IRVINE, Calif., Oct. 2 /PRNewswire-FirstCall/ -- Resources Connection,
Inc. (Nasdaq: RECN), a multinational professional services firm that provides
to clients -- through its operating subsidiary, Resources Global Professionals
('Resources') -- accomplished professionals in accounting and finance, risk
management and internal audit, information management, human capital, supply
chain management and legal services, today announced financial results for its
fiscal first quarter ended August 30, 2008.
Total revenue for the first quarter of fiscal 2009 improved 6.8% to
$207.3 million from $194.1 million for the first quarter in fiscal 2008.
Revenues in the U.S. were flat quarter-over-quarter while international
revenues increased 26.5% (17.4% on a constant dollar basis).
Gross margin was 39.0% in the first quarter of fiscal 2009 versus 37.9% in
the comparable period of fiscal 2008. Selling, general and administrative
expenses, which include stock compensation expense, were 27.3% of revenue for
the first quarter of fiscal 2009, the same as in the first quarter of fiscal
2008.
Net income determined in accordance with generally accepted accounting
principles ('GAAP') improved 7.8% to $12.5 million for the first quarter ended
August 30, 2008 compared with $11.6 million for the quarter ended August 25,
2007; earnings per diluted share improved 17.4% to $0.27 per diluted share for
the first quarter of fiscal 2009 from $0.23 per diluted share for the first
quarter of the prior year. GAAP net income includes non-cash stock based
compensation expense of $3.6 million and $4.1 million, net of tax for the
quarters ended August 30, 2008 and August 25, 2007, respectively.
Adjusted earnings before interest, taxes, depreciation, amortization and
stock compensation expense or 'EBITDA' for the first quarter of fiscal 2009
was $29.3 million or 14.1% of revenue versus $26.5 million or 13.7% of revenue
for the same quarter of fiscal 2008.
'I am particularly pleased with our gross margin and profitability trends,
which will remain a focus of the entire Resources team,' said Don Murray,
Executive Chairman of Resources. 'We continue to demonstrate our ability to
adapt to our clients' needs in these volatile times.'
'As we look forward, we will continue to face a challenging economic
environment and volatility in world financial markets,' said Thomas
Christopoul, President and CEO of Resources. 'We believe the enormous change
taking place in the capital markets will present significant opportunities for
us in the future; however, the timing of those opportunities will vary as
companies work through the difficult business environment. Our business
model, which is designed such that 70% of our cash costs are variable,
positions Resources extremely well in these uncertain times.'
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 4,000 professionals, from
more than 80 practice offices, annually serving 2,400 clients around the
world.
Headquartered in Irvine, California, Resources Global has served 84 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 Resources Global is
available at http://www.resourcesglobal.com.
Resources will hold a conference call for interested analysts and
investors at 5:00 p.m., ET today, October 2, 2008. This conference call will
be available for listening via a webcast on the Company's website:
http://www.resourcesglobal.com.
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 plans to remain focused on gross margin and profitability trends; our
belief that the enormous change taking place in the capital markets will
present significant opportunities for us in the future and that our business
model positions Resources Connection well in these uncertain times; and our
belief that we continue to demonstrate our ability to adapt to our clients'
needs in these volatile times. 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
August 30, August 25,
2008 2007
(unaudited)
Revenue $207,305 $194,120
Direct costs of services 126,466 120,631
Gross profit 80,839 73,489
Selling, general and administrative expenses (1) 56,513 53,029
Operating income before amortization and
depreciation (1) 24,326 20,460
Amortization of intangible assets 382 254
Depreciation expense 2,340 1,875
Operating income (1) 21,604 18,331
Interest income (516) (2,542)
Income before provision for income taxes (1) 22,120 20,873
Provision for income taxes (2) 9,628 9,291
Net income (1) (2) $12,492 $11,582
Diluted net income per share $0.27 $0.23
Diluted shares 46,008 50,411
EXPLANATORY NOTES
1. Includes $4,964 and $6,000 of expense for the three months ended August
30, 2008 and August 25, 2007, respectively, related to the mandatory
requirement to recognize compensation expense for employee stock option
grants and employee stock purchases.
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 the three
months ended August 30, 2008 and August 25, 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 43.5% and 44.5% for the three
months ended August 30, 2008 and August 25, 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 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
August 30, August 25,
2008 2007
(unaudited)
Consolidated EBITDA and Adjusted EBITDA
Net Income $12,492 $11,582
Adjustments:
Amortization of intangible assets 382 254
Depreciation expense 2,340 1,875
Interest income (516) (2,542)
Provision for income taxes 9,628 9,291
EBITDA 24,326 20,460
Stock Compensation Expense 4,964 6,000
Adjusted EBITDA $29,290 $26,460
Revenue $207,305 $194,120
Adjusted EBITDA Margin 14.1% 13.6%
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 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)
August 30, 2008 May 31, 2008
(unaudited)
Cash, cash equivalents and short-term
investments $121,742 $106,814
Accounts receivable, less allowances $116,981 $126,669
Total assets $408,625 $410,502
Current liabilities $70,076 $91,424
Total stockholders' equity $327,316 $305,888
SOURCE Resources Connection, Inc.
