Resources Connection, Inc. Reports Fourth Quarter and Year-End Results for Fiscal 2015
Company reports revenues of $148.8 million for fourth quarter, $590.6 million for fiscal year
Earnings per share increases to $0.21 in fourth quarter, $0.72 for fiscal year
Adjusted EBITDA* for fiscal year improves 21.7% to $60.6 million (10.3% of revenue)
Adjusted EBITDA* for fourth quarter improves 2.4% to $16.8 million (11.3% of revenue)
Company returns $8.9 million in capital to shareholders in fourth quarter and $38.0 million in fiscal
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.
Revenue for the fourth quarter of fiscal 2015 increased 1.3% to $148.8 million compared to the prior year's adjusted fourth quarter of $147.0 million. Since fiscal 2014 contained 53 weeks of operations, results for the fourth quarter of fiscal 2014 (a 14-week quarter) of $156.8 million include an extra week of revenue of approximately $9.8 million as compared to the fourth quarter of fiscal 2015 (a 13- week quarter). On a sequential basis, fourth quarter revenue was up 1.4% compared to $146.8 million in the third quarter of fiscal 2015.
Adjusting for the impact of currency fluctuations, fiscal 2015's fourth quarter revenue would have been $153.4 million, up 4.4% quarter-over-quarter on a comparable 13-week basis, and revenue for the year would have been $599.4 million, up 7.6% on a comparable 52-week basis.
Revenue in the U.S. increased 3.4% on an adjusted quarter-over-quarter basis and was down 0.6% sequentially. International revenue decreased 7.2% on an adjusted quarter-over-quarter basis but improved 10.6% sequentially. Adjusting for the impact of currency fluctuations, the increase in international revenue adjusted quarter-over-quarter was 7.9% and the sequential increase was 14.5%.
The Company's fourth quarter of fiscal 2015 net income improved 17.4% to $8.1 million, or $0.21 per diluted share, compared to the prior year's fourth quarter of $6.9 million, or $0.18 per diluted share (which included severance and related charges for European personnel reductions totaling $2.0 million or $0.05 per diluted share).
"I am pleased with our results for fiscal 2015 which show good improvement in revenues, gross margin and adjusted EBITDA," said Tony Cherbak, president and chief executive officer of RGP. "While we experienced some softness in weekly revenues in the latter part of the fourth quarter, the early weeks of the first quarter of fiscal 2016 have improved, approaching levels experienced early in the fourth quarter."
Gross margin was 38.9% in the fourth quarter of both fiscal 2015 and 2014. Sequentially, gross margin improved 160 basis points from 37.3%, primarily due to the decrease in employer payroll taxes as the calendar year progresses and one fewer compensated holiday in the U.S. in the fourth quarter compared to the third quarter of fiscal 2015.
Selling, general and administrative expenses for the fourth quarter of fiscal 2015 were $42.5 million (28.5% of revenue) compared to the prior year fourth quarter amount of $46.2 million (29.5% of revenue) and $43.5 million in the preceding quarter (29.6% of revenue). The quarter-over-quarter decrease is primarily attributable to $1.7 million related to European severance charges and the extra week of activity in the fourth quarter of fiscal 2014 sequentially, the decrease is primarily due to lower payroll taxes as the calendar year progresses and lower marketing expenses.
Cash provided by operations and Adjusted EBITDA were $28.9 million and $16.8 million (11.3% of revenue), respectively, for the fourth quarter of fiscal 2015 compared to cash provided by operations and Adjusted EBITDA of $18.4 million and $16.4 million (10.5% of revenue), respectively, for the fourth quarter of fiscal 2014.
"I am encouraged by the progress we have made in our international operations," said Don Murray, chairman of the board of RGP. "Asia Pacific revenue grew almost 15% during our fourth quarter and Europe's weekly revenues during the first few weeks of our new fiscal year are showing signs of stability."
The Company's revenue for the year ended May 30, 2015 improved 6.0% to $590.6 million compared to a 52-week adjusted amount of $557.4 million for the year ended May 31, 2014 ($567.2 million on a 53-week basis). The Company's net income for the year ended May 30, 2015 was $27.5 million or $0.72 per diluted share while net income for the year ended May 31, 2014 was $19.9 million, or $0.51 per diluted share.
Cash provided by operations and Adjusted EBITDA were $31.8 million and $60.6 million (10.3% of revenue), respectively, for fiscal 2015 compared to cash provided by operations and Adjusted EBITDA of $32.0 million and $49.8 million (8.8% of revenue), respectively, for fiscal 2014.
In the fourth quarter of fiscal 2015, the Company repurchased 364,000 shares of common stock for $5.9 million and paid a quarterly dividend totaling $3.0 million ($0.08 per diluted share) to shareholders.
During fiscal 2015, the Company repurchased 1.7 million shares (approximately 4.4% of the outstanding shares at the beginning of fiscal 2015) for $26.3 million. In addition, the Company paid quarterly dividends totaling $11.7 million to shareholders during the fiscal year. In total, the Company returned $38.0 million in cash to shareholders during fiscal 2015. As of May 30, 2015, the Company's cash, cash equivalents and short-term investments were $112.2 million compared to $114.3 million at fiscal year-end May 31, 2014.