Resources Connection, Inc. Reports Financial Results for First Quarter Fiscal 2022
Resources Connection, Inc. (Nasdaq: RGP) reported its strongest first-quarter revenue and margins in over a decade, with fiscal Q1 2022 revenue at $183.1 million, up 24.3% year-over-year. Net income rose to $12.9 million with a margin of 7.1%, compared to $2.3 million (1.6%) last year. Adjusted EBITDA reached $22.4 million, marking a 12.2% margin. SG&A expenses declined to 28.1% of revenue, a 660 basis points improvement from the previous year. The company declared a cash dividend of $0.14 per share, reflecting its strong operational performance.
- Revenue increased by 24.3% year-over-year to $183.1 million.
- Net income rose to $12.9 million, a significant increase from $2.3 million in the prior year.
- Adjusted EBITDA improved to $22.4 million, with a margin of 12.2%.
- SG&A as a percentage of revenue decreased by 660 basis points to 28.1%.
- Gross margin slightly declined to 39.0% from 39.3% due to lower conversion fees.
– Strongest First Quarter Revenue and Margin Performance in More than Ten Years –
First Quarter Fiscal 2022 Highlights:
-
Revenue of
$183.1 million 24.3% , or25.0% on a same day constant currency basis, compared to first quarter fiscal 2021, and a sequential increase of6.3% , or8.5% on a same day constant currency basis -
SG&A as a percentage of revenue of
28.1% , an improvement of 660 basis points from first quarter fiscal 2021 -
Net income grew to
$12.9 million 7.1% ) compared to$2.3 million 1.6% ) in first quarter fiscal 2021 -
Adjusted EBITDA, a non-GAAP measure, increased to
$22.4 million $10.2 million 12.2% , up 530 basis points from first quarter fiscal 2021 -
Diluted earnings per common share grew to
$0.39 $0.07 -
Adjusted diluted earnings per common share, a non-GAAP measure, improved to
$0.43 $0.14 -
Declared cash dividends of
$0.14
Management Commentary
“Our performance in Q1 supporting clients’ migration to more agile work is the trajectory we expected,” said
First Quarter Fiscal 2022 Results
Revenue growth in the first quarter of fiscal 2022 was propelled by strong client demand and better operational execution and delivery. The strengthened client demand across the vast majority of the Company’s markets and solution offerings reflected macro trends accelerated by the COVID-19 pandemic, such as workforce agility and digital transformation, and the increased relevance of the Company’s solutions to its clients. The revenue growth across all geographies was led by solution areas in Finance and Accounting, Business Transformation and Technology and Digital, as well as industry verticals including financial services and healthcare. The Company’s strategic client accounts program continued to be one of the key drivers of revenue acceleration, achieving
Gross margin was
SG&A as a percentage of revenue in the first quarter of fiscal 2022 was
Provision for income taxes was
Net income increased to
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
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Three Months Ended |
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2021 |
2021 |
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2020 |
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Revenue |
$ |
183,140 |
|
$ |
172,318 |
|
|
|
$ |
147,346 |
|
Direct cost of services |
|
111,708 |
|
|
104,035 |
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|
|
|
89,449 |
|
Gross profit |
|
71,432 |
|
|
68,283 |
|
|
|
|
57,897 |
|
Selling, general and administrative expenses |
|
51,392 |
|
|
50,780 |
|
|
|
|
51,154 |
|
Amortization of intangible assets |
|
1,103 |
|
|
1,104 |
|
|
|
|
1,530 |
|
Depreciation expense |
|
919 |
|
|
943 |
|
|
|
|
1,007 |
|
Income from operations |
|
18,018 |
|
|
15,456 |
|
|
|
|
4,206 |
|
Interest expense, net |
|
215 |
|
|
284 |
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|
|
495 |
|
Other income |
|
(306 |
) |
|
(262 |
) |
|
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(530 |
) |
Income before provision for income taxes |
|
18,109 |
|
|
15,434 |
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|
4,241 |
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Provision for income taxes |
|
5,186 |
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|
(7,814 |
) |
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|
1,957 |
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Net income |
$ |
12,923 |
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$ |
23,248 |
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$ |
2,284 |
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Net income per common share: |
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- |
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Basic |
$ |
0.39 |
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$ |
0.71 |
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$ |
0.07 |
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Diluted |
$ |
0.39 |
|
$ |
0.70 |
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$ |
0.07 |
|
Weighted average common shares outstanding: |
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- |
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Basic |
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32,894 |
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32,715 |
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32,183 |
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Diluted |
|
33,313 |
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|
33,053 |
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|
32,232 |
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Cash dividends declared per common share |
$ |
0.14 |
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$ |
0.14 |
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$ |
0.14 |
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Revenue by Geography |
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|||
|
$ |
151,879 |
|
|
141,518 |
|
|
|
$ |
120,614 |
|
|
|
18,865 |
|
|
19,371 |
|
|
|
|
16,292 |
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12,396 |
|
|
11,429 |
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|
10,440 |
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Total revenue |
$ |
183,140 |
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$ |
172,318 |
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$ |
147,346 |
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Cash dividend |
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Total cash dividends paid |
$ |
4,603 |
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$ |
4,605 |
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|
$ |
4,512 |
|
Conference Call Information
RGP will hold a conference call for analysts and investors at
About RGP
RGP is a global consulting firm helping businesses tackle transformation, change and compliance challenges by supplying the right professional talent and solutions. As a next-generation human capital partner for our clients, we specialize in solving today’s most pressing business problems across the enterprise in the areas of transactions, regulations, and transformations. Our pioneering approach to workforce strategy and our agile human capital model quickly align the right resources for the work at hand with speed and efficiency. Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our clients’, consultants’, and partners’ success. Our mission as an employer is to connect our team members to meaningful opportunities that further their career ambitions within the context of a supportive talent community of dedicated professionals. With approximately 5,000 professionals, we annually engage with over 2,100 clients around the world from over 40 physical practice offices and multiple virtual offices. We are their partner in delivering on the “now of work.” Headquartered in
The Company is listed on the Nasdaq Global Select Market, the exchange’s highest tier by listing standards. To learn more about RGP, visit: http://www.rgp.com. (RGP-F)
Forward-Looking Statements
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 statements regarding our growth and operational plans. Such statements and all phases of the Company’s operations are subject to known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements and those of our industry to differ materially from those expressed or implied by these forward-looking statements. Risks and uncertainties include uncertainties regarding the impact of the COVID-19 pandemic on our business and the economy generally, our ability to successfully execute on our strategic initiatives, our ability to realize the level of benefit that we expect from our restructuring initiatives, our ability to compete effectively in the highly competitive professional services market and to secure new projects from clients, our ability to successfully integrate any acquired companies, overall economic conditions and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended
Use of Non-GAAP Financial Measures
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 GAAP measure so calculated and presented. The following non-GAAP measures are presented in this press release:
-
Same day constant currency revenue is adjusted for the following items:
- Currency impact. In order to remove the impact of fluctuations in foreign currency exchange rates, the Company calculates constant currency revenue, which represents the outcome that would have resulted had exchange rates in the current period been the same as those in effect in the comparable prior period.
- Business days impact. In order to remove the fluctuations caused by comparable periods having different number of business days, the Company calculates same day revenue as current period revenue (adjusted for currency impact) divided by the number of business days in the current period, multiplied by the number of business days in the comparable prior period. The number of business days in each respective period is provided in the “Number of Business Days” section of the “Reconciliation of GAAP to Non-GAAP Financial Measures” table below.
- Adjusted EBITDA is calculated as net income before amortization of intangible assets, depreciation expense, interest, and income taxes plus stock-based compensation expense, restructuring costs, and plus or minus contingent consideration adjustments. Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate.
- Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue.
- Cash tax rate excludes the non-cash tax impact of stock option expirations, non-cash tax impact of valuation allowances on international deferred tax assets, and other non-cash tax items.
- Adjusted provision for income taxes is calculated based on the Company’s cash tax rates (as defined above).
- Adjusted diluted earnings per common share is calculated as diluted earnings per common share, plus the per share impact of stock-based compensation expense and restructuring costs, plus or minus the per share impact of contingent consideration adjustments, and adjusted for the related tax effects of these adjustments.
We believe the above-mentioned non-GAAP measures, which are used by management to assess the core performance of our Company, provide useful information and additional clarity of our operating results to our investors in their own evaluation of the core performance of our Company and facilitate a comparison of such performance from period to period. These 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 for, revenue, net income, earnings per share, cash flows or other measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently.
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RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
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Three Months Ended |
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Three Months Ended |
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Revenue by Geography |
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2021 |
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2020 |
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2021 |
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2021 |
||
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(Unaudited) |
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(Unaudited) |
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(Amounts in thousands, except number of business days) |
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As reported (GAAP) |
|
$ |
151,879 |
|
|
$ |
120,614 |
|
|
|
|
$ |
151,879 |
|
|
|
$ |
141,518 |
Currency impact |
|
|
(275 |
) |
|
|
|
|
|
|
|
|
(26 |
) |
|
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Business days impact |
|
|
2,407 |
|
|
|
|
|
|
|
|
|
4,821 |
|
|
|
|
|
Same day constant currency revenue |
|
$ |
154,011 |
|
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|
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$ |
156,674 |
|
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As reported (GAAP) |
|
$ |
18,865 |
|
|
$ |
16,292 |
|
|
|
|
$ |
18,865 |
|
|
|
$ |
19,371 |
Currency impact |
|
|
(970 |
) |
|
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|
|
|
|
|
|
97 |
|
|
|
|
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Business days impact |
|
|
- |
|
|
|
|
|
|
|
|
|
(882 |
) |
|
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Same day constant currency revenue |
|
$ |
17,895 |
|
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|
|
|
|
|
|
$ |
18,080 |
|
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As reported (GAAP) |
|
$ |
12,396 |
|
|
$ |
10,440 |
|
|
|
|
$ |
12,396 |
|
|
|
$ |
11,429 |
Currency impact |
|
|
(191 |
) |
|
|
|
|
|
|
|
|
88 |
|
|
|
|
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Business days impact |
|
|
- |
|
|
|
|
|
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(198 |
) |
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Same day constant currency revenue |
|
$ |
12,205 |
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$ |
12,286 |
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Total Consolidated |
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As reported (GAAP) |
|
$ |
183,140 |
|
|
$ |
147,346 |
|
|
|
|
$ |
183,140 |
|
|
|
$ |
172,318 |
Currency impact |
|
|
(1,436 |
) |
|
|
|
|
|
|
|
|
159 |
|
|
|
|
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Business days impact |
|
|
2,407 |
|
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|
|
|
|
|
|
|
3,741 |
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Same day constant currency revenue |
|
$ |
184,111 |
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|
|
|
|
|
|
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$ |
187,040 |
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Number of Business Days |
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|
63 |
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|
64 |
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|
63 |
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|
65 |
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|
65 |
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|
65 |
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65 |
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|
62 |
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|
63 |
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63 |
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63 |
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62 |
(1) |
This represents the number of business days in |
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(2) |
This represents the number of business days in the countries in which the revenues are most concentrated within the geography. |
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RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
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(Amounts in thousands, except per share amounts and percentages) |
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Three Months Ended |
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Percentage |
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Percentage |
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Adjusted EBITDA |
2021 |
of Revenue |
|
2020 |
of Revenue |
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(Unaudited) |
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Net income |
$ |
12,923 |
|
7.1 |
% |
|
$ |
2,284 |
|
1.6 |
% |
Adjustments: |
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Amortization of intangible assets |
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1,103 |
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0.6 |
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1,530 |
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1.0 |
|
Depreciation expense |
|
919 |
|
0.5 |
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|
1,007 |
|
0.7 |
|
Interest expense, net |
|
215 |
|
0.1 |
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|
495 |
|
0.3 |
|
Provision for income taxes |
|
5,186 |
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2.8 |
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|
1,957 |
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1.3 |
|
EBITDA |
|
20,346 |
|
11.1 |
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|
7,273 |
|
4.9 |
|
Stock-based compensation expense |
|
1,629 |
|
0.9 |
|
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|
1,397 |
|
0.9 |
|
Restructuring costs |
|
156 |
|
0.1 |
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|
1,016 |
|
0.7 |
|
Contingent consideration adjustment |
|
221 |
|
0.1 |
|
|
|
530 |
|
0.4 |
|
Adjusted EBITDA |
$ |
22,352 |
|
12.2 |
|
|
$ |
10,216 |
|
6.9 |
|
Revenue |
$ |
183,140 |
|
100.0 |
% |
|
$ |
147,346 |
|
100.0 |
% |
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Adjusted Diluted Earnings per Common Share |
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Diluted earnings per common share, as reported |
$ |
0.39 |
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$ |
0.07 |
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Stock-based compensation expense |
|
0.05 |
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|
0.04 |
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Restructuring costs |
|
- |
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|
0.03 |
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Contingent consideration adjustment |
|
0.01 |
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|
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|
0.02 |
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Income tax impact of adjustments |
|
(0.02 |
) |
|
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|
|
(0.02 |
) |
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Adjusted diluted earnings per common share |
$ |
0.43 |
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|
$ |
0.14 |
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Adjusted Provision for Income Taxes and Cash Tax Rate |
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Provision for income taxes |
$ |
5,186 |
|
|
|
|
$ |
1,957 |
|
|
|
Effect of non-cash tax items: |
|
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|
|
|
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||
Stock option expirations |
|
(108 |
) |
|
|
|
|
(149 |
) |
|
|
Valuation allowance on international deferred tax assets |
|
310 |
|
|
|
|
|
(388 |
) |
|
|
Net uncertain tax position adjustments |
|
(9 |
) |
|
|
|
|
- |
|
|
|
Other adjustments |
|
1 |
|
|
|
|
|
(20 |
) |
|
|
Adjusted provision for income taxes |
$ |
5,380 |
|
|
|
|
$ |
1,400 |
|
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||
Effective tax rate |
|
28.6 |
% |
|
|
|
|
46.1 |
% |
|
|
Total effect of non-cash tax items on effective tax rate |
|
1.1 |
% |
|
|
|
|
(13.1 |
%) |
|
|
Cash tax rate |
|
29.7 |
% |
|
|
|
|
33.0 |
% |
|
|
Segment Results
Effective in the second quarter of fiscal 2021, the Company revised its segment reporting to align with changes made in its internal management structure and its reporting structure of financial information used to assess performance and allocate resources.
Operating results by reportable segment are included in the following table. Prior year period presented was recast to reflect the impact of the segment changes. Please refer to the “Reconciliation of GAAP to Non-GAAP Financial Measures” table above for the reconciliation of consolidated net income to Adjusted EBITDA for each of the periods presented. Amounts are unaudited.
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Three Months Ended |
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2021 |
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2020 |
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(Amounts in thousands, except percentages) |
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Revenues: |
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|
||||
RGP |
|
$ |
172,933 |
|
94.4 |
% |
|
$ |
137,109 |
|
93.1 |
% |
Other Segments |
|
|
10,207 |
|
5.6 |
|
|
|
10,237 |
|
6.9 |
|
Total revenues |
|
$ |
183,140 |
|
100.0 |
% |
|
$ |
147,346 |
|
100.0 |
% |
|
|
|
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|
||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||
RGP |
|
$ |
29,002 |
|
129.8 |
% |
|
$ |
16,458 |
|
161.1 |
% |
Other Segments |
|
|
1,006 |
|
4.5 |
|
|
|
1,165 |
|
11.4 |
|
Reconciling items (1) |
|
|
(7,656 |
) |
(34.3 |
) |
|
|
(7,407 |
) |
(72.5 |
) |
Total Adjusted EBITDA |
|
$ |
22,352 |
|
100.0 |
% |
|
$ |
10,216 |
|
100.0 |
% |
(1) |
Reconciling items are generally comprised of unallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments. |
SELECTED BALANCE SHEET, CASH FLOW AND OTHER INFORMATION |
(Amounts in thousands, except consultant headcount and average rates) |
|
|
|
|
|
|
||
|
|
|
|
||||
SELECTED BALANCE SHEET INFORMATION: |
2021 |
|
2021 |
||||
|
(Unaudited) |
|
|
|
|||
Cash and cash equivalents |
$ |
61,899 |
|
|
$ |
74,391 |
|
Accounts receivable, net of allowance for doubtful accounts |
$ |
129,069 |
|
|
$ |
116,455 |
|
Total assets |
$ |
514,635 |
|
|
$ |
520,644 |
|
Current liabilities |
$ |
95,380 |
|
|
$ |
100,906 |
|
Long-term debt |
$ |
33,000 |
|
|
$ |
43,000 |
|
Total liabilities |
$ |
173,790 |
|
|
$ |
191,098 |
|
Total stockholders’ equity |
$ |
340,845 |
|
|
$ |
329,546 |
|
|
|
|
|
|
|
||
|
Three Months Ended |
||||||
|
|
|
|
||||
SELECTED CASH FLOW INFORMATION: |
2021 |
|
2020 |
||||
|
(Unaudited) |
|
(Unaudited) |
||||
Cash flow -- operating activities |
$ |
464 |
|
|
$ |
18,586 |
|
Cash flow -- investing activities |
$ |
(1,006 |
) |
|
$ |
(247 |
) |
Cash flow -- financing activities (1) |
$ |
(11,387 |
) |
|
$ |
(1,530 |
) |
|
|
|
|
|
|
||
|
Three Months Ended |
||||||
|
|
|
|
||||
SELECTED OTHER INFORMATION: |
2021 |
|
2020 |
||||
|
(Unaudited) |
|
(Unaudited) |
||||
Consultant headcount, end of period |
|
3,141 |
|
|
|
2,444 |
|
Average bill rate |
$ |
126 |
|
|
$ |
124 |
|
Average pay rate |
$ |
63 |
|
|
$ |
62 |
|
Common shares outstanding, end of period |
|
33,187 |
|
|
|
32,433 |
|
(1) |
Net cash used in financing activities in the three months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211006005933/en/
Analyst Contact:
(US+) 1-714-430-6500
jennifer.ryu@rgp.com
Media Contact:
(US+) 1-310-788-2850
mike_sitrick@sitrick.com
Source:
FAQ
What were RGP's revenue figures for Q1 2022?
How did RGP's net income change in Q1 2022?
What was RGP's diluted earnings per share for the first quarter of fiscal 2022?
What was the adjusted EBITDA margin for RGP in Q1 2022?
What cash dividend did RGP declare for Q1 2022?
