UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
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January
6, 2016
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RESOURCES CONNECTION, INC.
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|
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Delaware
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0-32113
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33-0832424
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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17101 Armstrong Avenue, Irvine, California
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92614
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(Address of principal executive offices)
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(Zip Code)
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|
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Registrant’s telephone number, including area code
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(714) 430-6400
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Not applicable
(Former name or former address, if changed since last
report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
___________________________________________________________________________
On
January 6, 2016, Resources Connection, Inc. (“Resources” or “the
Company”) issued a press release announcing its financial results for
the quarterly period ended November 28, 2015. A copy of the press
release is attached hereto as Exhibit 99.1.
Within the attached press release, the Company makes reference to
certain non-generally accepted accounting principles (“non-GAAP”)
financial measures, including consolidated EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin. The Company believes that these non-GAAP
measures are useful to our investors because they are financial measures
used by management to assess the core performance of our Company.
Accordingly, where these non-GAAP measures are provided, it is done so
that investors have the same financial data that management uses with
the belief that such information will assist the investment community in
assessing the underlying performance of the Company on a year-over-year
and sequential basis. Whenever such information is presented, the
Company has complied with the provisions of the rules under Regulation G
and Item 2.02 of Form 8-K. In addition to the reasons described above,
specific reasons the Company’s management believes that the presentation
of certain non-GAAP financial measures provides useful information to
investors regarding the Company’s financial condition, results of
operations and cash flows are as follows:
The non-GAAP measures presented in the attached press release are not in
accordance with, or an alternative for, GAAP and may be different from
non-GAAP measures used by other companies. In addition, these non-GAAP
measures are not based on any comprehensive set of accounting rules or
principles. The Company believes that non-GAAP measures have limitations
in that they do not reflect all of the amounts associated with the
Company’s results of operations as determined in accordance with GAAP
and that these measures should only be used to evaluate the Company’s
results of operations in conjunction with the corresponding GAAP
measures.
For its internal budgeting process, the Company’s management uses
financial statements that include Consolidated EBITDA, Adjusted EBITDA
and EBITDA Margin. The Company’s management also uses the foregoing
non-GAAP measures, in addition to other GAAP measures, in reviewing the
financial results of the Company.
The information in Item 2.02 of this current report on Form 8-K, as well
as Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, and shall
not be incorporated by reference into any registration statement or
other document pursuant to the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
Exhibit 99.1 Press Release issued January 6, 2016
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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RESOURCES CONNECTION, INC.
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Date: January 6, 2016
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By: /s/ ANTHONY CHERBAK
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Anthony Cherbak
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President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit No.
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Description
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Exhibit 99.1
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Press Release issued January 6, 2016
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Exhibit 99.1
Resources
Connection, Inc. Reports Second Quarter Results for Fiscal 2016
-
Company
reports revenues of $150.9 million compared to $151.5 million in prior
year quarter
-
Earnings
per share increases 9.5% to $0.23 from $0.21 in prior year quarter
-
Adjusted
EBITDA* at $17.1 million (11.3% of revenue)
-
Company
returns $9.0 million in capital to shareholders
*Adjusted
EBITDA is defined as earnings before interest, income taxes,
depreciation, amortization and stock-based compensation
IRVINE, Calif.--(BUSINESS WIRE)--January 6, 2016--Resources Connection,
Inc. (NASDAQ: RECN), today announced financial results for its second
fiscal quarter ended November 28, 2015. Resources Connection, Inc. (the
“Company”) is a multinational professional services firm that provides
to clients – through its operating subsidiary, Resources Global
Professionals (“RGP”) – consulting and business support services in the
areas of accounting; finance; corporate governance, risk and compliance;
corporate advisory, strategic communications and restructuring;
information management; human capital; supply chain management;
healthcare solutions; and legal and regulatory.
Revenue for the second quarter of fiscal 2016 decreased 0.4% to $150.9
million compared to the prior year’s second quarter of $151.5 million.
On a sequential basis, second quarter revenue increased 1.8% compared to
$148.3 million in the first quarter of fiscal 2016.
Using the comparable second quarter fiscal 2015 conversion rates to
adjust for the impact of currency fluctuations, fiscal 2016’s second
quarter revenue would have been $154.0 million, up 1.7%
quarter-over-quarter.
Revenue in the U.S. increased 0.2% quarter-over-quarter and 1.2%
sequentially. International revenue decreased 3.4% on a
quarter-over-quarter basis and increased 4.0% sequentially. Adjusting
for the impact of currency fluctuations, international revenue increased
7.5% quarter-over-quarter using the comparable second quarter fiscal
2015 conversion rates and 5.1% sequentially using the comparable first
quarter fiscal 2016 conversion rates.
The Company’s net income in the second quarter of fiscal 2016 improved
to $8.7 million, or $0.23 per diluted share, compared to the prior
year’s second quarter net income of $8.0 million, or $0.21 per diluted
share. Net income in the second quarter of fiscal 2016 includes a $0.01
per share charge for a European legal case. Also included in net income
for the second quarter of fiscal 2016 is a $0.01 per share positive
impact related to the reversal of approximately $290,000 of tax
valuation allowances. Net income in the second quarter of fiscal 2015
included a $0.01 per share charge for severance and related charges
related to the Company’s European operations.
“I am pleased with the profitability metrics we achieved during the
second quarter and encouraged by the improvement in our December revenue
trends,” said Tony Cherbak, president and chief executive officer of
RGP. “We continue to make progress internationally with constant
currency revenue growth in Asia Pacific and Europe quarter-over-quarter
of 17.7% and 3.0%, respectively.”
Gross margin was 39.0% in the second quarter of fiscal 2016, compared to
39.2% in the prior year quarter. The 20 basis point decrease results
from higher costs in the Company’s self-insured medical plan.
Sequentially, gross margin increased 30 basis points from 38.7%, due to
an improvement in the cost of the Company’s self-insured medical
coverage and employer payroll taxes, offset by one additional paid
holiday in the second quarter and a slight reduction in bill rate/pay
rate spreads.
Selling, general and administrative expenses for the second quarter of
fiscal 2016 were $43.2 million (28.6% of revenue) compared to the prior
year second quarter of $43.6 million (28.8% of revenue) and the first
quarter of fiscal 2016 of $44.0 million (29.6% of revenue). The second
quarter of fiscal 2016 includes approximately $300,000 related to a
European legal case. The first quarter of fiscal 2016 amount included
approximately $900,000 of stock-based compensation expense related to
the accelerated vesting of options held by Chairman Donald Murray. The
prior year quarter included approximately $500,000 of severance charges
related to the Company’s European operations.
Cash provided by operations and Adjusted EBITDA were $15.3 million and
$17.1 million (11.3% of revenue), respectively, for the second quarter
of fiscal 2016 compared to cash provided by operations and Adjusted
EBITDA of $14.3 million and $17.4 million (11.5% of revenue),
respectively, for the second quarter of fiscal 2015.
The Company’s revenue for the six months ended November 28, 2015 was
$299.2 million compared to $294.9 million for the six months ended
November 29, 2014. The Company’s net income for the six months ended
November 28, 2015 was $15.8 million or $0.42 per diluted share. This
compares to net income in the six months ended November 29, 2014 of
$13.4 million, or $0.35 per diluted share, including $0.03 per diluted
share related to European severance charges.
In the second quarter of fiscal 2016, the Company repurchased 294,000
shares of common stock for $5.3 million and paid a quarterly dividend
totaling $3.7 million ($0.10 per diluted share) to shareholders. The
Company has a total of $155.2 million available for share purchases when
combined with the balance remaining from the previous authorization. As
of November 28, 2015, the Company’s cash, cash equivalents and
short-term investments were $110.1 million compared to $112.2 million at
fiscal year-end May 30, 2015.
ABOUT RGP
RGP, 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 –
accounting; finance; corporate governance, risk and compliance;
corporate advisory, strategic communications and restructuring;
information management; human capital; supply chain management;
healthcare solutions; and legal and regulatory.
RGP was founded in 1996 within a Big Four accounting firm. Today, we are
a publicly traded company with over 3,400 professionals, annually
serving over 1,700 clients around the world from 68 practice offices.
Headquartered in Irvine, California, RGP has served 87 of the Fortune
100 companies.
The Company is listed on the NASDAQ Global Select Market, the exchange’s
highest tier by listing standards. More information about RGP is
available at http://www.rgp.com. (RECN-F)
RGP will hold a conference call for interested analysts and investors at
5:00 p.m., ET today, January 6, 2016. This conference call will be
available for listening via a webcast on the Company’s website: http://www.rgp.com.
An audio replay of the conference call will be available through January
13, 2016 at 855-859-2056. The conference ID number for the replay is
93803677. The call will also be archived on the RGP website for 30 days.
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,” “remain,”
“should” or “will” or the negative of these terms or other comparable
terminology. In this press release, such statements include the
profitability metrics. Such statements and all phases of the Company’s
operations are subject to known and unknown risks, uncertainties and
other factors that could cause our actual results, levels of activity,
performance or achievements and those of our industry to differ
materially from those expressed or implied by these forward-looking
statements. Risks and uncertainties include seasonality, overall
economic conditions and other factors and uncertainties as are
identified in our most recent Quarterly Report on Form 10-Q and our
other public filings made with the Securities and Exchange Commission
(File No. 0-32113). Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect our
business or operating results. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date hereof. The Company does not intend, and undertakes no obligation,
to update the forward-looking statements in this press release to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events, unless required by law to do so.
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RESOURCES CONNECTION, INC.
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CONSOLIDATED STATEMENT OF OPERATIONS
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(Amounts in thousands, except per share amounts)
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Three Months Ended
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Six Months Ended
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November 28,
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November 29,
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November 28,
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November 29,
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2015
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2014
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2015
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2014
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(Unaudited)
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(Unaudited)
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Revenue
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$
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150,887
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$
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151,496
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$
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299,227
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$
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294,943
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Direct costs of services
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92,011
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92,061
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182,888
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179,283
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Gross margin
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58,876
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59,435
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116,339
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115,660
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Selling, general and administrative expenses (1)
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43,171
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43,576
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87,128
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87,855
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Operating income before amortization and depreciation (1)
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15,705
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15,859
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29,211
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27,805
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Amortization of intangible assets
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30
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402
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60
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826
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Depreciation expense
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881
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849
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1,739
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1,703
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Operating income (1)
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14,794
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14,608
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27,412
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25,276
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Interest income
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|
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(34
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)
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(39
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)
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(66
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)
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(77
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)
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Income before provision for income taxes (1)
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14,828
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14,647
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27,478
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25,353
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Provision for income taxes (2)
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6,152
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6,631
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11,669
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11,942
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Net income (1), (2)
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$
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8,676
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$
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8,016
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$
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15,809
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$
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13,411
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Net income per common share:
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Basic (1), (2)
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$
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0.23
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$
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0.21
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$
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0.42
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$
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0.35
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Diluted (1), (2)
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$
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0.23
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$
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0.21
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$
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0.42
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$
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0.35
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Weighted average common shares outstanding:
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Basic
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37,191
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37,910
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37,243
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38,045
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Diluted
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37,868
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38,278
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37,857
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38,306
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Cash dividends declared per common share
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$
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0.10
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$
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0.08
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$
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0.20
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$
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0.16
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EXPLANATORY NOTES
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(1)
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Selling, general and administrative expenses include non-cash
compensation expense for employee stock option grants, restricted
share grants and employee stock purchases of $1.4 million and $1.6
million for the three months ended November 28, 2015 and November
29, 2014, respectively, and $3.5 million and $3.1 million for the
six months ended November 28, 2015 and November 29, 2014,
respectively. The expense for the six months ended November 28, 2015
includes approximately $900,000, or $0.01 per share, related to the
Board of Director’s approval of accelerated vesting of 127,500 stock
options related to Don Murray’s transition from Executive Chairman
to non-employee Chairman of the Board.
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(2)
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The Company's effective tax rate was approximately 42% and
approximately 45% for the three months ended November 28, 2015 and
November 29, 2014, respectively, and approximately 43% and
approximately 47% for the six months ended November 28, 2015 and
November 29, 2014, respectively. The three and six months ended
November 28, 2015 include the reversal of approximately $290,000 of
tax valuation allowances. For all periods presented, the Company is
unable to benefit from, or has limitations on the benefit of, tax
losses in certain foreign jurisdictions. To a lesser extent, the
accounting treatment under GAAP for the cost associated with
incentive stock options and shares purchased through the Employee
Stock Purchase Plan have caused volatility in the Company's
effective tax rate.
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RESOURCES CONNECTION, INC.
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RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
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(Amounts in thousands, except Adjusted EBITDA Margin)
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Three Months Ended
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Six Months Ended
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November 28, 2015
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November 29, 2014
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November 28, 2015
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November 29, 2014
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(Unaudited)
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(Unaudited)
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Net income
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$
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8,676
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$
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8,016
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$
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15,809
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$
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13,411
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Adjustments:
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Amortization of intangible assets
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30
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402
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60
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826
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Depreciation expense
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|
881
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|
|
|
|
849
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|
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1,739
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|
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1,703
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|
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Interest income
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(34
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)
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(39
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)
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(66
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)
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(77
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)
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Provision for income taxes
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6,152
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|
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|
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6,631
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|
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11,669
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|
|
|
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11,942
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EBITDA
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|
|
15,705
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15,859
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|
|
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29,211
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|
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|
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27,805
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Stock-based compensation expense
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|
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1,390
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|
|
|
|
1,558
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|
|
|
|
3,545
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|
|
|
|
3,104
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|
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Adjusted EBITDA
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$
|
17,095
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|
|
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$
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17,417
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|
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$
|
32,756
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|
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$
|
30,909
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Revenue
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$
|
150,887
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|
|
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$
|
151,496
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$
|
299,227
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$
|
294,943
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Adjusted EBITDA Margin
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11.3
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%
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11.5
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%
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10.9
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%
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10.5
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%
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|
|
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|
|
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|
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EXPLANATORY NOTE
The Company utilizes certain financial measures and key performance
indicators that are not defined by, or calculated in accordance with,
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 operations; 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, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP
financial measures. EBITDA is calculated as net income before
amortization of intangible assets, depreciation expense, interest income
and income taxes. Adjusted EBITDA is calculated as EBITDA plus
stock-based compensation expense. Adjusted EBITDA Margin is calculated
by dividing Adjusted EBITDA by revenue. We believe that EBITDA, Adjusted
EBITDA and Adjusted EBITDA Margin provide useful measures to our
investors because they are financial measures used by management to
assess the core performance of our Company. EBITDA, 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 to, net income, earnings per share, cash flows or other
measures of financial performance prepared in accordance with GAAP.
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RESOURCES CONNECTION, INC.
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CONSTANT CURRENCY REVENUE COMPARISON
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(Dollars in thousands)
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(Unaudited)
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|
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|
|
|
|
|
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|
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|
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Revenue for the Three Months Ended
|
|
|
|
|
|
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November 28, 2015 GAAP
|
|
|
November 29, 2014 GAAP
|
|
|
August 29, 2015 GAAP
|
|
% Decrease November 28, 2015 vs. November 29, 2014 GAAP
|
|
% Increase November 28, 2015 vs. November 29, 2014
Constant Currency (1)
|
|
% Increase November 28, 2015 vs. August 29, 2015 GAAP
|
|
% Increase November 28, 2015 vs. August 29, 2015
Constant Currency (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$
|
150,887
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$
|
151,496
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$
|
148,340
|
|
-0.4
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%
|
|
1.7
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%
|
|
1.7
|
%
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The percentage change in revenue on a constant currency basis is
calculated using the average foreign exchange rates for the second
quarter of fiscal 2015 and applying those rates to
foreign-denominated revenue in the second quarter of fiscal 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) The percentage change in revenue on a constant currency basis is
calculated using the average foreign exchange rates for the first
quarter of fiscal 2016 and applying those rates to
foreign-denominated revenue in the second quarter of fiscal 2016.
|
EXPLANATORY NOTE
In order to provide a more comprehensive view of trends in our business,
this table shows revenue data on an as reported basis (GAAP) for the
respective periods and relative change in the same periods from the
impact on revenue of exchange rate fluctuations between the United
States dollar and currencies in countries in which the Company operates.
|
|
|
|
|
|
|
RESOURCES CONNECTION, INC.
|
SELECTED BALANCE SHEET, CASH FLOW AND OTHER INFORMATION
|
(Amounts in thousands, except consultant headcount)
|
|
|
|
|
|
|
|
|
|
November 28, 2015
|
|
May 30, 2015
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
110,099
|
|
|
$
|
112,238
|
|
Accounts receivable, less allowances
|
|
$
|
98,033
|
|
|
$
|
96,574
|
|
Total assets
|
|
$
|
416,977
|
|
|
$
|
416,981
|
|
Current liabilities
|
|
$
|
63,707
|
|
|
$
|
68,946
|
|
Total stockholders’ equity
|
|
$
|
346,000
|
|
|
$
|
340,452
|
|
Consultant headcount, end of period
|
|
|
2,645
|
|
|
|
2,516
|
|
Shares outstanding, end of period
|
|
|
37,132
|
|
|
|
37,273
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
November 28, 2015
|
|
November 29, 2014
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Cash flow from operating activities
|
|
$
|
10,698
|
|
|
$
|
5,664
|
|
Cash flow from investing activities
|
|
$
|
(6,518
|
)
|
|
$
|
2,994
|
|
Cash flow from financing activities
|
|
$
|
(11,038
|
)
|
|
$
|
(14,370
|
)
|
CONTACT:
For Resources Connection, Inc.
Media Contact:
Michael
Sitrick
(US+) 1-310-788-2850
mike_sitrick@sitrick.com
or
Analyst
Contact:
Nate Franke, Chief Financial Officer
(US+)
1-714-430-6500
nate.franke@rgp.com
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