Group 1 - The recent commentary on Resources Connection, Inc. (NASDAQ: RGP) highlighted the need for the consulting-oriented business to report improved earnings trends to attract investor interest [1] - The investment strategy focuses on acquiring undervalued profitable stocks with strong balance sheets and minimal debt, while also considering writing calls against positions for additional income [1] - Risk management is emphasized through position sizing and the use of trailing stop losses over time [1]

RGP reported an earnings per share (EPS) of -$0.07, surpassing the estimated EPS of -$0.15, indicating a significant improvement from the previous quarter.The company's revenue for the quarter was approximately $120.23 million, slightly above the estimated $119.97 million, despite a decrease from the previous year.Financial ratios such as a negative price-to-earnings (P/E) ratio of -0.85 and a debt-to-equity ratio of 0.12 highlight RGP's financial health and potential for future growth.Resources Connection, ...

Resources Connection (RGP) came out with quarterly earnings of $0.03 per share, beating the Zacks Consensus Estimate of a loss of $0.15 per share. This compares to break-even earnings per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +120.00%. A quarter ago, it was expected that this consulting company would post earnings of $0.01 per share when it actually produced earnings of $0.16, delivering a surprise of +1500%.Over the las ...

These services are relevant to every business today, large and small. In these areas, we help our clients drive transformation from strategy through to execution by providing heightened value and impact. Our unique value proposition is built on five key differentiators. First, we bring agility, expertise, and experience. Unlike Big Four and large consultancies, we deploy skilled, analytical consultants paired with highly experienced professionals who can plug into client teams quickly without the heavy over ...

Financial Data and Key Metrics Changes - Revenue for Q1 was reported at $120.2 million, exceeding the outlook range, with a gross margin of 39.5%, which is 300 basis points higher than the prior year [26][28] - SG&A expenses were $44.5 million, a 7% improvement from $47.7 million a year ago, driven by lower management compensation and reductions in other G&A expenses [29] - Adjusted EBITDA improved to $3.1 million, representing a 2.5% adjusted EBITDA margin [26] Business Line Data and Key Metrics Changes - On-demand segment revenue declined by 16% year-over-year to $44.4 million, but segment-adjusted EBITDA improved to $4.4 million, or a 10% margin [30] - Consulting segment revenue was $43.6 million, a decline of 22% from the prior year, with segment-adjusted EBITDA at $5 million, or an 11.6% margin [30] - Europe and Asia-Pacific segment revenue grew by 5% year-over-year to $19.9 million, with segment-adjusted EBITDA of $0.8 million, or a 4.2% margin [31] Market Data and Key Metrics Changes - Europe and Asia-Pacific achieved solid growth, with a strong pipeline for Q2, driven by deepening multinational client relationships and expanding local client bases [24] - Demand for CFO advisory and digital transformation offerings remains strong, with a focus on cost efficiency and process automation [24][26] Company Strategy and Development Direction - The company is transforming from a professional staffing organization to a diversified platform combining on-demand talent with consulting and outsourced services, focusing on CFO advisory and digital transformation [5][8] - The strategy includes enhancing the addressable market and becoming known for a focused set of solutions, with a unique value proposition based on agility, expertise, and experience [6][10] - The company is actively redesigning its cost structure to fit the current size and scale of the business, aiming for a more stable and profitable operation [15][24] Management's Comments on Operating Environment and Future Outlook - Management noted that the global macro environment remains uncertain and slow-moving for professional services, but they are positioning the business for an upturn [3][12] - The company expects to maintain revenue stability through Q2, with an outlook for revenue between $115 million and $120 million [32][33] - Management emphasized the importance of improving sales execution and driving an efficient cost structure to deliver more value [33] Other Important Information - The company has a strong balance sheet with $77.5 million in cash and cash equivalents and zero outstanding debt [31] - The company is targeting venture-backed AI startups for outsourced services, capitalizing on the broader venture funding environment [24] Q&A Session Summary Question: Pricing Trends - Management indicated that while staffing rates have remained steady, there are pricing pressures in consulting, but the value provided allows for rate increases on new projects [37][38] Question: Pipeline and Cross-Selling - The pipeline is seeing an increase in $1 million+ deals, with expectations for continued growth through cross-selling efforts [39] Question: Revenue Guidance Breakdown - Revenue guidance for Q2 indicates continued strength in Europe and Asia-Pacific, while on-demand and consulting segments are expected to perform similarly to Q1 [42] Question: Regional Demand Differences - Demand is strong in the West Coast and Southeast regions, attributed to team tenure and alignment with client priorities [45] Question: Client Spending Appetite - Management noted that client appetite for spending remains choppy, with ongoing uncertainty affecting the operating environment [61] Question: Board Refresh Impact - New board members bring fresh perspectives, focusing on optimizing bottom-line performance and fostering collaborative teams [63][64]

Financial Data and Key Metrics Changes - Revenue for Q1 was reported at $120.2 million, exceeding the outlook range, with a gross margin of 39.5%, which is 300 basis points higher than the prior year [26][27] - SG&A expenses were $44.5 million, a 7% improvement from $47.7 million a year ago, driven by lower management compensation and reductions in other G&A spend [28] - Adjusted EBITDA improved to $3.1 million, representing a 2.5% adjusted EBITDA margin [26] Business Line Data and Key Metrics Changes - On-demand segment revenue declined by 16% year-over-year to $44.4 million, but segment-adjusted EBITDA improved to $4.4 million, or a 10% margin [29] - Consulting segment revenue was $43.6 million, a decline of 22% from the prior year, with segment-adjusted EBITDA at $5 million, or an 11.6% margin [29] - Europe and Asia-Pacific segment revenue grew by 5% year-over-year to $19.9 million, with segment-adjusted EBITDA of $0.8 million, or a 4.2% margin [30] Market Data and Key Metrics Changes - Europe and Asia-Pacific achieved solid growth, with a 5% increase in revenue, driven by strong client relationships and effective regional strategy [23] - Demand for CFO advisory and digital transformation offerings remains strong, with a focus on local delivery combined with scalable global delivery centers [24] Company Strategy and Development Direction - The company is transforming from a professional staffing organization to a diversified platform combining on-demand talent with consulting and outsourced services [5] - Focus areas include CFO advisory and digital transformation, which are critical for driving client transformation and enhancing value [8][10] - The company aims to increase its addressable market and improve return for shareholders through strategic investments and enhanced service offerings [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the global macro environment remains uncertain, but they are positioning the company for an upturn [3] - There is a belief that improvements in key operating metrics will lead to tangible revenue growth over time [27] - The outlook for Q2 anticipates revenue stability between $115 to $120 million, with gross margin expectations similar to Q1 [31][32] Other Important Information - The company is actively redesigning its cost structure to fit its current size and scale, with expected annual cost savings of $6 to $8 million from recent organizational changes [15][28] - The company maintains a strong balance sheet with $77.5 million in cash and no outstanding debt [30] Q&A Session Summary Question: What would you say regarding the trend in pricing? - Management indicated that while staffing rates have remained steady, there are pricing pressures in consulting, but value-added services are allowing for rate increases on new projects [35][36] Question: How much of the pipeline would you attribute to cross-selling? - The company is still building its pipeline but has seen an increase in $1 million-plus deals, anticipating further growth through cross-selling efforts [37] Question: Can you break out the revenue guide between segments? - The revenue guide for Q2 expects continued strength in Europe and Asia-Pacific, while on-demand and consulting segments are expected to perform similarly to Q1 [40][41] Question: Are there regional differences in demand? - Demand is strong in the West Coast and Southeast, attributed to team tenure and alignment with client priorities in CFO advisory and digital transformation [43] Question: What changes have new board members brought? - New board members have provided fresh perspectives, focusing on optimizing bottom-line performance and fostering collaborative teams [59][60]

Financial Data and Key Metrics Changes - Revenue for Q1 2026 was reported at $120.2 million, exceeding the high end of the outlook range, with a gross margin of 39.5%, which is 300 basis points higher than the prior year quarter [25][26] - SG&A expenses were $44.5 million, a 7% improvement from $47.7 million a year ago, primarily due to lower management compensation and reductions in other G&A expenses [27][28] - Adjusted EBITDA improved to $3.1 million, representing a 2.5% adjusted EBITDA margin [25] Business Line Data and Key Metrics Changes - Revenue from the on-demand segment was $44.4 million, a decline of 16% year-over-year, but segment-adjusted EBITDA improved to $4.4 million, or a margin of 10% [29] - Consulting segment revenue was $43.6 million, down 22% from the prior year, with segment-adjusted EBITDA at $5 million, or an 11.6% margin [29] - Europe and Asia-Pacific segment revenue grew by 5% year-over-year to $19.9 million, with segment-adjusted EBITDA of $0.8 million, or a 4.2% margin [30] Market Data and Key Metrics Changes - The company reported solid growth in Europe and Asia-Pacific, driven by strong client relationships and effective regional strategies [22][23] - Demand for CFO advisory and digital transformation offerings remains strong, with a focus on combining local delivery with scalable global delivery centers [23] Company Strategy and Development Direction - The company is transforming from a professional staffing organization to a diversified platform that combines on-demand talent with consulting and outsourced services [5][12] - Focus areas include CFO advisory and digital transformation, which are critical for driving client transformation from strategy to execution [5][8] - The company aims to increase its addressable market and improve return for shareholders through enhanced value creation and strategic investments [4][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the global macro environment remains uncertain, but they are positioning the company for an upturn [3] - The pipeline returned to growth during the quarter, with demand strengthening across CFO advisory and digital transformation [16] - Management expects continued revenue stability in Q2, with a revenue outlook of $115 to $120 million [31][32] Other Important Information - The company has a strong balance sheet with $77.5 million in cash and cash equivalents and no outstanding debt [30] - A reduction in force was implemented to streamline the organizational structure, expected to yield annual cost savings of $6 to $8 million [28] Q&A Session Summary Question: What is the trend in pricing? - Management indicated that while staffing rates have remained steady, there are pricing pressures in consulting, though value-added services are allowing for rate increases on new projects [36] Question: How much of the pipeline is attributed to cross-selling? - The company is still building its pipeline, but there is an increase in $1 million-plus deals, indicating positive momentum in cross-selling efforts [38] Question: Can you break down the revenue guide between segments? - The revenue guide for Q2 indicates continued strength in Europe and Asia-Pacific, while on-demand and consulting segments are expected to perform similarly to Q1 [40][41] Question: What is the general appetite for spending among clients? - Management noted that the environment remains choppy, with some interesting work progressing, but overall client spending appetite has not changed significantly [50][51]

PART I—FINANCIAL INFORMATION [ITEM 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for Resources Connection, Inc. for the three months ended August 30, 2025, and August 24, 2024, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, acquisitions, segment information, and other financial disclosures [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheet Metrics (in thousands) | Metric (in thousands) | August 30, 2025 | May 31, 2025 | Change | % Change | | :-------------------- | :-------------- | :----------- | :----- | :------- | | Cash and cash equivalents | $77,518 | $86,147 | $(8,629) | -10.0% | | Trade accounts receivable, net | $93,555 | $99,210 | $(5,655) | -5.7% | | Total current assets | $188,248 | $203,686 | $(15,438) | -7.6% | | Total assets | $287,211 | $304,688 | $(17,477) | -5.7% | | Accrued salaries and related obligations | $32,207 | $47,931 | $(15,724) | -32.8% | | Total current liabilities | $58,614 | $75,402 | $(16,788) | -22.3% | | Total liabilities | $80,852 | $97,607 | $(16,755) | -17.2% | | Total stockholders' equity | $206,359 | $207,081 | $(722) | -0.3% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific periods, providing insight into operational performance Consolidated Statements of Operations Metrics (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :----- | :------- | | Revenue | $120,229 | $136,935 | $(16,706) | -12.2% | | Cost of services | $72,760 | $86,948 | $(14,188) | -16.3% | | Gross profit | $47,469 | $49,987 | $(2,518) | -5.0% | | Gross profit margin | 39.5% | 36.5% | +3.0 pp | | | Selling, general and administrative expenses | $47,916 | $48,910 | $(994) | -2.0% | | Goodwill impairment | $0 | $3,855 | $(3,855) | -100.0% | | Loss from operations | $(1,988) | $(4,803) | $2,815 | -58.6% | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | | Basic net loss per common share | $(0.07) | $(0.17) | $0.10 | -58.8% | | Diluted net loss per common share | $(0.07) | $(0.17) | $0.10 | -58.8% | | Cash dividends declared per common share | $0.07 | $0.14 | $(0.07) | -50.0% | [Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the total comprehensive loss, including net loss and other comprehensive income or loss items, for the specified periods Consolidated Statements of Comprehensive Loss Metrics (in thousands) | Metric (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :-------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | | Foreign currency translation adjustment gain, net of tax | $767 | $831 | $(64) | -7.7% | | Total comprehensive loss | $(1,638) | $(4,876) | $3,238 | -66.4% | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity accounts, including common stock, additional paid-in capital, accumulated deficit, and treasury stock Consolidated Statements of Stockholders' Equity Metrics (in thousands) | Metric (in thousands) | Balances at May 31, 2025 | Balances at August 30, 2025 | Change | | :-------------------- | :----------------------- | :-------------------------- | :----- | | Common Stock (Amount) | $370 | $373 | $3 | | Additional Paid-in Capital | $400,180 | $403,673 | $3,493 | | Accumulated Other Comprehensive Loss | $(17,863) | $(17,096) | $767 | | Accumulated Deficit | $(121,575) | $(126,881) | $(5,306) | | Treasury Stock (Amount) | $(54,031) | $(53,710) | $321 | | Total Stockholders' Equity | $207,081 | $206,359 | $(722) | - Key changes in stockholders' equity for the three months ended August 30, 2025, include a **$2.3 million increase** from stock-based compensation expense, **$1.1 million** from ESPP share issuance, a **$2.3 million decrease** from cash dividends, and a **$2.4 million net loss**[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities, reflecting the company's liquidity and solvency Consolidated Statements of Cash Flows Metrics (in thousands) | Metric (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | | :-------------------- | :--------------------------------- | :--------------------------------- | :----- | | Net cash used in operating activities | $(7,832) | $(309) | $(7,523) | | Net cash used in investing activities | $(121) | $(10,924) | $10,803 | | Net cash used in financing activities | $(1,554) | $(7,685) | $6,131 | | Net decrease in cash and cash equivalents | $(8,629) | $(19,267) | $10,638 | | Cash and cash equivalents at end of period | $77,518 | $89,625 | $(12,107) | - The significant increase in cash used in operating activities for Q1 FY2026 was primarily due to a **$15.8 million decrease** in accrued salaries and related obligations, driven by the timing of the pay cycle and annual incentive compensation payout[184](index=184&type=chunk) - The substantial reduction in cash used in investing activities in Q1 FY2026 was mainly because the prior year period included a **$23.0 million net cash outflow** for the Reference Point acquisition, partially offset by **$12.3 million** from the sale of the Irvine office building, with no comparable large transactions in the current period[187](index=187&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information regarding the figures presented in the consolidated financial statements [Note 1. Description of the Company and its Business](index=8&type=section&id=Note%201.%20Description%20of%20the%20Company%20and%20its%20Business) This note describes Resources Connection, Inc.'s global professional services offerings and its primary markets of operation - Resources Connection, Inc. (RGP) is a global professional services firm offering On-Demand Talent, Consulting, and Outsourced Services, primarily serving CFOs and C-suite leaders[22](index=22&type=chunk) - The Company's principal markets of operations are North America, Europe & Asia Pacific[22](index=22&type=chunk) - The Company's fiscal year consists of 52 or 53 weeks, ending on the Saturday in May closest to May 31; fiscal 2026 will consist of **52 weeks**[23](index=23&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=8&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition and segment reporting - The unaudited financial statements are prepared in conformity with GAAP for interim financial information and include all necessary normal recurring adjustments[24](index=24&type=chunk) - The Company's reportable segments are On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick disclosed under 'All Other'[29](index=29&type=chunk) - Revenue is primarily recognized over time based on hours worked, net of variable consideration, with fixed-price contracts using the input method[31](index=31&type=chunk)[32](index=32&type=chunk) - The Company does not expect ASU 2025-06 (Intangibles — Goodwill and Other — Internal-Use Software) to have a material impact and is evaluating ASU 2025-05 (Financial Instruments – Credit Losses)[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 3. Revenues](index=14&type=section&id=Note%203.%20Revenues) This note provides details on contract assets and liabilities, and revenue recognized from deferred revenue Contract Assets and Liabilities (in thousands) | Metric (in thousands) | August 30, 2025 | May 31, 2025 | | :-------------------- | :-------------- | :----------- | | Contract assets | $25,100 | $30,700 | | Contract liabilities | $4,500 | $4,300 | Revenue Recognized from Deferred Revenue (in thousands) | Revenue Recognized from Deferred Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------------------------- | :--------------------------------- | :--------------------------------- | | Revenue recognized from deferred revenue | $1,800 | $600 | [Note 4. Acquisitions](index=14&type=section&id=Note%204.%20Acquisitions) This note details the acquisition of Reference Point LLC, including the cash consideration, recognized intangible assets, and goodwill - On July 1, 2024, the Company acquired Reference Point LLC, a strategy, management, and technology consulting firm for the financial services sector, for cash consideration of **$23.2 million** (net of cash acquired)[64](index=64&type=chunk) - The acquisition resulted in the recognition of **$15.7 million** in identifiable intangible assets (customer relationships, non-compete, trade name) and **$6.9 million** in goodwill, primarily attributable to expected synergies and the assembled workforce[66](index=66&type=chunk)[68](index=68&type=chunk) Acquisition Costs (in thousands) | Acquisition Costs (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------- | :--------------------------------- | :--------------------------------- | | Acquisition costs | $400 | $1,300 | [Note 5. Goodwill and Intangible Assets](index=15&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets) This note provides information on goodwill impairment, allocation, and the net carrying amount and amortization of intangible assets - No goodwill impairment was recorded for the three months ended August 30, 2025. In the first quarter of fiscal 2025, a non-cash goodwill impairment charge of **$3.9 million** was recorded for the Europe & Asia Pacific segment due to a business segment reorganization[70](index=70&type=chunk)[71](index=71&type=chunk) - As of August 30, 2025, all goodwill on the Consolidated Balance Sheet is allocated to the Outsourced Services segment[73](index=73&type=chunk) Intangible Assets (in thousands) | Intangible Assets (in thousands) | August 30, 2025 (Net Carrying Amount) | May 31, 2025 (Net Carrying Amount) | | :------------------------------- | :------------------------------------ | :--------------------------------- | | Customer contracts and relationships | $17,233 | $18,340 | | Trade names | $0 | $50 | | Non-Compete Agreements | $552 | $588 | | Total Intangible Assets, net | $17,785 | $18,978 | Amortization Expense (in thousands) | Amortization Expense (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------- | :--------------------------------- | :--------------------------------- | | Amortization expense | $1,200 | $1,500 | [Note 6. Leases](index=16&type=section&id=Note%206.%20Leases) This note details the components of lease cost, weighted-average lease terms, discount rates, and future operating lease liabilities Lease Cost Components (in thousands) | Lease Cost Components (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Operating lease cost | $1,774 | $1,727 | | Short-term lease cost | $56 | $79 | | Variable lease cost | $368 | $381 | | Sublease income | $(128) | $(179) | | Total lease cost | $2,070 | $2,008 | - As of August 30, 2025, the weighted-average remaining lease term for operating leases was **6.1 years**, and the weighted-average discount rate was **5.15%**[76](index=76&type=chunk) Future Operating Lease Liabilities (in thousands) | Future Operating Lease Liabilities (in thousands) | Amount | | :------------------------------------------------ | :----- | | 2026 (remaining nine months) | $4,891 | | 2027 | $5,149 | | 2028 | $4,727 | | 2029 | $3,879 | | 2030 | $3,148 | | Thereafter | $8,014 | | Total future lease payments | $29,808 | | Less: interest | $(4,455) | | Present value of operating lease liabilities | $25,353 | [Note 7. Long-Term Debt](index=17&type=section&id=Note%207.%20Long-Term%20Debt) This note describes the Company's new $50.0 million secured revolving credit facility, its maturity, and interest rate terms - On July 2, 2025, the Company entered into a new **$50.0 million** secured revolving credit facility (the '2025 Credit Facility') maturing on November 30, 2029, concurrently terminating the previous 2021 Credit Facility[77](index=77&type=chunk) - As of August 30, 2025, the Company had no debt outstanding under the 2025 Credit Facility and **$49.3 million** of potential remaining capacity, subject to terms and financial covenants[83](index=83&type=chunk) - The 2025 Credit Facility bears interest at Term SOFR plus a margin ranging from **1.25% to 2.50%** or Base Rate plus a margin of **0.25% to 1.50%**, depending on Consolidated EBITDA[79](index=79&type=chunk) [Note 8. Income Taxes](index=18&type=section&id=Note%208.%20Income%20Taxes) This note provides details on income tax expense, effective tax rates, and unrecognized tax benefits Income Tax Metrics | Income Tax Metric | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------- | :--------------------------------- | :--------------------------------- | | Income tax expense | $0.5 million | $1.1 million | | Effective tax rate | 24.7% | 22.7% | - The effective tax rate was negative in both quarters due to income tax expense measured against consolidated pretax losses, primarily driven by an increase in domestic and foreign valuation allowance in Q1 FY2026 and non-deductible tax adjustment on goodwill impairment in Q1 FY2025[85](index=85&type=chunk) - The Company's total liability for unrecognized gross tax benefits, including accrued interest and penalties, was **$1.1 million** as of August 30, 2025, with no anticipated cash payments within the next 12 months[87](index=87&type=chunk) [Note 9. Stockholders' Equity](index=18&type=section&id=Note%209.%20Stockholders'%20Equity) This note details the remaining availability for stock repurchases and the declared quarterly cash dividends - As of August 30, 2025, approximately **$79.2 million** remained available for future repurchases under the Company's Stock Repurchase Programs, with no shares purchased in Q1 FY2026[89](index=89&type=chunk) - The Board of Directors approved a regular quarterly dividend of **$0.07 per share** for Q1 FY2026, a **50% reduction** from the **$0.14 per share** declared in Q1 FY2025[13](index=13&type=chunk)[90](index=90&type=chunk) [Note 10. Stock-Based Compensation Plans](index=19&type=section&id=Note%2010.%20Stock-Based%20Compensation%20Plans) This note outlines stock-based compensation expense, shares issued under the ESPP, and unrecognized compensation costs for various equity awards Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------------------- | :--------------------------------- | :--------------------------------- | | Stock-based compensation expense | $2,300 | $1,600 | - The Company issued **240,674 shares** under the Employee Stock Purchase Plan (ESPP) in Q1 FY2026, compared to **229,341 shares** in Q1 FY2025, with **589,714 shares** remaining available for issuance[98](index=98&type=chunk) Unrecognized Compensation Costs (in thousands) | Unrecognized Compensation Costs (in thousands) | Amount | Weighted-Average Recognition Period | | :--------------------------------------------- | :----- | :---------------------------------- | | Restricted Stock Awards (RSAs) | $1,900 | 1.53 years | | Equity-classified Restricted Stock Units (RSUs) | $8,100 | 2.07 years | | Liability-classified Restricted Stock Units (RSUs) | $500 | 1.70 years | | Performance Stock Units (PSUs) | $1,200 | 1.75 years | [Note 11. Commitments and Contingencies](index=22&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note addresses the company's legal matters and management's assessment of their potential financial impact - Management believes that all legal matters, if disposed of unfavorably, would not have a material adverse effect on the Company's financial position, cash flows, or results of operations[106](index=106&type=chunk) [Note 12. Segment Information and Enterprise Reporting](index=22&type=section&id=Note%2012.%20Segment%20Information%20and%20Enterprise%20Reporting) This note provides a breakdown of the company's reportable segments, including revenue and Adjusted EBITDA by segment and geographic revenue - The Company's reportable segments are On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick reported as 'All Other'[109](index=109&type=chunk) Segment Revenue (in thousands) | Segment Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :----------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | On-Demand Talent | $44,442 | $52,473 | $(8,031) | -15.3% | | Consulting | $43,641 | $55,025 | $(11,384) | -20.7% | | Europe & Asia Pacific | $19,888 | $17,983 | $1,905 | 10.6% | | Outsourced Services | $9,994 | $9,491 | $503 | 5.3% | | All Other | $2,264 | $1,963 | $301 | 15.3% | | Total consolidated revenue | $120,229 | $136,935 | $(16,706) | -12.2% | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | On-Demand Talent | $4,422 | $2,559 | $1,863 | 72.8% | | Consulting | $5,045 | $7,753 | $(2,708) | -34.9% | | Europe & Asia Pacific | $837 | $227 | $610 | 268.7% | | Outsourced Services | $2,330 | $1,394 | $936 | 67.1% | | All Other | $183 | $(467) | $650 | 139.2% | Geographic Revenue (in thousands) | Geographic Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | United States | $95,556 | $112,452 | | International | $24,673 | $24,483 | | Total | $120,229 | $136,935 | [Note 13. Subsequent Events](index=26&type=section&id=Note%2013.%20Subsequent%20Events) This note discloses a global workforce reduction initiated after the reporting period and its expected financial charges - On September 30, 2025, the Company initiated a global reduction in its management and administrative workforce, expecting estimated charges of approximately **$2.1 million** in Q2 FY2026, primarily for one-time employee termination benefits[116](index=116&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of the Company's financial condition, results of operations, and liquidity and capital resources for the three months ended August 30, 2025, compared to the prior year period. It covers strategic focus areas, market trends, critical accounting policies, non-GAAP financial measures, and a breakdown of operating results by segment and cash flow activities [Forward-Looking Statements](index=27&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements regarding expectations for operating segments, macroeconomic environment, costs, liabilities, business strategies, growth, and future performance, identified by words like 'anticipates,' 'expects,' 'will,' or similar terms[119](index=119&type=chunk) - These statements are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, including economic downturns, market competition, talent retention, and compliance risks[120](index=120&type=chunk) [Overview](index=28&type=section&id=Overview) This section provides a general description of RGP as a global professional services firm and outlines its strategic reorganization and focus areas - RGP is a global professional services firm delivering flexible solutions through on-demand resourcing, strategic and execution consulting, and fully outsourced services, with core capabilities spanning Enterprise Strategy & Operational Performance; Finance & Accounting; Digital, Technology & Data; and Governance, Risk & Compliance[122](index=122&type=chunk) - In Q1 FY2025, the Company reorganized into distinct business units: On-Demand Talent, Consulting, Europe & Asia Pacific, Outsourced Services, and Sitrick (All Other), focusing on CFO Advisory and Digital, Data and Cloud, and completed technology modernization in North America[123](index=123&type=chunk) [Fiscal 2026 Strategic Focus Areas](index=28&type=section&id=Fiscal%202026%20Strategic%20Focus%20Areas) This section outlines the company's key strategic priorities for fiscal year 2026, including expanding cross-sell opportunities and optimizing high-growth solutions - The Company's fiscal 2026 strategic focus areas include expanding cross-sell opportunities across its diversified services platform (On-Demand Talent, Consulting, Outsourced Services)[124](index=124&type=chunk)[126](index=126&type=chunk) - Other key focus areas are optimizing high-growth solutions (e.g., ERP/cloud finance modernization, AI adoption) and evolving talent strategy, further leveraging value-based pricing, and driving improvement in cost structure[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Market Trends and Uncertainties](index=29&type=section&id=Market%20Trends%20and%20Uncertainties) This section discusses the impact of uncertain macroeconomic conditions on the company's financial results and professional services spending - Uncertain macroeconomic conditions, including ambiguity around interest rates, softening labor markets, currency fluctuations, and policy changes, have created significant uncertainty in the global economy and adversely impacted financial results[130](index=130&type=chunk) - The Company observes caution in professional services spending, and persistent adverse conditions could lead to further declines in billable hours and bill rates[130](index=130&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no material changes to the company's critical accounting policies or estimates since the last annual report - There have been no material changes in the Company's critical accounting policies or underlying estimates and assumptions from those described in its Fiscal Year 2025 Form 10-K[132](index=132&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures such as Same-day constant currency revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to evaluate performance - The Company uses non-GAAP financial measures like Same-day constant currency revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to assess financial and operating performance and evaluate revenue trends on a comparable basis[133](index=133&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) Non-GAAP Financial Metrics (in thousands, except %) | Non-GAAP Metric (in thousands, except %) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Same-day constant currency revenue | $117,969 | $136,935 | $(18,966) | -13.9% | | Adjusted EBITDA | $3,065 | $2,320 | $745 | 32.1% | | Adjusted EBITDA Margin | 2.5% | 1.7% | +0.8 pp | | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the consolidated operating results, including revenue, cost of services, gross profit, and selling, general and administrative expenses Consolidated Operating Results (in thousands, except %) | Consolidated Operating Results (in thousands, except %) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :---------------------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Revenue | $120,229 | $136,935 | $(16,706) | -12.2% | | Cost of services | $72,760 | $86,948 | $(14,188) | -16.3% | | Gross profit | $47,469 | $49,987 | $(2,518) | -5.0% | | Selling, general and administrative expenses | $47,916 | $48,910 | $(994) | -2.0% | | Loss from operations | $(1,988) | $(4,803) | $2,815 | -58.6% | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | - Revenue decreased by **12.2%** year-over-year, or **13.9%** on a same-day constant currency basis, primarily due to a **14.3% decline** in billable hours amidst a choppy demand environment, partially offset by a **2.2% increase** in average bill rates[145](index=145&type=chunk) - Cost of services as a percentage of revenue improved to **60.5%** from **63.5%** year-over-year, driven by an improved pay/bill ratio and lower consultant costs[147](index=147&type=chunk) - Selling, general and administrative expenses decreased by **$1.0 million**, primarily due to reduced employee compensation, technology transformation costs, and business support costs, partially offset by the absence of a gain on sale of assets recorded in the prior year[150](index=150&type=chunk) [Operating Results of Segments](index=34&type=section&id=Operating%20Results%20of%20Segments) This section analyzes the revenue and Adjusted EBITDA performance of the On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services segments - On-Demand Talent revenue declined by **15.3%** due to lower demand and a softer labor market, while Adjusted EBITDA increased by **72.8%** due to decreased segment expenses[162](index=162&type=chunk)[167](index=167&type=chunk) - Consulting revenue decreased by **20.7%** due to a **28.4% decrease** in billable hours, despite an **11.1% increase** in average bill rates from value-based pricing, leading to a **34.9% decrease** in Adjusted EBITDA[163](index=163&type=chunk)[168](index=168&type=chunk) - Europe & Asia Pacific revenue increased by **10.6%** (**5.4%** on a same-day constant currency basis), driven by a **9.6% increase** in average bill rates and growing client demand in Europe, resulting in a **268.7% increase** in Adjusted EBITDA[164](index=164&type=chunk)[169](index=169&type=chunk) - Outsourced Services revenue grew by **5.3%** (**3.7%** on a same-day constant currency basis) due to increased billable hours, and Adjusted EBITDA increased by **67.1%** primarily from higher gross profit[165](index=165&type=chunk)[170](index=170&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, cash position, new credit facility, purchase obligations, and future funding outlook - Primary liquidity sources include cash from operating activities and the senior secured revolving credit facility. As of August 30, 2025, the Company had **$77.5 million** in cash and cash equivalents, with **$41.3 million** held in international operations[172](index=172&type=chunk) - The Company entered into a new 2025 Credit Facility on July 2, 2025, providing a secured revolving loan up to **$50.0 million**, maturing on November 30, 2029, with no debt outstanding as of August 30, 2025[174](index=174&type=chunk)[176](index=176&type=chunk) - Non-cancellable purchase obligations total **$8.5 million**, primarily for licensing arrangements, with **$4.0 million** due in fiscal 2026[178](index=178&type=chunk)[179](index=179&type=chunk) - The Company believes current cash, ongoing cash flows from operations, and the 2025 Credit Facility will provide sufficient funds for working capital and capital expenditure needs for at least the next 12 months, despite macroeconomic uncertainties[181](index=181&type=chunk) [Operating Activities](index=38&type=section&id=Operating%20Activities) This section analyzes the net cash used in operating activities and the primary drivers of changes between periods Cash Flow from Operating Activities (in thousands) | Cash Flow from Operating Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :----------------------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash used in operating activities | $(7,832) | $(309) | - The increase in cash used in operating activities was primarily driven by a **$15.8 million decrease** in accrued salaries and related obligations due to the timing of the pay cycle and annual incentive compensation payout[184](index=184&type=chunk) [Investing Activities](index=39&type=section&id=Investing%20Activities) This section details the net cash used in investing activities, highlighting the impact of acquisitions and asset sales Cash Flow from Investing Activities (in thousands) | Cash Flow from Investing Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash used in investing activities | $(121) | $(10,924) | - Net cash used in investing activities significantly decreased from **$10.9 million** in Q1 FY2025 to **$0.1 million** in Q1 FY2026. The prior period included a **$23.0 million net cash outflow** for the Reference Point acquisition and **$12.3 million net proceeds** from the sale of the Irvine office building[187](index=187&type=chunk) [Financing Activities](index=39&type=section&id=Financing%20Activities) This section analyzes the net cash used in financing activities, focusing on changes related to dividends and stock repurchases Cash Flow from Financing Activities (in thousands) | Cash Flow from Financing Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash used in financing activities | $(1,554) | $(7,685) | - Net cash used in financing activities decreased significantly, primarily due to lower cash dividend payments (**$2.3 million** vs **$4.7 million**) and the absence of common stock repurchases (**$0** vs **$5.0 million**) compared to the prior year[188](index=188&type=chunk)[189](index=189&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to market risks, primarily from fluctuations in interest rates and foreign currency exchange rates, and discusses how these risks are managed [Interest Rate Risk](index=39&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to interest rate fluctuations on its cash and borrowings, and the expected impact of rate changes - The Company is exposed to market risks from fluctuations in interest rates affecting its cash and cash equivalents and borrowings under the 2025 Credit Facility[190](index=190&type=chunk) - As of August 30, 2025, the Company had **$77.5 million** in cash and cash equivalents and no outstanding borrowings under its 2025 Credit Facility, with a **10% decline** in interest rates not expected to materially impact financial position or results[191](index=191&type=chunk)[192](index=192&type=chunk) [Foreign Currency Exchange Rate Risk](index=39&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) This section details the company's exposure to foreign currency exchange rate fluctuations due to international operations and cash holdings - Approximately **20.5%** of the Company's revenues for Q1 FY2026 were generated outside the U.S., making operating results subject to foreign currency exchange rate fluctuations[193](index=193&type=chunk) - As of August 30, 2025, **53.3%** of cash and cash equivalents were denominated in foreign currencies (Euros, Mexican Pesos, Canadian Dollar, Chinese Yuan, Indian Rupee, Japanese Yen, and British Pound Sterling)[194](index=194&type=chunk) - The Company does not currently use financial hedges to mitigate foreign currency fluctuation risks, believing its economic exposure has not been material[195](index=195&type=chunk) [ITEM 4. Controls and Procedures](index=41&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by its principal officers - As of August 30, 2025, the Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective[197](index=197&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the fiscal quarter - There has been no material change in the Company's internal control over financial reporting during the fiscal quarter ended August 30, 2025[198](index=198&type=chunk) PART II—OTHER INFORMATION [ITEM 1A. Risk Factors](index=42&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that there have been no material changes to the Company's risk factors since its last annual report - There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A of its Fiscal Year 2025 Form 10-K[200](index=200&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities and use of proceeds during the reporting period[201](index=201&type=chunk) [ITEM 5. Other Information](index=42&type=section&id=ITEM%205.%20Other%20Information) This section confirms that there are no other material information or insider trading arrangements to report - There were no insider trading arrangements to report[202](index=202&type=chunk) [ITEM 6. Exhibits](index=43&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with or incorporated by reference in this Quarterly Report on Form 10-Q, including certifications and financial statements in Inline XBRL format - The report includes certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and unaudited interim consolidated financial statements formatted in Inline XBRL (Exhibit 101)[204](index=204&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section contains the duly authorized signatures of the Company's President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, affirming the filing of the report - The report is signed by Kate W. Duchene, President and Chief Executive Officer, and Jennifer Ryu, Executive Vice President and Chief Financial Officer, on October 8, 2025[208](index=208&type=chunk)

Resources Connection Reports Financial Results for First Quarter Fiscal 2026 Management Commentary "First quarter results exceeded our outlook ranges on all fronts and we continue to make progress to transform our business to be more integrated, diversified and resilient," said Kate W. Duchene, Chief Executive Officer. "We are engaging with clients on more consulting opportunities which have higher bill rates, larger deal size and often create more extension and cross selling. We are increasingly becoming a ...

DALLAS--(BUSINESS WIRE)--Resources Connection, Inc. (Nasdaq: RGP) (the "Company†), a professional services firm, today announced its financial results for its first quarter of fiscal 2026 ended August 30, 2025. First Quarter Fiscal 2026 Highlights Compared to Prior Year Quarter: Revenue of $120.2 million compared to $136.9 million Same-day constant currency revenue, a non-GAAP measure, declined by 13.9% Significant improvement in gross margin to 39.5%, from 36.5% Selling, general and administra. ...