IRVINE, California, January 5, 2011 - 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, corporate advisory and strategic communications, information management, human capital, supply chain management and legal services, today announced financial results for its fiscal second quarter ended November 27, 2010.
Total revenue for the second quarter of fiscal 2011 was $138.5 million, up 14.0% on a quarter-over-quarter basis and 12.0% on a sequential quarter basis. Revenues in the U.S. were up 16.2% quarter-over-quarter and 6.4% sequentially. International revenues improved 8.5% quarter-over-quarter and 31.2% sequentially (10.3% quarter-over-quarter and 23.8% sequentially on a constant dollar basis).
The Company's pre-tax income for the second quarter was $32.6 million, including a non-cash adjustment of $23.7 million related to the reduction of the estimated fair value of contingent consideration related to the Sitrick Brincko Group acquisition. Accounting standards require the Company to record increases or decreases in the estimated fair value of contingent consideration to earnings. Due to the inherent difficulties in projecting the future operating results of the episodic Sitrick Brincko business, the Company anticipates the estimated fair value of the Sitrick Brincko contingent consideration will continue to change in future periods, and future changes could materially impact our operating results.
The Company's net income for the second quarter ended November 27, 2010, was $17.5 million, or $0.38 per diluted share, which includes the after tax impact of the adjustment of the estimated fair value of contingent consideration expense of $14.0 million or $0.30 per share, partially offset by a $0.01 per share charge related to newly established tax valuation allowances. This compares with a net loss for the second quarter ended November 28, 2009 of $1.9 million, or $0.04 per diluted share.
Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, stock based compensation and contingent consideration adjustment) was $14.6 million and $5.6 million, for the second quarter of fiscal 2011 and fiscal 2010, respectively. Cash flow from operations was $4.0 million and $5.1 million for the second quarter of fiscal 2011 and fiscal 2010, respectively.
Gross margin was 39.5% in the second quarter of fiscal 2011, up 140 basis points from 38.1% in the comparable period of fiscal 2010 but down slightly from the fiscal 2011 first quarter's 39.8%. Selling, general and administrative expenses for the second quarter of fiscal 2011 were $42.7 million, up as anticipated from the first quarter of fiscal 2011 amount of $40.9 million.
"Our revenue increase for the quarter is especially gratifying in that it reflects solid contributions from all of our geographies," said Tony Cherbak, chief operating officer. "In addition to the consistent growth in U.S. revenue, our international offices accounted for 27% of consolidated revenue during the quarter."
The Company's revenue for the six months ended November 27, 2010 was $262.2 million compared with $239.8 million for the six months ended November 28, 2009. The Company's net income for the six months ended November 27, 2010 was $18.7 million, or $0.40 per diluted share (including the after tax impact of the adjustment of the estimated fair value of contingent consideration expense of $14.0 million or $0.30 per share), compared with a net loss of $9.1 million, or $0.20 per diluted share, for the six months ended November 28, 2009.
During the second quarter of fiscal 2011, the Company purchased 79,000 shares of common stock for $1.3 million. On December 22, 2010, the Company paid $1.8 million to shareholders, representing its regular quarterly dividend of $0.04 per share.
"The results of the second quarter reflect the strength of our business as we enter 2011," said Don Murray chief executive officer. "Sitrick Brincko continues to give Resources greater skills in corporate advisory services than we previously possessed and contributed $8.9 million to EBITDA over the last twelve months, representing 33.8% of Sitrick Brincko's revenue. We are committed to the long term strategy underlying the Sitrick Brincko acquisition."
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, corporate advisory and strategic communications, 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 2,900 professionals, annually serving 1,800 clients around the world from more than 80 practice offices.
Headquartered in Irvine, California, Resources Global has served 83 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, January 5, 2011. 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," "remain," "should," or "will" or the negative of these terms or other comparable terminology. In this press release, such statements include the Company's commitment to the long term strategy underlying the Sitrick Brincko acquisition. 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.
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.
Adjusted EBITDA, a non-GAAP financial measure, is calculated as net income (loss) before amortization of intangible assets, depreciation expense, interest income, income taxes, stock-based compensation expense and fair value adjustments to contingent consideration. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Revenue. 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 to, net income, earnings per share, cash flows or other measures of financial performance prepared in accordance with GAAP.
Michael Sitrick, CEO Sitrick Brincko Group
(US+) 1-310-788-2850 or firstname.lastname@example.org
Nate Franke, Chief Financial Officer
(US+) 1-714-430-6500 or email@example.com