Resources Connection Q3 revenue $146.8m
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 third quarter of fiscal 2015 increased 10.6% to $146.8 million ($148.4 million on a sequential constant currency basis) compared to the prior year's third quarter of $132.7 million (which included the Thanksgiving holiday).
Revenue was down 3.1% sequentially (down 2.0% on a constant currency basis) compared to $151.5 million in the second quarter of fiscal 2015. The Company estimates the revenue impact of the Thanksgiving holiday shift was approximately $4.0 million on a pro forma basis, current quarter revenue would have grown 7.6% (9.8% on a constant currency basis) compared to the prior year quarter.
Revenue in the U.S. increased 17.3% quarter-over-quarter (13.4% on a pro forma basis reflecting the Thanksgiving holiday) and was down 0.7% sequentially. International revenue decreased 13.0% both sequentially and quarter-over-quarter (7.5% sequentially and 3.1% quarter-over-quarter on a constant currency basis).
The Company's net income increased 161.0% in the third quarter of fiscal 2015 to $6.0 million, or $0.16 per diluted share, compared to net income for the third quarter of fiscal 2014 of $2.3 million, or $0.06 per diluted share.
"Our increase in net earnings was substantially driven by an improvement in gross margin as well as leveraging our general and administrative expenses over higher revenues," said Tony Cherbak, president and chief executive officer of RGP. "We are pleased with our quarter-over-quarter revenue growth in the U.S. and Asia Pacific and are working hard to improve our operations in Europe."
Gross margin improved quarter-over-quarter to 37.3% in the third quarter of fiscal 2015 from 36.0% in the prior year quarter, primarily due to improvement in the bill to pay rate ratio and one less paid holiday in the current quarter gross margin was down 190 basis points sequentially, primarily due to the reset of certain employer payroll taxes entering calendar 2015.
Selling, general and administrative expenses for the third quarter of fiscal 2015 were $43.5 million (29.6% of revenue) compared to the prior year third quarter amount of $41.6 million (31.3% of revenue) and $43.6 million in the preceding quarter (28.8% of revenue). The quarter-over-quarter increase is attributable to increased headcount and incentive compensation, primarily in the U.S. offset in part by favorable currency adjustments of approximately $1.0 million.
Cash used in operations and Adjusted EBITDA were $2.9 million and $12.9 million (8.8% of revenue), respectively, for the third quarter of fiscal 2015 compared to cash provided by operations and Adjusted EBITDA of $5.2 million and $7.8 million (5.8% of revenue), respectively, for the third quarter of fiscal 2014.
"It was gratifying to see continuing improvement in our operating metrics, including Adjusted EBITDA, this quarter," said Don Murray, executive chairman of RGP. "Our strong operating metrics allowed us to return $10.1 million of capital to our shareholders in the third quarter through our dividend and stock repurchase programs."
The Company's revenue for the nine months ended February 28, 2015 was $441.8 million compared to $410.4 million for the nine months ended February 22, 2014. The Company's net income for the nine months ended February 28, 2015 was $19.4 million, or $0.51 per diluted share, including $0.03 per diluted share related to European severance charges. This compares to net income in the nine months ended February 22, 2014 of $13.0 million, or $0.33 per diluted share.
During the third quarter of fiscal 2015, the Company repurchased 408,000 shares of common stock for $7.0 million. As of April 8, 2015, the Company has approximately $22.7 million remaining under its board authorized stock buyback program. On March 19, 2015, the Company paid a quarterly dividend totaling $3.0 million ($0.08 per share) to shareholders. As of February 28, 2015, the Company's cash, cash equivalents and short-term investments were $92.3 million compared to $114.3 million at fiscal year-end May 31, 2014.