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Resources nection(RGP) - 2025 Q4 - Annual Report
2025-07-28 20:41
Part I [Business](index=4&type=section&id=ITEM%201.%20BUSINESS) RGP is a global professional services firm specializing in consulting, on-demand talent, and outsourced services, serving over 1,600 clients and reorganizing into new operating segments - RGP is a professional services firm specializing in consulting, on-demand resourcing, and outsourced services for clients navigating transformation, transactions, or compliance[17](index=17&type=chunk) - The company serves over **1,600 clients** globally, including **88% of the Fortune 100**, with a team of approximately **3,100 professionals** as of May 2025[19](index=19&type=chunk) - In fiscal 2025, the company reorganized its business into four main reportable segments: On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services[20](index=20&type=chunk)[21](index=21&type=chunk) - On July 1, 2024, RGP acquired Reference Point LLC, an advisory firm for financial institutions, which is now part of its Consulting segment[22](index=22&type=chunk) - The company's growth strategy focuses on increasing penetration of its existing client base, growing its client base, optimizing service offerings with a focus on digital capabilities, and engaging in strategic acquisitions[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) [Risk Factors](index=13&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks from economic downturns, intense competition, human capital challenges, operational issues, cybersecurity threats, and evolving data privacy regulations - Economic downturns, inflation, geopolitical conflicts (such as in Ukraine and the Middle East), and trade friction could reduce demand for the company's services and adversely affect financial results[77](index=77&type=chunk)[78](index=78&type=chunk) - The professional services market is highly competitive and fragmented, with competitors including consulting firms, accounting firms, independent contractors, and staffing firms, some of whom have greater financial resources and name recognition[81](index=81&type=chunk)[83](index=83&type=chunk) - The business depends on attracting and retaining highly qualified consultants, and failure to do so could be caused by an inability to offer challenging projects or competitive compensation[87](index=87&type=chunk) - Technological advances, particularly in AI and automation, may reduce demand for the company's services or enable competitors to develop new offerings, potentially bypassing the need for external experts[92](index=92&type=chunk)[93](index=93&type=chunk) - Cybersecurity incidents, such as data breaches or ransomware attacks, could disrupt business operations, damage the company's reputation, and result in significant costs for remediation and potential legal penalties[114](index=114&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk) - Failure to comply with evolving and complex data privacy laws, such as GDPR and various U.S. state laws, could result in significant civil and criminal penalties and damage the company's reputation[124](index=124&type=chunk)[126](index=126&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments to report - Not applicable[148](index=148&type=chunk) [Cybersecurity](index=25&type=section&id=ITEM%201C.%20CYBERSECURITY) The company manages cybersecurity risks through an enterprise-wide strategy, governed by a CSIRT and Board oversight, employing various risk management practices - The company has an enterprise-wide strategy to manage cybersecurity risks, including an Information Assurance Program and a Cybersecurity Incident Response Plan[149](index=149&type=chunk)[150](index=150&type=chunk) - Cybersecurity governance is managed by a Cybersecurity Incident Response Team (CSIRT) led by the Chief Information Officer (CIO) and overseen by the Board's Audit Committee, which receives quarterly updates[157](index=157&type=chunk)[158](index=158&type=chunk) - Risk management practices include third-party penetration testing, cybersecurity awareness training for employees, and phishing test campaigns[153](index=153&type=chunk) - As of the report date, the company states that known risks from cybersecurity threats have not materially affected its business, operations, or financial condition[155](index=155&type=chunk) [Properties](index=26&type=section&id=ITEM%202.%20PROPERTIES) The company sold its Irvine building for **$13.0 million**, relocated its principal office to Dallas, and maintains leased offices in over 38 cities globally - The company sold its building in Irvine, California for **$13.0 million** in August 2024 and entered into a new lease in Irvine effective November 1, 2024[159](index=159&type=chunk) - Effective November 1, 2024, the company's principal executive office was relocated to Dallas, Texas[160](index=160&type=chunk) - As of May 31, 2025, the company leases facilities in over **38 cities** in **14 countries**, including major business centers such as New York, London, Tokyo, and Shanghai[161](index=161&type=chunk) [Legal Proceedings](index=26&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is not currently subject to any material legal proceedings - The company is not currently subject to any material legal proceedings[163](index=163&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[164](index=164&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on Nasdaq, with a reduced quarterly dividend and **$79.2 million** remaining for repurchases, while stock performance has underperformed benchmarks - The company's common stock is listed on The Nasdaq Global Select Market under the symbol "RGP"[166](index=166&type=chunk) - The quarterly dividend was reduced from **$0.14 per share** to **$0.07 per share**, approved on April 29, 2025[167](index=167&type=chunk) - As of May 31, 2025, approximately **$79.2 million** remained available for future stock repurchases under the company's authorized programs, with no shares repurchased in the fourth quarter of fiscal 2025[169](index=169&type=chunk)[170](index=170&type=chunk) 5-Year Cumulative Total Return Comparison | | May 29, 2020 | May 31, 2025 | | :--- | :--- | :--- | | **Resources Connection, Inc.** | $100.00 | $57.82 | | **Russell 3000** | $100.00 | $204.11 | | **SIC Code 8742 - Management Consulting** | $100.00 | $191.50 | | **Peer Group** | $100.00 | $204.25 | [Reserved](index=29&type=section&id=ITEM%206.%20RESERVED) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Fiscal 2025 saw a **12.9% revenue decrease** to **$551.3 million** and a **$191.8 million net loss** due to goodwill impairment, with strategic focus on new segments and digital capabilities Fiscal Year 2025 vs. 2024 Financial Performance | Metric | FY 2025 | FY 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $551.3M | $632.8M | ($81.5M) | (12.9)% | | **Gross Profit** | $207.4M | $246.1M | ($38.7M) | (15.7)% | | **Net Income (Loss)** | ($191.8M) | $21.0M | ($212.8M) | (1013.3)% | | **Adjusted EBITDA** | $23.5M | $51.5M | ($28.0M) | (54.4)% | - The significant net loss in fiscal 2025 was primarily driven by a non-cash goodwill impairment charge of **$194.4 million**[240](index=240&type=chunk) - Revenue decline was attributed to reduced client spending due to global macroeconomic uncertainty, protracted sales cycles, and attrition within the sales team following strategic changes[233](index=233&type=chunk) - The company's strategic focus in fiscal 2025 was on evolving its new business segments (On-Demand Talent, Consulting, Outsourced Services), launching a new brand identity, and enhancing digital and AI capabilities, including the acquisition of Reference Point[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - As of May 31, 2025, the company had **$86.1 million** in cash and cash equivalents, and subsequently entered into a new **$50.0 million** secured revolving loan facility on July 2, 2025[280](index=280&type=chunk)[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are from interest rate fluctuations on cash and variable-rate debt, and foreign currency exposure from **18.2%** international revenue - The company's primary market risks are from fluctuations in interest rates and foreign currency exchange rates[302](index=302&type=chunk)[305](index=305&type=chunk) - Interest rate risk exposure relates to earnings on **$86.1 million** of cash and cash equivalents and potential borrowings under its new variable-rate credit facility, with no borrowings outstanding as of May 31, 2025[303](index=303&type=chunk)[304](index=304&type=chunk) - Approximately **18.2%** of fiscal 2025 revenues were generated outside the U.S., exposing operating results to foreign currency fluctuations, though the company does not currently use financial hedges to mitigate this risk[305](index=305&type=chunk)[307](index=307&type=chunk) [Financial Statements and Supplementary Data](index=50&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the company's audited consolidated financial statements for fiscal year 2025, including balance sheets, income statements, and cash flow statements, along with notes Consolidated Balance Sheet Summary (in thousands) | | May 31, 2025 | May 25, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $203,686 | $240,755 | | **Goodwill** | $28,757 | $216,579 | | **Total Assets** | $304,688 | $510,914 | | **Total Current Liabilities** | $75,402 | $72,433 | | **Total Liabilities** | $97,607 | $92,151 | | **Total Stockholders' Equity** | $207,081 | $418,763 | Consolidated Statement of Operations Summary (in thousands) | | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | **Revenue** | $551,331 | $632,801 | $775,643 | | **Gross Profit** | $207,424 | $246,068 | $313,142 | | **Goodwill Impairment** | $194,409 | $0 | $2,955 | | **Income (Loss) from Operations** | ($196,757) | $28,776 | $72,788 | | **Net Income (Loss)** | ($191,780) | $21,034 | $54,359 | Consolidated Statement of Cash Flows Summary (in thousands) | | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $18,899 | $21,919 | $81,636 | | **Net Cash from Investing Activities** | ($13,571) | ($8,554) | $3,943 | | **Net Cash from Financing Activities** | ($27,731) | ($20,709) | ($71,914) | | **Net (Decrease) Increase in Cash** | ($22,745) | ($7,892) | $12,560 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=90&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There were no changes in or disagreements with accountants on accounting and financial disclosure - None[509](index=509&type=chunk) [Controls and Procedures](index=90&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and internal control over financial reporting were effective as of May 31, 2025, a conclusion audited by RSM US LLP - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of May 31, 2025[510](index=510&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of May 31, 2025, based on the 2013 COSO framework[513](index=513&type=chunk) - The independent registered public accounting firm, RSM US LLP, audited and confirmed the effectiveness of the company's internal control over financial reporting as of May 31, 2025[514](index=514&type=chunk) [Other Information](index=91&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) There is no other information to report in this section - None[515](index=515&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=91&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to the company - Not applicable[516](index=516&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=91&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 proxy statement - The required information for this item is incorporated by reference from the company's proxy statement for the 2025 Annual Meeting of Stockholders[519](index=519&type=chunk) [Executive Compensation](index=91&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information on executive and director compensation is incorporated by reference from the 2025 proxy statement - The required information for this item is incorporated by reference from the company's proxy statement for the 2025 Annual Meeting of Stockholders[520](index=520&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=91&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Security ownership information is incorporated by reference, with **3,547,662** securities issuable under equity plans and **2,138,601** remaining for future issuance - Information on security ownership is incorporated by reference from the 2025 proxy statement[521](index=521&type=chunk) Equity Compensation Plan Information as of May 31, 2025 | Plan Category | Securities to be Issued Upon Exercise (a) | Weighted-Average Exercise Price (b) | Securities Remaining for Future Issuance (c) | | :--- | :--- | :--- | :--- | | **Approved by Security Holders** | 3,547,662 | $16.89 | 2,138,601 | | **Not Approved by Security Holders** | - | - | - | | **Total** | 3,547,662 | $16.89 | 2,138,601 | [Certain Relationships and Related Transactions, and Director Independence](index=92&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information on related party transactions and director independence is incorporated by reference from the 2025 proxy statement - The required information for this item is incorporated by reference from the company's proxy statement for the 2025 Annual Meeting of Stockholders[526](index=526&type=chunk) [Principal Accountant Fees and Services](index=92&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information on principal accountant fees and services from RSM US LLP is incorporated by reference from the 2025 proxy statement - The company's independent registered public accounting firm is RSM US LLP[527](index=527&type=chunk) - Information regarding principal accountant fees and services is incorporated by reference from the 2025 proxy statement[528](index=528&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=93&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists financial statements and exhibits filed as part of the Form 10-K, with consolidated financial statements in Item 8 - This section includes the list of financial statements filed in Item 8 and the Exhibit Index[531](index=531&type=chunk)[532](index=532&type=chunk) [Form 10-K Summary](index=95&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item is not applicable - Not applicable[536](index=536&type=chunk)
Resources Connection (RGP) Q4 Earnings and Revenues Surpass Estimates
ZACKS· 2025-07-24 22:25
Group 1 - Resources Connection (RGP) reported quarterly earnings of $0.16 per share, significantly exceeding the Zacks Consensus Estimate of $0.01 per share, although this is a decrease from $0.28 per share a year ago, representing an earnings surprise of +1,500.00% [1] - The company posted revenues of $139.34 million for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 3.75%, but down from $148.2 million year-over-year [2] - Resources Connection has outperformed consensus EPS estimates three times over the last four quarters, indicating a positive trend in earnings performance [2] Group 2 - The stock has underperformed the market, losing about 35.5% since the beginning of the year, while the S&P 500 has gained 8.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.03 on revenues of $130.5 million, and for the current fiscal year, it is $0.46 on revenues of $564.76 million [7] Group 3 - The Zacks Industry Rank indicates that the Staffing Firms industry is currently in the top 35% of over 250 Zacks industries, suggesting a favorable outlook for companies within this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]
Resources nection(RGP) - 2025 Q4 - Earnings Call Transcript
2025-07-24 22:00
Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $139.3 million, with a gross margin of 40.2%, both exceeding the high end of the outlook range [29][36] - Adjusted EBITDA was $9.8 million, representing a 7.1% adjusted EBITDA margin, marking the strongest quarterly performance in fiscal 2025 [29] - Average bill rate increased by 4% year over year, with the enterprise-wide average bill rate reaching $125, reflecting a disciplined value-based pricing strategy [11][32] Business Line Data and Key Metrics Changes - Consulting segment revenue was $51 million, a decline of 14% year over year, with adjusted EBITDA of $8.3 million, a margin of 16% [34] - On-demand segment revenue was $53 million, down 16% compared to the prior year, with adjusted EBITDA of $6.4 million, maintaining a 12% margin [35] - Outsourced services segment revenue grew by 4% year over year to $11.3 million, with adjusted EBITDA of $3.1 million, a margin of 28% [35] Market Data and Key Metrics Changes - Europe and Asia Pacific segment revenue was $21.3 million, flat compared to the prior year, with adjusted EBITDA of $1.9 million, a margin of 9% [35] - The UK was highlighted as a strong market within Europe, contributing to revenue stability and high client retention at 90% year over year [13] - Asia Pacific revenue growth was 3% sequentially, primarily driven by Japan, despite challenges in China [13] Company Strategy and Development Direction - The company is focused on evolving from a staffing-centric model to a value-added consulting and digital solutions firm, enhancing shareholder value through disciplined operations and capital allocation strategies [17] - There is a strong emphasis on integrating AI technologies to improve operational efficiency and client engagement [10] - The strategy includes deepening client relationships and expanding cross-selling opportunities, particularly in consulting and outsourced services [22][26] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the professional services marketplace in North America, anticipating growth driven by digital transformation initiatives [9] - The company is focused on pipeline generation and conversion, with expectations for revenue in Q1 2026 to be between $115 million and $120 million [38] - Management acknowledged macroeconomic uncertainties but remains committed to executing their strategy to deliver value to clients [28] Other Important Information - The company appointed two new board members to strengthen alignment with long-term investors and support its strategic evolution [16] - A non-cash goodwill impairment charge of $69 million was recorded in the consulting segment due to business performance and market capitalization reduction [36] Q&A Session Summary Question: Can you provide more color on the gross margin beat? - Management attributed the gross margin improvement to higher average bill rates and favorable medical claims [44][47] Question: How is cross-selling progressing? - Management noted an uplift in existing clients where on-demand talent has transitioned to deeper consulting capabilities, indicating potential for future growth [49][50] Question: What are the expected trends for consulting and on-demand talent? - Management expects stability in the on-demand segment but acknowledges that consulting is impacted by project delays [60][62] Question: Can you clarify the pipeline shrinkage? - Management explained that the pipeline contracted due to a focus on funnel discipline and the abandonment of deals as clients reassess their needs [66]
Resources nection(RGP) - 2025 Q4 - Annual Results
2025-07-24 20:09
[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Kate W. Duchene noted Q4 revenue and gross margin exceeded expectations, driven by sequential growth, improved bill rates, and strong client retention - The company **exceeded its outlook** for revenue and gross margin despite market challenges[5](index=5&type=chunk) - Strategic focus includes cross-selling, cost efficiency via new systems, and targeting larger sales opportunities[5](index=5&type=chunk) - Achieved **sequential revenue growth** and **improved average bill rates** across multiple segments[5](index=5&type=chunk) - **Client retention rates** remain **steady and strong**[5](index=5&type=chunk) [Fourth Quarter Fiscal 2025 Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Highlights) Q4 FY2025 revenue was **$139.3 million**, with a **$73.3 million net loss** due to goodwill impairment, but **gross margin remained 40.2%** Q4 FY2025 Key Financial Metrics (vs. Q4 FY2024) | Metric | Q4 FY2025 | Q4 FY2024 | | :--- | :--- | :--- | | Revenue | $139.3 million | $148.2 million | | Gross Margin | 40.2% | 40.2% | | Net Income (Loss) | $(73.3) million | $10.5 million | | Goodwill Impairment | $69.0 million | - | | GAAP Diluted EPS | $(2.23) | $0.31 | | Adjusted Diluted EPS | $0.16 | $0.28 | | Adjusted EBITDA | $9.8 million | $13.1 million | [Full Fiscal Year 2025 Highlights](index=1&type=section&id=Full%20Fiscal%20Year%202025%20Highlights) FY2025 revenue was **$551.3 million**, with a **$191.8 million net loss** due to goodwill impairment, while **SG&A decreased 3.3%** Full Year FY2025 Key Financial Metrics (vs. FY2024) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Revenue | $551.3 million | $632.8 million | | Gross Margin | 37.6% | 38.9% | | Net Income (Loss) | $(191.8) million | $21.0 million | | Goodwill Impairment | $194.4 million | - | | GAAP Diluted EPS | $(5.80) | $0.62 | | Adjusted Diluted EPS | $0.23 | $0.93 | | Adjusted EBITDA | $23.5 million | $51.5 million | | Cash & Equivalents | $86.1 million | $108.9 million | [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) [Fourth Quarter Fiscal 2025 Results](index=2&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Results) Q4 FY2025 revenue declined to **$139.3 million** due to demand issues, with a **$73.3 million net loss** from a **$69.0 million goodwill impairment** - Revenue was **$139.3 million**, a **YoY decrease** of **11.4%** on a same-day constant currency basis, due to challenging demand[7](index=7&type=chunk) - Average bill rate **improved by 4.2% YoY** due to value-based pricing, despite a **10.5% decrease in billable hours**[7](index=7&type=chunk) - Gross margin remained **strong and consistent** at **40.2%**[8](index=8&type=chunk) - SG&A expenses increased to **$50.6 million** due to a prior-year **$4.4 million favorable adjustment** from the CloudGo acquisition[9](index=9&type=chunk) - A **non-cash goodwill impairment charge** of **$69.0 million** was recorded in the Consulting segment[10](index=10&type=chunk) - The company reported a **net loss of $73.3 million**, primarily due to the goodwill impairment, compared to **$10.5 million net income** prior year[12](index=12&type=chunk) [Full Fiscal Year 2025 Results](index=2&type=section&id=Full%20Fiscal%20Year%202025%20Results) FY2025 revenue **decreased 12.9%** to **$551.3 million**, with a **$194.4 million goodwill impairment** driving the net loss despite **3.3% lower SG&A** - Annual revenue was **$551.3 million**, a **12.9% decrease** from prior year (**13.9%** on a same-day constant currency basis)[13](index=13&type=chunk) - Gross margin **decreased to 37.6%** from **38.9%** due to lower salaried consultant utilization[14](index=14&type=chunk) - SG&A expenses **improved by 3.3%** to **$202.0 million**, driven by lower compensation and a **$3.4 million gain** on asset sale[15](index=15&type=chunk) - A total **non-cash goodwill impairment charge** of **$194.4 million** was recorded across On-Demand Talent, Consulting, and Europe & Asia segments[16](index=16&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Summary of Consolidated Financial Results](index=5&type=section&id=Summary%20of%20Consolidated%20Financial%20Results) FY2025 consolidated results show a significant profitability decline, with revenue falling to **$551.3 million** and a **$191.8 million net loss** due to impairment Consolidated Income Statement (in thousands) | Line Item | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Revenue | $551,331 | $632,801 | | Gross Profit | $207,424 | $246,068 | | Goodwill Impairment | $194,409 | $0 | | Income (Loss) from Operations | $(196,757) | $28,776 | | Net Income (Loss) | $(191,780) | $21,034 | | Diluted EPS | $(5.80) | $0.62 | [Selected Balance Sheet and Cash Flow Information](index=24&type=section&id=Selected%20Balance%20Sheet%20and%20Cash%20Flow%20Information) As of May 31, 2025, total assets significantly decreased to **$304.7 million** due to impairment, with **cash at $86.1 million** and **operating cash flow of $18.9 million** Selected Balance Sheet Data (in thousands) | Line Item | May 31, 2025 | May 25, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $86,147 | $108,892 | | Total assets | $304,688 | $510,914 | | Total liabilities | $97,607 | $92,151 | | Total stockholders' equity | $207,081 | $418,763 | Selected Cash Flow Data (in thousands) | Line Item | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Cash flow -- operating activities | $18,899 | $21,919 | | Cash flow -- investing activities | $(13,571) | $(8,554) | | Cash flow -- financing activities | $(27,731) | $(20,709) | [Segment Analysis](index=20&type=section&id=Segment%20Analysis) [Segment Definitions](index=20&type=section&id=Segment%20Definitions) The company operates four segments: On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick in 'All Other' - The company's reportable segments include **On-Demand Talent**, **Consulting**, **Outsourced Services**, and **Europe & Asia Pacific**[48](index=48&type=chunk) - **On-Demand Talent** provides businesses with expert consultants[49](index=49&type=chunk) - **Consulting** drives transformation in finance, technology, and supply chain across people, processes, and technology[49](index=49&type=chunk) - **Outsourced Services** (Countsy) offers finance, accounting, and HR services to startups and scaling enterprises[49](index=49&type=chunk) [Segment Revenue and Performance](index=5&type=section&id=Segment%20Revenue%20and%20Performance) FY2025 saw revenue declines in On-Demand Talent and Consulting, while Outsourced Services grew; Consulting was largest at **$219.2 million** revenue Revenue by Segment (in thousands) | Segment | FY 2025 | FY 2024 | | :--- | :--- | :--- | | On-Demand Talent | $205,976 | $272,600 | | Consulting | $219,215 | $227,967 | | Europe & Asia Pacific | $77,602 | $84,207 | | Outsourced Services | $39,618 | $38,122 | Adjusted EBITDA by Segment (in thousands) | Segment | FY 2025 | FY 2024 | | :--- | :--- | :--- | | On-Demand Talent | $17,116 | $31,673 | | Consulting | $31,718 | $38,420 | | Europe & Asia Pacific | $4,478 | $5,289 | | Outsourced Services | $7,581 | $7,641 | [Key Operating Metrics by Segment](index=23&type=section&id=Key%20Operating%20Metrics%20by%20Segment) Q4 FY2025 average consolidated bill rate increased to **$125**, with Consulting highest at **$158**; total consultant headcount was **2,368** Average Bill Rate by Segment | Segment | Q4 FY2025 | Q4 FY2024 | | :--- | :--- | :--- | | Consolidated | $125 | $120 | | On-Demand Talent | $143 | $142 | | Consulting | $158 | $142 | | Europe & Asia Pacific | $64 | $58 | | Outsourced Services | $140 | $142 | - Consultant headcount at Q4 FY2025 end was **2,368**, a decrease from **2,585** in Q4 FY2024[59](index=59&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of GAAP to Non-GAAP Measures (Q4)](index=13&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures%20(Q4)) Q4 FY2025 GAAP net loss of **$73.3 million** adjusted to **$9.8 million Adjusted EBITDA**; GAAP diluted EPS of **$(2.23)** adjusted to **$0.16** non-GAAP Reconciliation of Net Loss to Adjusted EBITDA (Q4 FY2025, in thousands) | Description | Amount | | :--- | :--- | | Net loss (GAAP) | $(73,306) | | Goodwill impairment | $69,032 | | Restructuring costs | $1,904 | | Stock-based compensation expense | $1,337 | | **Adjusted EBITDA (Non-GAAP)** | **$9,830** | Reconciliation of Diluted EPS (Q4 FY2025) | Description | Per Share Amount | | :--- | :--- | | Diluted loss per common share (GAAP) | $(2.23) | | Goodwill impairment | $2.10 | | Restructuring costs | $0.06 | | Income tax impact of adjustments | $0.16 | | **Adjusted diluted earnings per common share (Non-GAAP)** | **$0.16** | [Reconciliation of GAAP to Non-GAAP Measures (Full Year)](index=16&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures%20(Full%20Year)) Full-year FY2025 GAAP net loss of **$191.8 million** adjusted to **$23.5 million Adjusted EBITDA**; GAAP diluted EPS of **$(5.80)** adjusted to **$0.23** non-GAAP Reconciliation of Net Loss to Adjusted EBITDA (Full Year FY2025, in thousands) | Description | Amount | | :--- | :--- | | Net loss (GAAP) | $(191,780) | | Goodwill impairment | $194,409 | | Stock-based compensation expense | $6,754 | | Technology transformation costs | $5,474 | | Restructuring costs | $5,061 | | Gain on sale of assets | $(3,420) | | **Adjusted EBITDA (Non-GAAP)** | **$23,457** | Reconciliation of Diluted EPS (Full Year FY2025) | Description | Per Share Amount | | :--- | :--- | | Diluted loss per common share (GAAP) | $(5.80) | | Goodwill impairment | $5.88 | | Stock-based compensation expense | $0.20 | | Technology transformation costs | $0.17 | | Restructuring costs | $0.15 | | Gain on sale of assets | $(0.10) | | Income tax impact of adjustments | $(0.39) | | **Adjusted diluted earnings per common share (Non-GAAP)** | **$0.23** | [Company and Investor Information](index=7&type=section&id=Company%20and%20Investor%20Information) [About RGP](index=7&type=section&id=About%20RGP) RGP is a global professional services firm with **over 2,300 experts**, serving **88% of Fortune 100** companies, recognized as a top consulting firm - RGP is a global professional services firm offering high-impact solutions across **Finance, HR, Operations, and Technology**[22](index=22&type=chunk) - The company has **over 2,300 experts** worldwide, engaging **over 1,600 clients annually** from **41 offices**[22](index=22&type=chunk)[23](index=23&type=chunk) - As of May 2025, RGP served **88% of the Fortune 100** and was recognized by Forbes as a **top management consulting firm**[23](index=23&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks like economic downturns and market competition, which may cause actual results to differ - The press release contains forward-looking statements regarding **expected recovery, growth, and operational plans**[24](index=24&type=chunk) - These statements are subject to risks including **economic downturns, market competition, consultant retention**, and **client project security**[24](index=24&type=chunk) - Investors are cautioned against undue reliance, and the Company does not undertake an obligation to update these statements[25](index=25&type=chunk)
Resources Connection (RGP) Earnings Call Presentation
2025-06-19 11:42
Company Overview - RGP is a global professional services firm with nearly 2,600 delivery professionals and a history of partnering with Fortune 500 companies, with $600 million LTM total revenue[5] - 88% of clients are Fortune 100 & 77% of Fortune 500 companies[5] - 51% of consultants have Big 4, Big Consulting or Big Law experience[11] - 69% of U.S.-based consultants are Racially/Ethnically Diverse or Women[11] Financial Performance - The company has zero debt and a 70% variable cost structure[6] - In FY2024, revenue was $632.801 million, a decrease of 18.4% compared to FY2023[42] - Adjusted EBITDA for FY2024 was $51.483 million, with an adjusted EBITDA margin of 8.1%[42] - The company paid $164 million in total dividends and $255 million in total share repurchases[41] - Q1 Fiscal 2025 revenue by business segment: On-Demand Talent 38.3%, Consulting 40.2%, EU/Asia Pacific 13.1%, Outsourced Services 6.9%, Other 1.4%[5] Strategic Initiatives - The company is implementing a new Go-to-Market Strategy with three engagement models[7] - The company is expanding its addressable market by evolving its service offering catalog[7] - The company reduced its global real estate footprint by over 30,000 square feet during Fiscal Year 2024 and 196,000 square feet since Fiscal Year 2021[35] - The company is investing in digital innovation and AI development to create advanced experiences in response to market demand[39]
Resources nection(RGP) - 2025 Q3 - Quarterly Report
2025-04-03 21:23
Financial Performance - For the three months ended February 22, 2025, the company recorded pre-tax goodwill impairment charges of $12.4 million in the On-Demand Talent segment and $29.6 million in the Consulting segment[143]. - Same-day constant currency revenue for the three months ended February 22, 2025, was $134,415 thousand, a decrease from $151,307 thousand for the same period in 2024, reflecting a decline of approximately 11.1%[149]. - Adjusted EBITDA for the three months ended February 22, 2025, was $1,651 thousand, representing 1.3% of revenue, compared to $10,786 thousand or 7.1% of revenue for the same period in 2024[151]. - The net loss for the three months ended February 22, 2025, was $(44,052) thousand, which is a margin of (34.0%), compared to a net income of $2,550 thousand or 1.7% margin for the same period in 2024[151]. - Total consolidated revenue for the nine months ended February 22, 2025, was $413,902 thousand, down from $484,603 thousand for the same period in 2024, indicating a decrease of approximately 14.6%[149]. - Revenue decreased by $21.9 million, or 14.5%, to $129.4 million for the three months ended February 22, 2025, compared to $151.3 million for the same period in 2024[155]. - Revenue decreased by $72.6 million, or 15.0%, to $412.0 million for the nine months ended February 22, 2025, compared to $484.6 million for the same period in 2024[166]. - The company reported a goodwill impairment charge of $42,039 thousand for the three months ended February 22, 2025, which accounted for 32.5% of EBITDA[151]. Business Segments - The company reorganized its business into three engagement models: On-Demand Talent, Consulting, and Outsourced Services, aiming to enhance clarity and service delivery[136]. - The acquisition of Reference Point LLC on July 1, 2024, is expected to enhance tailored technology and data modernization offerings for financial services clients[139]. - The company expects its new organizational structure to provide greater optionality for clients and improve cross-selling opportunities[137]. - The company’s consulting segment reported same-day constant currency revenue of $54,661 thousand for the three months ended February 22, 2025, compared to $55,828 thousand for the same period in 2024[149]. - The company’s on-demand talent segment reported same-day constant currency revenue of $48,956 thousand for the three months ended February 22, 2025, down from $64,162 thousand for the same period in 2024, reflecting a decline of approximately 23.6%[149]. - On-Demand Talent segment revenue decreased by $17.1 million or 26.6%, to $47.1 million in Q3 FY2025 compared to $64.2 million in Q3 FY2024, primarily due to lower demand and a 24.8% decrease in billable hours[184]. - Consulting segment revenue declined by $3.2 million or 5.8%, to $52.6 million in Q3 FY2025, with an 18.8% decrease in billable hours, partially offset by a 12.8% increase in average bill rate[185]. - Europe and Asia Pacific segment revenue decreased by $1.1 million or 5.4%, to $18.6 million in Q3 FY2025, primarily due to a 5.5% decrease in billable hours[186]. - Outsourced Services segment revenue remained flat at $9.4 million in Q3 FY2025, with steady billable hours and average bill rates[187]. - All Other segment revenue declined by $0.5 million or 21.7%, to $1.8 million in Q3 FY2025, with a 31.9% decrease in billable hours[188]. Operational Challenges - The company anticipates continued uncertainty in macroeconomic conditions, which may adversely impact financial results through at least the rest of fiscal 2025[140]. - The company has experienced both voluntary and involuntary attrition, particularly within the sales team, which may affect near-term revenue performance[140]. - The company is focused on driving long-term growth by refining its operating model and enhancing consulting capabilities in digital transformation[135]. - Billable hours decreased by 17.0%, while the average bill rate increased by 3.4% for the three months ended February 22, 2025[155]. - Selling, general and administrative expenses increased to $51.2 million, or 39.5% of revenue, for the three months ended February 22, 2025, compared to $49.6 million, or 32.8% of revenue, for the same period in 2024[160]. Cash Flow and Investments - As of February 22, 2025, the company had $72.5 million in cash and cash equivalents, including $39.2 million held in international operations[197]. - The company has a $175.0 million senior secured revolving credit facility, with no debt outstanding as of February 22, 2025, and up to $173.5 million of potential remaining capacity[200]. - Cash provided by operating activities for the nine months ended February 22, 2025 was $2.1 million, a decrease from $18.8 million for the same period in the previous year, primarily due to a net loss of $118.5 million[212]. - Net cash used in investing activities was $13.1 million for the nine months ended February 22, 2025, primarily related to a $23.0 million acquisition of Reference Point[214]. - Net cash used in financing activities totaled $23.1 million for the nine months ended February 22, 2025, including $13.0 million for stock repurchases and $14.0 million in cash dividends[216]. - The company capitalized $21.6 million related to its technology platform initiative, which went live in most of North America in December 2024[205]. Tax and Dividend - Income tax benefit was $12.3 million, reflecting an effective tax rate of 9.4%, for the nine months ended February 22, 2025[172]. - The company paid a quarterly dividend of $0.14 per share on March 14, 2025, to stockholders of record as of February 14, 2025[206].
Resources nection(RGP) - 2025 Q3 - Earnings Call Transcript
2025-04-03 07:49
Financial Data and Key Metrics Changes - Total revenue for Q3 was $129.4 million, consistent with client budget constraints and slower project ramp-ups [5][42] - Adjusted EBITDA was $1.7 million, reflecting a 1.3% adjusted EBITDA margin [42] - Year-over-year revenue gap moderated to 11% on a same-day constant currency basis, an improvement from 13% in the previous quarter [43] - Gross margin for the quarter was 35.1%, better than expected but down 190 basis points from the prior year [44] Business Line Data and Key Metrics Changes - Consulting segment revenue was $52.6 million, a decline of 2% from the prior year, with adjusted EBITDA of $5.9 million or an 11% margin [51] - On-demand segment revenue was $47.1 million, a decline of 24% versus the prior year, with adjusted EBITDA of $2.6 million or a 5% margin [52] - Outsourced services segment revenue was $9.4 million, similar to the prior year quarter, with a 3% implied growth on an adjusted basis [55] Market Data and Key Metrics Changes - Europe and Asia Pacific segment revenue was $18.6 million, a decline of 2% [53] - Average bill rate improved to $124 from $119 a year ago, led by a 13% increase in the consulting segment [45] - Average bill rates in Europe and Asia Pacific increased by 5% over the prior year [46] Company Strategy and Development Direction - The company is focusing on enhancing client offerings and building a diversified services platform [10][12] - A strategic shift towards on-demand consulting and outsourced services is being implemented to create a more resilient business model [28][30] - The company aims to leverage technology and automation to improve operational efficiency and reduce costs [16][18] Management's Comments on Operating Environment and Future Outlook - The operating environment remains uncertain, particularly in the US, affecting client decision-making [24][66] - Management is optimistic about the potential for growth as the market stabilizes and client budgets strengthen [24][60] - The company anticipates a revenue range of $132 million to $137 million for Q4, with a focus on maintaining improved gross margins [58][59] Other Important Information - A non-cash goodwill impairment charge of $42 million was recorded in Q3 due to sluggish demand [55] - The company maintains a strong balance sheet with $73 million in cash and no outstanding debt [56] Q&A Session Summary Question: How high priority are the clients' transformational activities? - Management noted that while there are delays, pent-up demand in Europe is starting to open up, leading to project advancements [66] Question: What is being done to retain consultants during challenging times? - The company is focusing on engaging consultants with prior clients and maintaining strong relationships to keep them active [70] Question: How much more cost-cutting can be done before impacting the business? - Management is exploring various areas for cost reduction while also leveraging new technology for efficiency [73] Question: Are there cancellations or delays in projects? - Management confirmed that while there are delays, project extensions are growing, particularly in Europe [80] Question: What is the revenue guide for Q4? - The revenue guide for Q4 is expected to show a decline of about 14% year-over-year, with variability primarily from North America [92] Question: What are the implications for dividends and cash flow sustainability? - The company intends to maintain dividends while balancing capital allocation for growth and shareholder returns [96]
Resources nection(RGP) - 2025 Q3 - Earnings Call Transcript
2025-04-03 00:55
Financial Data and Key Metrics Changes - Total revenue for Q3 was $129.4 million, consistent with client budget constraints and slower project ramp-ups [5][42] - Adjusted EBITDA was $1.7 million, reflecting a 1.3% adjusted EBITDA margin [42] - Year-over-year revenue gap moderated to 11% on a same-day constant currency basis, an improvement from 13% in the previous quarter [43] - Gross margin for the quarter was 35.1%, better than expected but down 190 basis points from the prior year [44] Business Line Data and Key Metrics Changes - Consulting segment revenue was $52.6 million, a decline of 2% from the prior year, with an adjusted EBITDA margin of 11% [51] - On-demand segment revenue was $47.1 million, down 24% year-over-year, with a 5% adjusted EBITDA margin [52] - Outsourced services segment revenue was $9.4 million, similar to the prior year quarter, with a 16% adjusted EBITDA margin [55] Market Data and Key Metrics Changes - Europe and Asia Pacific segments saw a sequential increase in revenue backlog, although growth slowed compared to the previous quarter [38] - The consulting segment's average bill rate increased by 13% year-over-year, while the average bill rate in Europe and Asia Pacific increased by 5% [45][46] - The federal government work represented only 1.5% of overall revenue, indicating a diversified client base [33] Company Strategy and Development Direction - The company is focusing on enhancing client offerings through a diversified services platform and flexible engagement models [10][11] - Strategic investments are being made to improve technology and infrastructure, particularly in North America [17][18] - The company aims to build scale in key markets, particularly in Southeast Asia and India, to support international client needs [8][22] Management's Comments on Operating Environment and Future Outlook - The operating environment remains sluggish due to increased uncertainty and decreased consumer confidence in the U.S. [5] - Management expressed cautious optimism about the potential for growth as project extensions improve and larger deal opportunities arise [39][57] - The near-term outlook for professional services in the U.S. is uncertain, with delays in client decision-making expected to continue [24][58] Other Important Information - A non-cash goodwill impairment charge of $42 million was recorded in Q3 due to sluggish demand in both on-demand and consulting segments [55] - The company maintains a strong balance sheet with $73 million in cash and no outstanding debt, allowing for a balanced approach to capital allocation [56] Q&A Session Summary Question: How high priority are the clients' transformational activities given the delays? - Management noted that while there are delays, there is pent-up demand in Europe leading to project advancements, whereas the U.S. market is more hesitant due to uncertainty [66][68] Question: What measures are being taken to retain consultants during challenging times? - The company is focusing on engaging consultants with prior clients and maintaining strong relationships, even with those who are not currently active [70][71] Question: How much more cost-cutting can be done before impacting the business? - Management is exploring various areas for cost reduction, including real estate and discretionary spending, while also leveraging new technology for efficiency [73][74] Question: What has been observed regarding project cancellations and delays? - Management clarified that while there are delays in project starts, cancellations are not prevalent, and extensions are actually growing [80][82] Question: What is the revenue guide for the fourth quarter and its implications? - The fourth quarter is expected to see a revenue decline of about 14% year-over-year, with variability primarily coming from North America [92][94] Question: What is the outlook for cash flow and dividends? - The company anticipates improved operating cash flow starting in fiscal 2026 and intends to maintain a balanced approach to dividends and capital allocation [96][97]
Resources nection(RGP) - 2025 Q3 - Quarterly Results
2025-04-02 20:04
[Financial Highlights & Management Commentary](index=1&type=section&id=Financial%20Highlights%20%26%20Management%20Commentary) This section summarizes Q3 FY2025 financial performance, including revenue decline and net loss, and management's strategic commentary [Third Quarter Fiscal 2025 Highlights](index=1&type=section&id=Third%20Quarter%20Fiscal%202025%20Highlights) For the third quarter of fiscal 2025, Resources Connection, Inc. (RGP) reported a significant revenue decline and a net loss, primarily driven by a non-cash goodwill impairment charge | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $129.4 M | $151.3 M | -14.5% | | **Gross Margin** | 35.1% | 37.0% | -1.9 p.p. | | **Net (Loss) Income** | $(44.1) M | $2.6 M | - | | **Diluted (Loss) EPS** | $(1.34) | $0.08 | - | | **Adjusted Diluted (Loss) EPS** | $(0.08) | $0.17 | - | | **Adjusted EBITDA** | $1.7 M | $10.8 M | -84.3% | | **Goodwill Impairment Charge** | $42.0 M | $0 | - | | **Cash Dividends Declared** | $0.14/share | $0.14/share | No Change | [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Kate W. Duchene stated that Q3 results were in line with or better than the company's outlook, despite a deeper-than-expected holiday impact and disruptions in the U.S. market - Strategic progress was noted in several areas despite a challenging macroenvironment[3](index=3&type=chunk) - **Pricing and Deal Size:** Notable progress in driving stronger pricing and larger average deal sizes - **Efficiency:** Improved efficiency in the cost structure - **Sales Pipeline:** While new opportunity volume was soft, the pipeline quality has meaningfully improved to include larger, higher-value deals - **Client Relationships:** Client relationships remain strong, enabling growth into new buying centers[3](index=3&type=chunk) [Consolidated Financial Performance](index=1&type=section&id=Consolidated%20Financial%20Performance) This section provides a detailed analysis of the company's consolidated revenue, profitability, and operating expenses for the period [Revenue Analysis](index=1&type=section&id=Revenue%20Analysis) Third-quarter revenue was $129.4 million, a 14.5% decrease year-over-year (11.2% on a constant currency basis) | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | $129.4 M | $151.3 M | -14.5% | | **Constant Currency Revenue** | $134.4 M | $151.3 M | -11.2% | | **Billable Hours** | - | - | -17.0% | | **Average Bill Rate** | - | - | +3.4% | [Profitability Analysis](index=1&type=section&id=Profitability%20Analysis) Gross margin decreased to 35.1% from 37.0% YoY, primarily due to additional holiday pay and lower utilization of salaried consultants - Gross margin declined to **35.1%** from **37.0%** in Q3 FY2024, primarily due to additional holiday pay and lower utilization of salaried consultants during the Christmas and New Year's holidays[5](index=5&type=chunk) - A non-cash goodwill impairment charge of **$42.0 million** was recorded during the quarter, with **$12.4 million** allocated to the On-Demand Talent segment and **$29.6 million** to the Consulting segment[8](index=8&type=chunk) - The company reported a net loss of **$44.1 million** (net loss margin of **34.0%**), a significant downturn from the **$2.6 million** net income (**1.7%** margin) in the prior year quarter, mainly due to the goodwill impairment[10](index=10&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) SG&A expenses increased to $51.2 million (39.5% of revenue) from $49.6 million (32.8% of revenue) in the prior year - SG&A expenses rose year-over-year primarily due to: - **$1.3 million increase** in employee termination benefits from the 2025 Restructuring Plan - **$1.1 million increase** in computer software expenses related to technology transformation - These were partially offset by a **$1.2 million decrease** in employee compensation[7](index=7&type=chunk) [Segment Performance Analysis](index=2&type=section&id=Segment%20Performance%20Analysis) This section examines the revenue and performance across the company's various operating segments, highlighting key drivers for each [Segment Results Overview](index=2&type=section&id=Segment%20Results%20Overview) In Q3 FY2025, most segments experienced revenue declines, with On-Demand Talent seeing the sharpest drop at 26.6%, while Consulting and Europe & Asia Pacific saw more moderate declines | Segment | Q3 FY2025 Revenue | Q3 FY2024 Revenue | YoY Change | Key Drivers | | :--- | :--- | :--- | :--- | :--- | | **On-Demand Talent** | $47.1 M | $64.2 M | -26.6% | Billable hours down 24.8%, bill rate down 2.1% | | **Consulting** | $52.6 M | $55.8 M | -5.8% | Billable hours down 18.8%, bill rate up 12.8%; includes $4.0M from Reference Point | | **Europe & Asia Pacific** | $18.6 M | $19.6 M | -5.4% | Billable hours down 5.5%, bill rate up 1.7% | | **Outsourced Services** | $9.4 M | $9.4 M | 0.0% | Billable hours and bill rates remained steady | | **All Other** | $1.8 M | $2.3 M | -21.7% | Billable hours down 31.9%, bill rate up 6.1% | [Financial Statements and Key Metrics](index=3&type=section&id=Financial%20Statements%20and%20Key%20Metrics) This section presents a summary of consolidated financial statements, including balance sheet, cash flow, and other key operational metrics [Summary of Consolidated Financial Results](index=3&type=section&id=Summary%20of%20Consolidated%20Financial%20Results) The consolidated financial results for the third quarter and first nine months of fiscal 2025 show a significant downturn compared to the prior year Consolidated Financial Results (in thousands, except per share data) | Metric | Three Months Ended Feb 22, 2025 | Three Months Ended Feb 24, 2024 | Nine Months Ended Feb 22, 2025 | Nine Months Ended Feb 24, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $129,438 | $151,307 | $411,991 | $484,603 | | **Gross Profit** | $45,374 | $56,008 | $151,447 | $186,485 | | **Goodwill Impairment** | $42,039 | $0 | $125,376 | $0 | | **(Loss) Income from Operations** | $(49,725) | $4,261 | $(131,260) | $17,491 | | **Net (Loss) Income** | $(44,052) | $2,550 | $(118,474) | $10,562 | | **Diluted (Loss) EPS** | $(1.34) | $0.08 | $(3.58) | $0.31 | [Selected Balance Sheet and Cash Flow Information](index=17&type=section&id=Selected%20Balance%20Sheet%20and%20Cash%20Flow%20Information) As of February 22, 2025, the company's balance sheet reflects a decrease in cash and total assets compared to the end of fiscal year 2024, primarily due to the net loss and goodwill impairment Selected Balance Sheet Information (in thousands) | Metric | Feb 22, 2025 | May 25, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $72,495 | $108,892 | | **Total assets** | $375,625 | $510,914 | | **Total liabilities** | $97,799 | $92,151 | | **Total stockholders' equity** | $277,826 | $418,763 | Selected Cash Flow Information (in thousands, for nine months ended) | Metric | Feb 22, 2025 | Feb 24, 2024 | | :--- | :--- | :--- | | **Cash flow -- operating activities** | $2,149 | $18,754 | | **Cash flow -- investing activities** | $(13,083) | $(8,432) | | **Cash flow -- financing activities** | $(23,114) | $(12,977) | [Other Key Metrics](index=16&type=section&id=Other%20Key%20Metrics) The company's consultant headcount decreased to 2,514 at the end of Q3 FY2025 from 2,765 a year prior Selected Other Information (Q3 FY2025 vs Q3 FY2024) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | **Consultant headcount, end of period** | 2,514 | 2,765 | | **Average bill rate** | $123 | $119 | | **Average pay rate** | $58 | $58 | Average Bill Rate by Segment | Segment | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | **Consolidated** | $123 | $119 | | **On-Demand Talent** | $140 | $143 | | **Consulting** | $159 | $141 | | **Europe & Asia Pacific** | $59 | $58 | | **Outsourced Services** | $137 | $139 | [Non-GAAP Financial Measures Reconciliation](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section reconciles non-GAAP financial measures such as adjusted revenue, EBITDA, and EPS to their most directly comparable GAAP equivalents [Adjusted Revenue Reconciliation](index=7&type=section&id=Adjusted%20Revenue%20Reconciliation) The company provides a reconciliation for same-day constant currency revenue, which adjusts for currency fluctuations and differing numbers of business days Q3 FY2025 Revenue Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | **As reported revenue (GAAP)** | $129,438 | | Currency impact | $1,209 | | Business days impact | $3,768 | | **Same-day constant currency revenue** | $134,415 | | **Prior Year As reported revenue (GAAP)** | $151,307 | | **YoY Decline (Same-day constant currency)** | **-11.2%** | [Adjusted EBITDA and Adjusted EPS Reconciliation](index=9&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EPS%20Reconciliation) For Q3 FY2025, the company reconciled its net loss of $44.1 million to an Adjusted EBITDA of $1.7 million, and diluted loss per share to a non-GAAP loss of $(0.08) per share Q3 Adjusted EBITDA Reconciliation (in thousands) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | **Net (Loss) Income** | $(44,052) | $2,550 | | Adjustments (incl. Goodwill Impairment of $42,039) | $45,703 | $8,236 | | **Adjusted EBITDA** | **$1,651** | **$10,786** | | **Adjusted EBITDA Margin** | 1.3% | 7.1% | Q3 Adjusted Diluted EPS Reconciliation | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | **Diluted (Loss) EPS, as reported** | $(1.34) | $0.08 | | Goodwill impairment per share | $1.28 | $0.00 | | Other adjustments (net) | $(0.02) | $0.09 | | **Adjusted Diluted (Loss) EPS** | **$(0.08)** | **$0.17** | [Segment Adjusted EBITDA](index=13&type=section&id=Segment%20Adjusted%20EBITDA) All operating segments saw a decline in Adjusted EBITDA and Adjusted EBITDA margin year-over-year in the third quarter Q3 Segment Adjusted EBITDA (in thousands) | Segment | Q3 FY2025 Adj. EBITDA | Q3 FY2024 Adj. EBITDA | Q3 FY2025 Margin | Q3 FY2024 Margin | | :--- | :--- | :--- | :--- | :--- | | **On-Demand Talent** | $2,567 | $7,341 | 5.5% | 11.4% | | **Consulting** | $5,914 | $8,769 | 11.2% | 15.7% | | **Europe & Asia Pacific** | $841 | $1,342 | 4.5% | 6.8% | | **Outsourced Services** | $1,493 | $1,577 | 15.9% | 16.8% | | **All Other** | $(727) | $(244) | (40.2%) | (10.6%) | [Company Overview and Other Information](index=4&type=section&id=Company%20Overview%20and%20Other%20Information) This section provides an overview of RGP's business model and brands, along with important disclosures regarding forward-looking statements [About RGP](index=4&type=section&id=About%20RGP) RGP is a professional services firm that provides operational and change initiative support through three distinct brands: On-Demand by RGP, Veracity by RGP, and Countsy by RGP - RGP operates through three main engagement brands: - **On-Demand by RGP:** Provides on-demand expert talent - **Veracity by RGP:** A consulting arm focused on transformation across people, processes, and technology - **Countsy by RGP:** Offers outsourced accounting, HR, and equity services for startups and scaleups[18](index=18&type=chunk)[21](index=21&type=chunk) - The company has a global presence with **42 physical offices**, multiple virtual offices, and approximately **3,200 professionals**, serving **88% of the Fortune 100**[19](index=19&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section contains standard cautionary language regarding forward-looking statements made in the press release, warning that actual results could differ materially from expectations - The press release includes forward-looking statements concerning operational plans, expected benefits of segments, and the demand environment[20](index=20&type=chunk) - The company's operations are subject to numerous risks and uncertainties that could cause actual results to differ, including macroeconomic conditions, market competition, and the ability to retain talent[20](index=20&type=chunk)[22](index=22&type=chunk)
Should Value Investors Buy Resources Connection (RGP) Stock?
ZACKS· 2025-01-29 15:46
Core Viewpoint - The article emphasizes the attractiveness of Resources Connection (RGP) as a strong value stock based on various valuation metrics and its earnings outlook [4][8]. Valuation Metrics - RGP has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [4]. - The stock's P/E ratio is 9.77, significantly lower than the industry average of 16.34 [4]. - RGP's PEG ratio stands at 0.65, compared to the industry average of 1.22, suggesting it is undervalued relative to its expected earnings growth [5]. - The P/B ratio for RGP is 0.87, which is attractive compared to the industry's average P/B of 2.05 [6]. - RGP's P/CF ratio is 9.44, lower than the industry average of 13.90, indicating a favorable cash flow outlook [7]. Investment Outlook - The combination of RGP's strong valuation metrics and positive earnings outlook positions it as one of the market's strongest value stocks [8].