IRVINE, Calif., January 4, 2012 - 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, finance, risk management and internal audit, corporate advisory, strategic communications and restructuring, information management, human capital, supply chain management, actuarial and legal and regulatory services, today announced financial results for its fiscal second quarter ended November 26, 2011.
Total revenue for the second quarter of fiscal 2012 was $145.0 million, up 4.7% from last year's second quarter revenue of $138.5 million and up 5.1% on a sequential quarter basis. Revenues in the U.S. were up 1.3% quarter-over-quarter and 2.6% sequentially, while international revenues increased 13.8% quarter-over-quarter and 11.4% sequentially (up 11.1% quarter-over-quarter and 14.8% sequentially on a constant dollar basis).
The Company's pre-tax income for the second quarter was $43.3 million, including a non-cash adjustment of $33.9 million reducing the estimated fair value of contingent consideration liability (including the employee portion 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, significant increases over the current estimated future adjusted EBITDA1 (earnings before interest, income taxes, depreciation, amortization, stock based compensation and contingent consideration adjustments) could result in an increase in the estimated fair value of the Sitrick Brincko contingent consideration which would materially impact our future operating results.
The Company's net income for the second quarter ended November 26, 2011, was $25.3 million, or $0.58 per diluted share, which includes the after tax impact of the adjustment of the estimated fair value of contingent consideration expense of $20.4 million or $0.47 per share. This compares with a net income for the second quarter ended November 27, 2010 of $17.5 million, or $0.38 per diluted share, which included 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.
Gross margin was 37.9% in the second quarter of fiscal 2012, up 10 basis points from the first quarter of fiscal 2012. Selling, general and administrative expenses for the second quarter of fiscal 2012 were $43.0 million, up $400,000 from $42.6 million in the first quarter of fiscal 2012 as the Company ramped up its branding campaign during the second quarter.
Cash flow from operations and adjusted EBITDA were $5.4 million and $14.3 million (9.9% of revenue), respectively, for the second quarter of fiscal 2012.
"I am pleased our client service focused strategy continues to yield growth in a challenging global economy," said Don Murray, chief executive officer of Resources. "Despite the reduction in the Sitrick Brincko contingent consideration, we remain committed to growing this practice in the coming years and believe we have an excellent team to do so."
The Company's revenue for the six months ended November 26, 2011 was $283.0 million compared with $262.2 million for the six months ended November 27, 2010. The Company's net income for the six months ended November 26, 2011 was $27.9 million, or $0.63 per diluted share (including the after tax impact of the adjustment of the estimated fair value of contingent consideration expense of $20.4 million or $0.46 per share), compared with a net income for the six months ended November 27, 2010 of $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).
During the second quarter of fiscal 2012, the Company purchased 1,002,000 shares of common stock for $10.9 million. On December 22, 2011, the Company paid its quarterly dividend of $2.2 million to shareholders, representing a dividend of $0.05 per share.
"Our business model continues to produce positive cash flows as evidenced by our 9.9% cash flow margin for the quarter," said Tony Cherbak, chief operating officer. "Our strong cash position allowed us to purchase over 1 million shares of our stock during our second quarter and, along with our dividend program, we returned $13.1 million to our shareholders."
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 - accounting, finance, risk management and internal audit, corporate advisory, strategic communications and restructuring, information management, human capital, supply chain management, actuarial and legal and regulatory services.
Resources Global was founded in 1996 within a Big Four accounting firm. Today, we are a publicly traded company with over 3,000 professionals, annually serving over 1,900 clients around the world from 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, January 4, 2012. 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 beliefs regarding the strength of our team. 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.
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