Revenue of
Net income of
Announces three key
strategic initiatives to enhance revenue and profitability
Revenue for the fiscal 2017 third quarter was
"I am pleased with the improving performance that we have seen in
*Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization and stock-based compensation
KEY STRATEGIC INITIATIVES
The Company today announced that it has implemented three strategic
initiatives to help improve its performance in both cost containment and
revenue generation. The initiatives include (1) reducing selling,
general and administrative expenses by approximately
The first initiative, which includes a clear and actionable plan for reducing costs in low growth markets, will streamline the Company's field and back office operations to better match current and anticipated demand in certain geographies. The implementation of this plan will result in a reduction in overhead expenses and head count, and is expected to be completed by the end of the fiscal 2017 fourth quarter.
The second priority initiative focuses on driving sales on an enterprise level to advance the account development and management activities in local markets, and will support a more sophisticated and robust sales culture. The initiative includes four major components: the implementation of Salesforce as a global Customer Relationship Management tool and the realignment of the Company's sales process, the establishment of an enterprise-wide Business Development function, the creation of a Strategic Client Program dedicated to expanding service and revenue in the Company's highest level clients, and the evolution of the incentive compensation plans to prioritize growth. These transition activities will involve multi-step changes that are expected to take approximately 12-18 months to complete.
Finally, the Company's decision to redesign its operating model is expected to enhance its client offerings, providing insightful business solutions as well as industry-leading project execution. For example, the Company will build deeper capabilities in project support for M&A transactions and Data Solutions, including Data Governance, Privacy, Security & Analytics. The shift will also enable stronger inter-office collaboration and allow the Company to deliver improved solutions, expertise and talent to all of its clients around the globe, regardless of their location.
"Our focus has always been to deliver exceptional service to help our clients work differently and better," said Duchene. "To continue to do that at the highest level - and while delivering the strongest possible business results - we are committed to evolving. We will build on our strengths and adapt our services and model to the changing needs of our client base. We are confident that the three strategic initiatives we announced today will bolster our offerings for our clients and drive better productivity in our business over the long term."
FISCAL THIRD QUARTER REVIEW
Revenue for the third quarter of fiscal 2017 decreased by 2.0% (1.2%
constant currency) to
Revenue in the
Net income declined in the third quarter of fiscal 2017 to
Gross margin was 36.3% in the third quarter of fiscal 2017, compared to 37.4% in the prior year third quarter, as a result of an unfavorable change in the bill rate/pay rate ratio and an increase in costs related to the Company's self-insured medical program. Sequentially, gross margin decreased 200 basis points from 38.3% in the second quarter of fiscal 2017, primarily due to an increase in employer payroll taxes after the reset for the new calendar year and the aforementioned increase in medical coverage costs.
Selling, general and administrative expenses ("S, G & A") for the third
quarter of fiscal 2017 were
Revenue for the nine months ended
Cash provided by operations and Adjusted EBITDA were
In the third quarter of fiscal 2017, the Company repurchased 400,100
shares of its common stock for
CONFERENCE CALL
RGP will hold a conference call for analysts and investors at
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 66 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)
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 expectations regarding strategic initiatives to enhance
revenue and profitability. 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
|
|||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
|
|
|
|
||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||
Revenue | $ | 143,844 | $ | 146,779 | $ | 434,791 | $ | 446,006 | |||||||||
Direct cost of services | 91,597 | 91,851 | 271,507 | 274,739 | |||||||||||||
Gross margin | 52,247 | 54,928 | 163,284 | 171,267 | |||||||||||||
Selling, general and administrative expenses (1) | 45,376 | 43,318 | 135,046 | 130,446 | |||||||||||||
Operating income before amortization and depreciation (1) |
6,871 | 11,610 | 28,238 | 40,821 | |||||||||||||
Amortization of intangible assets | - | 30 | - | 90 | |||||||||||||
Depreciation expense | 909 | 867 | 2,511 | 2,606 | |||||||||||||
Operating income (1) | 5,962 | 10,713 | 25,727 | 38,125 | |||||||||||||
Interest expense | 351 | - | 415 | - | |||||||||||||
Interest income | (16 | ) | (52 | ) | (126 | ) | (118 | ) | |||||||||
Income before provision for income taxes (1) | 5,627 | 10,765 | 25,438 | 38,243 | |||||||||||||
Provision for income taxes (2) | 2,743 | 4,808 | 11,224 | 16,477 | |||||||||||||
Net income (1), (2) | $ | 2,884 | $ | 5,957 | $ | 14,214 | $ | 21,766 | |||||||||
Net income per common share: | |||||||||||||||||
Basic (1), (2) | $ | 0.10 | $ | 0.16 | $ | 0.42 | $ | 0.59 | |||||||||
Diluted (1), (2) | $ | 0.09 | $ | 0.16 | $ | 0.41 | $ | 0.58 | |||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 29,764 | 37,073 | 33,916 | 37,186 | |||||||||||||
Diluted | 30,584 | 37,615 | 34,550 | 37,777 | |||||||||||||
Cash dividends declared per common share | $ | 0.11 | $ | 0.10 | $ | 0.33 | $ | 0.30 | |||||||||
EXPLANATORY NOTES
(1) |
Selling, general and administrative expenses include non-cash
compensation expense for employee stock option grants, restricted
share grants and employee stock purchases of |
||
(2) |
The Company's effective tax rate was approximately 49% and
approximately 44% for the three months ended |
|
||||||||||||||||||||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
|
|
|
|
|||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
Net income | $ | 2,884 | $ | 5,957 | $ | 14,214 | $ | 21,766 | ||||||||||||
Adjustments: | ||||||||||||||||||||
Amortization of intangible assets | - | 30 | - | 90 | ||||||||||||||||
Depreciation expense | 909 | 867 | 2,511 | 2,606 | ||||||||||||||||
Interest expense | 351 | - | 415 | - | ||||||||||||||||
Interest income | (16 | ) | (52 | ) | (126 | ) | (118 | ) | ||||||||||||
Provision for income taxes | 2,743 | 4,808 | 11,224 | 16,477 | ||||||||||||||||
EBITDA | 6,871 | 11,610 | 28,238 | 40,821 | ||||||||||||||||
Stock-based compensation expense | 1,508 | 1,483 | 4,658 | 5,028 | ||||||||||||||||
Adjusted EBITDA | $ | 8,379 | $ | 13,093 | $ | 32,896 | $ | 45,849 | ||||||||||||
Revenue | $ | 143,844 | $ | 146,779 | $ | 434,791 | $ | 446,006 | ||||||||||||
Adjusted EBITDA Margin | 5.8 | % | 8.9 | % | 7.6 | % | 10.3 | % | ||||||||||||
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, which are used by management to assess the core performance of our Company, also provide useful information to our investors because they are alternative financial measures that investors can also use to assess the core performance of our Company and compare it to the Company's peers. 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 for, net income, earnings per share, cash flows or other measures of financial performance prepared in accordance with GAAP.
|
|||||||||||||||||||
CONSTANT CURRENCY REVENUE COMPARISON | |||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Revenue for the Three Months Ended | |||||||||||||||||||
2017 GAAP |
2016 GAAP |
2016 GAAP |
% Decrease
vs.
GAAP |
% Decrease
vs.
Constant Currency (1) |
% Decrease
vs.
2016 GAAP |
% Decrease
vs.
2016 Constant Currency (2) |
|||||||||||||
$ | 143,844 | $ | 146,779 | $ | 147,558 | -2.0 | % | -1.2 | % | -2.5 | % | -1.8 | % | ||||||
(1) The percentage change in revenue on a constant currency basis is calculated using the average foreign exchange rates for the third quarter of fiscal 2016 and applying those rates to foreign-denominated revenue in the third 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 second quarter of fiscal 2017 and applying those rates to foreign-denominated revenue in the third 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
|
||||||||
SELECTED BALANCE SHEET, CASH FLOW AND OTHER INFORMATION | ||||||||
(Amounts in thousands, except consultant headcount) | ||||||||
|
|
|||||||
2017 | 2016 | |||||||
(Unaudited) | ||||||||
Cash, cash equivalents and short-term investments | $ | 44,607 | $ | 116,046 | ||||
Accounts receivable, less allowances | $ | 96,864 | $ | 97,807 | ||||
Total assets | $ | 345,355 | $ | 417,255 | ||||
Current liabilities | $ | 58,545 | $ | 70,884 | ||||
Total stockholders' equity | $ | 233,480 | $ | 342,649 | ||||
Consultant headcount, end of period | 2,611 | 2,511 | ||||||
Shares outstanding, end of period | 29,646 | 36,229 | ||||||
Nine Months Ended | ||||||||
|
|
|||||||
2017 | 2016 | |||||||
(Unaudited) | ||||||||
Cash flow from operating activities | $ | 6,926 | $ | 7,047 | ||||
Cash flow from investing activities | $ | 21,133 | $ | (1,659 | ) | |||
Cash flow from financing activities | $ | (73,785 | ) | $ | (20,841 | ) |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170405006235/en/
For
Media Contact:
(US+) 1-310-788-2850
mike_sitrick@sitrick.com
or
Investor
Contact:
(US+)
1-714-430-6500
herb.mueller@rgp.com
Source:
News Provided by Acquire Media