Resources
Connection, Inc. (NASDAQ: RECN), today announced financial results
for its fiscal fourth quarter and year ended May 31, 2014. Resources
Connection, Inc. (the “Company”) is a multinational professional
services firm that provides to clients – through its operating
subsidiary, Resources Global Professionals (“RGP”) – consulting services
in the areas of accounting, finance, risk management and internal audit,
corporate advisory, strategic communications and restructuring,
information management, human capital, supply chain management,
healthcare solutions, and legal and regulatory services.
Revenue for the fourth quarter of fiscal 2014 was $156.8 million,
increasing 11.8% (11.6% on a constant dollar basis) compared to the
prior year’s fourth quarter and 18.2% (18.0% on a constant dollar basis)
sequentially. Revenue in the U.S. increased 14.8% quarter-over-quarter
and 20.2% sequentially. International revenue increased 1.9%
quarter-over-quarter and 10.9% sequentially (0.9% quarter-over-quarter
and 9.9% sequentially on a constant dollar basis). Since fiscal 2014
contained 53 weeks of operations, results for the fourth quarter include
an extra week of revenue of approximately $9.8 million (a 14-week
quarter) as compared to the fourth quarter of fiscal 2013 (a 13-week
quarter). Excluding the 14th week revenues, quarter and
sequential growth was 4.9% and 10.8%, respectively.
The Company’s net income for the fourth quarter of fiscal 2014 was $6.9
million, or $0.18 per diluted share, compared to net income for the
fourth quarter of fiscal 2013 of $5.3 million, or $0.13 per diluted
share. Net income includes severance and related charges for European
personnel reductions totaling $2.0 million or $0.05 per diluted share
and $1.1 million or $0.03 per diluted share for the quarters ended May
31, 2014 and May 25, 2013, respectively.
“We are pleased to see significant improvement in our U.S. based
business, with fourth quarter revenue improving 14.8% (7.7% on a
comparable 13-week basis) over the prior year quarter,” said Tony
Cherbak, president and chief executive officer of RGP. “In
particular, in the fourth quarter, we experienced more balanced revenue
growth across the country than at any other time this past year. We also
believe the actions we took in the fourth quarter in Europe will
position that region, which is critical for maintaining our global
footprint with our Fortune 1000 clients, for improved results. On an
overall basis, our revenues for the first six weeks of fiscal 2015 have
tracked 7.8% better than the comparable period last year.”
Gross margin increased 290 basis points sequentially to 38.9% in the
fourth quarter of fiscal 2014 and was the same quarter-over-quarter. The
increase in sequential gross margin was primarily attributable to fewer
paid U.S. holidays in the fourth quarter (the third quarter contained
the Thanksgiving and Christmas holidays); a reduced impact from payroll
taxes; and an improvement in the bill rate/pay rate spread.
Selling, general and administrative (“S,G&A”) expenses for the fourth
quarter of fiscal 2014 were $46.2 million (29.5% of revenue) compared to
the prior year fourth quarter amount of $42.3 million (30.2% of revenue)
and $41.6 million in the preceding quarter (31.3% of revenue). The
increase in S,G&A is primarily attributable to $1.7 million related to
European personnel reductions in the fourth quarter of fiscal 2014 and
the impact of the 14th week in comparison to the
year-over-year and sequential quarters.
Cash flow from operations and Adjusted EBITDA were $18.4 million and
$16.4 million (10.5% of revenue), respectively, for the fourth quarter
of fiscal 2014 compared to $16.9 million and $13.9 million (9.9% of
revenue), respectively, for the fourth quarter of fiscal 2013.
“The Company’s continued execution on our initiatives led to a
successful fourth quarter,” said Don
Murray, executive chairman of RGP. “As a result, we were able to
return $10.7 million of capital to our shareholders in the form of
dividends and share repurchases during the quarter and over $40.2
million for fiscal 2014.”
The Company’s revenue for the year ended May 31, 2014 was $567.2 million
compared to $556.3 million for the year ended May 25, 2013. On a
comparable 52-week basis excluding revenues of $9.8 million during the 53rd
week of fiscal 2014, revenues improved $1.1 million in fiscal 2014
(0.2%) as compared to fiscal 2013. The Company’s net income for the year
ended May 31, 2014 was $19.9 million, or $0.51 per diluted share. This
compares to net income for the year ended May 25, 2013 of $20.5 million,
or $0.50 per diluted share.
During the fourth quarter of fiscal 2014, the Company repurchased
601,250 shares of common stock for $8.0 million. As of July 17, 2014,
the Company has approximately $43.0 million remaining under its board
authorized stock buyback program. On June 19, 2014, the Company paid a
quarterly dividend totaling $2.7 million ($0.07 per share) to
shareholders. As of May 31, 2014, the Company’s cash, cash equivalents
and short-term investments were $114.3 million compared to $119.0
million at fiscal year-end May 25, 2013.
ABOUT RGP
RGP, the operating subsidiary of Resources Connection, Inc. (NASDAQ:
RECN), is a multinational professional services firm that helps business
leaders execute internal initiatives. Partnering with business leaders,
we drive internal change across all parts of a global enterprise –
accounting, finance, risk management and internal audit, corporate
advisory, strategic communications and restructuring, information
management, human capital, supply chain management, healthcare
solutions, and legal and regulatory services.
RGP was founded in 1996 within a Big Four accounting firm. Today, we are
a publicly traded company with over 3,100 professionals, annually
serving over 1,800 clients around the world from 68 practice offices.
Headquartered in Irvine, California, RGP has served 87 of the Fortune
100 companies.
The Company is listed on the NASDAQ Global Select Market, the exchange’s
highest tier by listing standards. More information about RGP is
available at http://www.rgp.com.
RGP will hold a conference call for interested analysts and investors at
5:00 p.m. ET today, July 17, 2014. This conference call will be
available for listening via a webcast
on the Company’s website: http://www.rgp.com.
An audio replay of the conference call will be available through July
24, 2014 at 855-859-2056. The conference ID number for the replay is
61678641. The call will also be archived on the RGP website for 30 days.
Certain statements in this press release are “forward-looking
statements” within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements may be identified by words such as
“anticipates,” “believes,” “can,” “continue,” “could,” “estimates,”
“expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “remain,”
“should” or “will” or the negative of these terms or other comparable
terminology. In this press release, such statements include the
anticipated effects of European personnel reductions on our financial
results. Such statements and all phases of the Company’s operations are
subject to known and unknown risks, uncertainties and other factors that
could cause our actual results, levels of activity, performance or
achievements and those of our industry to differ materially from those
expressed or implied by these forward-looking statements. Risks and
uncertainties include seasonality, overall economic conditions and other
factors and uncertainties as are identified in our most recent Quarterly
Report on Form 10-Q and our other public filings made with the
Securities and Exchange Commission (File No. 0-32113). Additional risks
and uncertainties not presently known to us or that we currently deem
immaterial may also affect our business or operating results. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company does not
intend, and undertakes no obligation, to update the forward-looking
statements in this press release to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events, unless required by law to do so.
RESOURCES CONNECTION, INC.
|
CONSOLIDATED STATEMENT OF OPERATIONS
|
(Amounts in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
May 31,
|
|
May 25,
|
|
May 31,
|
|
May 25,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
156,783
|
|
|
$
|
140,184
|
|
|
$
|
567,181
|
|
|
$
|
556,334
|
|
Direct costs of services
|
|
|
95,841
|
|
|
|
85,684
|
|
|
|
351,359
|
|
|
|
342,040
|
|
Gross margin
|
|
|
60,942
|
|
|
|
54,500
|
|
|
|
215,822
|
|
|
|
214,294
|
|
Selling, general and administrative expenses (1)
|
|
|
46,194
|
|
|
|
42,325
|
|
|
|
172,531
|
|
|
|
168,318
|
|
Operating income before amortization and depreciation (1)
|
|
|
14,748
|
|
|
|
12,175
|
|
|
|
43,291
|
|
|
|
45,976
|
|
Amortization of intangible assets
|
|
|
426
|
|
|
|
412
|
|
|
|
1,688
|
|
|
|
1,694
|
|
Depreciation expense
|
|
|
881
|
|
|
|
1,092
|
|
|
|
3,628
|
|
|
|
4,580
|
|
Operating income (1)
|
|
|
13,441
|
|
|
|
10,671
|
|
|
|
37,975
|
|
|
|
39,702
|
|
Interest income
|
|
|
(45
|
)
|
|
|
(40
|
)
|
|
|
(168
|
)
|
|
|
(175
|
)
|
Income before provision for income taxes (1)
|
|
|
13,486
|
|
|
|
10,711
|
|
|
|
38,143
|
|
|
|
39,877
|
|
Provision for income taxes (2)
|
|
|
6,627
|
|
|
|
5,396
|
|
|
|
18,257
|
|
|
|
19,373
|
|
Net income (1), (2)
|
|
$
|
6,859
|
|
|
$
|
5,315
|
|
|
$
|
19,886
|
|
|
$
|
20,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share (1), (2)
|
|
$
|
0.18
|
|
|
$
|
0.13
|
|
|
$
|
0.51
|
|
|
$
|
0.50
|
|
Diluted net income per share (1), (2)
|
|
$
|
0.18
|
|
|
$
|
0.13
|
|
|
$
|
0.51
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares
|
|
|
38,580
|
|
|
|
40,481
|
|
|
|
39,216
|
|
|
|
41,108
|
|
Diluted shares
|
|
|
38,720
|
|
|
|
40,495
|
|
|
|
39,307
|
|
|
|
41,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
|
$
|
0.28
|
|
|
$
|
0.24
|
|
|
EXPLANATORY NOTES
|
|
|
|
|
|
(1)
|
|
Selling, general and administrative expenses include non-cash
compensation expense for employee stock option grants and employee
stock purchases of $1.6 million and $1.7 million for the three
months ended May 31, 2014 and May 25, 2013, respectively, and $6.5
million and $7.2 million for the years ended May 31, 2014 and May
25, 2013, respectively.
|
|
|
|
|
|
(2)
|
|
The Company's effective tax rate was approximately 49% and
approximately 50% for the three months ended May 31, 2014 and May
25, 2013, respectively, and approximately 48% and approximately 49%
for the years ended May 31, 2014 and May 25, 2013, respectively. For
all periods presented, the Company is unable to benefit from, or has
limitations on the benefit of, tax losses in certain foreign
jurisdictions. To a lesser extent, the accounting treatment under
GAAP for the cost associated with incentive stock options and shares
purchased through the Employee Stock Purchase Plan have caused
volatility in the Company's effective tax rate. In addition, the
effective tax rate during the year ended May 31, 2014 benefited from
the reversal of $690,000 of uncertain international tax position
accruals for which the statute of limitations has expired.
|
|
RESOURCES CONNECTION, INC.
|
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
|
(Amounts in thousands, except Adjusted EBITDA Margin)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
May 31,
|
|
May 25,
|
|
May 31,
|
|
May 25,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
6,859
|
|
|
$
|
5,315
|
|
|
$
|
19,886
|
|
|
$
|
20,504
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
426
|
|
|
|
412
|
|
|
|
1,688
|
|
|
|
1,694
|
|
Depreciation expense
|
|
|
881
|
|
|
|
1,092
|
|
|
|
3,628
|
|
|
|
4,580
|
|
Interest income
|
|
|
(45
|
)
|
|
|
(40
|
)
|
|
|
(168
|
)
|
|
|
(175
|
)
|
Provision for income taxes
|
|
|
6,627
|
|
|
|
5,396
|
|
|
|
18,257
|
|
|
|
19,373
|
|
EBITDA
|
|
|
14,748
|
|
|
|
12,175
|
|
|
|
43,291
|
|
|
|
45,976
|
|
Stock-based compensation expense
|
|
|
1,640
|
|
|
|
1,728
|
|
|
|
6,519
|
|
|
|
7,188
|
|
Adjusted EBITDA
|
|
$
|
16,388
|
|
|
$
|
13,903
|
|
|
$
|
49,810
|
|
|
$
|
53,164
|
|
Revenue
|
|
$
|
156,783
|
|
|
$
|
140,184
|
|
|
$
|
567,181
|
|
|
$
|
556,334
|
|
Adjusted EBITDA Margin
|
|
|
10.5
|
%
|
|
|
9.9
|
%
|
|
|
8.8
|
%
|
|
|
9.6
|
%
|
|
The Company utilizes certain financial measures and key performance
indicators that are not defined by, or calculated in accordance
with, GAAP to assess our financial and operating performance. A
non-GAAP financial measure is defined as a numerical measure of a
company's financial performance that (i) excludes amounts, or is
subject to adjustments that have the effect of excluding amounts,
that are included in the comparable measure calculated and presented
in accordance with GAAP in the statement of operations; or (ii)
includes amounts, or is subject to adjustments that have the effect
of including amounts, that are excluded from the comparable measure
so calculated and presented.
|
|
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP
financial measures. EBITDA is calculated as net income before
amortization of intangible assets, depreciation expense, interest
income and income taxes. Adjusted EBITDA is calculated as EBITDA
plus stock-based compensation expense. Adjusted EBITDA Margin is
calculated by dividing Adjusted EBITDA by Revenue. We believe that
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin provide useful
measures to our investors because they are financial measures used
by management to assess the core performance of our Company.
Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of
financial performance or liquidity under GAAP and should not be
considered in isolation or construed as substitutes for net income
or other cash flow data prepared in accordance with GAAP for
purposes of analyzing our profitability or liquidity. These measures
should be considered in addition to, and not as a substitute to, net
income, earnings per share, cash flows or other measures of
financial performance prepared in accordance with GAAP.
|
|
RESOURCES CONNECTION, INC.
|
SELECTED BALANCE SHEET, CASH FLOW AND OTHER INFORMATION
|
(Amounts in thousands, except consultant headcount)
|
|
|
|
|
|
|
|
May 31,
|
|
May 25,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
114,277
|
|
|
$
|
119,012
|
|
Accounts receivable, less allowances
|
|
$
|
90,334
|
|
|
$
|
84,194
|
|
Total assets
|
|
$
|
420,078
|
|
|
$
|
417,640
|
|
Current liabilities
|
|
$
|
67,175
|
|
|
$
|
61,333
|
|
Total stockholders’ equity
|
|
$
|
345,761
|
|
|
$
|
352,327
|
|
Consultant headcount, end of period
|
|
|
2,401
|
|
|
|
2,208
|
|
Shares outstanding, end of period
|
|
|
38,158
|
|
|
|
39,705
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
May 31,
|
|
May 25,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Cash flow from operating activities
|
|
$
|
32,018
|
|
|
$
|
34,959
|
|
Cash flow from investing activities
|
|
$
|
(12,715
|
)
|
|
$
|
(5,152
|
)
|
Cash flow from financing activities
|
|
$
|
(32,910
|
)
|
|
$
|
(38,092
|
)
|
Copyright Business Wire 2014