Resources Connection, Inc. Reports Second Quarter Fiscal 2009 Results
Total revenue for the second quarter of fiscal 2009 was
"While the global economic events occurring during our second quarter are
without precedent, our average weekly client service hours, excluding the
holiday weeks, were relatively consistent throughout the quarter. However,
foreign exchange rate changes from early in the second quarter through the end
of the quarter accounted for an approximate
Total revenue for the six months ended
Gross margin improved 50 basis points to 39.0% in the second quarter of
fiscal 2009 compared with 38.5% in the comparable period of fiscal 2008.
Selling, general and administrative expenses, which include stock compensation
Net income was
Adjusted earnings before interest, taxes, depreciation, amortization and
stock compensation expense or "Adjusted EBITDA" for the second quarter of
fiscal 2009 was
Net income was
Adjusted earnings before interest, taxes, depreciation, amortization and
stock compensation expense or "Adjusted EBITDA" for the first six months of
fiscal 2009 was
"Given the external environment, we are pleased to have been able to
maintain our gross margin trends," said
"The current financial crisis is a test of the resolve of our people," said Christopoul. "Everyone at Resources is working harder today to develop business and help our clients through this difficult economic environment, while at the same time remaining conservative with respect to discretionary costs. We continue to believe that the enormous change taking place in the global markets will present significant opportunities for us in the future; however, the timing of those opportunities will vary as companies work through their strategies to offset what will likely be a period of sustained economic contraction."
ABOUT RESOURCES GLOBAL PROFESSIONALS
Resources Global Professionals, the operating subsidiary of Resources Connection, Inc. (NASDAQ: RECN), is a multinational professional services firm that helps business leaders execute internal initiatives. Partnering with business leaders, we drive internal change across all parts of a global enterprise -- finance and accounting, information management, internal audit, human capital, legal services and supply chain management.
Resources Global was founded in 1996 within a Big Four accounting firm. Today, we are a publicly traded company with over 3,700 professionals, from more than 80 practice offices, annually serving 2,400 clients around the world.
The Company is listed on the NASDAQ Global Select Market, the exchange's highest tier by listing standards. More information about Resources Global is available at http://www.resourcesglobal.com.
Resources will hold a conference call for interested analysts and
Certain statements in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by words such as "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "should," or "will" or the negative of these terms or other comparable terminology. In this press release, such statements include our belief that the change taking place in the global markets will present significant opportunities for us in the future but that the timing of these opportunities will vary. Such statements and all phases of Resources Connection's operations are subject to known and unknown risks, uncertainties and other factors, including seasonality, overall economic conditions and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K and our other public filings made with the Securities and Exchange Commission (File No. 0-32113). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Resources Connection's, and its industry's, actual results, levels of activity, performance or achievements may be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. The Company undertakes no obligation to update the forward-looking statements in this press release.
RESOURCES CONNECTION, INC. INCOME STATEMENT (in thousands, except per share amounts) Quarter Ended Six Months Ended November 29, November 24, November 29, November 24, 2008 2007 2008 2007 (unaudited) (unaudited) Revenue $190,233 $206,638 $397,538 $400,758 Direct costs of services 116,122 127,025 242,588 247,656 Gross profit 74,111 79,613 154,950 153,102 Selling, general and administrative expenses (1) 54,380 55,514 110,893 108,543 Operating income before amortization and depreciation (1) 19,731 24,099 44,057 44,559 Amortization of intangible assets 275 84 657 338 Depreciation expense 2,263 2,007 4,603 3,882 Operating income (1) 17,193 22,008 38,797 40,339 Interest income (380) (1,629) (896) (4,171) Income before provision for income taxes (1) 17,573 23,637 39,693 44,510 Provision for income taxes (2) 8,097 10,601 17,725 19,892 Net income (1) (2) $9,476 $13,036 $21,968 $24,618 Diluted net income per share $0.21 $0.27 $0.48 $0.49 Diluted shares 45,859 48,754 45,945 50,226 EXPLANATORY NOTES 1. Includes $4,635 and $5,262 of stock compensation expense for the three months ended November 29, 2008 and November 24, 2007, respectively, and $9,599 and $11,262 of stock compensation expense for the six months ended November 29, 2008 and November 24, 2007, respectively. 2. The Company's effective tax rate, absent the impact of the requirement to recognize compensation expense related to employee stock option grants and employee stock purchases, was 40.5% and 40.0% for both the three and six months ended November 29, 2008 and November 24, 2007, respectively. The Company's effective tax rate, including the impact of the requirement to recognize compensation expense related to employee stock option grants and employee stock purchases, was 46.1% and 44.8% for the three months ended November 29, 2008 and November 24, 2007, respectively, and 44.7% for both the six months ended November 29, 2008 and November 24, 2007, respectively. The Company cannot recognize a potential tax benefit for certain stock option grants until and unless the holder exercises his or her option and sells the shares. In addition, the Company can only recognize a potential tax benefit for employees' acquisition and subsequent sale of shares purchased through the Company's Employee Stock Purchase Plan if the sale occurs within a certain defined period. Further, under Statement of Financial Accounting Standards 123 ( R ), "Share-Based Payment" ("SFAS 123 ( R )"), certain potential tax benefits associated with incentive stock options fully vested at the time of adoption of SFAS 123( R ) will be recognized as additional paid in capital when and if those options are exercised. RESOURCES CONNECTION, INC. Reconciliation of Net Income to Adjusted EBITDA (in thousands, except Adjusted EBITDA Margin) Quarter Ended Six Months Ended November 29, November 24, November 29, November 24, 2008 2007 2008 2007 (unaudited) (unaudited) Consolidated EBITDA and Adjusted EBITDA Net income $9,476 $13,036 $21,968 $24,618 Adjustments: Amortization of intangible assets 275 84 657 338 Depreciation expense 2,263 2,007 4,603 3,882 Interest income (380) (1,629) (896) (4,171) Provision for income taxes 8,097 10,601 17,725 19,892 EBITDA 19,731 24,099 44,057 44,559 Stock compensation expense 4,635 5,262 9,599 11,262 Adjusted EBITDA $24,366 $29,361 $53,656 $55,821 Revenue $190,233 $206,638 $397,538 $400,758 Adjusted EBITDA Margin 12.8% 14.2% 13.5% 13.9%
The Company utilizes certain financial measures and key performance indicators that are not defined by or calculated in accordance with generally accepted accounting principles ("GAAP") to assess our financial and operating performance. A non-GAAP financial measure is defined as a numerical measure of a company's financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of income; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented.
EBITDA, a non-GAAP financial measure, is calculated as net income before amortization of intangible assets, depreciation expense, interest income and income taxes. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA before stock compensation expense. Adjusted EBITDA Margin is calculated by dividing Revenue by Adjusted EBITDA. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful measures to our investors because they are financial measures used by management to assess the performance of our Company. Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for net income or other cash flow data prepared in accordance with GAAP for purposes of analyzing our profitability or liquidity. These measures should be considered in addition to, and not as a substitute, or a superior measure to, net income, earnings per share, cash flows or other measures of financial performance prepared in accordance with GAAP.
RESOURCES CONNECTION, INC. SELECTED BALANCE SHEET INFORMATION (in thousands) November 29, May 31, 2008 2008 (unaudited) Cash, cash equivalents and short-term investments $133,657 $106,814 Accounts receivable, less allowances $102,810 $ 126,669 Total assets $406,729 $410,502 Current liabilities $ 75,005 $91,424 Total stockholders' equity $326,482 $305,888
SOURCE Resources Connection, Inc.
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