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Resources Connection, Inc. Reports Second Quarter Results For Fiscal 2014

Stocks in this article: RECN

Resources Connection, Inc. (NASDAQ: RECN), today announced financial results for its fiscal second quarter ended November 23, 2013. Resources Connection, Inc. 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 2014 was $146.0 million, increasing 3.4% (3.8% on a constant dollar basis) compared to the prior year’s second quarter and 10.9% (10.5% on a constant dollar basis) sequentially. Revenue in the U.S. increased 6.6% quarter-over-quarter and 10.5% sequentially. U.S. revenue in the second quarter of fiscal 2014 was favorably impacted by an estimated $3.3 million, as the Thanksgiving holiday fell in the third quarter this year but occurred in the second quarter last year. International revenue improved 12.2% sequentially and declined 6.2% quarter-over-quarter (10.5% improvement sequentially and 4.8% decline quarter-over-quarter on a constant dollar basis).

The Company’s net income for the second quarter of fiscal 2014 was $7.1 million, or $0.18 per diluted share compared to net income for the second quarter of fiscal 2013 of $5.9 million, or $0.14 per diluted share.

“We are pleased with the improvement in our most important financial metrics in the second quarter, including revenue, gross margin, Adjusted EBITDA and operating cash flows,” said Tony Cherbak, president and chief executive officer of RGP. “Weekly revenue trends improved steadily through the second quarter from $11.2 million to $11.7 million by quarter-end.”

Gross margin improved 160 basis points sequentially and 20 basis points quarter-over-quarter to 39.3% in the second quarter of fiscal 2014. The improvement in gross margin sequentially was primarily attributable to decreased healthcare costs and payroll taxes and only one paid holiday in the U.S. (Labor Day) in the second quarter of fiscal 2014. The second quarter gross margin quarter-over-quarter improvement was attributable to the Thanksgiving holiday falling in the third quarter in fiscal 2014 and reduced levels of zero margin client reimbursable expenses, offset in part by an unfavorable reduction in the current quarter bill rate/pay rate ratio.

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