start off productive on day one? Is there as we think about 3Q versus 4Q even -- is there a margin impact on 3Q we should be thinking about here?

The 33.5 -- what do we have 33.5 for the quarter was a really healthy gross margin for the firm. I would expect a little bit of decrease from that level as we integrate these people into the firm. Again I don't see it as a long term hit to the firm. So I would like to see margins back to our historical norms in Q4. I don't have an exact number for you as to the decrease in the gross margin during Q3. Most of the people start really joining us in first couple of weeks of August. So it's a little mix in terms of the timing there.

Okay. And on the guidance, you gave the guidance on constant currency and I apologize if you gave this and I missed it, so for the year just based on where currency is now, I guess what's the revenue impact for '15 from currency? I guess so could just do that math.

I think if you look at the revenue impact on '15, we didn't forecast out but right now we're not seeing the volatility in the currency markets and the levels wouldn't have me expecting something much different than what I experienced during the first half of 2015, but everyone's estimates in currency is quite frankly are as good as mine given the volatility that we've been observing in the marketplace.

Okay. And then I guess just you mentioned these hires, obviously I guess campus hires are what they are, but the senior hires you're bringing in there, why such an influx now? I guess is there something was there just you put more emphasis on, is it just an unusual timing that it's coming together in one quarter or is there something I guess -- is there a trend or signal from it?

Yes, no, it's a good question. For a while starting back in '13, the focus was on improving productivity and trying to make more productive use of the assets I had in this firm when we communicated out to the market almost a year ago about our desire to start expanding on the services, yes more of a focus was happening during that time, building relationships with recruits, trying to find the right pieces and the courtships take a while to develop. And so what I prefer to see them more equally dispersed through 2015, yes of course, but with that said, we're thrilled that they've chose CRA and have joined us. I am also thrilled when I look at pipeline of new recruits and it's really quite full. So not only are we able to bring on new recruits is when I look at the pipeline it is quickly getting refilled. And that's why we talk about CRA being an attractive destination. The pipeline is not getting depleted as these people are joining us. So we're optimistic that hopefully you will see a steady flow of some really nice talent in the quarters ahead.

Okay. Thank you.

Thank you, Tim.

Thank you. The next question is from Manas Gautam of Osmium Partners. Please go ahead.

Hi. Good morning, guys. This is actually John Lewis. Just a couple of quick questions. I joined the call a few minutes late, but obviously you guys have had a pretty robust appetite for share repurchase over the last couple of years, given where your stock and how your cash cycle works can you talk about your appetite for second half share repurchases and give any color on how much cash -- what kind of cash flows will go into your balance sheet even that your ballpark estimate in the back half will be helpful?

Sure. Sense to accumulate cash during the quarter three and quarter four and relative to Q1 and Q2 and the main reason for that is that bonuses were paid out to our administrative and consulting staff during Q1 and Q2. So there will be an accumulation of cash during those quarters. And right now we're not lacking for reinvestment opportunities. It's been on the real estate, which I think position us well for the future to run it more efficient operation. It's on reinvesting in this talent so we could talk, we could driven revenue and profits and also John as you know, you've seen we've been active re-purchasers of our shares. It is just trying to balance all three in the quarters ahead. I don't want to get too clear and ahead of myself here. We're not a financial engineering firm where I am looking to come up with schemes to get ahead of these kind of requirements, but I think over the last 18 months, we've been active re-purchasers of the shares and I think shareholders should expect that kind of activity in the quarters ahead. We've not given specific levels in terms of expected repurchases John, but the appetite is there again because of where we see the price and because where we see our prospects.

That's helpful and I guess my last point would be you guys have invested pretty considerably and share repurchases in the high to mid 20s stock is $24 today and just looking at what you can do on a cash flow per basis, ability to grow your cash flow per share in light of the current prices assumes like an excellent opportunity to put more capital to work and repurchasing cheap shares, so thanks.

We agree with you John, we agree.

Thank you. We've no further questions at this time. I would like to turn the floor back over to management for any closing remarks.

Again, thank you to everyone for joining us today. We appreciate your time and interest in CRA. We'll be getting out meeting with investors in the coming months and we look forward to updating you on our progress next quarter. With that, that concludes today's call. Thanks again everyone.