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Resources Connection, Inc. Reports Fourth Quarter and Year-End Results for Fiscal 2012

Resources Connection, Inc. Reports Fourth Quarter and Year-End Results for Fiscal 2012

Fourth quarter net income of $8.9 million improves from $5.4 million in prior year fourth quarter adjusted EBITDA* improves to $18.4 million from $13.7 million in prior year fourth quarter

Company reports fourth quarter earnings per share of $0.21, up from $0.12 in prior year fourth quarter

Fiscal 2012 revenue increases 4.8% over prior year

Gross margin improves to 40.2% in fourth quarter

Company buys back 534,000 shares and returns over $9 million in capital to shareholders during fourth quarter returns almost $54 million in capital during fiscal 2012

*Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization, stock based compensation and contingent consideration adjustments

Resources Connection, Inc. a multinational professional services firm that provides to clients - through its operating subsidiary, Resources Global Professionals ("Resources") - accomplished professionals in 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, today announced financial results for its fiscal fourth quarter and year ended May 26, 2012.

Total revenue for the fourth quarter of fiscal 2012 was $145.5 million, up 1.5% on a sequential quarter basis and even with last year's fourth quarter revenue. Revenues in the U.S. were up 4.6% quarter-over-quarter and 3.8% sequentially, while international revenues decreased 11.7% quarter-over-quarter and 4.4% sequentially (7.4% quarter-over-quarter and 4.4% sequentially on a constant dollar basis).

The Company's net income for the fourth quarter ended May 26, 2012, was $8.9 million, or $0.21 per diluted share. This compares with a net income for the fourth quarter ended May 28, 2011 of $5.4 million, or $0.12 per diluted share (which includes $0.05 per share impact of contingent consideration adjustments).

"While the uncertain global economic environment constrained our growth, our results for the fourth quarter demonstrate our ongoing efforts to improve our financial metrics," said Tony Cherbak, chief operating officer of Resources. "We are pleased to see substantial increases in earnings per share and adjusted EBITDA which have allowed us to continue returning capital to our shareholders."

Gross margin was 40.2% in the fourth quarter of fiscal 2012, up 210 basis points from the fourth quarter of fiscal 2011. Selling, general and administrative expenses for the fourth quarter of fiscal 2012 were $42.0 million, down $1.4 million from $43.4 million in the third quarter of fiscal 2012.

Cash flow from operations and adjusted EBITDA were $16.6 million and $18.4 million (12.6% of revenue), respectively, for the fourth quarter of fiscal 2012 and $11.0 million and $13.7 million (9.4% of revenue), respectively, for the fourth quarter of fiscal 2011.

The Company's revenue for the year ended May 26, 2012 was $571.8 million compared with $545.5 million for the year ended May 28, 2011, an increase of $26.3 million. The Company's net income for the year ended May 26, 2012 was $41.1 million, or $0.94 per diluted share (including the after tax impact of the adjustment of the estimated fair value of contingent consideration expense of $20.4 million or $0.47 per share), compared with net income for the year ended May 28, 2011 of $24.9 million, or $0.53 per diluted share (including the after tax impact of the adjustment of the estimated fair value of contingent consideration expense of $15.6 million or $0.34 per share, offset by a $0.03 per share charge related to newly established tax valuation allowances).

"While our clients remain cautious in their spending on business initiatives, we believe the current environment will cause many companies to further utilize a variable model for an increasing portion of their intellectual capital needs," said Don Murray, chief executive officer. "Our improving financial metrics result from our steadfast focus on client service and client relationships."

The Company's pre-tax income for the year ended May 26, 2012 was $73.3 million, including a non-cash adjustment of $33.9 million reducing the estimated fair value of contingent consideration liability (including the employee portion of contingent consideration) related to the Sitrick Brincko Group acquisition. Accounting standards require the Company to record increases or decreases in the estimated fair value of contingent consideration to earnings.

During the fourth quarter of fiscal 2012, the Company purchased 534,000 shares of common stock for $7.0 million. On June 21, 2012, the Company paid its quarterly dividend of $2.1 million to shareholders, representing a dividend of $0.05 per share.

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