Resources Connection, Inc. Reports Third Quarter Fiscal 2009 Results
Total revenue for the third quarter of fiscal 2009 was
"Our current business, like many other professional services companies, continues to be challenged by the negative macroeconomic environment around the world," said Thomas D. Christopoul, President and CEO of Resources. "While our clients are approaching their business initiatives much more cautiously, we believe that our value proposition to our clients remains compelling despite the obvious uncertainty in the global economy."
Total revenue for the nine months ended
Gross margin decreased 10 basis points to 37.2% in the third quarter of fiscal 2009 compared with 37.3% in the comparable period of fiscal 2008, primarily as a result of decreased leverage on certain employee benefit costs. Selling, general and administrative expenses, which include stock compensation expense, were
Net income was
Adjusted earnings before interest, taxes, depreciation, amortization and stock compensation expense or "Adjusted EBITDA" for the third quarter of fiscal 2009 was
Net income was
Adjusted EBITDA for the first nine months of fiscal 2009 was
For the nine months ended
"Undoubtedly, the economic climate will continue to challenge Resources," said Christopoul. "We remain convinced that our flexible business model, combined with the strength of our balance sheet, gives us a distinct competitive advantage. While our primary focus will always be on growing revenue, we cannot ignore our infrastructure costs in this environment, and we have executed a plan to consolidate certain offices over the next few months. These actions are being taken in connection with our continued focus on client development where we see substantial potential to shift additional share of consulting spend from our traditional competitors."
"We expect Resources to continue to provide superior value to our clients, balanced rewards to our employees and a solid return on investment to our shareholders," said
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 3,200 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 investors at
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 expectations concerning economic conditions, our beliefs regarding the value that we will deliver to our clients and the investment return that we will deliver to our shareholders, our belief that there will be a substantial potential to shift additional share of consulting spend from our traditional competitors, our expectation of
RESOURCES CONNECTION, INC. INCOME STATEMENT (in thousands, except per share amounts) Quarter Ended Nine Months Ended February 28, February 23, February 28, February 23, 2009 2008 2009 2008 (unaudited) (unaudited) Revenue $155,989 $202,803 $553,527 $603,561 Direct costs of services 97,988 127,252 340,576 374,908 Gross profit 58,001 75,551 212,951 228,653 Selling, general and administrative expenses (1) 50,803 57,518 161,696 166,061 Operating income before amortization and depreciation (1) 7,198 18,033 51,255 62,592 Amortization of intangible assets 271 211 928 549 Depreciation expense 2,185 2,200 6,788 6,082 Operating income (1) 4,742 15,622 43,539 55,961 Interest income (458) (952) (1,354) (5,123) Income before provision for income taxes (1) 5,200 16,574 44,893 61,084 Provision for income taxes (2) 3,120 7,909 20,845 27,801 Net income (1) (2) $2,080 $8,665 $24,048 $33,283 Diluted net income per share $0.05 $0.19 $0.53 $0.67 Diluted shares 45,390 46,547 45,760 49,952 EXPLANATORY NOTES (1) Includes $4,212 and $6,052 of stock compensation expense for the three months ended February 28, 2009 and February 23, 2008, respectively, and $13,811 and $17,314 of stock compensation expense for the nine months ended February 28, 2009 and February 23, 2008, 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 43.6% and 40.4% for the three months ended February 28, 2009 and February 23, 2008, respectively and 41.0% and 40.1% for the nine months ended February 28, 2009 and February 23, 2008, respectively. The Company adjusted its estimate of the effective tax rate for the year ended May 30, 2009 during its third quarter, as a result of the magnified impact of permanent differences relative to lower pretax income; state income tax increases; and foreign earnings. 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 60.0% and 47.7% for the three months ended February 28, 2009 and February 23, 2008, respectively, and 46.4% and 45.5% for the nine months ended February 28, 2009 and February 23, 2008, 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 Nine Months Ended February 28, February 23, February 28, February 23, 2009 2008 2009 2008 (unaudited) (unaudited) Adjusted EBITDA Net income $2,080 $8,665 $24,048 $33,283 Adjustments: Amortization of intangible assets 271 211 928 549 Depreciation expense 2,185 2,200 6,788 6,082 Interest income (458) (952) (1,354) (5,123) Provision for income taxes 3,120 7,909 20,845 27,801 EBITDA 7,198 18,033 51,255 62,592 Stock compensation expense 4,212 6,052 13,811 17,314 Adjusted EBITDA $11,410 $24,085 $65,066 $79,906 Revenue $155,989 $202,803 $553,527 $603,561 Adjusted EBITDA Margin 7.3% 11.9% 11.8% 13.2% 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) February 28, 2009 May 31, 2008 (unaudited) Cash, cash equivalents and short-term investments $145,977 $106,814 Accounts receivable, less allowances $84,134 $126,669 Total assets $408,834 $410,502 Current liabilities $72,789 $91,424 Total stockholders' equity $331,568 $305,888
SOURCE Resources Connection, Inc.