IRVINE, Calif., October 2, 2014 - Resources Connection, Inc. (NASDAQ: RECN), today announced financial results for its fiscal first quarter ended August 30, 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 first quarter of fiscal 2015 was $143.4 million; increasing 8.9% (8.7% on a constant dollar basis) compared to the prior year's first quarter and was down 8.5% (8.4% on a constant dollar basis) sequentially. Revenue in the U.S. increased 13.3% quarter-over-quarter and decreased 6.8% sequentially. International revenue decreased 6.4% quarter-over-quarter and 15.1% sequentially (7.1% quarter-over-quarter and 14.5% sequentially on a constant dollar basis). Since fiscal 2014 contained 53 weeks of operations, results for the fourth quarter included an extra week of revenue of approximately $9.8 million (a 14-week quarter) as compared to the first quarter of fiscal 2015 (a 13-week quarter). Excluding the 14th week revenues, the sequential decrease in total revenue was 2.4% (2.2% on a constant dollar basis).
The Company's net income increased 46% in the first quarter of fiscal 2015 to $5.4 million, or $0.14 per diluted share, compared to net income for the first quarter of fiscal 2014 of $3.7 million, or $0.09 per diluted share. Net income in the first quarter of fiscal 2015 includes severance and related charges for European personnel reductions totaling $700,000 or $0.02 per diluted share.
"Fiscal 2015 started well with quarter-over-quarter improvement in our significant financial metrics, including revenue, gross margin and adjusted EBITDA," said Tony Cherbak, president and chief executive officer of RGP. "Overall, first quarter revenue is our highest for a first quarter since fiscal 2009 and, in particular, our U.S. operations achieved double digit growth quarter-over-quarter. Overseas, we continue to make changes that we believe will strengthen our operations in the long-term. Our international presence is critical for serving our Fortune 1000 clients."
Gross margin increased 150 basis points quarter-over-quarter to 39.2% in the first quarter of fiscal 2015 and 30 basis points sequentially. The increase in quarter-over-quarter gross margin was primarily attributable to improvement in the ratio of bill rate to pay rate; one less holiday in the first quarter of fiscal 2015 than fiscal 2014; and lower healthcare costs.
Selling, general and administrative ("S, G&A") expenses for the first quarter of fiscal 2015 were $44.3 million (30.9% of revenue) compared to the prior year first quarter amount of $41.6 million (31.6% of revenue) and $46.2 million in the preceding quarter (29.5% of revenue). The increase in S,G&A compared to the prior year first quarter is primarily attributable to an increase in marketing costs, including a global client service meeting in June, headcount additions in offices experiencing growth and European severance charges; the decrease in S,G&A compared to the fourteen week fourth quarter of fiscal 2014 is primarily attributable to the one less week of activity in the first quarter of fiscal 2015 and a lower amount of costs associated with European personnel reductions.
Cash used in operations and Adjusted EBITDA were $8.7 million and $13.5 million (9.4% of revenue), respectively, for the first quarter of fiscal 2015 compared to cash provided by operations and Adjusted EBITDA of $5.3 million and $9.8 million (7.4% of revenue), respectively, for the first quarter of fiscal 2014.
"We recently announced the fourth consecutive annual increase in our quarterly dividend of 14% to $0.08 per share," said Don Murray, executive chairman of RGP. "Our ability to balance growth and investment opportunities with returning capital to our shareholders is an important facet of our company goals. This quarter we returned $8.7 million of capital to our shareholders in the form of dividends and share repurchases."
During the first quarter of fiscal 2015, the Company repurchased 383,000 shares of common stock for $5.7 million. As of October 2, 2014, the Company has approximately $37.3 million remaining under its board authorized stock buyback program. On September 25, 2014, the Company paid a quarterly dividend totaling $3.0 million ($0.08 per share) to shareholders. As of August 30, 2014, the Company's cash, cash equivalents and short-term investments were $100.1 million compared to $114.3 million at fiscal year-end May 31, 2014.
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 69 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, October 2, 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 October 9, 2014 at 855-859-2056. The conference ID number for the replay is 98407986. 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 changes made overseas that will strengthen operations in the long-term. 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 Annual Report on Form 10-K 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.
Nate Franke, Chief Financial Officer