Earnings ESP and Zacks Rank Analysis - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate being a more recent version of the consensus EPS estimate [1] - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold), with stocks in this combination producing a positive surprise nearly 70% of the time [3] - A negative Earnings ESP reading does not necessarily indicate an earnings miss, but it is difficult to predict an earnings beat with confidence for stocks with negative Earnings ESP readings or Zacks Rank of 4 (Sell) or 5 (Strong Sell) [6] Resources Connection Earnings Outlook - Resources Connection is expected to post break-even quarterly earnings per share, representing a year-over-year change of -100% [4] - The Most Accurate Estimate for Resources Connection is higher than the Zacks Consensus Estimate, suggesting analysts have recently become bullish on the company's earnings prospects, resulting in an Earnings ESP of +200% [10][22] - The consensus EPS estimate for the quarter has been revised 42.22% lower over the last 30 days, reflecting how analysts have collectively reassessed their initial estimates [20] Revenue and Historical Performance - Revenues for Resources Connection are expected to be $136.63 million, down 16.2% from the year-ago quarter [14] - Over the last four quarters, the company has beaten consensus EPS estimates three times [28] - For the last reported quarter, Resources Connection was expected to post earnings of $0.04 per share but actually produced break-even earnings, delivering a surprise of -100% [23] Market Expectations and Stock Movement - The market expects Resources Connection to deliver a year-over-year decline in earnings on lower revenues for the quarter ended November 2024 [13] - The stock might move higher if key numbers top expectations in the upcoming earnings report, expected to be released on January 2, but could move lower if they miss [9] - While an earnings beat or miss may not be the sole basis for stock movement, unforeseen catalysts can help stocks gain despite an earnings miss [18]

Company Performance - Resources Connection Inc (NASDAQ: RGP) has experienced declining revenue and a significant drop in stock performance over the past few years [1] - The company faces intense competition from gig platforms such as Upwork and Fiverr, which are impacting its market share [1] - The rise of AI technology is further challenging the company by automating tasks traditionally handled by its services [1] Industry and Market Focus - Grassroots Trading focuses on providing objective, unbiased, and data-driven research, particularly for small- to mid-cap companies [1] - The platform aims to highlight investment opportunities in these often-overlooked segments of the market [1] - Grassroots Trading also periodically identifies potential opportunities in large- and mega-cap companies to offer comprehensive coverage of the equity markets [1]

Business Segment Reorganization and Financial Recast - The company reorganized its business segments in Q1 fiscal 2025, resulting in new reportable segments: On-Demand Talent, Consulting, Outsourced Services, Europe and Asia Pacific, and All Other[4] - Recast segment revenue, adjusted EBITDA, and average bill rate for fiscal 2024 quarters are included in the investor presentation and Exhibit 99.1 to assist in reviewing fiscal 2025 financial results[6] - The recast of financial information does not affect the company's reported net income, earnings per share, total assets, or stockholders' equity for any previously reported periods[6] - The investor relations presentation with recasted financial information was posted on October 3, 2024, on the company's investor relations website[6] - The recast financial information is not considered a restatement of previously issued financial statements[6] Company Information and Stock Details - The company's common stock is registered on the Nasdaq Global Select Market under the symbol RGP[1] - The company's principal executive offices are located at 17101 Armstrong Avenue, Irvine, California, 92614[2] - The company's telephone number is (714) 430-6400[2] Regulatory and Compliance Information - The company is not classified as an emerging growth company[3] - The information in Item 2.02 and Exhibit 99.1 is not deemed "filed" under Section 18 of the Securities Exchange Act of 1934[7]

Business Segments and Strategy - For the three months ended August 24, 2024, the company reported a significant focus on evolving its business segments, specifically On-Demand Talent, Consulting, and Outsourced Services [103]. - The company acquired Reference Point LLC on July 1, 2024, which is now included in the Consulting Services operating segment [104]. - The company aims to enhance its digital and AI capabilities, responding to increased client needs in technology migration, cybersecurity, and data modernization [109]. - The company is implementing a new brand identity to clarify its service offerings and enhance stakeholder understanding of its capabilities [109]. - The company is focused on driving long-term growth by refining its operating model and aligning incentives to business performance [102]. - The company expects to leverage its consulting capabilities to better align with client transformation agendas, enhancing financial flexibility [106]. - The company emphasizes the importance of a flexible workforce to execute transformational projects amid economic uncertainty [101]. - The company has reorganized its business into five reportable segments to better serve clients and reduce market confusion [103]. Financial Performance - Total consolidated revenue decreased by $33.2 million, or 19.5%, to $136.9 million for the three months ended August 24, 2024, compared to $170.2 million for the same period in 2023 [127]. - Direct cost of services decreased by $16.2 million, or 15.7%, to $86.9 million, resulting in a direct cost of services as a percentage of revenue of 63.5% for the first quarter of fiscal 2025 [128][129]. - Gross profit for the first quarter of fiscal 2025 was $49.99 million, representing 36.5% of revenue, down from 39.4% in the prior year [126]. - Selling, general and administrative expenses (SG&A) were $48.9 million, or 35.7% of revenue, compared to $59.9 million, or 35.2% of revenue, in the prior year [132]. - The company recorded a goodwill impairment charge of $3.9 million in the Europe and Asia Pacific segment during the first quarter of fiscal 2025 [133]. - Net loss for the first quarter of fiscal 2025 was $5.7 million, or (4.2%) of revenue, compared to a net income of $3.1 million, or 1.8% of revenue, in the prior year [126]. - Average billable hours decreased by 15.3%, and the average bill rate declined by 5.0% compared to the prior year quarter [127]. - The number of consultants on assignment decreased to 2,570 from 2,885 year-over-year [131]. Tax and Cash Flow - The effective tax rate for the first quarter of fiscal 2025 was (22.7%), reflecting a tax expense of $1.1 million against a pretax loss [134]. - The company recognized a tax benefit of approximately $0.5 million for the three months ended August 24, 2024, compared to $0.2 million for the same period in 2023 [135]. - Cash used in operating activities for Q1 fiscal 2025 was $0.3 million, compared to $2.2 million for Q1 fiscal 2024, driven by a net loss of $5.7 million [165]. - The company generated negative cash flow from operations during the three months ended August 24, 2024, but has historically generated positive cash flows from operations [154]. Revenue by Segment - Revenue in the On-Demand Talent segment declined by $25.5 million or 32.7%, to $52.5 million compared to $78.0 million in the prior year quarter [145]. - Consulting segment revenue decreased by $1.8 million or 3.2%, to $55.0 million compared to $56.8 million in the prior year quarter [146]. - Revenue in the Europe and Asia Pacific segment declined by $5.3 million or 22.7%, to $18.0 million compared to $23.3 million in the prior year quarter [147]. - Adjusted EBITDA for the On-Demand Talent segment decreased by $6.0 million or 70.1%, to $2.6 million for the first quarter of fiscal 2025 [149]. - The Consulting segment's Adjusted EBITDA decreased by $0.8 million or 9.1%, to $7.8 million for the first quarter of fiscal 2025 [150]. - The Europe & Asia Pacific segment's Adjusted EBITDA decreased by $1.5 million or 86.7%, to $0.2 million for the first quarter of fiscal 2025 [151]. Investments and Liquidity - The company had $89.6 million of cash and cash equivalents as of August 24, 2024, including $44.9 million held in international operations [154]. - The company has a $175.0 million senior secured revolving credit facility, with $173.5 million remaining capacity as of August 24, 2024 [156]. - The company expects to meet its long-term liquidity needs through cash flows from operations and financing arrangements [163]. - As of August 24, 2024, the company capitalized $18.1 million related to its technology platform initiative and recorded $1.9 million in expenses for Q1 fiscal 2025 [158]. - The estimated remaining investments for the technology platform initiative range from $11.0 million to $16.0 million, with the majority expected in fiscal 2025 [158]. - The company has non-cancellable purchase obligations totaling $11.1 million, primarily related to licensing arrangements for the technology platform initiative [160]. - An initial cash consideration of $23.0 million was paid for the acquisition of Reference Point LLC, net of $0.2 million cash acquired [161]. - Net cash used in investing activities was $10.9 million for Q1 fiscal 2025, primarily due to the acquisition of Reference Point, partially offset by $12.3 million from the sale of the Irvine office building [168]. - Net cash used in financing activities totaled $7.7 million in Q1 fiscal 2025, including $5.0 million for share repurchases and $4.7 million in cash dividends [169]. Foreign Exposure - Approximately 18.3% of the company's revenues for the three months ended August 24, 2024, were generated outside of the U.S., exposing it to foreign currency exchange rate risks [172]. - As of August 24, 2024, the company had approximately $89.6 million in cash and cash equivalents, with no outstanding debt under its Credit Facility [170][171].

Core Insights - Resources Connection's recent quarterly earnings report revealed a significant decline in both revenue and profitability, leading to a nearly 12% drop in share price, contrasting with the flat performance of the S&P 500 index [1][2] - The company reported first-quarter fiscal 2025 revenue of approximately $137 million, a nearly 20% decrease year-over-year, and a net loss of over $5.7 million compared to a profit of $3.1 million in the same quarter last year [3][4] - The decline in revenue was primarily attributed to a 33% drop in its on-demand talent segment, which experienced a more than 30% decrease in billable hours, causing it to fall behind consulting activities in revenue generation [5] Company Performance - Resources Connection's core fundamentals fell short of analyst expectations, with projected revenue of slightly over $146 million and adjusted net income of $0.02 per share [5] - Management expressed optimism regarding a recently implemented restructuring program aimed at better aligning business segments with internal management and financial reporting, indicating a need to demonstrate effectiveness in driving growth [6]

Group 1 - Resources Connection (RGP) reported break-even quarterly earnings per share, missing the Zacks Consensus Estimate of $0.04, and compared to earnings of $0.20 per share a year ago, representing an earnings surprise of -100% [1] - The company posted revenues of $136.94 million for the quarter ended August 2024, missing the Zacks Consensus Estimate by 0.63%, and down from year-ago revenues of $170.17 million [2] - Resources Connection shares have lost about 31.6% since the beginning of the year, while the S&P 500 has gained 20.8% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.10 on $141.76 million in revenues, and $0.80 on $607.26 million in revenues for the current fiscal year [7] - The Zacks Industry Rank indicates that the Staffing Firms industry is currently in the bottom 41% of over 250 Zacks industries, suggesting potential underperformance compared to the top 50% [8]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Resources Connection (RGP) due to lower revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The earnings report is expected on October 1, 2024, with a consensus estimate of $0.04 per share, reflecting an 80% decrease year-over-year. Revenues are projected at $137.8 million, down 19% from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has been revised down by 66.67% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a negative reading of -100% for Resources Connection, suggesting analysts have become more pessimistic. The stock holds a Zacks Rank of 3, complicating predictions of an earnings beat [10][8]. Historical Performance - Resources Connection has exceeded consensus EPS estimates in the last four quarters, with a notable surprise of +180% in the most recent quarter where actual earnings were $0.28 compared to an expected $0.10 [11][12]. Conclusion - Resources Connection does not appear to be a strong candidate for an earnings beat, and investors should consider additional factors before making investment decisions [15][13].

Core Viewpoint - Resources Connection (RGP) is identified as a potentially undervalued stock with strong value metrics, making it an attractive investment opportunity in the current market environment [2][4]. Valuation Metrics - RGP has a P/E ratio of 10.43, significantly lower than the industry average of 15.87, indicating potential undervaluation [2]. - The stock's P/B ratio stands at 0.89, compared to the industry's average P/B of 2.19, further suggesting that RGP may be undervalued [3]. - RGP's PEG ratio is 0.70, which is lower than the industry average PEG of 1.59, highlighting its favorable valuation in relation to expected earnings growth [7]. - The P/CF ratio for RGP is 12.55, which is attractive compared to the industry's average P/CF of 12.99, indicating solid cash flow prospects [8]. Earnings Outlook - The strength of RGP's earnings outlook contributes to its classification as an impressive value stock at the moment [4].

Part I [Business Overview](index=5&type=section&id=Item%201.%20Business) RGP is a global consulting firm delivering enterprise initiatives through a flexible talent model and strategic growth strategies - RGP is a global consulting firm serving **1,800 clients**, including **88% of the Fortune 100**, with approximately **3,400 professionals**[56](index=56&type=chunk)[58](index=58&type=chunk) - The company operates through two main segments: RGP, accounting for over **90% of consolidated revenue**, and Sitrick, a crisis communications firm[59](index=59&type=chunk)[60](index=60&type=chunk) - RGP's strategy emphasizes retaining highly qualified consultants and fostering long-term client relationships, evidenced by a **75% retention rate** for its top 100 clients over five years[92](index=92&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) - Growth strategy focuses on brand marketing, client base expansion, optimizing digital service offerings, and strategic acquisitions[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - As of May 25, 2024, the company had **3,376 employees**, including **2,585 consultants**, with a strong emphasis on culture and DE&I[129](index=129&type=chunk)[130](index=130&type=chunk)[133](index=133&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces multiple risks including economic downturns, intense competition, human capital challenges, operational dependencies, and cybersecurity threats - The business faces risks from economic downturns, geopolitical conflicts, and high interest rates, potentially reducing client spending and impacting receivables[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) - The highly competitive professional services market includes consulting, accounting, and staffing firms, many with greater resources and recognition[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) - Success depends on attracting and retaining highly qualified consultants and key senior management; failure could adversely affect operations[234](index=234&type=chunk)[237](index=237&type=chunk) - Business relies on securing new projects and contract renewals; automation and AI could reduce demand, and an unsuitable pay/bill ratio could compress gross margins[257](index=257&type=chunk)[258](index=258&type=chunk)[262](index=262&type=chunk) - Systems are vulnerable to security breaches and cyber-attacks, risking data loss, reputational harm, and significant costs[330](index=330&type=chunk)[333](index=333&type=chunk)[336](index=336&type=chunk) - Compliance with evolving data privacy laws (e.g., GDPR, CCPA) and other regulations is critical; non-compliance could result in penalties and reputational damage[338](index=338&type=chunk)[344](index=344&type=chunk)[346](index=346&type=chunk) [Unresolved Staff Comments](index=26&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - Not applicable[367](index=367&type=chunk) [Cybersecurity](index=26&type=section&id=Item%201C.%20Cybersecurity) The company maintains an enterprise-wide cybersecurity strategy, overseen by the CIO and Audit Committee, to manage evolving threats - The company has an enterprise-wide strategy to manage cybersecurity threats, including an Information Assurance Program and a Cybersecurity Incident Response Plan[370](index=370&type=chunk)[371](index=371&type=chunk) - Cybersecurity governance is overseen by the Audit Committee, receiving quarterly updates from the CIO who leads the Cybersecurity Incident Response Team[377](index=377&type=chunk)[378](index=378&type=chunk) - As of the report date, known cybersecurity risks are not believed to have materially affected or likely to materially affect business, operations, or financial condition[375](index=375&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) The company owns its Irvine headquarters, which is being sold for **$13.0 million**, and leases offices globally, deeming current facilities adequate - The company owns its **57,000 sq. ft.** principal executive office in Irvine, California, with an agreement to sell it for **$13.0 million** by August 15, 2024[379](index=379&type=chunk) - The company leases facilities in over **36 cities** across **13 countries**, including major global business centers[380](index=380&type=chunk) [Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[382](index=382&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[384](index=384&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&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, pays a **$0.14** quarterly dividend, and has **$42.2 million** remaining for repurchases, though its stock has underperformed peers - The company's common stock is listed on The Nasdaq Global Select Market under the symbol **"RGP"**[388](index=388&type=chunk) - A quarterly dividend of **$0.14 per share** was declared in each quarter of fiscal 2024, 2023, and 2022, subject to Board approval[389](index=389&type=chunk) Issuer Purchases of Equity Securities (Q4 FY2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | March 24, 2024 – April 20, 2024 | 252,396 | $11.89 | | Total | 252,396 | $11.89 | - As of May 25, 2024, approximately **$42.2 million** remained available for future repurchases under the stock repurchase program[11](index=11&type=chunk) - The 5-year cumulative total return for the company's stock was **86.85**, underperforming the Russell 3000 (**196.98**), SIC Code 8742 (**164.41**), and a customized Peer Group (**221.84**), based on a **$100** investment on May 24, 2019[14](index=14&type=chunk) [Reserved](index=30&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=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2024 revenue decreased **18.4%** to **$632.8 million** and net income fell to **$21.0 million**, driven by reduced client spending amid strategic focus areas [Fiscal 2024 Strategic Focus Areas](index=30&type=section&id=Fiscal%202024%20Strategic%20Focus%20Areas) The company's fiscal 2024 strategy focused on digital transformation, brand amplification, operating model evolution, value-based pricing, and targeted M&A - The company's five strategic focus areas for fiscal 2024 included digital transformation, brand amplification, operating model evolution, value-based pricing, and targeted M&A[313](index=313&type=chunk) - Digital transformation efforts include a multi-year global technology project, with a new talent management system launched and a new enterprise financial system planned for late 2024[312](index=312&type=chunk) - Strategic M&A included the acquisition of CloudGo in November 2023 and Reference Point, which closed on July 1, 2024[1](index=1&type=chunk)[3](index=3&type=chunk)[21](index=21&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies involve significant estimates for revenue, credit losses, income taxes, stock-based compensation, and asset valuations, with no goodwill impairment in fiscal 2024 - Key critical accounting policies requiring significant estimates include revenue recognition, allowance for credit losses, income taxes, stock-based compensation, and valuation of long-lived assets, goodwill, and business combinations[6](index=6&type=chunk) - The allowance for credit losses was **$2.8 million** as of May 25, 2024, compared to **$3.3 million** in the prior year[8](index=8&type=chunk) - A valuation allowance of **$8.6 million** was established on deferred tax assets as of May 25, 2024, compared to **$6.5 million** in the prior year[26](index=26&type=chunk) - Stock-based compensation expense was **$5.7 million** in fiscal 2024, down from **$9.5 million** in fiscal 2023[32](index=32&type=chunk) - The annual goodwill impairment assessment for the RGP reporting unit in Q4 fiscal 2024 concluded no impairment[41](index=41&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Same-Day Constant Currency Revenue and Adjusted EBITDA to assess performance, providing a clearer view of core operating trends Reconciliation of Revenue to Same-Day Constant Currency Revenue (FY 2024) | (In thousands) | As reported (GAAP) | Currency impact | Business days impact | Same-day constant currency revenue | | :--- | :--- | :--- | :--- | :--- | | North America | $543,926 | $(2,153) | - | $541,773 | | Europe | $38,383 | $(1,687) | $(639) | $36,057 | | Asia Pacific | $50,492 | $1,915 | $(624) | $51,783 | | **Total Consolidated** | **$632,801** | **$(1,925)** | **$(1,263)** | **$629,613** | Reconciliation of Net Income to Adjusted EBITDA (Fiscal Years Ended) | (In thousands) | May 25, 2024 | May 27, 2023 | May 28, 2022 | | :--- | :--- | :--- | :--- | | Net income | $21,034 | $54,359 | $67,175 | | EBITDA | $37,193 | $81,727 | $92,515 | | **Adjusted EBITDA** | **$51,483** | **$100,194** | **$103,131** | | **Adjusted EBITDA Margin** | **8.1%** | **12.9%** | **12.8%** | [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Fiscal 2024 revenue decreased **18.4%** to **$632.8 million** and net income fell to **$21.0 million**, driven by reduced billable hours and lower average bill rates Consolidated Statements of Operations Summary | (In thousands) | FY 2024 | % of Revenue | FY 2023 | % of Revenue | | :--- | :--- | :--- | :--- | :--- | | Revenue | $632,801 | 100.0% | $775,643 | 100.0% | | Gross profit | $246,068 | 38.9% | $313,142 | 40.4% | | Income from operations | $28,776 | 4.5% | $72,788 | 9.5% | | Net income | $21,034 | 3.3% | $54,359 | 7.0% | - Fiscal 2024 revenue decreased by **$142.8 million** (**18.4%**) year-over-year, driven by a **13.8%** decrease in billable hours and a **4.7%** decline in average bill rate due to reduced client spending[103](index=103&type=chunk) - Revenue declined across all geographic regions in fiscal 2024, with North America most impacted, showing a **20.1%** decrease (**20.4%** on a same-day constant currency basis)[104](index=104&type=chunk) - Direct cost of services as a percentage of revenue increased to **61.1%** in fiscal 2024 from **59.6%** in fiscal 2023, partly due to higher employee health benefit expenses[107](index=107&type=chunk) - SG&A expenses decreased by **$20.0 million** in fiscal 2024, primarily due to a **$17.1 million** reduction in bonuses and commissions and a **$4.4 million** favorable contingent consideration adjustment[109](index=109&type=chunk) - The effective tax rate for fiscal 2024 was **29.5%**, higher than **25.1%** in fiscal 2023, primarily due to a non-recurring increase in forfeiture of stock options[113](index=113&type=chunk) [Operating Results of Segments](index=43&type=section&id=Operating%20Results%20of%20Segments) In fiscal 2024, the RGP segment's revenue decreased **18.5%** to **$622.9 million** and Adjusted EBITDA fell **36.0%**, while Other Segments also saw revenue and EBITDA declines Revenue and Adjusted EBITDA by Segment (FY 2024 vs FY 2023) | (In thousands) | FY 2024 Revenue | FY 2023 Revenue | FY 2024 Adj. EBITDA | FY 2023 Adj. EBITDA | | :--- | :--- | :--- | :--- | :--- | | RGP | $622,895 | $764,511 | $84,677 | $132,377 | | Other Segments | $9,906 | $11,132 | $(676) | $1,179 | | **Total** | **$632,801** | **$775,643** | **$51,483** | **$100,194** | - RGP segment revenue decreased by **$141.6 million** (**18.5%**) in fiscal 2024, consistent with the overall consolidated trend[149](index=149&type=chunk) - Other Segments' revenue decreased by **$1.2 million** (**11.0%**) in fiscal 2024, primarily due to a decline in Sitrick's revenue affected by court proceeding delays[151](index=151&type=chunk) - RGP segment's Adjusted EBITDA decreased by **$47.7 million** (**36.0%**) in fiscal 2024, mainly due to the significant drop in revenue[153](index=153&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) As of May 25, 2024, the company had **$108.9 million** in cash and **$173.6 million** available credit, with cash from operations at **$21.9 million** for fiscal 2024 - As of May 25, 2024, the company had **$108.9 million** in cash and cash equivalents and no debt outstanding under its **$175.0 million** credit facility, with **$173.6 million** remaining capacity[157](index=157&type=chunk)[160](index=160&type=chunk) - The company is undergoing a multi-year technology platform upgrade, with an estimated **$10.0 million to $20.0 million** in remaining investments expected, largely in fiscal 2025[163](index=163&type=chunk) - In fiscal 2024, the company acquired CloudGo for initial cash consideration of **$7.4 million** and entered an agreement to acquire Reference Point, which closed on July 1, 2024[165](index=165&type=chunk)[166](index=166&type=chunk) Cash Flow Summary (Fiscal Years Ended) | (In millions) | May 25, 2024 | May 27, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $21.9 | $81.6 | | Net cash (used in) provided by investing activities | $(8.6) | $3.9 | | Net cash used in financing activities | $(20.7) | $(71.9) | - Net cash used in financing activities in fiscal 2024 totaled **$20.7 million**, consisting mainly of **$18.8 million** in dividend payments and **$8.0 million** in common stock repurchases[201](index=201&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate and foreign currency exchange rate risks, with **17.8%** of fiscal 2024 revenues from outside the U.S - The company is exposed to interest rate risk on cash equivalents and its variable-rate credit facility, with no outstanding borrowings as of May 25, 2024[206](index=206&type=chunk)[207](index=207&type=chunk) - Foreign currency exchange rate risk exists as **17.8%** of fiscal 2024 revenues were generated outside the U.S., impacting reported results[208](index=208&type=chunk) - The company does not currently use financial hedges to mitigate foreign currency risks, believing the economic exposure has not been material[210](index=210&type=chunk) [Financial Statements and Supplementary Data](index=49&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements and the independent auditor's report, including detailed notes on accounting policies and financial components - The independent auditor, RSM US LLP, issued an unqualified opinion on the consolidated financial statements and internal control over financial reporting as of May 25, 2024[242](index=242&type=chunk) - Critical Audit Matters included the valuation of the RGP reporting unit for goodwill impairment testing and the acquisition-date contingent consideration for the CloudGo Pte Ltd acquisition[250](index=250&type=chunk)[275](index=275&type=chunk) [Consolidated Financial Statements](index=53&type=section&id=Consolidated%20Financial%20Statements) As of May 25, 2024, total assets were **$510.9 million**, total liabilities **$92.2 million**, with fiscal 2024 revenue at **$632.8 million** and net income at **$21.0 million** Consolidated Balance Sheet Highlights (as of May 25, 2024) | (In thousands) | Amount | | :--- | :--- | | Cash and cash equivalents | $108,892 | | Total current assets | $240,755 | | Goodwill | $216,579 | | Total assets | $510,914 | | Total current liabilities | $72,433 | | Total liabilities | $92,151 | | Total stockholders' equity | $418,763 | Consolidated Statement of Operations Highlights (Year ended May 25, 2024) | (In thousands, except per share) | Amount | | :--- | :--- | | Revenue | $632,801 | | Gross profit | $246,068 | | Income from operations | $28,776 | | Net income | $21,034 | | Diluted EPS | $0.62 | Consolidated Statement of Cash Flows Highlights (Year ended May 25, 2024) | (In thousands) | Amount | | :--- | :--- | | Net cash provided by operating activities | $21,919 | | Net cash used in investing activities | $(8,554) | | Net cash used in financing activities | $(20,709) | | Net decrease in cash | $(7,892) | [Notes to Consolidated Financial Statements](index=61&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including the CloudGo acquisition for **$7.4 million** cash and **$12.0 million** contingent consideration, **$216.6 million** goodwill, and a **29.5%** effective tax rate - On November 15, 2023, the company acquired CloudGo for **$7.4 million** cash (net of cash acquired) and up to **$12.0 million** in contingent consideration, including **$9.6 million** in goodwill[532](index=532&type=chunk)[533](index=533&type=chunk)[546](index=546&type=chunk) - Goodwill increased from **$206.7 million** in fiscal 2023 to **$216.6 million** in fiscal 2024 due to the CloudGo acquisition; a **$3.0 million** impairment for Sitrick was recorded in fiscal 2023[443](index=443&type=chunk)[442](index=442&type=chunk) - As of May 25, 2024, operating lease liabilities totaled **$13.3 million** with a weighted-average remaining lease term of **3.5 years**[415](index=415&type=chunk)[416](index=416&type=chunk) - The company has a **$175.0 million** senior secured revolving credit facility maturing in November 2026, with no debt outstanding and **$173.6 million** remaining capacity as of May 25, 2024[552](index=552&type=chunk)[556](index=556&type=chunk) - The effective tax rate for fiscal 2024 was **29.5%**, compared to **25.1%** in fiscal 2023 and **19.0%** in fiscal 2022[566](index=566&type=chunk) - During fiscal 2024, the company repurchased **606,254 shares** of common stock for **$8.0 million**, with **$42.2 million** remaining available under the repurchase program as of May 25, 2024[596](index=596&type=chunk) - Stock-based compensation expense was **$5.7 million** in fiscal 2024, a decrease from **$9.5 million** in fiscal 2023[590](index=590&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=89&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[640](index=640&type=chunk) [Controls and Procedures](index=89&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of May 25, 2024 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of May 25, 2024[641](index=641&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of May 25, 2024, a conclusion supported by the independent auditor's audit[654](index=654&type=chunk)[632](index=632&type=chunk) [Other Information](index=90&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[656](index=656&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=90&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[405](index=405&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=90&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 company's 2024 proxy statement - Information for this item is incorporated by reference from the company's 2024 proxy statement[407](index=407&type=chunk) [Executive Compensation](index=90&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2024 proxy statement - Information for this item is incorporated by reference from the company's 2024 proxy statement[408](index=408&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=90&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the 2024 proxy statement, detailing outstanding options and available securities under equity plans - Information regarding security ownership is incorporated by reference from the company's 2024 proxy statement[409](index=409&type=chunk) Equity Compensation Plan Information (as of May 25, 2024) | Category | Number of Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Number of Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 3,422,166 | $16.36 | 2,518,159 | [Certain Relationships and Related Transactions, and Director Independence](index=91&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's 2024 proxy statement - Information for this item is incorporated by reference from the company's 2024 proxy statement[426](index=426&type=chunk) [Principal Accountant Fees and Services](index=91&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2024 proxy statement - Information for this item is incorporated by reference from the company's 2024 proxy statement[412](index=412&type=chunk) Part IV [Exhibit and Financial Statement Schedules](index=92&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including an exhibit index - This item includes the consolidated financial statements, notes, and the report of the independent registered public accounting firm[429](index=429&type=chunk)[434](index=434&type=chunk) - An index of exhibits filed with the report is provided, including corporate governance documents, material contracts, and certifications[661](index=661&type=chunk)[430](index=430&type=chunk) [Form 10-K Summary](index=95&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[435](index=435&type=chunk)

Financial Data and Key Metrics Changes - In Q4, the company achieved revenue of $148.2 million and a gross margin of 40.2%, both significantly above the high end of the outlook ranges provided in April [60] - The run rate SG&A was $46.5 million, reflecting an 11% improvement from the previous fiscal year, primarily due to lower management compensation costs [68] - Adjusted EBITDA improved to $13.1 million, resulting in an 8.8% adjusted EBITDA margin during the quarter [61] - Revenue declined by 20% year-over-year on a same-day constant currency basis, with demand in North America and Europe remaining cautious [62] Business Line Data and Key Metrics Changes - Countsy and Veracity showed positive performance, with Countsy growing revenue year-over-year and Veracity achieving its best top-line performance since joining RGP in 2019 [63] - The Asia Pacific region experienced a 9% year-over-year revenue growth, driven by project opportunities with multinational clients [63] Market Data and Key Metrics Changes - The pricing environment remained competitive globally, with the enterprise average bill rate decreasing to $120 from $129 a year ago, although the U.S. standalone average bill rate increased by 1% [66] - The company noted a heavier mix of business in Europe and Asia Pacific, which typically results in lower gross margins [65] Company Strategy and Development Direction - The company is focusing on evolving its business into three core engagement models: on-demand talent, consulting, and outsourced services, to better meet client needs [19][28] - A new enterprise brand will be launched to enhance stakeholder understanding of the company's offerings and differentiate it from competitors [22] - The acquisition of Reference Point, a management consulting firm, is expected to expand the company's advisory services in the financial services sector [36][70] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, anticipating improvements as clients begin to invest more confidently [14][17] - The company is preparing for a potential upturn in demand, emphasizing the importance of talent acquisition and management to respond quickly to client needs [87] - The first quarter outlook projects revenue between $135 million and $140 million, reflecting typical summer seasonality and ongoing macroeconomic challenges [75] Other Important Information - The company maintains a strong balance sheet with $109 million in cash and no outstanding debt, allowing for continued investment in strategic areas [69] - The company is on track to complete its technology transformation project by the end of the calendar year [72] Q&A Session Summary Question: How has the rollout of talent management and contract management systems gone? - Management reported an outstanding launch with significant efficiency improvements and plans for international rollout [84][85] Question: How well positioned is the company if an upturn occurs sooner than expected? - Management highlighted three main engines of revenue, talent acquisition, and delivery that are ready to respond quickly to increased demand [87] Question: What are the company's thoughts on being more aggressive with share buybacks? - Management indicated that the current stock price is attractive for buybacks and that they may increase the pace of repurchases [89] Question: What is the organic constant currency same-day revenue year-over-year for the first quarter? - The company expects a decline of approximately 20% on a constant currency basis for the first quarter [94] Question: Are there specific sectors driving the outperformance in Q4? - North America, particularly in healthcare and financial services, performed better than expected, along with strong performance in Asia Pacific [102]