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CRAI's Q3 earnings rose 6.3% y/y to $2.19 per share, while revenues jumped 15.6% to a record $214.9 million.
Charles River raises its 2026 revenue outlook to $830-$840 million, backed by broad-based demand and growth.
CRAI hikes its quarterly dividend 17.5% to 67 cents as operating income surges 38.8% y/y & margins expand.
Charles River Associates (CRAI - Free Report) reported third-quarter fiscal 2026 results, with adjusted earnings of $2.19 per share, beating the Zacks Consensus Estimate of $2.06 by 6.3% and increasing 6.3% year over year. Revenues rose 15.6% to $214.9 million, surpassing the consensus mark of $198.6 million by 8.2%.
Charles River Associates Price, Consensus and EPS Surprise
Broad-based demand supported record third-quarter revenues, with seven practices growing year over year. Utilization improved to 78% from 77% a year ago, while quarter-end consultant headcount increased 6.2% to 1,028.
However, CRAI’s share price remained largely unchanged following its Nov. 5 earnings release, suggesting a muted investor response despite better-than-expected results, raised revenue guidance and a continued increase in its quarterly dividend.
Charles River raised its fiscal 2026 revenue outlook to $830-$840 million on a constant-currency basis from the previous $805-$820 million range. The midpoint increased to $835 million from $812.5 million, reflecting strong year-to-date performance and a healthy sales pipeline.
The company announced a 17.5% sequential increase in its quarterly cash dividend to 67 cents per share from 57 cents. The dividend is payable Dec. 11, 2026, to shareholders of record as of Nov. 24. This marks the company's 10th consecutive annual dividend increase.
Over the past year, CRAI's shares have risen 8.6% against the industry's 5.3% decline. The Zacks S&P 500 composite gained 9.2% during that period.
Image Source: Zacks Investment Research
CRAI's Q3 Results in Detail
Costs of services increased 15.9% year over year to $152.4 million, representing 70.9% of revenues, up from 70.7% in the prior-year quarter. Forgivable loan amortization, including performance award amortization, rose to $15.1 million from $11.5 million, reflecting continued investments in talent.
Share-based compensation expense declined to $1.4 million from $1.6 million. Client reimbursables increased to $21.2 million, representing 9.9% of revenues compared with $17.8 million or 9.6%, a year earlier.
Selling, general and administrative (SG&A) expenses increased 5% to $35.4 million. As a percentage of revenues, SG&A improved to 16.5% from 18.1%. Excluding commissions to non-employee experts, SG&A represented 14.9% of revenues compared with 16.3% a year ago.
Charles River's Practice Mix Supports Growth
Legal & Regulatory offerings grew revenues 15.7% year over year, while Management Consulting services advanced 9.8%. Seven practices, representing approximately 95% of third-quarter revenues, reported year-over-year growth.
Forensic Services, Life Sciences and Risk, Investigations and Analytics each delivered double-digit revenue growth. The Antitrust and Competition Economics practice achieved a new quarterly revenue high.
Geographically, North American operations grew 18%, while international operations increased 6.2%. The broad-based expansion across practices and geographies contributed to CRA's record third-quarter revenue performance.
CRAI's Operating Profitability Strengthens
Operating income increased 38.8% year over year to $23.9 million, while operating margin expanded to 11.1% from 9.3%. Depreciation and amortization declined to $3.2 million from $3.5 million, representing 1.5% of revenues compared with 1.9%.
Non-GAAP EBITDA rose 11.2% to $27.1 million, although the margin contracted to 12.6% from 13.1%. Non-GAAP net income increased 1.5% to $13.9 million, while its margin declined to 6.4% from 7.3%.
Net interest expense increased to $2.6 million from $1.8 million. The non-GAAP effective tax rate rose to 34.9% from 28.8%.
Charles River's Cash Flow & Working Capital
CRAI generated $74.4 million of cash from operating activities during the quarter compared with $36.5 million a year earlier. Excluding forgivable loan advances and repayments, adjusted net cash flows from operations increased to $74.9 million from $64.6 million.
Cash and cash equivalents ended the quarter at $20.4 million. Billed and unbilled receivables totaled $289.6 million compared with $243.1 million a year ago. Total days sales outstanding increased to 117 days from 115, reflecting higher unbilled receivable days.
Borrowings under the revolving credit facility stood at $75 million, with remaining borrowing capacity of $171.9 million. Capital expenditures increased to $1.2 million from $0.7 million in the year-ago quarter.
CRAI’s EBITDA Margin Outlook Narrows Amid Cost Pressures
CRAI narrowed its non-GAAP EBITDA margin outlook to 12.2-12.8% from the previous 12-13% range. Through the first three quarters, constant-currency revenues reached $624 million, while non-GAAP EBITDA totaled $76.8 million, representing a 12.3% margin.
Management expects currency adjustments to reduce reported annual revenues by approximately $2.9 million and EBITDA by $0.4 million. Non-cash forgivable loan amortization is expected to increase by approximately $15 million during fiscal 2026.
CRAI Continues Dividend Payments Amid Pause in Buybacks
The company returned $3.6 million to shareholders through dividend payments during the third quarter. CRAI did not repurchase shares during the period, compared with approximately 22,000 shares repurchased for $4 million in the year-ago quarter.
Waste Connections, Inc. (WCN - Free Report) reported impressive third-quarter 2026 results. WCN’s adjusted earnings of $1.58 per share outpaced the consensus mark by 4% and rose 9.7% from the year-ago quarter. WCN’s total revenues of $2.64 billion surpassed the consensus mark by 1.2% and increased 7.3% year over year.
Rollins, Inc. (ROL - Free Report) posted unimpressive third-quarter 2026 results. ROL’s adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate by 2.9% and declined 2.9% year over year. Total revenues of $1.09 billion fell short of the consensus estimate by 3.2% and increased 6.2% from the year-ago quarter.
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CRAI Q3 Earnings & Revenues Surpass Estimates, Stock Barely Moves
Key Takeaways
Charles River Associates (CRAI - Free Report) reported third-quarter fiscal 2026 results, with adjusted earnings of $2.19 per share, beating the Zacks Consensus Estimate of $2.06 by 6.3% and increasing 6.3% year over year. Revenues rose 15.6% to $214.9 million, surpassing the consensus mark of $198.6 million by 8.2%.
Charles River Associates Price, Consensus and EPS Surprise
Charles River Associates price-consensus-eps-surprise-chart | Charles River Associates Quote
Broad-based demand supported record third-quarter revenues, with seven practices growing year over year. Utilization improved to 78% from 77% a year ago, while quarter-end consultant headcount increased 6.2% to 1,028.
However, CRAI’s share price remained largely unchanged following its Nov. 5 earnings release, suggesting a muted investor response despite better-than-expected results, raised revenue guidance and a continued increase in its quarterly dividend.
Charles River raised its fiscal 2026 revenue outlook to $830-$840 million on a constant-currency basis from the previous $805-$820 million range. The midpoint increased to $835 million from $812.5 million, reflecting strong year-to-date performance and a healthy sales pipeline.
The company announced a 17.5% sequential increase in its quarterly cash dividend to 67 cents per share from 57 cents. The dividend is payable Dec. 11, 2026, to shareholders of record as of Nov. 24. This marks the company's 10th consecutive annual dividend increase.
Over the past year, CRAI's shares have risen 8.6% against the industry's 5.3% decline. The Zacks S&P 500 composite gained 9.2% during that period.
Image Source: Zacks Investment Research
CRAI's Q3 Results in Detail
Costs of services increased 15.9% year over year to $152.4 million, representing 70.9% of revenues, up from 70.7% in the prior-year quarter. Forgivable loan amortization, including performance award amortization, rose to $15.1 million from $11.5 million, reflecting continued investments in talent.
Share-based compensation expense declined to $1.4 million from $1.6 million. Client reimbursables increased to $21.2 million, representing 9.9% of revenues compared with $17.8 million or 9.6%, a year earlier.
Selling, general and administrative (SG&A) expenses increased 5% to $35.4 million. As a percentage of revenues, SG&A improved to 16.5% from 18.1%. Excluding commissions to non-employee experts, SG&A represented 14.9% of revenues compared with 16.3% a year ago.
Charles River's Practice Mix Supports Growth
Legal & Regulatory offerings grew revenues 15.7% year over year, while Management Consulting services advanced 9.8%. Seven practices, representing approximately 95% of third-quarter revenues, reported year-over-year growth.
Forensic Services, Life Sciences and Risk, Investigations and Analytics each delivered double-digit revenue growth. The Antitrust and Competition Economics practice achieved a new quarterly revenue high.
Geographically, North American operations grew 18%, while international operations increased 6.2%. The broad-based expansion across practices and geographies contributed to CRA's record third-quarter revenue performance.
CRAI's Operating Profitability Strengthens
Operating income increased 38.8% year over year to $23.9 million, while operating margin expanded to 11.1% from 9.3%. Depreciation and amortization declined to $3.2 million from $3.5 million, representing 1.5% of revenues compared with 1.9%.
Non-GAAP EBITDA rose 11.2% to $27.1 million, although the margin contracted to 12.6% from 13.1%. Non-GAAP net income increased 1.5% to $13.9 million, while its margin declined to 6.4% from 7.3%.
Net interest expense increased to $2.6 million from $1.8 million. The non-GAAP effective tax rate rose to 34.9% from 28.8%.
Charles River's Cash Flow & Working Capital
CRAI generated $74.4 million of cash from operating activities during the quarter compared with $36.5 million a year earlier. Excluding forgivable loan advances and repayments, adjusted net cash flows from operations increased to $74.9 million from $64.6 million.
Cash and cash equivalents ended the quarter at $20.4 million. Billed and unbilled receivables totaled $289.6 million compared with $243.1 million a year ago. Total days sales outstanding increased to 117 days from 115, reflecting higher unbilled receivable days.
Borrowings under the revolving credit facility stood at $75 million, with remaining borrowing capacity of $171.9 million. Capital expenditures increased to $1.2 million from $0.7 million in the year-ago quarter.
CRAI’s EBITDA Margin Outlook Narrows Amid Cost Pressures
CRAI narrowed its non-GAAP EBITDA margin outlook to 12.2-12.8% from the previous 12-13% range. Through the first three quarters, constant-currency revenues reached $624 million, while non-GAAP EBITDA totaled $76.8 million, representing a 12.3% margin.
Management expects currency adjustments to reduce reported annual revenues by approximately $2.9 million and EBITDA by $0.4 million. Non-cash forgivable loan amortization is expected to increase by approximately $15 million during fiscal 2026.
CRAI Continues Dividend Payments Amid Pause in Buybacks
The company returned $3.6 million to shareholders through dividend payments during the third quarter. CRAI did not repurchase shares during the period, compared with approximately 22,000 shares repurchased for $4 million in the year-ago quarter.
Charles River currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
Waste Connections, Inc. (WCN - Free Report) reported impressive third-quarter 2026 results. WCN’s adjusted earnings of $1.58 per share outpaced the consensus mark by 4% and rose 9.7% from the year-ago quarter. WCN’s total revenues of $2.64 billion surpassed the consensus mark by 1.2% and increased 7.3% year over year.
Rollins, Inc. (ROL - Free Report) posted unimpressive third-quarter 2026 results. ROL’s adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate by 2.9% and declined 2.9% year over year. Total revenues of $1.09 billion fell short of the consensus estimate by 3.2% and increased 6.2% from the year-ago quarter.