CRA INTERNATIONAL, INC. 10-Q

ITEM 1. Financial Statements CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data) Fiscal Quarter Ended Fiscal Year-to-Date Period Ended June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Revenues $ 186,878 $ 171,442 $ 368,729 $ 343,230 Costs of services (exclusive of depreciation and amortization) 128,542 125,327 248,896 244,206 Selling, general and administrative expenses 35,079 32,016 67,617 62,514 Depreciation and amortization 3,530 2,811 6,941 5,603 Income from operations 19,727 11,288 45,275 30,907 Interest expense, net ( 1,796 ) ( 1,483 ) ( 2,225 ) ( 1,948 ) Foreign currency gains (losses), net ( 815 ) ( 191 ) ( 1,290 ) ( 333 ) Income before provision for income taxes 17,116 9,614 41,760 28,626 Provision for income taxes 4,994 3,076 11,636 8,397 Net income $ 12,122 $ 6,538 $ 30,124 $ 20,229 Net income per share: Basic $ 1.81 $ 0.96 $ 4.47 $ 2.93 Diluted $ 1.79 $ 0.94 $ 4.42 $ 2.90 Weighted average number of shares outstanding: Basic 6,694 6,834 6,734 6,880 Diluted 6,753 6,911 6,807 6,961 See accompanying notes to the condensed consolidated financial statements. 3 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (in thousands) Fiscal Quarter Ended Fiscal Year-to-Date Period Ended June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Net income $ 12,122 $ 6,538 $ 30,124 $ 20,229 Other comprehensive income (loss) Foreign currency translation adjustments, net of tax 3,823 ( 315 ) 5,566 ( 1,420 ) Comprehensive income $ 15,945 $ 6,223 $ 35,690 $ 18,809 See accompanying notes to the condensed consolidated financial statements. 4 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except share data) June 28, 2025 December 28, 2024 ASSETS Current assets: Cash and cash equivalents $ 19,448 $ 26,711 Accounts receivable, net of allowances of $ 6,215 and $ 5,659 , respectively 159,717 162,293 Unbilled services, net of allowances of $ 1,734 and $ 1,411 , respectively 75,308 57,255 Prepaid expenses and other current assets 20,674 16,569 Forgivable loans 17,961 6,535 Total current assets 293,108 269,363 Property and equipment, net 41,338 45,205 Goodwill, net 94,948 93,737 Intangible assets, net 6,451 7,216 Right-of-use assets 83,353 81,157 Deferred income taxes 17,073 16,648 Forgivable loans, net of current portion 64,353 48,957 Other assets 6,153 9,156 Total assets $ 606,777 $ 571,439 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 24,628 $ 28,155 Accrued expenses 139,751 181,413 Deferred revenue and other liabilities 9,042 14,130 Current portion of lease liabilities 18,718 18,696 Current portion of deferred compensation 5,186 8,915 Revolving line of credit 120,000 — Total current liabilities 317,325 251,309 Non-current liabilities: Deferred compensation and other non-current liabilities 5,987 22,329 Non-current portion of lease liabilities 85,166 84,541 Deferred income taxes 1,299 1,187 Total non-current liabilities 92,452 108,057 Commitments and contingencies (Note 10) Shareholders’ equity: Preferred stock, no par value; 1,000,000 shares authorized; none issued and outstanding — — Common stock, no par value; 25,000,000 shares authorized; 6,561,563 and 6,768,575 shares issued and outstanding, respectively — 1,663 Retained earnings 206,485 225,461 Accumulated other comprehensive loss ( 9,485 ) ( 15,051 ) Total shareholders’ equity 197,000 212,073 Total liabilities and shareholders’ equity $ 606,777 $ 571,439 See accompanying notes to the condensed consolidated financial statements. 5 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Fiscal Year-to-Date Period Ended June 28, 2025 June 29, 2024 OPERATING ACTIVITIES: Net income $ 30,124 $ 20,229 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 6,941 5,603 Right-of-use asset amortization 7,748 7,462 Deferred income taxes ( 360 ) ( 102 ) Share-based compensation expense 2,352 2,396 Bad debt expense (recovery) 563 681 Unrealized foreign currency remeasurement (gains) losses, net 465 ( 271 ) Changes in operating assets and liabilities: Accounts receivable 5,161 1,341 Unbilled services ( 16,532 ) ( 19,817 ) Prepaid expenses and other current assets, and other assets ( 671 ) ( 3,821 ) Forgivable loans ( 26,312 ) ( 6,083 ) Incentive cash awards payable 6,001 4,796 Accounts payable, accrued expenses, and other liabilities ( 80,182 ) ( 64,488 ) Lease liabilities ( 9,440 ) ( 9,199 ) Net cash used in operating activities ( 74,142 ) ( 61,273 ) INVESTING ACTIVITIES: Purchases of property and equipment ( 2,163 ) ( 3,046 ) Consideration paid for acquisition — ( 1,500 ) Net cash used in investing activities ( 2,163 ) ( 4,546 ) FINANCING ACTIVITIES: Borrowings under revolving line of credit 132,000 93,000 Repayments under revolving line of credit ( 12,000 ) ( 6,000 ) Tax withholding payments reimbursed by shares ( 2,809 ) ( 1,977 ) Cash dividends paid ( 6,858 ) ( 5,976 ) Repurchase of common stock ( 43,150 ) ( 33,348 ) Net cash provided by financing activities 67,183 45,699 Effect of foreign exchange rates on cash and cash equivalents 1,859 ( 817 ) Net decrease in cash and cash equivalents ( 7,263 ) ( 20,937 ) Cash and cash equivalents at beginning of period 26,711 45,586 Cash and cash equivalents at end of period $ 19,448 $ 24,649 Noncash investing and financing activities: Increase (decrease) in accounts payable and accrued expenses for property and equipment $ ( 585 ) $ 553 Excise tax on share repurchases $ ( 388 ) $ ( 300 ) Right-of-use assets obtained in exchange for lease obligations $ 7,808 $ 2,329 Supplemental cash flow information: Cash paid for taxes $ 14,854 $ 12,681 Cash paid for interest $ 1,670 $ 1,533 Cash paid for amounts included in operating lease liabilities $ 11,515 $ 11,163 See accompanying notes to the condensed consolidated financial statements. 6 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED June 28, 2025 (unaudited) (in thousands, except share data) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity Shares Issued Amount BALANCE AT DECEMBER 28, 2024 6,768,575 $ 1,663 $ 225,461 $ ( 15,051 ) $ 212,073 Net income — — 18,002 — 18,002 Foreign currency translation adjustment — — — 1,743 1,743 Share-based compensation expense — 1,390 — — 1,390 Restricted shares vesting 34,780 — — — — Redemption of vested employee restricted shares for tax withholding ( 13,462 ) ( 2,454 ) — — ( 2,454 ) Shares repurchased — — — — — Accrued excise tax on shares repurchased — — 39 — 39 Accrued dividends on unvested shares — — 14 — 14 Cash dividends paid ($ 0.49 per share) — — ( 3,488 ) — ( 3,488 ) BALANCE AT MARCH 29, 2025 6,789,893 599 $ 240,028 $ ( 13,308 ) $ 227,319 Net income — $ — $ 12,122 $ — $ 12,122 Foreign currency translation adjustment — — — 3,823 3,823 Share-based compensation expense — 962 — — 962 Restricted shares vesting 4,487 — — — — Redemption of vested employee restricted shares for tax withholding ( 2,144 ) ( 355 ) — — ( 355 ) Shares repurchased ( 230,673 ) ( 1,206 ) ( 41,944 ) — ( 43,150 ) Accrued excise tax on shares repurchased — — ( 428 ) — ( 428 ) Accrued dividends on unvested shares — — 77 — 77 Cash dividends paid ($ 0.49 per share) — — ( 3,370 ) — ( 3,370 ) BALANCE AT JUNE 28, 2025 6,561,563 — $ 206,485 $ ( 9,485 ) $ 197,000 See accompanying notes to the condensed consolidated financial statements. 7 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED June 29, 2024 (unaudited) (in thousands, except share data) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity Shares Issued Amount BALANCE AT DECEMBER 30, 2023 6,934,265 $ — $ 224,283 $ ( 12,182 ) $ 212,101 Net income — — 13,691 — 13,691 Foreign currency translation adjustment — — — ( 1,105 ) ( 1,105 ) Share-based compensation expense — 1,039 — — 1,039 Restricted shares vesting 33,441 — — — — Redemption of vested employee restricted shares for tax withholding ( 12,526 ) ( 1,631 ) — — ( 1,631 ) Shares repurchased ( 65,882 ) 592 ( 9,834 ) — ( 9,242 ) Accrued excise tax on shares repurchased — — ( 65 ) — ( 65 ) Accrued dividends on unvested shares — — 77 — 77 Cash dividends paid ($ 0.42 per share) — — ( 3,075 ) — ( 3,075 ) BALANCE AT MARCH 30, 2024 6,889,298 $ — $ 225,077 $ ( 13,287 ) $ 211,790 Net income — — 6,538 — 6,538 Foreign currency translation adjustment — — — ( 315 ) ( 315 ) Share-based compensation expense — 1,357 — — 1,357 Restricted shares vesting 6,143 — — — — Redemption of vested employee restricted shares for tax withholding ( 2,340 ) ( 346 ) — — ( 346 ) Shares repurchased ( 140,497 ) ( 1,011 ) ( 23,095 ) — ( 24,106 ) Accrued excise tax on shares repurchased — — ( 235 ) — ( 235 ) Accrued dividends on unvested shares — — ( 33 ) — ( 33 ) Cash dividends paid ($ 0.42 per share) — — ( 2,901 ) — ( 2,901 ) BALANCE AT JUNE 29, 2024 6,752,604 $ — $ 205,351 $ ( 13,602 ) $ 191,749 See accompanying notes to the condensed consolidated financial statements. 8 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Summary of Significant Accounting Policies Description of Business CRA International, Inc. and its wholly-owned subsidiaries (collectively, "CRA" or the "Company") is a worldwide leading consulting services firm that applies advanced analytic techniques and in-depth industry knowledge to complex engagements for a broad range of clients. CRA offers services in two broad areas: litigation, regulatory, and financial consulting and management consulting. CRA operates in one business segment. CRA operates its business under its registered trade name, Charles River Associates. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of CRA which require consolidation, after the elimination of intercompany accounts and transactions. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all the information and note disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair presentation of CRA’s results of operations, financial position, cash flows, and shareholders’ equity for the interim periods presented in conformity with U.S. GAAP. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 28, 2024 included in CRA’s Annual Report on Form 10-K filed with the SEC on February 20, 2025. Note 1 to the Consolidated Financial Statements included in Part II, Item 8, on Form 10-K for the fiscal year ended December 28, 2024 describes the significant accounting policies and methods used in preparation of the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. Recent Accounting Standards Not Yet Adopted Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09") . The ASU expands annual disclosures in an entity’s income tax rate reconciliation table and requires annual disclosures regarding cash taxes paid both in the U.S. (federal, state and local) and foreign jurisdictions. ASU 2023-09 also requires income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. ASU 2023-09 is effective for CRA for annual periods beginning after December 15, 2024. CRA plans to adopt the amendment during the annual reporting for fiscal year 2025. CRA has begun to assess the impact of the amendment and has modeled out the changes to its income tax disclosures. As the amendment relates solely to disclosures, the adoption is not expected to have an effect on CRA's financial results. Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03") . The 9 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) ASU requires disclosure, in the notes to the financial statements, specified information about certain costs and expenses including employee compensation, depreciation, and intangible asset amortization. ASU 2024-03, further clarified in ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date is effective for CRA for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. CRA expects the adoption of this ASU will have no impact on its financial position or its results of operations, but will result in additional disclosures. 2. Revenues and Allowances The contracts CRA enters into and operates under specify whether the projects are billed on a time-and-materials or a fixed-price basis. Time-and-materials contracts are typically used for litigation, regulatory, and financial consulting projects while fixed-price contracts are principally used for management consulting projects. In general, project costs are classified in costs of services and are based on the direct salary of CRA’s employee consultants on the engagement, plus all direct expenses incurred to complete the project, including any amounts billed to CRA by its non-employee experts. Disaggregation of Revenue The following tables disaggregate CRA’s revenue by type of contract and geographic location (in thousands): Fiscal Quarter Ended Fiscal Year-to-Date Period Ended Type of Contract June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Consulting services revenues: Fixed-price $ 29,413 $ 29,292 $ 59,742 $ 59,373 Time-and-materials 157,465 142,150 308,987 283,857 Total $ 186,878 $ 171,442 $ 368,729 $ 343,230 Revenues have been attributed to locations based on the location of the legal entity generating the revenues. Fiscal Quarter Ended Fiscal Year-to-Date Period Ended Geographic Breakdown June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Consulting services revenues: United States $ 151,745 $ 138,601 $ 301,458 $ 280,805 United Kingdom 22,463 22,161 45,587 43,315 Other 12,670 10,680 21,684 19,110 Total $ 186,878 $ 171,442 $ 368,729 $ 343,230 Reserves for Variable Consideration and Credit Risk Revenues from CRA's consulting services are recorded at the net transaction price, which includes estimates of variable consideration for which reserves are established. Variable consideration reserves are based on specific price concessions and those expected to be extended to CRA customers estimated by CRA's historical realization rates. Reserves for variable consideration are recorded as a component of the allowances for accounts receivable and unbilled services on the condensed consolidated balance sheets. Adjustments to the reserves for variable consideration are included in revenues on the condensed consolidated statements of operations. 10 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) CRA also maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments. Under ASC Topic 326, Financial Instruments—Credit Losses , CRA estimates allowances based on historical charge-off rates, adjusted for days sales outstanding and expected changes to clients’ financial conditions during the anticipated collection period. Bad debt expense, net of recoveries of previously written off allowances, is recorded as a component of selling, general and administrative expenses on the condensed consolidated statements of operations. The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands): Fiscal Quarter Ended Fiscal Year-to-Date Period Ended June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Bad debt expense (recovery), net $ 129 $ 18 $ 563 $ 681 Reimbursable Expenses Revenues also include reimbursements for costs incurred by CRA in fulfilling its performance obligations, including travel and other out-of-pocket expenses, fees for outside consultants, and other reimbursable expenses. CRA recovers substantially all of these costs. The following expenses are subject to reimbursement (in thousands): Fiscal Quarter Ended Fiscal Year-to-Date Period Ended June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Reimbursable expenses $ 19,615 $ 16,361 $ 36,121 $ 33,423 Contract Balances from Contracts with Customers The timing of revenue recognition, billings, and cash collections results in accounts receivables, unbilled services, and contract liabilities on the condensed consolidated balance sheets. Revenues recognized for services performed, but not yet billed to clients, are recorded as unbilled services. The following table presents the open and closing balances of CRA's accounts receivable, net and unbilled services, net (in thousands): June 28, 2025 December 28, 2024 December 30, 2023 Accounts receivable, net $ 159,717 $ 162,293 $ 142,729 Unbilled services, net $ 75,308 $ 57,255 $ 56,827 CRA defines contract assets as assets for which it has recorded revenue because it determines that it is probable that it will earn a performance-based or contingent fee, but is not yet entitled to receive a fee because certain events, such as completion of the measurement period or client approval, must occur. The contract assets balance was immaterial as of June 28, 2025, December 28, 2024, and December 30, 2023. When consideration is received, or such consideration is unconditionally due from a customer prior to transferring consulting services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after performance obligations have been satisfied and all revenue recognition criteria have been met. Contract liabilities are included in deferred revenue and other liabilities in the condensed consolidated balance sheets. The following table presents the closing balances of CRA's contract liabilities (in thousands): June 28, 2025 December 28, 2024 December 30, 2023 Contract liabilities $ 2,966 $ 7,340 $ 6,037 11 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) CRA recognized the following revenue that was included in the contract liabilities balance as of the opening of the respective period or for performance obligations satisfied in previous periods (in thousands): Fiscal Quarter Ended Fiscal Year-to-Date Period Ended June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Amounts included in contract liabilities at the beginning of the period $ 2,567 $ 2,296 $ 6,983 $ 5,612 Performance obligations satisfied in previous periods $ 3,686 $ 3,394 $ 2,702 $ 3,515 3. Forgivable Loans In order to attract and retain highly skilled professionals, CRA may issue forgivable loans to employees and non-employee experts, certain of which may be denominated in local currencies. A portion of these loans is collateralized. The forgivable loans have terms that are generally between two and eight years with interest rates currently between 0.43 % and 5.12 %. The principal amount of forgivable loans and accrued interest is forgiven by CRA over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with CRA and complies with certain contractual requirements. During the fiscal year-to-date period ended June 28, 2025 and fiscal year 2024 there were no balances due under these loans for which the full principal and interest were not forgiven or not collected upon termination of employment or affiliation with CRA. The forgiveness of the principal amount of the loans is recorded as compensation over the service period, which is consistent with the term of the loans. The following table presents forgivable loan activity for the respective periods (in thousands): June 28, 2025 December 28, 2024 Beginning balance $ 55,492 $ 53,941 Advances 40,938 45,494 Repayments ( 600 ) ( 2,761 ) Reclassifications from accrued expenses or to other assets (1) — ( 9,989 ) Amortization (2) ( 14,080 ) ( 31,055 ) Effects of foreign currency translation 564 ( 138 ) Ending balance $ 82,314 $ 55,492 Current portion of forgivable loans $ 17,961 $ 6,535 Non-current portion of forgivable loans $ 64,353 $ 48,957 _______________________________ (1) Relates to the reclassification of performance awards previously recorded as accrued expenses or forgivable loans that have been reclassified to other receivables. (2) During the fiscal year-to-date period ended June 28, 2025 and fiscal year ended December 28, 2024, approximately $ 0.04 million and $ 5.7 million, respectively, of amortization was accelerated due to involuntary terminations. 4. Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the fiscal year-to-date period ended June 28, 2025 are summarized as follows (in thousands): 12 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Goodwill, at December 28, 2024 $ 165,630 Accumulated goodwill impairment ( 71,893 ) Goodwill, net at December 28, 2024 93,737 Foreign currency translation adjustment 1,211 Goodwill, net at June 28, 2025 $ 94,948 Goodwill, net at June 28, 2025 is comprised of goodwill of $ 166.8 million and accumulated impairment of $ 71.9 million. There were no impairment losses related to goodwill during the fiscal year-to-date period ended June 28, 2025 or during the fiscal year ended December 28, 2024. Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and amortized using the straight-line method over their expected useful lives. There were no impairment losses related to intangible assets during the fiscal-year-to-date period ended June 28, 2025 or during the fiscal year ended December 28, 2024. The components of acquired identifiable intangible assets are as follows (in thousands): June 28, 2025 December 28, 2024 Useful Life (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 10 $ 15,300 $ ( 8,849 ) $ 6,451 $ 15,300 $ ( 8,084 ) $ 7,216 As a result of an asset acquisition in CRA's intellectual property practice, CRA recognized $1.5 million of intangible assets related to customer relationships during the second quarter of fiscal 2024. Amortization expense related to intangible assets was $ 0.4 million and $ 0.8 million for the fiscal quarter and fiscal year-to-date period ended June 28, 2025, respectively. Amortization expense related to intangible assets was $ 0.4 million and $ 0.7 million for the fiscal quarter and fiscal year-to-date period ended June 29, 2024, respectively. 5. Accrued Expenses Accrued expenses consist of the following (in thousands): June 28, 2025 December 28, 2024 Compensation and related expenses $ 110,398 $ 167,899 Performance awards 16,880 159 Direct project accruals 2,918 2,236 Other 9,555 11,119 Total accrued expenses $ 139,751 $ 181,413 As of June 28, 2025 and December 28, 2024, approximate ly $ 82.6 million and $ 144.2 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.” 6. Income Taxes For the fiscal quarters ended June 28, 2025 and June 29, 2024, CRA’s effective income tax rate (“ETR”) was 29.2 % and 32.0 %, respectively. The ETR for the second quarter of fiscal 2025 wa s lower than the second quarter of fiscal 2024 primarily due to the impact of state tax law changes effective for the 2025 tax year as well as an ETR true-up adjustment during the second quarter of fiscal 2024 that was substantially less in the current period. The impact of these items were partially offset by a tax reserve recognized in the estimated annual effective tax rate of fiscal 2025. 13 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) For the fiscal year-to-date periods ended June 28, 2025 and June 29, 2024, CRA's ETR was 27.9 % and 29.3 %, respectively. The ETR for the current fiscal year-to-date period was lower than the prior year-to-date period primarily due to the impact of state tax law changes effective for the 2025 tax year and an increased benefit related to share-based compensation and the foreign-derived intangible income (“FDII”) deduction. The impact of these items were partially offset by a tax reserve recognized in the estimated annual effective tax rate of fiscal 2025. On July 4, 2025, tax legislation known as the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. The Company is currently evaluating the impact of U.S. tax law changes introduced by OBBBA on our consolidated financial statements but does not currently expect a material impact on CRA. 7. Net Income Per Share CRA calculates basic earnings per share using the two-class method. CRA calculates diluted earnings per share using the more dilutive of either the two-class method or treasury stock method. The two-class method was more dilutive for the fiscal quarters and fiscal year-to-date periods ended June 28, 2025 and June 29, 2024. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all the net earnings for the period had been distributed. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Net earnings allocable to these participating securities were not material for the fiscal quarters and fiscal year-to-date periods ended June 28, 2025 and June 29, 2024. The following table presents the calculation of basic and diluted net income per share (in thousands, except per share data): Fiscal Quarter Ended Fiscal Year-to-Date Period Ended June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Numerator: Net income — basic $ 12,122 $ 6,538 $ 30,124 $ 20,229 Less: net income attributable to participating shares 23 22 61 68 Net income — diluted $ 12,099 $ 6,516 $ 30,063 $ 20,161 Denominator: Weighted average shares outstanding — basic 6,694 6,834 $ 6,734 $ 6,880 Effect of dilutive stock options and restricted stock units 59 77 73 81 Weighted average shares outstanding — diluted 6,753 6,911 6,807 6,961 Net income per share: Basic $ 1.81 $ 0.96 $ 4.47 $ 2.93 Diluted $ 1.79 $ 0.94 $ 4.42 $ 2.90 For the fiscal quarter and fiscal year-to-date period ended June 28, 2025, the anti-dilutive share-based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding amounted to 5,229 and 1,283 shares, respectively. There were no anti-dilutive share-based awards for the fiscal quarter and fiscal year-to-date period ended June 29, 2024. 14 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 8. Fair Value of Financial Instruments As of June 28, 2025 and December 28, 2024, CRA did not have any financial instruments measured at fair value on a recurring basis. CRA had no contingent consideration obligations during the fiscal quarter and fiscal year-to-date period ended June 28, 2025. The contingent consideration liability pertained to estimated future contingent consideration payments related to the acquisition of bioStrategies Group, Inc. during fiscal 2022. The following table summarizes the changes in the contingent consideration liability for the fiscal year ended December 28, 2024 (in thousands): Fiscal Year Ended December 28, 2024 Beginning balance $ 190 Remeasurement of acquisition-related contingent consideration ( 190 ) Accretion — Ending balance $ — 9. Credit Agreement CRA is party to a Credit Agreement, dated as of August 19, 2022 (as amended, the "Credit Agreement") with Bank of America, N.A., as swingline lender, a letter of credit issuing bank and administrative agent, and with Citizens Bank, N.A., as a letter of credit issuing bank. The Credit Agreement provides CRA with a $ 250.0 million revolving credit facility, which may be decreased at CRA's option to $ 200.0 million during the period from July 16 in a year through January 15 in the next year. Additionally, for the period from January 16 to July 15 of each calendar year, CRA may elect to not increase the revolving credit facility to $ 250.0 million. The revolving credit facility includes a $ 25.0 million sublimit for the issuance of letters of credit. Under the Credit Agreement, CRA must comply with various financial and non-financial covenants. The primary financial covenants consist of a maximum consolidated net leverage ratio of 3.0 to 1 and a minimum consolidated interest coverage ratio of 2.5 to 1. The primary non-financial covenants include, but are not limited to, restrictions on CRA's ability to incur future indebtedness, engage in acquisitions or dispositions, pay dividends or repurchase capital stock, and enter into business combinations. Any indebtedness outstanding under the revolving credit facility may become immediately due upon the occurrence of stated events of default, including CRA's failure to pay principal, interest or fees, or upon the breach of any covenant. As of June 28, 2025, CRA was in compliance with the covenants of the Credit Agreement. There were $ 120.0 million in borrowings outstanding under the revolving credit facility as of June 28, 2025 and no borrowings outstanding as of December 28, 2024. As of June 28, 2025, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 3.5 million. 10. Commitments and Contingencies As described in Note 9, CRA is party to standby letters of credit with its banks in support of minimum future lease payments under certain operating leases for office space. CRA is subject to legal actions arising in the ordinary course of business. In management’s opinion, based on current knowledge, CRA believes it has adequate legal defenses or insurance coverage, or both, with respect to the eventuality of such actions. CRA does not believe any settlement or judgment relating to any pending legal action would materially affect its financial position or results of operations . However, the outcome of such legal actions is inherently unpredictable and subject to inherent uncertainties. 15 Table of Contents CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 11. Segment Reporting CRA manages its business globally within one operating segment, professional and consulting services, in accordance with ASC Topic 280, Segment Reporting . The accounting policies of the professional and consulting services segment are the same as those described in Note 1 of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the SEC on February 20, 2025. The chief operating decision maker, which is our Chief Executive Officer, assesses performance for the professional and consulting services segment and decides how to allocate resources based on consolidated net income that is also reported in the condensed consolidated statements of operations as net income. The measure of segment assets is reported in the condensed consolidated balance sheets as total assets. The following table represents consolidated net income reported by segment revenue, segment profit or loss, and significant segment expenses (in thousands): Fiscal Quarter Ended Fiscal Year-to-Date Period Ended June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024 Revenues $ 186,878 $ 171,442 $ 368,729 $ 343,230 Employee compensation and fringe benefit costs 110,860 106,270 223,657 211,417 Forgivable loan amortization 7,428 11,985 14,080 17,757 Client reimbursable expenses 19,615 16,361 36,121 33,423 Other segment expense (1) 31,859 27,212 53,111 52,007 Provision for income taxes 4,994 3,076 11,636 8,397 Segment net income 12,122 6,538 30,124 20,229 Reconciliation of profit or loss Adjustments and reconciling items — — — — Consolidated net income $ 12,122 $ 6,538 $ 30,124 $ 20,229 1 Other segment expenses included in segment net income includes, rent, commissions to non-employee experts, legal and professional services, software subscription and data services, travel and entertainment expenses, training and marketing expenses, other operating expenses, depreciation and amortization, interest expense, net, and foreign currency gains (losses), net. 12. Subsequent Events On July 31, 2025, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.49 per common share, payable on September 12, 2025 to shareholders of record as of August 26, 2025. 16 Table of Contents