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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 27, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to______ 

Commission File Number: 0-32113

 

RESOURCES CONNECTION, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

33-0832424

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

17101 Armstrong Avenue, Irvine, California 92614

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (714430-6400

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Exchange on Which Registered

Common stock, par value $0.01 per share

RGP

The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of March 31, 2021, there were approximately 32,823,022 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

  

1


 

RESOURCES CONNECTION, INC.

INDEX

 

Page

No.

PART I—FINANCIAL INFORMATION

ITEM 1.

Consolidated Financial Statements (Unaudited)

3

Consolidated Balance Sheets as of February 27, 2021 and May 30, 2020

3

Consolidated Statements of Operations for the Three and Nine Months Ended February 27, 2021 and February 22, 2020

4

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended February 27, 2021 and February 22, 2020

5

Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended February 27, 2021 and February 22, 2020

6

Consolidated Statements of Cash Flows for the Nine Months Ended February 27, 2021 and February 22, 2020

8

Notes to Consolidated Financial Statements

9

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

33

ITEM 4.

Controls and Procedures

33

PART II—OTHER INFORMATION

ITEM 1A.

Risk Factors

33

ITEM 6.

Exhibits

33

Signatures.

35


2


PART I—FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

RESOURCES CONNECTION, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except par value per share)

February 27,

May 30,

2021

2020

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

84,008

$

95,624

Trade accounts receivable, net of allowance for doubtful accounts of $2,406

and $3,067 as of February 27, 2021 and May 30, 2020, respectively

108,429

124,986

Prepaid expenses and other current assets

8,141

6,222

Income taxes receivable

11,467

4,167

Total current assets

212,045

230,999

Goodwill

216,497

214,067

Intangible assets, net

20,568

20,077

Property and equipment, net

21,252

23,644

Operating right-of-use assets

27,702

34,287

Deferred income taxes

1,726

1,597

Other assets

1,812

4,510

Total assets

$

501,602

$

529,181

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

17,450

$

15,799

Accrued salaries and related obligations

57,878

52,407

Operating lease liabilities, current

10,636

11,223

Other liabilities

17,427

15,472

Total current liabilities

103,391

94,901

Long-term debt

53,000

88,000

Operating lease liabilities, noncurrent

23,996

30,672

Deferred income taxes

5,915

6,215

Other long-term liabilities

7,709

5,732

Total liabilities

194,011

225,520

Commitments and contingencies

 

 

Stockholders’ equity:

Preferred stock, $0.01 par value, 5,000 shares authorized; zero shares

issued and outstanding

-

-

Common stock, $0.01 par value, 70,000 shares authorized; 64,540 and

63,910 shares issued, and 32,799 and 32,144 shares outstanding as of

February 27, 2021 and May 30, 2020, respectively

646

639

Additional paid-in capital

487,339

477,438

Accumulated other comprehensive loss

(8,216)

(13,862)

Retained earnings

348,676

360,534

Treasury stock at cost, 31,741 and 31,766 shares as of February 27, 2021 and

May 30, 2020, respectively

(520,854)

(521,088)

Total stockholders’ equity

307,591

303,661

Total liabilities and stockholders’ equity

$

501,602

$

529,181

The accompanying notes are an integral part of these consolidated financial statements

3


RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in thousands, except per share amounts)

Three Months Ended

Nine Months Ended

February 27,

February 22,

February 27,

February 22,

2021

2020

2021

2020

Revenue

$

156,631

$

168,052

$

457,199

$

524,784

Direct cost of services, primarily payroll and related taxes

for professional services employees

99,584

106,632

284,078

321,484

Gross profit

57,047

61,420

173,121

203,300

Selling, general and administrative expenses

52,838

55,299

158,544

166,032

Amortization of intangible assets

1,202

1,549

4,125

4,153

Depreciation expense

963

1,120

2,954

3,913

Income from operations

2,044

3,452

7,498

29,202

Interest expense, net

361

493

1,316

1,526

Other income

(64)

-

(1,069)

(537)

Income before income tax expense (benefit)

1,747

2,959

7,251

28,213

Income tax expense (benefit)

1,057

(3,983)

5,270

3,995

Net income

$

690

$

6,942

$

1,981

$

24,218

Net income per common share:

Basic

$

0.02

$

0.22

$

0.06

$

0.76

Diluted

$

0.02

$

0.21

$

0.06

$

0.75

Weighted average common shares outstanding:

Basic

32,520

32,159

32,353

31,954

Diluted

32,659

32,498

32,422

32,350

Cash dividends declared per common share

$

0.14

$

0.14

$

0.42

$

0.42

 

The accompanying notes are an integral part of these consolidated financial statements


4


RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Amounts in thousands)

Three Months Ended

Nine Months Ended

February 27,

February 22,

February 27,

February 22,

2021

2020

2021

2020

COMPREHENSIVE INCOME:

Net income

$

690

$

6,942

$

1,981

$

24,218

Foreign currency translation adjustment, net of tax

390

(522)

5,646

(1,160)

Total comprehensive income

$

1,080

$

6,420

$

7,627

$

23,058

The accompanying notes are an integral part of these consolidated financial statements


5


RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Amounts in thousands)

For the Three Months Ended February 27, 2021

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Treasury Stock

Comprehensive

Retained

Stockholders'

Shares

Amount

Capital

Shares

Amount

Loss

Earnings

Equity

Balances as of November 28, 2020

64,199 

$

642 

$

483,087 

31,766 

$

(520,892)

$

(8,606)

$

352,716 

$

306,947 

Exercise of stock options

5 

-

54 

54 

Stock-based compensation expense

1,490 

1,490 

Issuance of common stock under Employee

Stock Purchase Plan

261 

3 

2,600 

2,603 

Issuance of restricted stock

75 

1 

(1)

(25)

-

Amortization of restricted stock issued out of

treasury stock to board of director members

(12)

38 

(18)

8 

Cash dividends declared ($0.14 per share)

(4,591)

(4,591)

Dividend equivalents on restricted stock

121