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Resources Connection, Inc. Reports First Quarter Results for Fiscal 2014

Resources Connection, Inc. Reports First Quarter Results for Fiscal 2014

Company reports first quarter earnings per share of $0.09 on revenue of $131.7 million

Company returns $7.0 million in capital to shareholders in dividends and stock buy-backs during first quarter

Company's Adjusted EBITDA* Margin for the first quarter is 7.4%

*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 first quarter ended August 24, 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 first quarter of fiscal 2014 was $131.7 million, decreasing 3.8% (3.7% on a constant dollar basis) compared to the prior year's first quarter and 6.1% (6.0% on a constant dollar basis) sequentially. Revenue in the U.S. decreased 2.5% quarter-over-quarter and 5.6% sequentially. International revenue was down 8.1% quarter-over-quarter and 7.5% sequentially (7.5% quarter-over-quarter and 7.2% sequentially on a constant dollar basis).

The Company's net income for the first quarter of fiscal 2014 was $3.7 million, or $0.09 per diluted share. The Company's net income for the first quarter of fiscal 2013 was $4.8 million, or $0.12 per diluted share.

"Our first quarter was challenging due to cautious spending by our clients," said Tony Cherbak, president and chief executive officer of RGP. "However, we are encouraged to see Q-2 start positively with post Labor Day average weekly revenue over $11 million as some of our clients start larger scale initiatives."

Gross margin was 37.7% in the first quarter of fiscal 2014, decreasing 130 basis points quarter-over-quarter and 120 basis points sequentially. The decline in gross margin quarter-over-quarter was primarily attributable to increased healthcare costs and a decline in the bill rate/pay rate ratio. The first quarter gross margin sequential decline was attributable to similar trends in healthcare costs and the bill rate/pay rate ratio and to paid holidays in the US in the first quarter of fiscal 2014 (there were no paid holidays in the fourth quarter of fiscal 2013).

Selling, general and administrative expenses for the first quarter of fiscal 2014 were $41.6 million, a decrease of $700,000 sequentially and $500,000 from the comparable quarter a year ago.

Cash flow from operations and Adjusted EBITDA were $5.3 million and $9.8 million (7.4% of revenue), respectively, for the first quarter of fiscal 2014 compared to $3.7 million and $13.1 million (9.6% of revenue), respectively, for the first quarter of fiscal 2013.

"We were pleased this quarter to enhance our dividend program" said Don Murray, executive chairman of RGP. "We increased our quarterly dividend payment by 17% to $0.07 per share combined with our stock buy-back program, we returned over $7 million to shareholders."

During the first quarter of fiscal 2014, the Company repurchased 312,000 shares of common stock for $4.2 million. The Company has approximately $68.4 million remaining under its board authorized stock buyback program. On September 19, 2013, the Company paid its quarterly dividend of $2.8 million to shareholders, representing a dividend of $0.07 per share. As of August 24, 2013, the Company's cash, cash equivalents and short-term investments were $121 million compared to $123 million a year ago.

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