Revenue of
Net income of
Diluted
earnings per share of
Company makes progress on
strategic initiatives to enhance revenue and profitability
Revenue for the fourth quarter of 2017 was
"I am pleased with the progress we made in the fourth quarter against
our key strategic initiatives, in particular the reduction in force cost
savings initiative and the sales transformation initiative," said
*Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization and stock-based compensation
UPDATE ON STRATEGIC INITIATIVES
In its third quarter fiscal 2017 earnings release, the Company announced
that it was implementing three strategic initiatives to improve cost
containment and drive revenue growth: (1) reducing selling, general and
administrative expenses by approximately
The Company made significant progress on the first initiative,
completing the cost reduction plan during the fourth quarter and
implementing changes to improve its cost containment strategies without
impairing revenue performance. The Company took a charge of
approximately
The Company continues to focus on its multi-step, second initiative, to
cultivate a more sophisticated and robust sales culture. During the
fourth quarter, the Company began implementing new management techniques
and processes and made leadership changes in five underperforming
markets in
In addition, the Company began building out its national business
development function targeting the middle market, where the Company sees
significant growth opportunities. RGP will revise its management
incentive program in fiscal 2018 to more heavily incentivize growth. The
Company also completed in July the implementation of SalesForce in all
of its offices in
Finally, the redesign of the Company's operating model is well under way, as it continues to prioritize building its integrated solutions capabilities and delivering multi-disciplinary offerings to its clients in its three new areas of focus - M&A Integration, Technical Accounting, and Data Solutions. This focus has already delivered strong revenue growth and the Company expects this upward performance trend to continue.
FISCAL FOURTH QUARTER AND YEAR-END REVIEW
Revenue for the fourth quarter of fiscal 2017 decreased by 2.6% (1.6%
constant currency) to
Revenue in the
Net income declined in the fourth quarter of fiscal 2017 to
Gross margin was 39.1% in the fourth quarter of fiscal 2017, compared to 39.9% in the prior year fourth 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 increased 280 basis points from 36.3% in the third quarter of fiscal 2017, primarily due to the lack of paid holidays in the fourth quarter, decreased employer payroll taxes as the calendar year progresses and a decrease in medical coverage costs.
Selling, general and administrative expenses ("S, G & A") for the fourth
quarter of fiscal 2017 were
Revenue for the year ended
Cash provided by operations was
In the fourth quarter of fiscal 2017, the Company paid a quarterly
dividend to shareholders totaling
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 67 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 improve cost
containment and drive 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
|
|||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||
Three Months Ended | Year Ended | ||||||||||||
|
|
|
|
||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
(Unaudited) | (Unaudited) | ||||||||||||
Revenue | $ | 148,620 | $ | 152,515 | $ | 583,411 | $ | 598,521 | |||||
Direct cost of services | 90,579 | 91,616 | 362,086 | 366,355 | |||||||||
Gross margin | 58,041 | 60,899 | 221,325 | 232,166 | |||||||||
Selling, general and administrative expenses (1) | 48,425 | 44,360 | 183,471 | 174,806 | |||||||||
Operating income before amortization | |||||||||||||
and depreciation (1) | 9,616 | 16,539 | 37,854 | 57,360 | |||||||||
Amortization of intangible assets | - | - | - | 90 | |||||||||
Depreciation expense | 941 | 861 | 3,452 | 3,467 | |||||||||
Operating income (1) | 8,675 | 15,678 | 34,402 | 53,803 | |||||||||
Interest expense | 358 | - | 773 | - | |||||||||
Interest income | (18) | (68) | (144) | (186) | |||||||||
Income before provision for income taxes (1) | 8,335 | 15,746 | 33,773 | 53,989 | |||||||||
Provision for income taxes (2) | 3,898 | 7,069 | 15,122 | 23,546 | |||||||||
Net income (1), (2) | $ | 4,437 | $ | 8,677 | $ | 18,651 | $ | 30,443 | |||||
Net income per common share: | |||||||||||||
Basic (1), (2) | $ | 0.15 | $ | 0.24 | $ | 0.57 | $ | 0.82 | |||||
Diluted (1), (2) | $ | 0.15 | $ | 0.23 | $ | 0.56 | $ | 0.81 | |||||
Weighted average common shares outstanding: | |||||||||||||
Basic | 29,654 | 36,590 | 32,851 | 37,037 | |||||||||
Diluted | 30,234 | 37,102 | 33,471 | 37,608 | |||||||||
Cash dividends declared per common share | $ | 0.11 | $ | 0.10 | $ | 0.44 | $ | 0.40 | |||||
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 47% and
approximately 45% for the three months ended |
|
||||||||||||||||||||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
|
|
|
|
|||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
Net income | $ | 4,437 | $ | 8,677 | $ | 18,651 | $ | 30,443 | ||||||||||||
Adjustments: | ||||||||||||||||||||
Amortization of intangible assets | - | - | - | 90 | ||||||||||||||||
Depreciation expense | 941 | 861 | 3,452 | 3,467 | ||||||||||||||||
Interest expense | 358 | - | 773 | - | ||||||||||||||||
Interest income | (18 | ) | (68 | ) | (144 | ) | (186 | ) | ||||||||||||
Provision for income taxes | 3,898 | 7,069 | 15,122 | 23,546 | ||||||||||||||||
EBITDA | 9,616 | 16,539 | 37,854 | 57,360 | ||||||||||||||||
Stock-based compensation expense | 1,410 | 1,252 | 6,068 | 6,280 | ||||||||||||||||
Adjusted EBITDA | $ | 11,026 | $ | 17,791 | $ | 43,922 | $ | 63,640 | ||||||||||||
Revenue | $ | 148,620 | $ | 152,515 | $ | 583,411 | $ | 598,521 | ||||||||||||
Adjusted EBITDA Margin | 7.4 | % | 11.7 | % | 7.5 | % | 10.6 | % | ||||||||||||
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 |
2017 GAAP |
% Decrease
vs.
GAAP |
% Decrease
vs.
Constant Currency (1) |
% Increase
vs.
2017 GAAP |
% Increase
vs.
2017 Constant Currency (2) |
|||||||||
$ | 148,620 | $ | 152,515 | $ | 143,844 | -2.6% | -1.6% | 3.3% | 3.0% | ||||||
(1) 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 fourth 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 third quarter of fiscal 2017 and applying those rates to foreign-denominated revenue in the fourth 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 | $ |
62,329 |
$ | 116,046 | |
Accounts receivable, less allowances | $ | 98,222 | $ | 97,807 | |
Total assets | $ | 364,128 | $ | 417,255 | |
Current liabilities |
$ |
71,771 | $ | 70,884 | |
Total stockholders' equity |
$ |
238,142 |
$ |
342,649 | |
Consultant headcount, end of period | 2,569 | 2,511 | |||
Shares outstanding, end of period | 29,662 | 36,229 | |||
For the Years Ended | |||||
|
|
||||
2017 | 2016 | ||||
(Unaudited) | |||||
Cash flow from operating activities | $ | 28,265 | $ | 38,262 | |
Cash flow from investing activities | $ | 20,409 | $ | (2,350) | |
Cash flow from financing activities | $ | (76,876) | $ | (32,258) |
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Media Contact:
(US+) 1-310-788-2850
mike_sitrick@sitrick.com
or
Investor
Contact:
(US+)
1-714-430-6500
herb.mueller@rgp.com
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