Resources Connection, Inc. Reports Third Quarter Results for Fiscal 2015

Resources Connection, Inc. Reports Third Quarter Results for Fiscal 2015

• Company reports Q3 revenues of $146.8 million, up 10.6% quarter-over-quarter
• Company's earnings per share improves to $0.16, up $0.10 from $0.06 per share in prior year's third quarter
• Company's Adjusted EBITDA* improves 65% to $12.9 million (8.8% of revenue) from $7.8 million (5.8% of revenue) in prior year's third quarter
• Company returns $10.1 million in capital to shareholders in dividends and stock buy-backs *Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization and stock-based compensation.

IRVINE, Calif., April 8, 2015 - Resources Connection, Inc. (NASDAQ: RECN), today announced financial results for its fiscal third quarter ended February 28, 2015. 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 third quarter of fiscal 2015 increased 10.6% to $146.8 million ($148.4 million on a sequential constant currency basis) compared to the prior year's third quarter of $132.7 million (which included the Thanksgiving holiday). Revenue was down 3.1% sequentially (down 2.0% on a constant currency basis) compared to $151.5 million in the second quarter of fiscal 2015. The Company estimates the revenue impact of the Thanksgiving holiday shift was approximately $4.0 million; on a pro forma basis, current quarter revenue would have grown 7.6% (9.8% on a constant currency basis) compared to the prior year quarter.

Revenue in the U.S. increased 17.3% quarter-over-quarter (13.4% on a pro forma basis reflecting the Thanksgiving holiday) and was down 0.7% sequentially. International revenue decreased 13.0% both sequentially and quarter-over-quarter (7.5% sequentially and 3.1% quarter-over-quarter on a constant currency basis).

The Company's net income increased 161.0% in the third quarter of fiscal 2015 to $6.0 million, or $0.16 per diluted share, compared to net income for the third quarter of fiscal 2014 of $2.3 million, or $0.06 per diluted share.

"Our increase in net earnings was substantially driven by an improvement in gross margin as well as leveraging our general and administrative expenses over higher revenues," said Tony Cherbak, president and chief executive officer of RGP. "We are pleased with our quarter-over-quarter revenue growth in the U.S. and Asia Pacific and are working hard to improve our operations in Europe."

Gross margin improved quarter-over-quarter to 37.3% in the third quarter of fiscal 2015 from 36.0% in the prior year quarter, primarily due to improvement in the bill to pay rate ratio and one less paid holiday in the current quarter; gross margin was down 190 basis points sequentially, primarily due to the reset of certain employer payroll taxes entering calendar 2015.

Selling, general and administrative expenses for the third quarter of fiscal 2015 were $43.5 million (29.6% of revenue) compared to the prior year third quarter amount of $41.6 million (31.3% of revenue) and $43.6 million in the preceding quarter (28.8% of revenue). The quarter-over-quarter increase is attributable to increased headcount and incentive compensation, primarily in the U.S. offset in part by favorable currency adjustments of approximately $1.0 million.

Cash used in operations and Adjusted EBITDA were $2.9 million and $12.9 million (8.8% of revenue), respectively, for the third quarter of fiscal 2015 compared to cash provided by operations and Adjusted EBITDA of $5.2 million and $7.8 million (5.8% of revenue), respectively, for the third quarter of fiscal 2014.

"It was gratifying to see continuing improvement in our operating metrics, including Adjusted EBITDA, this quarter," said Don Murray, executive chairman of RGP. "Our strong operating metrics allowed us to return $10.1 million of capital to our shareholders in the third quarter through our dividend and stock repurchase programs."

The Company's revenue for the nine months ended February 28, 2015 was $441.8 million compared to $410.4 million for the nine months ended February 22, 2014. The Company's net income for the nine months ended February 28, 2015 was $19.4 million, or $0.51 per diluted share, including $0.03 per diluted share related to European severance charges. This compares to net income in the nine months ended February 22, 2014 of $13.0 million, or $0.33 per diluted share.

During the third quarter of fiscal 2015, the Company repurchased 408,000 shares of common stock for $7.0 million. As of April 8, 2015, the Company has approximately $22.7 million remaining under its board authorized stock buyback program. On March 19, 2015, the Company paid a quarterly dividend totaling $3.0 million ($0.08 per share) to shareholders. As of February 28, 2015, the Company's cash, cash equivalents and short-term investments were $92.3 million compared to $114.3 million at fiscal year-end May 31, 2014.

ABOUT RGP

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, April 8, 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 April 15, 2015 at 855-859-2056. The conference ID number for the replay is 1410056. The call will also be archived on the RGP website for 30 days.

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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 statements concerning our efforts to improve operations in Europe. 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.

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Media Contact: Michael Sitrick (US+) 1-310-788-2850 mike_sitrick@sitrick.com

Analyst Contact: Nate Franke, Chief Financial Officer (US+) 1-714-430-6500 nate.franke@rgp.com