IRVINE, Calif., January 7, 2015 - Resources Connection, Inc. (NASDAQ: RECN), today announced financial results for its fiscal second quarter ended November 29, 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 second quarter of fiscal 2015, which included the Thanksgiving holiday, was $151.5 million, increasing 3.8% (4.9% on a constant dollar basis) compared to the prior year's second quarter and up 5.6% (6.7% on a constant dollar basis) sequentially. The Thanksgiving holiday fell in the third quarter of the prior fiscal year. The Company estimates the holiday reduced revenue in North America approximately $4.0 million in the second quarter of fiscal 2015; on a pro forma basis, current quarter revenue would have increased 6.5% compared to the prior year second quarter. Revenue in the U.S. increased 8.2% quarter-over-quarter and 5.5% sequentially. International revenue improved 6.2% sequentially while decreasing 11.5% quarter-over-quarter (11.6% sequential increase and 6.6% quarter-over-quarter decrease on a constant dollar basis).
The Company's net income increased 12.7% in the second quarter of fiscal 2015 to $8.0 million, or $0.21 per diluted share, compared to net income for the second quarter of fiscal 2014 of $7.1 million, or $0.18 per diluted share. Net income in the second quarter of fiscal 2015 includes severance and related charges for European personnel reductions totaling $500,000 or $0.01 per diluted share.
"We are pleased with the second quarter improvements in revenues, earnings and Adjusted EBITDA, some of our most important financial metrics," said Tony Cherbak, president and chief executive officer of RGP. "These achievements reflect our ability to leverage our operating results as revenue increases."
Gross margin was consistent sequentially at 39.2% in the second quarter of fiscal 2015 and down 10 basis points quarter-over-quarter. Selling, general and administrative expenses for the second quarter of fiscal 2015 were $43.6 million (28.8% of revenue) compared to the prior year second quarter amount of $43.1 million (29.5% of revenue) and $44.3 million in the preceding quarter of fiscal 2015 (30.9% of revenue). The second quarter of fiscal 2015 includes $500,000 related to European severance charges compared to $700,000 in the first quarter of fiscal 2015.
Cash provided by operations and Adjusted EBITDA were $14.3 million and $17.4 million (11.5% of revenue), respectively, for the second quarter of fiscal 2015 compared to cash provided by operations and Adjusted EBITDA of $3.1 million and $15.9 million (10.9% of revenue), respectively, for the second quarter of fiscal 2014.
"We believe that this quarter reflects an improving economy and the value our consultants bring to our clients on a daily basis," said Don Murray, executive chairman of RGP. "With revenue growth and our consistently strong balance sheet, we can continue to improve our operating leverage, invest in our people and service lines and at the same time, continue our stock repurchase and dividend programs which returned $10.6 million in capital to our shareholders this quarter."
The Company's revenue for the six months ended November 29, 2014 was $294.9 million compared to $277.7 million for the six months ended November 23, 2013. The Company's net income for the six months ended November 29, 2014 was $13.4 million, or $0.35 per diluted share, including $0.03 per diluted share related to European severance charges. This compares to net income in the six months ended November 23, 2013 of $10.7 million, or $0.27 per diluted share.
During the second quarter of fiscal 2015, the Company repurchased 523,000 shares of common stock for $7.6 million. As of January 7, 2015, the Company has approximately $29.7 million remaining under its board authorized stock buyback program. On December 18, 2014, the Company paid a quarterly dividend totaling $3.0 million ($0.08 per share) to shareholders. As of November 29, 2014, the Company's cash, cash equivalents and short-term investments were $103.3 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 3,300 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, January 7, 2015. 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 January 14, 2015 at 855-859-2056. The conference ID number for the replay is 48888612. 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 expectations about our results of operations, our ability to improve our operating leverage and our ability to continue our stock repurchase and dividend programs. 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.
Nate Franke, Chief Financial Officer