*Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization, stock-based compensation and contingent consideration adjustments
IRVINE, Calif., December 20, 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, healthcare solutions, and legal and regulatory services, today announced financial results for its fiscal second quarter ended November 24, 2012.
Total revenue for the second quarter of fiscal 2013 was $141.2 million, improving 3.1% (2.4% on a constant dollar basis) sequentially and down 2.6% (1.9% on a constant dollar basis) compared to the prior year's second quarter revenue. Revenues in the U.S. were up 1.0% sequentially and 2.9% quarter-over-quarter. International revenues improved 10.0% sequentially and decreased 16.2% quarter-over-quarter (improvement of 7.2% sequentially and decline of 13.8% quarter-over-quarter on a constant dollar basis).
The Company's net income for the second quarter ended November 24, 2012, was $5.9 million, or $0.14 per diluted share. This compares to the Company's net income for the second quarter of fiscal 2012 of $25.3 million, or $0.58 per diluted share, including the after tax impact of the adjustment of the estimated fair value of contingent consideration liability related to the Sitrick Brincko Group acquisition of $20.4 million, or $0.47 per diluted share.
"We are pleased to see the increase in our Adjusted EBITDA Margin to 10.4%, which has been driven by improvements in gross margin and control over SG&A expenses," said Tony Cherbak, chief operating officer of Resources. "This quarter, our people and our clients faced the additional challenge of Superstorm Sandy and its devastating impact on both personal and professional lives. The quick response of our employees after the storm limited the known financial impact on the quarter to approximately $1 million in lost revenue and approximately $0.01 per share."
Gross margin was 39.1% in the second quarter of fiscal 2013, up 120 basis points from the prior year second quarter and up 10 basis points from the first quarter of fiscal 2013. Selling, general and administrative expenses for the second quarter of fiscal 2013 were $42.3 million, a decrease of $700,000 from the comparable quarter a year ago and an increase of $200,000 from the first quarter of fiscal 2013.
Cash flow from operations and Adjusted EBITDA were $1.4 million and $14.7 million (10.4% of revenue), respectively, for the second quarter of fiscal 2013 compared to $5.4 million and $14.3 million (9.9% of revenue), respectively, for the second quarter of fiscal 2012.
"From a revenue standpoint, I believe the results of our second quarter are indicative of the uncertain global environment businesses face," said Don Murray, chief executive officer of Resources. "The total financial impact of Superstorm Sandy on our operations is hard to measure as we lost a week or more in marketing efforts regarding new work or referring new work out of the Tri-State region."
The Company's revenue for the six months ended November 24, 2012 was $278.1 million compared with $283.0 million for the first six months ended November 26, 2011. The Company's net income for the six months ended November 24, 2012 was $10.7 million, or $0.26 per diluted share. This compares to net income in the prior year's first six months ended November 26, 2011 of $27.9 million or $0.63 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 $0.46 per diluted share).
During the second quarter of fiscal 2013, the Company purchased 545,000 shares of common stock for $7.0 million. On December 13, 2012, the Company paid its quarterly dividend of $2.5 million to shareholders, representing a dividend of $0.06 per share.
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, healthcare solutions, 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 approximately 1,900 clients around the world from 77 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, December 20, 2012. This conference call will be available for listening via a webcast on the Company's website: http://www.resourcesglobal.com. An audio replay of the conference call will be available through December 27, 2012 at 855-859-2056. The password for the replay is 73425300. The call will also be archived on the Resources Global Professionals 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 uncertain business environment and the effects of Superstorm Sandy. 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 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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