CRA International Inc.

February 27, 2015 CRA International Inc. Current Recommendation Prior Recommendation Outperform Date of Last Change 02/09/2015 Current Price (02/26/15) $30.11 Target Price $32.00 NEUTRAL (CRAI-NASDAQ) SUMMARY CRA International reported healthy fourth quarter 2014 results as adjusted earnings beat the Zacks Consensus Estimate by $0.04. The company benefited from broadbased demand and positive contributions from Litigation/Regulatory and Management Consulting segments. Additionally, the company s growth initiatives and solid cash balance augur well for the long term. Going forward, the company aims to achieve profitable growth both organically and through strategic hires. However, we remain concerned about the ongoing cautious spending by clients, stiff competition and currency fluctuations. We are maintaining our long-term Neutral recommendation on the stock as we expect it to perform in line with the broader market. SUMMARY DATA 52-Week High $32.28 52-Week Low $19.70 One-Year Return (%) 29.95 Beta 0.99 Average Daily Volume (sh) 40,295 Shares Outstanding (mil) 10 Market Capitalization ($mil) $287 Short Interest Ratio (days) 3.62 Institutional Ownership (%) 90 Insider Ownership (%) 4 Annual Cash Dividend $0.00 Dividend Yield (%) 0.00 5-Yr. Historical Growth Rates Sales (%) -0.6 Earnings Per Share (%) 5.0 Dividend (%) N/A using TTM EPS 22.1 using 2015 Estimate 19.4 using 2016 Estimate 18.1 Zacks Rank *: Short Term 1 3 months outlook 2 - Buy * Definition / Disclosure on last page Risk Level * Average, Type of Stock Small-Value Industry Consulting Zacks Industry Rank * 43 out of 267 ZACKS CONSENSUS ESTIMATES Revenue Estimates (In millions of $) Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec) 2013 63 A 65 A 74 A 76 A 278 A 2014 76 A 78 A 74 A 79 A 307 A 2015 76 E 81 E 77 E 81 E 315 E 2016 333 E Earnings Per Share Estimates (EPS is operating earnings before non-recurring items, but including employee stock options expenses) Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec) 2013 $0.31 A $0.15 A $0.31 A $0.37 A $1.14 A 2014 $0.35 A $0.32 A $0.33 A $0.36 A $1.36 A 2015 $0.35 E $0.41 E $0.39 E $0.40 E $1.55 E 2016 $1.66 E Projected EPS Growth - Next 5 Years % 8 2015 Zacks Investment Research, All Rights reserved. www.zacks.com 10 S. Riverside Plaza, Chicago IL 60606

OVERVIEW Founded in 1965 and headquartered in Boston, Massachusetts, CRA International Inc., formerly known as Charles River Associates, provides legal, regulatory, business consulting and other expert services through its specialized consultants across the globe. The company s economists, business professionals, engineers and other industry leaders provide original authoritative advice to support various customer activities. These include high-priority matters such as multibillion-dollar mergers and acquisitions (M&A), new product introductions, major capital investment decisions and complex litigation, the results of which often have significant consequences for the parties involved. CRA International s consultants blend economic and financial analysis, with expertise in litigation and regulatory support, business strategy and planning, market and demand forecasting, policy analysis, and engineering and technology strategy. The company functions through a global network of coordinated offices across North America, Europe, the Middle East, and Asia. In April 2005, CRA International acquired Lee & Allen, a provider of forensic accounting and dispute resolution services in the U.K., in order to expand in Europe, as well as in South Africa. This was followed by the acquisition of Lexecon Ltd. in June 2005. Lexecon is a provider of competition economics consulting in Europe, with offices in U.K., Germany, and Belgium. In May 2006, the company completed its domestic transfer pricing practice via the acquisition of certain assets of Ballentine Barbera Group. In June 2009, the company acquired Marakon Associates Inc., a leading strategy consulting firm renowned for its revolutionary value-based management. In an attempt to further expand its presence in the Middle East, the company opened its second office in Riyadh, Saudi Arabia in April 2010 after opening the first one in Bahrain in 2005. CRA International competes with a broad range of public and private consulting firms. The closest publicly traded peers to CRA International include FTI Consulting, Huron Consulting Group, LECG Corporation and Navigant Consulting. REASONS TO BUY CRA International has a more robust service offering than a year ago and an excellent professional team to deliver upon it. The key areas of focus for the company are generating balanced and profitable growth across the organization, strengthening client relationships within two lines of business and simplifying internal processes. The company is well positioned to deliver profitable growth through organic expansions and strategic acquisitions. CRA International remains focused on driving profitable organic growth by deepening client relationships and creating new revenue generating opportunities via natural extensions of its current offering. These augur well for the long-term growth prospects of the company. The company has been very active with its restructuring efforts and remains on track to curtail its expenses by eliminating excess office space capacity, better rationalizing the remaining office space and lowering its administrative spending, particularly related to outside contractors and professional fees. CRA International further aims to achieve profitable growth organically in the coming quarters through new engagements and several cross-selling opportunities. The improved cost structure and broad-based profitable growth are expected to translate into attractive margins. CRA International s healthy financial position gives it the flexibility to pursue new hires and acquisitions that support the core offerings in its portfolio. The long-term goal of the company is to consistently deliver top line growth in the mid-to-high single digits on an annualized basis. The company s senior consultants are highly educated, with the vast majority holding advanced degrees and are recognized experts in their respective fields. The company attempts to generate a high level of repeat business from its existing Equity Research CRAI Page 2

relationships based on its solid reputation and quality of work. It remains aggressive in hiring rainmakers to drive future growth. The company has continued to make hires following the close of fiscal 2014 and seek to increase headcounts in the upcoming quarter and beyond. Moreover, CRA International views employee and client as two main pillars of expansion. The company continues to invest in business developments, client-facing activities and recruiting senior-level consultants. We remain encouraged with such activities of the company. REASONS TO SELL CRA International followed the declining trends of the financial services industry during the peak of the financial crisis and its after-effects are still reflected in weak customer growth. Over the years, customer growth has slowed down significantly as the potential customers are less willing to add consulting services when budgets are tight. This scenario is crucial as it has the potential to cause the worst longterm negative impact on the company s consulting business. The company s strategy to grow through acquisitions has led to new geographic expansions, as well as new practice areas. However, at the same time, it has created additional challenges and has also exposed CRA International to integration risks. The market for economic, litigation support and management consulting services is intensely competitive, highly fragmented, and subject to rapid changes. Moreover, since an entry into this market is relatively easy, the company has to compete with new entrants, facing intense competitive pressure. These have undermined the growth potential of the company to some extent. RECENT NEWS CRA International (CRAI) Q4 Earnings Beat, Revenues Rise Jan 3, 2015 CRA International reported adjusted net income of $3.5 million, or $0.37 per share in fourth-quarter fiscal 2014 (ended Jan 3, 2015) compared with $3.7 million or $0.37 per share in the prior-year quarter. The adjusted earnings beat the Zacks Consensus Estimate of $0.33. For full year 2014 adjusted income stood at $13.5 million, or $1.37 per share compared with $11.5 million or $1.13 per share in the prior-year period. The adjusted earnings beat the Zacks Consensus Estimate of $1.33 per share. The increase in full-year earnings was driven by growth in revenues. The company reported GAAP net income of $3.4 million or $0.36 per share in the fourth quarter versus $3.7 million or $0.37 per share in the year-ago quarter. For full year 2014, GAAP net income stood at $13.2 million or $1.34 per share versus $11.4 million or $1.12 per share in the previous year. Quarter Highlights Revenues for fourth-quarter 2014 increased to $78.5 million from $75.7 million in the prior-year quarter. The increase in revenues was driven by solid contributions throughout its portfolio and double digit growth in its finance, life sciences and energy practices. Company-wide utilization stood at 75% in the reported quarter. Adjusted revenues for fourth-quarter 2014 increased to $77.4 million from $74.3 million in the prior-year quarter. Quarterly adjusted revenues beat the Zacks Consensus Estimate of $73.0 million. Equity Research CRAI Page 3

Revenues for full year 2014 stood at $306.4 million versus $278.4 million in the prior year. The company continues to witness broad-based demand for its services, with Litigation and Regulatory revenue growing by 9.2% year over year and Management Consulting revenue increasing by 16.2%. Adjusted revenues for full year 2014 stood at $301.6 million versus $273.4 million in the prior year. Gross profit improved to $25.1 million in the reported quarter from $24.0 million in the year-ago quarter. Selling, general and administrative expenses increased to 22.8% of revenues from 22.4% in the prioryear quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $12.5 million in the reported quarter compared with $11.9 million in the year-ago quarter. Financial Position At year end 2014, cash and cash equivalents were $48.2 million compared with $51.3 million on Dec 28, 2013. Long-term liabilities stood at $11.9 million at the end of the year versus $7.7 million on Dec 28, 2013. In 2014, the company generated net cash of $30.1 million from its operating activities versus $18.4 million in the prior-year period. Share Repurchase During the fourth quarter, the company repurchased approximately 440,000 shares for $12.8 million, bringing the total fiscal 2014 tally to approximately 971,500 shares worth $25.5 million. Outlook CRA International expects full-year 2015 non-gaap revenue guidance in the range of $312 million to $320 million. Non-GAAP adjusted EBITDA margin is expected to be in the range of 16.3% 16.7%. CRA International is encouraged by the strong momentum in its operations. Going forward, the company is well positioned to deliver profits through organic and inorganic growth and aims to deepen its client relationships and create new revenue generating opportunities via natural extension of its current offerings. Equity Research CRAI Page 4

VALUATION CRA International s current trailing 12-month earnings multiple is 22.1x, compared to the 19.3x average for the peer group and 18.5x for the S&P 500. Over the last five years, shares of CRAI International have traded in a range of 12.5x to 29.5x trailing 12-month earnings. We are maintaining our long term Neutral recommendation on CRA International as we anticipate the stock to perform in line with the broader market. Our target price of $32.00 equates to 20.6x 2015 EPS. Key Indicators F1 F2 Est. 5-Yr EPS Gr% P/CF 5-Yr High 5-Yr Low CRA International Inc. (CRAI) 19.4 18.1 8.0 17.1 22.1 29.5 12.5 Industry Average 18.5 16.4 14.6 27.4 19.3 52.2 10.7 S&P 500 16.8 15.7 10.7 15.3 18.5 19.4 12.0 Accretive Health, Inc. (ACHI) 20.0 3.5 3.7 220.5 3.7 Hill International, Inc (HIL) 10.4 7.4 25.0 11.6 134.4 9.6 Exponent Inc. (EXPO) 27.9 25.8 12.0 25.9 29.5 28.4 18.1 The Hackett Group Inc. (HCKT) 18.8 15.0 28.4 23.1 112.7 9.8 TTM is trailing 12 months; F1 is 2015 and F2 is 2016, CF is operating cash flow P/B Last Qtr. P/B 5-Yr High P/B 5-Yr Low ROE D/E Last Qtr. Div Yield Last Qtr. EV/EBITDA CRA International Inc. (CRAI) 1.3 1.3 0.6 6.1 0.0 0.0 9.8 Industry Average 5.8 5.8 5.8 19.7 0.6 0.5 9.1 S&P 500 5.3 9.8 3.2 25.5 2.1 Equity Research CRAI Page 5

Earnings Surprise and Estimate Revision History Equity Research CRAI Page 6

DISCLOSURES & DEFINITIONS The analysts contributing to this report do not hold any shares of CRAI. The EPS and revenue forecasts are the Zacks Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers. Outperform- Zacks expects that the subject company will outperform the broader U.S. equity market over the next six to twelve months. Neutral- Zacks expects that the company will perform in line with the broader U.S. equity market over the next six to twelve months. Underperform- Zacks expects the company will under perform the broader U.S. Equity market over the next six to twelve months. The current distribution of Zacks Ratings is as follows on the 1126 companies covered: Outperform - 15.5%, Neutral - 75.6%, Underperform 8.2%. Data is as of midnight on the business day immediately prior to this publication. Our recommendation for each stock is closely linked to the Zacks Rank, which results from a proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank 2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total. Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better. Historically, the top half of the industries has outperformed the general market. In determining Risk Level, we rely on a proprietary quantitative model that divides the entire universe of stocks into five groups, based on each stock s historical price volatility. The first group has stocks with the lowest values and are deemed Low Risk, while the 5 th group has the highest values and are designated High Risk. Designations of Below-Average Risk, Average Risk, and Above-Average Risk correspond to the second, third, and fourth groups of stocks, respectively. Analyst: Meenu Goyal QCA: Supriyo Bose Content Editor: Supriyo Bose Lead Analyst: Supriyo Bose Reasons for Update: 4Q14 &FY14 Earnings Update Equity Research CRAI Page 7