Resources Connection’s Q4 revenue up 2.5% YoY
Massachusetts-based Resources Connection, Inc. has announced its financial results for its fourth fiscal quarter and year ended 28th May 2016.
Revenue for the fourth quarter of fiscal 2016 increased 2.5% (2.6% constant currency) to $152.5m compared to the prior year's fourth quarter of $148.8m. Approximately 0.9% of the quarter-over-quarter revenue increase is attributable to the shift of the Memorial Day holiday to the first quarter of fiscal 2017. On a sequential basis, fourth quarter revenue increased 3.9% (3.4% constant currency) compared to $146.8m in the third quarter of fiscal 2016, which includes the winter holiday season.
Revenue in the U.S. increased 3.1% quarter-over-quarter and 2.8% sequentially. International revenue was flat quarter-over-quarter (and on a constant currency basis) but increased 9.2% sequentially (6.4% constant currency).
The Company's net income improved in the fourth quarter of fiscal 2016 to $8.7m, or $0.23 per diluted share, compared to $8.1m, or $0.21 per diluted share, in the prior year's fourth quarter.
"Overall, I am pleased with our fiscal 2016 financial results," said Tony Cherbak, president and chief executive officer of Resources Connection’s operating subsidiary, Resources Global Professionals. "On a constant currency basis, revenue improved 2.9%, gross margin increased to 38.8% and we saw double digit gains in net earnings and earnings per share. While the uncertainty over Brexit will play out during fiscal 2017 and beyond, we will continue to pursue growth opportunities in areas such as implementation of revenue recognition and lease accounting standards, M&A integration and Data Solutions, among others."
Gross margin was 39.9% in the fourth quarter of fiscal 2016, compared to 38.9% in the prior year quarter. Gross margin in the current quarter improved due to the shift in the paid Memorial Day holiday to the first quarter of fiscal 2017 and decreased health care costs. Sequentially, gross margin improved 250 basis points from 37.4% in the third quarter of fiscal 2016, due primarily to fewer holidays in the U.S. during the fourth quarter and the reduced impact of employer payroll taxes.
Selling, general and administrative expenses for the fourth quarter of fiscal 2016 were $44.4m (29.1% of revenue) compared to $42.5m (28.5% of revenue) in the prior year's fourth quarter and $43.3m (29.5% of revenue) in the third quarter of fiscal 2016. The quarter-over-quarter increase is primarily from higher marketing and compensation/benefit costs, while the sequential increase is primarily due to higher marketing expenses.
Cash provided by operations and Adjusted EBITDA were $31.2m and $17.8m (11.7% of revenue), respectively, for the fourth quarter of fiscal 2016 compared to cash provided by operations and Adjusted EBITDA of $28.9m and $16.8m (11.3% of revenue), respectively, for the fourth quarter of fiscal 2015.
The Company's revenue for the year ended 28th May 2016 improved 1.3% to $598.5m, compared to $590.6m for the year ended 30th May 2015. The Company's net income for the year ended 28th May 2016 improved 10.5% to $30.4m or $0.81 per diluted share; this compares to net income for the year ended 30th May 2015 of $27.5m, or $0.72 per diluted share.
In the fourth quarter of fiscal 2016, the Company repurchased approximately 558,500 shares of common stock for $8.1m and paid a quarterly dividend totalling $3.7m ($0.10 per diluted share) to shareholders. Currently, the Company has a total of $138.6m available for share purchases.
During fiscal 2016, the Company repurchased 1.8m shares (approximately 4.9% of the outstanding shares at the beginning of fiscal 2016) for $28.1m. In addition, the Company paid quarterly dividends totalling $14.1m to shareholders during the fiscal year. In total, the Company returned $42.2m in cash to shareholders during fiscal 2016. As of 28th May 2016, the Company's cash, cash equivalents and short-term investments were $116.0 million compared to $112.2m at fiscal year-end 30th May 2015.