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Resources Connection, Inc. Reports Fourth Quarter and Year-End Results for Fiscal 2013

Resources Connection, Inc. Reports Fourth Quarter and Year-End Results for Fiscal 2013

Company reports fourth quarter earnings per share of $0.13 (including a $0.03 impact of severance charges primarily related to European headcount reductions) on revenue of $140.2 million

Company returns $14.7 million in capital to shareholders in dividends and stock buy-backs during fourth quarter

Company's Adjusted EBITDA* Margin for the fourth quarter is 9.9% and 9.6% for the fiscal year

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

Resources Connection, Inc. has announced financial results for its fiscal fourth quarter and year ended May 25, 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 fourth quarter of fiscal 2013 was $140.2 million, increasing 1.6% (2.2% on a constant dollar basis) sequentially and decreasing 3.6% (3.1% on a constant dollar basis) compared to the prior year's fourth quarter. Revenue in the U.S. improved 2.3% sequentially and was down 0.4% quarter-over-quarter. International revenue was down 0.6% sequentially and 13.6% quarter-over-quarter (up 1.9% sequentially and down 11.4% quarter-over-quarter on a constant dollar basis).

The Company's net income for the fourth quarter of fiscal 2013 was $5.3 million, or $0.13 per diluted share. These amounts include severance charges totaling $1.1 million or $0.03 per diluted share. The Company's net income for the fourth quarter of fiscal 2012 was $8.9 million, or $0.21 per diluted share.

"I am pleased that we were able to return $43.7 million to our shareholders during fiscal 2013 through our stock repurchase and dividend programs," said Tony Cherbak, president and chief executive officer of RGP. "We look forward to seeing the benefit of some of our growth initiatives in fiscal 2014."

Gross margin was 38.9% in the fourth quarter of fiscal 2013, up 180 basis points sequentially and down 130 basis points from the fourth quarter of fiscal 2012. Fourth quarter gross margin includes $525,000 (40 basis points) of severance costs related to RGP's European operations. The decline in gross margin quarter-over-quarter was attributable to these severance costs, as well as increased healthcare costs and a 30 basis point decline in the bill rate/pay rate relationship. The fourth quarter gross margin benefited from the absence of paid holidays in the US as compared to the third quarter which included the Christmas and New Year's holidays.

Selling, general and administrative expenses for the fourth quarter of fiscal 2013 were $42.3 million, an increase of $700,000 sequentially and $300,000 from the comparable quarter a year ago. Current quarter selling, general and administrative expenses include $625,000 of severance costs primarily related to European operations, as well as increased marketing spend as compared to the sequential and prior year quarters.

Cash flow from operations and Adjusted EBITDA were $16.9 million and $13.9 million (9.9% of revenue), respectively, for the fourth quarter of fiscal 2013 compared to $16.6 million and $18.4 million (12.6% of revenue), respectively, for the fourth quarter of fiscal 2012.

"We, like many of our clients, remain focused on growing our revenue in a challenging business environment," said Don Murray, executive chairman of RGP. "I look forward to continuing to work with Tony, who became CEO at the beginning of fiscal 2014, to drive our growth initiatives."

The Company's revenue for fiscal 2013 was $556.3 million compared with $571.8 million for fiscal 2012, a decrease of $15.5 million or 2.7%. The Company's net income for fiscal 2013 was $20.5 million, or $0.50 per diluted share, compared with net income for fiscal 2012 of $41.1 million, or $0.94 per diluted share (including the after tax impact of the estimated fair value of contingent consideration adjustment of $20.4 million or $0.47 per share).

The Company's pre-tax income for fiscal 2013 was $39.9 million compared to $73.3 million for fiscal 2012. Pre-tax income in fiscal 2012 included a non-cash adjustment of $33.9 million, which reduced the estimated fair value of contingent consideration liability (including the employee portion of contingent consideration) related to the Sitrick Brincko Group acquisition. Generally accepted accounting principles require the Company to record increases or decreases in the estimated fair value of contingent consideration to earnings.

During the fourth quarter of fiscal 2013, the Company repurchased 1.1 million shares of common stock for $12.3 million. The Company has approximately $72.6 million remaining under its board authorized stock buyback program. On June 11, 2013, the Company paid its quarterly dividend of $2.4 million to shareholders, representing a dividend of $0.06 per share. For fiscal 2013, the Company repurchased a total of 2.9 million shares of common stock for $34.2 million and paid dividends of $9.5 million, returning $43.7 million in capital to shareholders. As of May 25, 2013, the Company's cash, cash equivalents and short-term investments were $119 million compared to $128 million a year ago.

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