Resources Connection announces Q1 revenue up 8.9%
Company's first quarter revenue up 8.9% to $143.4 million compared to prior year first quarter
Company's earnings per share improves to $0.14 for the first quarter (including $0.02 impact of severance charges), up from $0.09 in prior year first quarter
Company's Adjusted EBITDA* improves 38% to $13.5 million (9.4% of revenue) for the first quarter from $9.8 million (7.4% of revenue) in prior year first quarter
Company returns $8.7 million in capital to shareholders in dividends and stock buy-backs during first quarter
*Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization and stock-based compensation
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 first quarter of fiscal 2015 was $143.4 million increasing 8.9% (8.7% on a constant dollar basis) compared to the prior year's first quarter and was down 8.5% (8.4% on a constant dollar basis) sequentially. Revenue in the U.S. increased 13.3% quarter-over-quarter and decreased 6.8% sequentially. International revenue decreased 6.4% quarter-over-quarter and 15.1% sequentially (7.1% quarter-over-quarter and 14.5% sequentially on a constant dollar basis). Since fiscal 2014 contained 53 weeks of operations, results for the fourth quarter included an extra week of revenue of approximately $9.8 million (a 14-week quarter) as compared to the first quarter of fiscal 2015 (a 13-week quarter). Excluding the 14th week revenues, the sequential decrease in total revenue was 2.4% (2.2% on a constant dollar basis).
The Company's net income increased 46% in the first quarter of fiscal 2015 to $5.4 million, or $0.14 per diluted share, compared to net income for the first quarter of fiscal 2014 of $3.7 million, or $0.09 per diluted share. Net income in the first quarter of fiscal 2015 includes severance and related charges for European personnel reductions totaling $700,000 or $0.02 per diluted share.
"Fiscal 2015 started well with quarter-over-quarter improvement in our significant financial metrics, including revenue, gross margin and adjusted EBITDA," said Tony Cherbak, president and chief executive officer of RGP. "Overall, first quarter revenue is our highest for a first quarter since fiscal 2009 and, in particular, our U.S. operations achieved double digit growth quarter-over-quarter. Overseas, we continue to make changes that we believe will strengthen our operations in the long-term. Our international presence is critical for serving our Fortune 1000 clients."
Gross margin increased 150 basis points quarter-over-quarter to 39.2% in the first quarter of fiscal 2015 and 30 basis points sequentially. The increase in quarter-over-quarter gross margin was primarily attributable to improvement in the ratio of bill rate to pay rate one less holiday in the first quarter of fiscal 2015 than fiscal 2014 and lower healthcare costs.
Selling, general and administrative ("S, G&A") expenses for the first quarter of fiscal 2015 were $44.3 million (30.9% of revenue) compared to the prior year first quarter amount of $41.6 million (31.6% of revenue) and $46.2 million in the preceding quarter (29.5% of revenue). The increase in S,G&A compared to the prior year first quarter is primarily attributable to an increase in marketing costs, including a global client service meeting in June, headcount additions in offices experiencing growth and European severance charges the decrease in S,G&A compared to the fourteen week fourth quarter of fiscal 2014 is primarily attributable to the one less week of activity in the first quarter of fiscal 2015 and a lower amount of costs associated with European personnel reductions.
Cash used in operations and Adjusted EBITDA were $8.7 million and $13.5 million (9.4% of revenue), respectively, for the first quarter of fiscal 2015 compared to cash provided by operations and Adjusted EBITDA of $5.3 million and $9.8 million (7.4% of revenue), respectively, for the first quarter of fiscal 2014.
"We recently announced the fourth consecutive annual increase in our quarterly dividend of 14% to $0.08 per share," said Don Murray, executive chairman of RGP. "Our ability to balance growth and investment opportunities with returning capital to our shareholders is an important facet of our company goals. This quarter we returned $8.7 million of capital to our shareholders in the form of dividends and share repurchases."
During the first quarter of fiscal 2015, the Company repurchased 383,000 shares of common stock for $5.7 million. As of October 2, 2014, the Company has approximately $37.3 million remaining under its board authorized stock buyback program. On September 25, 2014, the Company paid a quarterly dividend totaling $3.0 million ($0.08 per share) to shareholders. As of August 30, 2014, the Company's cash, cash equivalents and short-term investments were $100.1 million compared to $114.3 million at fiscal year-end May 31, 2014.
The appointee will be responsible for the successful execution of RGP's business model in Europe