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Resources Connection, Inc. Reports Fourth Quarter And Year-End Results For Fiscal 2014

Stocks in this article: RECN

Resources Connection, Inc. (NASDAQ: RECN), today announced financial results for its fiscal fourth quarter and year ended May 31, 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 fourth quarter of fiscal 2014 was $156.8 million, increasing 11.8% (11.6% on a constant dollar basis) compared to the prior year’s fourth quarter and 18.2% (18.0% on a constant dollar basis) sequentially. Revenue in the U.S. increased 14.8% quarter-over-quarter and 20.2% sequentially. International revenue increased 1.9% quarter-over-quarter and 10.9% sequentially (0.9% quarter-over-quarter and 9.9% sequentially on a constant dollar basis). Since fiscal 2014 contained 53 weeks of operations, results for the fourth quarter include an extra week of revenue of approximately $9.8 million (a 14-week quarter) as compared to the fourth quarter of fiscal 2013 (a 13-week quarter). Excluding the 14 th week revenues, quarter and sequential growth was 4.9% and 10.8%, respectively.

The Company’s net income for the fourth quarter of fiscal 2014 was $6.9 million, or $0.18 per diluted share, compared to net income for the fourth quarter of fiscal 2013 of $5.3 million, or $0.13 per diluted share. Net income includes severance and related charges for European personnel reductions totaling $2.0 million or $0.05 per diluted share and $1.1 million or $0.03 per diluted share for the quarters ended May 31, 2014 and May 25, 2013, respectively.

“We are pleased to see significant improvement in our U.S. based business, with fourth quarter revenue improving 14.8% (7.7% on a comparable 13-week basis) over the prior year quarter,” said Tony Cherbak, president and chief executive officer of RGP. “In particular, in the fourth quarter, we experienced more balanced revenue growth across the country than at any other time this past year. We also believe the actions we took in the fourth quarter in Europe will position that region, which is critical for maintaining our global footprint with our Fortune 1000 clients, for improved results. On an overall basis, our revenues for the first six weeks of fiscal 2015 have tracked 7.8% better than the comparable period last year.”

Gross margin increased 290 basis points sequentially to 38.9% in the fourth quarter of fiscal 2014 and was the same quarter-over-quarter. The increase in sequential gross margin was primarily attributable to fewer paid U.S. holidays in the fourth quarter (the third quarter contained the Thanksgiving and Christmas holidays); a reduced impact from payroll taxes; and an improvement in the bill rate/pay rate spread.

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