Savvy Trades and Investments

[2morrowsGains]

RGP...Resources Connection, Inc. Reports Financial Results for Fourth Quarter and Full Fiscal Year 2021

Revenue Growth and Significant Margin Expansion Over Prior Year Quarter Exceeds High-End of Quarterly Guidance, As Revenue Reaches $172.3 Million

IRVINE, Calif., July 21, 2021--(BUSINESS WIRE)--Resources Connection, Inc. (Nasdaq: RGP), a multinational business consulting firm operating as RGP (the "Company"), today announced financial results for its fiscal fourth quarter and year ended May 29, 2021.

Fourth Quarter Fiscal 2021 Highlights:

Revenue up 10.0% sequentially to $172.3 million compared to $156.6 million in the third quarter; revenue was $178.6 million in the prior year quarter

Same day constant currency revenue up 4.7% sequentially and 1.2% from the prior year quarter

SG&A expense decreased 18.1% to $50.8 million compared to $62.0 million in the prior year quarter

Net income grew to $23.2 million, or $0.70 diluted earnings per common share, which included a discrete tax benefit of $12.8 million, or $0.39 per diluted common share, compared to net income of $4.1 million in the prior year quarter, or $0.13 diluted earnings per common share

Adjusted diluted earnings per common share improved to $0.80 compared to $0.33 in the prior year quarter

Adjusted EBITDA margin of 12.0%, up 160 basis points compared to 10.4% in the prior year quarter

Available financial liquidity of $150.1 million, up from $126.3 million at fiscal year end 2020

Cash dividends declared of $0.14 per share, consistent with the prior year quarter

Full Fiscal Year 2021 Highlights:

Revenue of $629.5 million compared to $703.4 million in the prior year

SG&A expense decreased 8.2% to $209.3 million compared to $228.1 million in the prior year

Net income of $25.2 million, or $0.78 diluted earnings per common share, compared to $28.3 million, or $0.88 diluted earnings per common share in the prior year

Adjusted diluted earnings per common share of $1.30 compared to $1.18 in the prior year

Adjusted EBITDA margin of 8.4%, down 10 basis points compared to the prior year

Management Commentary

"We came back strong in the fourth quarter and delivered on all fronts – top line growth, gross margin improvement and disciplined cost control," said Kate W. Duchene, chief executive officer. "I am especially proud of our progress expanding Adjusted EBITDA margin by 600 basis points sequentially and 160 basis points year over year. We are starting off the new fiscal year in a position of strength as our pipeline has grown significantly over the past six months, fueled by our clients’ needs for transformational project work and traditional staffing gaps. Coming out of the global pandemic, professional talent is making different choices. The move toward careers built on agile work, increased flexibility and continuous learning is advantageous for RGP as we have been built to offer such a professional home for the best talent of the future. We are increasingly excited about these macro trends and our ability to execute."

Fourth Quarter Fiscal 2021 Results

Revenue increased 10.0% sequentially, or 4.7% on a same day constant currency basis, compared to the third quarter of fiscal 2021. Compared to the prior year quarter, revenue declined 3.5% but grew 1.2% on a same day constant currency basis. The revenue acceleration during the fourth quarter reflected strong demand across the majority of our solution offerings, led by Finance and Accounting, Business Transformation and Technology and Digital, as well as industry verticals led by financial services and healthcare. Our strategic clients continued to be one of the key drivers of revenue acceleration, achieving a 10.1% revenue improvement sequentially in the fourth quarter of fiscal 2021. The strong topline performance in the fourth quarter resulted from the combination of better operational execution, pent-up client demand from the COVID-19 pandemic (the "Pandemic"), and new demand in areas such as digital transformation as clients accelerate their digital agendas and resume discretionary spending. In addition, macro trends accelerated by the Pandemic, including increased use of contingent talent and the shift towards a more agile workforce model, also helped propel the robust momentum in professional staffing revenue growth throughout fiscal 2021. Given the timing of our fiscal period and the latent impact of the Pandemic in the fourth quarter of fiscal 2020, we did not yet see the full impact of the recovery from the Pandemic in our results in the fourth quarter of fiscal 2021.

Gross margin was 39.6%, compared to 40.4% in the prior year quarter. The change was mostly due to an 85-basis-point increase in pay/bill ratio primarily caused by more opportunistic pricing through rebates and discounts, while offering competitive pay rates to consultants as the labor market continues to tighten.

SG&A continues to improve as a result of the Company’s restructuring efforts at the beginning and throughout the Pandemic. SG&A expense for the fourth quarter of fiscal 2021 was $50.8 million, which included $1.5 million of contingent consideration expense and $0.2 million benefit from the adjustment of restructuring costs. SG&A expense for the fourth quarter of fiscal 2020 was $62.0 million, which included $1.9 million of contingent consideration expense and $5.0 million of restructuring costs. Excluding contingent consideration and restructuring costs in both periods, SG&A expense improved $5.6 million, or 10.2%, year over year. Management compensation including bonus was reduced by $3.9 million, or 10.3%, compared to the prior year quarter, primarily as a result of the restructuring initiatives and one less week included in the fourth quarter of fiscal 2021. Occupancy costs were reduced by $1.3 million, or 29.6%, compared to the prior year, as we continue to realize savings from real estate exits.

Income taxes was a benefit of $7.8 million in the fourth quarter of fiscal 2021, compared to an expense of $2.9 million in the prior year quarter. The income tax benefit in the fourth quarter of fiscal 2021 was primarily related to our tax planning strategies under which we elected to make certain changes to the capitalization of fixed assets, resulting in an NOL carryback permitted under the Coronavirus Aid, Relief, and Economic Security Act. As a result, we recognized a discrete tax benefit of $12.8 million in the fourth quarter of fiscal 2021, and plan to file for a federal tax refund of $34.0 million within the next 12 months.

Net income was $23.2 million in the fourth quarter of fiscal 2021, elevated by the discrete tax benefit of $12.8 million, compared to $4.1 million in the prior year quarter, which included substantially higher restructuring costs in the amount of $5.0 million. With revenue growth and significantly improved cost structure, the Company delivered an adjusted EBITDA margin of 12.0%, an improvement of 160 basis points from the prior year quarter.

Full Fiscal Year 2021 Results

Revenue declined 10.5% year-over-year, or 10.2% on a same day constant currency basis, due to the Pandemic, which started to impact the Company globally in the fourth quarter of fiscal 2020. Beginning in the second quarter of fiscal 2021, revenue has steadily accelerated each quarter, resulting in revenue growth when comparing the fourth quarters of the two fiscal years on a same day constant currency basis.

Net income was $25.2 million for fiscal 2021 compared to $28.3 million in the prior year. Fiscal 2021’s results included the impact of contingent consideration and restructuring charges totaling $12.8 million, offset by the discrete tax benefit of $12.8 million in connection with the NOL carryback as described above. Fiscal 2020 included $5.8 million of contingent consideration and restructuring charges, offset by $6.6 million of tax benefit as a result of the deduction of the investment basis in four European entities upon their dissolutions.

Through steady topline recovery during the fiscal year and achieving a significantly favorable cost structure, the Company delivered an 8.4% adjusted EBITDA margin in fiscal 2021, just 10 basis points below the prior year.
https://finance.yahoo.com/news/resources-connection-inc-reports-financial-200500650.html