*Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization and stock-based compensation
IRVINE, Calif., July 17, 2014 - 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.
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.
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