Resources Connection, Inc. Reports First Quarter Results for Fiscal 2017
Resources Connection, Inc. Reports First Quarter Results for Fiscal 2017
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Company reports first quarter revenue of
$143.4 million -
Revenue improves quarter-over-quarter in
Europe (6.2%) andAsia Pacific (2.5%) -
Net income
$5.6 million (3.9% of revenue), Adjusted EBITDA*$12.2 million (8.5% of revenue) for quarter -
Company returns capital to shareholders of
$9.3 million in first quarter
*Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization and stock-based compensation
Revenue for the first quarter of fiscal 2017 decreased 3.3% (3.1%
constant currency) to
Revenue in the
The Company's net income declined in the first quarter of fiscal 2017 to
"Our strong balance sheet allows us to return capital to our
shareholders as evidenced by the
In a separate press release issued today, the Company announced that Mr.
Cherbak will resign as the Company's President and CEO effective
Gross margin was 38.0% in the first quarter of fiscal 2017, compared to
38.7% in the prior year quarter. Gross margin in the first quarter of
2017 decreased more than expected primarily due to an unfavorable change
in the bill rate/pay rate ratio. Sequentially, gross margin decreased
190 basis points from 39.9% in the fourth quarter of fiscal 2016, due
primarily to two paid holidays in the
Selling, general and administrative expenses for the first quarter of
fiscal 2017 were
Cash used in operations and Adjusted EBITDA were
In the first quarter of fiscal 2017, the Company repurchased
approximately 375,000 shares of its common stock for
ABOUT RGP
RGP, the operating subsidiary of
RGP was founded in 1996 within a Big Four accounting firm. Today, we are a publicly traded company with over 3,300 professionals, annually serving over 1,800 clients around the world from 68 practice offices.
Headquartered in
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. (RECN-F)
RGP will hold a conference call for interested analysts and investors at
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
Company's continued focus on business development to stimulate revenue
growth. 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
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| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Amounts in thousands, except per share amounts) | ||||||||
| Three Months Ended | ||||||||
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| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| Revenue | $ | 143,389 | $ | 148,340 | ||||
| Direct cost of services | 88,862 | 90,877 | ||||||
| Gross margin | 54,527 | 57,463 | ||||||
| Selling, general and administrative expenses (1) | 43,614 | 43,957 | ||||||
| Operating income before amortization | ||||||||
| and depreciation (1) | 10,913 | 13,506 | ||||||
| Amortization of intangible assets | - | 30 | ||||||
| Depreciation expense | 794 | 858 | ||||||
| Operating income (1) | 10,119 | 12,618 | ||||||
| Interest income | (70 | ) | (32 | ) | ||||
| Income before provision for income taxes (1) | 10,189 | 12,650 | ||||||
| Provision for income taxes (2) | 4,551 | 5,517 | ||||||
| Net income (1), (2) | $ | 5,638 | $ | 7,133 | ||||
| Net income per common share: | ||||||||
| Basic (1), (2) | $ | 0.16 | $ | 0.19 | ||||
| Diluted (1), (2) | $ | 0.15 | $ | 0.19 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 36,269 | 37,295 | ||||||
| Diluted | 36,817 | 37,847 | ||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.10 | ||||
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EXPLANATORY NOTES |
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| (1) |
Selling, general and administrative expenses include non-cash
compensation expense for employee stock option grants, restricted
share grants and employee stock purchases of |
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| (2) |
The Company's effective tax rate was approximately 45% and
approximately 44% for the three months ended |
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| RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||||||||||
| (Dollars in thousands) | ||||||||||
| Three Months Ended | ||||||||||
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| 2016 | 2015 | |||||||||
| (Unaudited) | ||||||||||
| Net income | $ | 5,638 | $ | 7,133 | ||||||
| Adjustments: | ||||||||||
| Amortization of intangible assets | - | 30 | ||||||||
| Depreciation expense | 794 | 858 | ||||||||
| Interest income | (70 | ) | (32 | ) | ||||||
| Provision for income taxes | 4,551 | 5,517 | ||||||||
| EBITDA | 10,913 | 13,506 | ||||||||
| Stock-based compensation expense | 1,295 | 2,155 | ||||||||
| Adjusted EBITDA | $ | 12,208 | $ | 15,661 | ||||||
| Revenue | $ | 143,389 | $ | 148,340 | ||||||
| Adjusted EBITDA Margin | 8.5 |
% |
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10.6 |
% |
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EXPLANATORY NOTE
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. EBITDA, 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.
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| CONSTANT CURRENCY REVENUE COMPARISON | |||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Revenue for the Three Months Ended | |||||||||||||||||||
|
2016 GAAP |
2015 GAAP |
2016 GAAP |
% Decrease
vs.
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% Decrease
vs.
Constant Currency (1) |
% Decrease
vs.
|
% Decrease
vs.
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| $ | 143,389 | $ | 148,340 | $ | 152,515 | -3.3 | % | -3.1 | % | -6.0 | % | -5.9 | % | ||||||
| (1) The percentage change in revenue on a constant currency basis is calculated using the average foreign exchange rates for the first quarter of fiscal 2016 and applying those rates to foreign-denominated revenue in the first quarter of fiscal 2017. | |||||||||||||||||||
| (2) The percentage change in revenue on a constant currency basis is calculated using the average foreign exchange rates for the fourth quarter of fiscal 2016 and applying those rates to foreign-denominated revenue in the first quarter of fiscal 2017. | |||||||||||||||||||
EXPLANATORY NOTE
In order to provide a more comprehensive view of trends in our business,
this table shows revenue data on an as reported basis (GAAP) for the
respective periods and relative change in the same periods from the
impact on revenue of exchange rate fluctuations between
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| SELECTED BALANCE SHEET, CASH FLOW AND OTHER INFORMATION | ||||||||
| (Amounts in thousands, except consultant headcount) | ||||||||
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| 2016 | 2016 | |||||||
| (Unaudited) | ||||||||
| Cash, cash equivalents and short-term investments | $ | 102,921 | $ | 116,046 | ||||
| Accounts receivable, less allowances | $ | 96,236 | $ | 97,807 | ||||
| Total assets | $ | 402,835 | $ | 417,255 | ||||
| Current liabilities | $ | 54,891 | $ | 70,884 | ||||
| Total stockholders' equity | $ | 344,019 | $ | 342,649 | ||||
| Consultant headcount, end of period | 2,570 | 2,511 | ||||||
| Shares outstanding, end of period | 36,151 | 36,229 | ||||||
| Three Months Ended | ||||||||
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| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| Cash flow from operating activities | $ | (7,055 | ) | $ | (4,553 | ) | ||
| Cash flow from investing activities | $ | 13,898 | $ | (572 | ) | |||
| Cash flow from financing activities | $ | (5,595 | ) | $ | (5,694 | ) | ||
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for
Media Contact:
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or
Analyst
Contact:
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herb.mueller@rgp.com
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