Resources Connection reports Q2 results for fiscal 2014
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.
Selling, general and administrative expenses for the second quarter of fiscal 2014 were $43.1 million (29.5% of revenue), an increase of $1.5 million sequentially (from $41.6 million or 31.6% or revenue) and $800,000 quarter-over-quarter (from $42.3 million or 30.0% of revenue).
Cash flow from operations and Adjusted EBITDA were $3.1 million and $15.9 million (10.9% of revenue), respectively, for the second quarter of fiscal 2014 compared to $1.4 million and $14.7 million (10.4% of revenue), respectively, for the second quarter of fiscal 2013.
"Although our clients remain focused on cost management, we have seen a renewed willingness by certain clients to engage in larger scale projects" said Don Murray (pictured), executive chairman of RGP. "Our revenue this quarter is the highest achieved since the third quarter of fiscal 2009."
The Company's revenue for the six months ended November 23, 2013 was $277.7 million compared to $278.1 million for the first six months ended November 24, 2012. The Company's net income for the six months ended November 23, 2013 was $10.7 million, or $0.27 per diluted share. This compares to net income in the six months ended November 24, 2012 of $10.7 million, or $0.26 per diluted share. The improvement in earnings per share was driven primarily by a reduction in the weighted average diluted common shares outstanding in the first six months of fiscal 2014.
During the second quarter of fiscal 2014, the Company repurchased 807,000 shares of common stock for $10.1 million. As of January 2, 2014, the Company has approximately $58.3 million remaining under its board authorized stock buyback program. On December 19, 2013, the Company paid a quarterly dividend totaling $2.7 million ($0.07 per share) to shareholders. As of November 23, 2013, the Company's cash, cash equivalents and short-term investments were $110.5 million compared to $119.0 million at fiscal year-end 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.