Slight drop in Q3 revenue for Resources Connection
Resources Connection, Inc. has announced financial results for its third fiscal quarter ended 27th February 2016.
Revenue for the third quarter of fiscal 2016 was $146.8m, essentially flat with the prior year’s third quarter. On a sequential basis, third quarter revenue decreased 2.7% compared to $150.9m in the second quarter of fiscal 2016. The company says that using the comparable third quarter fiscal 2015 conversion rates to adjust for the impact of currency fluctuations, fiscal 2016’s third quarter revenue would have been $148.4m, up 1.1% quarter-over-quarter.
Revenue in the U.S. decreased 0.2% quarter-over-quarter and 1.2% sequentially. International revenue increased 1.2% on a quarter-over-quarter basis and decreased 8.8% sequentially. Adjusting for the impact of currency fluctuations, international revenue increased 7.5% quarter-over-quarter using the comparable third quarter fiscal 2015 conversion rates and decreased 7.8% sequentially using the comparable second quarter fiscal 2016 conversion rates.
The company’s net income in the third quarter of fiscal 2016 was $6.0m, or $0.16 per diluted share, or flat compared to the prior year’s third quarter.
Tony Cherbak, president and chief executive officer of RGP, said, “We continue to make progress internationally, especially in Europe where we had constant currency quarter-over-quarter growth in revenue of 8.9%.
“Our results in the U.S. were unfavorably impacted by weakness in demand from our energy clients. In spite of this, our strong operating metrics allowed us to return $12.2 million of capital to shareholders in the form of our dividend and stock repurchase programs.”
Gross margin was 37.4% in the third quarter of fiscal 2016, compared to 37.3% in the prior year quarter. Sequentially, gross margin decreased 160 basis points from 39.0%, due to the reset of employer payroll taxes after the New Year, offset by an improvement in the bill/pay spread in the current quarter, the company says.
Cash used in operations and Adjusted EBITDA were $3.7m and $13.1m (8.9% of revenue), respectively, for the third quarter of fiscal 2016 compared to cash used in operations and Adjusted EBITDA of $2.9m and $12.9m (8.8% of revenue), respectively, for the third quarter of fiscal 2015. In each of the quarters, operating cash flows were impacted by the timing of payroll accruals.
The company’s revenue for the nine months ended 27th February 2016 was $446.0m compared to $441.8m for the nine months ended 28th February 2015. The company’s net income for the nine months ended 27th February 2016 was $21.8m or $0.58 per diluted share. This compares to net income in the nine months ended 28th February 2015 of $19.4m, or $0.51 per diluted share, including $0.03 per diluted share related to European severance charges.
The company also announced the planned retirement of its executive vice president and chief financial officer, Nathan Franke, following the close of the company’s fiscal year. Franke will remain in his current position until the end of July, while the company conducts a search for his successor.
Cherbak stated, “Nate and I have worked together for more than 30 years, first at Deloitte and then RGP. He is an outstanding financial professional who we will all miss in the day-to-day business. Nate has been a valuable member of the management team at RGP for the past nine years, and on behalf of all of the employees of RGP and the Board of Directors, we want to thank Nate for his contribution and wish him well as he embraces retirement.
“I am incredibly fortunate to finish my career working with the great people and clients of RGP.
“As I move to the next chapter of my life, I know RGP is well positioned to continue to capitalize on these two phenomenal assets.”