IRVINE, Calif., July 14, 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 fourth quarter and year ended May 28, 2011.
Total revenue for the fourth quarter of fiscal 2011 was $145.7 million, up 8.8% and 5.9% on a quarter-over-quarter basis and sequential quarter basis, respectively. Revenues in the U.S. were up 4.0% and 0.6% sequentially and quarter-over-quarter, respectively, while international revenues increased 10.9% and 36.6% sequentially and quarter-over-quarter, respectively (6.1% sequentially and 25.5% quarter-over-quarter on a constant dollar basis).
Gross margin was 38.1% in the fourth quarter of fiscal 2011, up 110 basis points from the third quarter of fiscal 2011. Selling, general and administrative expenses for the fourth quarter of fiscal 2011 were $43.7 million, down $1.6 million from $45.3 million in the third quarter of fiscal 2011.
Cash flow from operations and adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, stock based compensation and contingent consideration adjustments) were $11.0 million and $13.7 million (9.4% of revenue), respectively, for the fourth quarter of fiscal 2011.
"In fiscal 2011, we grew our revenues by $46.5 million, bringing operating leverage to our business," said Tony Cherbak, chief operating officer. "The 320 basis point improvement in our adjusted EBITDA margin of 8.7% for 2011 is reflective of the excellent work our talented employees are doing for our clients."
The Company's pre-tax income for the fourth quarter was $12.1 million, and included a non-cash adjustment of $3.2 million related to a reduction of the estimated fair value of contingent consideration.
The Company's net income for the fourth quarter ended May 28, 2011, was $5.4 million, or $0.12 per diluted share. Included in the $0.12 net income per diluted share was non-cash income of $0.05 per diluted share related to a decrease in the estimated fair value of contingent consideration, partially offset by a $0.02 per share charge related to newly established tax valuation allowances. This compares with net income for the fourth quarter ended May 29, 2010, of $2.3 million, or $0.05 per diluted share (the $0.05 per diluted share included $0.03 per diluted share of non-cash charges related to an increase in the estimated fair value of contingent consideration, the estimated employee portion of contingent consideration and newly established tax valuation allowances).
"We are pleased with the improvement in profitability and adjusted EBITDA from prior year levels," said Don Murray, chief executive officer of Resources. "It is also gratifying to have returned almost $30 million in capital to our shareholders this year. Our ability to generate cash allows us to return cash to our shareholders and to invest as opportunities for growth present themselves."
Total revenue for the year ended May 28, 2011 was $545.5 million, up 9.3% from $499.0 million for fiscal 2010. Revenues in the U.S. in fiscal 2011 were up 7.3% from the prior year while international revenues in fiscal 2011 increased 15.4% from the prior year (13.9% on a constant dollar basis).
The Company's net income for the year ended May 28, 2011, was $24.9 million, or $0.53 per diluted share (including non-cash income of $0.34 per diluted share related to net decreases in the estimated fair value of contingent consideration, partially offset by a $0.03 per share charge related to newly established tax valuation allowances). This compares with a net loss for the year ended May 29, 2010, of $11.7 million, or $0.26 per diluted share (the loss of $0.26 per diluted share included $0.13 per diluted share of non-cash charges related to an increase in the estimated fair value of contingent consideration, the estimated employee portion of contingent consideration and newly established tax valuation allowances).
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 over 1,900 clients around the world from more than 80 practice offices.
Headquartered in Irvine, California, Resources Global has served 86 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, July 14, 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," "should," or "will" or the negative of these terms or other comparable terminology. In this press release, such statements include the Company's beliefs regarding its ability to generate cash to return cash to its shareholders and to invest in opportunities for growth. 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.
Selling, general and administrative expenses ("SG&A") include non-cash compensation expense for employee stock option grants and employee stock purchases of $2.0 million and $2.9 million for the three months ended May 28, 2011 and May 29, 2010, respectively, and $9.8 million and $15.5 million for the years ended May 28, 2011 and May 29, 2010, respectively. The SG&A expenses for the year ended May 29, 2010 also include $7.0 million related to the resignation of two senior executives during the period, including the acceleration of recognition of compensation expense for employee stock option grants of $2.2 million.
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 contingent consideration expense. 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.
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Nate Franke, Chief Financial Officer
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