Resources nection(US:RGP)2022-01-06 02:17Financial Data and Key Metrics Changes - Revenue for Q2 reached $200.2 million, representing a 31% year-over-year growth and exceeding the high end of guidance by $10 million [32] - Adjusted EBITDA doubled to nearly $25 million, with an adjusted EBITDA margin of 12.5%, the highest in a decade [8][31] - The effective tax rate for the quarter was 28%, with expectations of a favorable impact from the release of certain valuation allowances in the second half of fiscal '22 [39][64] Business Line Data and Key Metrics Changes - Professional staffing revenue increased by 41% year-over-year, while project consulting revenue grew by 26% [34] - Strategic client accounts grew by 27% year-over-year and 7% sequentially [34] - Digital transformation services, particularly through Veracity, saw a growth rate of 36% year-over-year [34] Market Data and Key Metrics Changes - North America revenue improved by 36% year-over-year, with the tri-state area and California leading growth at 51% and 36% respectively [35] - In Europe, revenue grew by 10% year-over-year, with the UK nearly doubling its revenue from the prior year quarter [35] - Asia-Pacific revenue grew by 18% year-over-year, led by Japan and India [35] Company Strategy and Development Direction - The company is focusing on enhancing its agile talent model to meet the growing demand for flexible workforce solutions [9][21] - The HUGO initiative, a digital engagement platform, is being piloted with plans for broader rollout in the next six months [13][51] - The establishment of an Advisory Board aims to provide strategic insights and enhance market strategies [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustained revenue growth driven by macro trends favoring agile workforce models and increased project initiatives [7][10] - The company anticipates continued strong performance in Q3, despite typical seasonal impacts and potential Omicron-related disruptions [43][88] - There is a focus on maintaining operational efficiency and controlling fixed costs to improve margins further [28][84] Other Important Information - The company maintained a quarterly dividend of $0.14 per share, reflecting a 3% dividend yield [41] - A new multi-bank credit facility was established, increasing borrowing capacity from $120 million to $175 million [40] Q&A Session Summary Question: HUGO rollout plans and market expansion - Management indicated a six-month timeframe for moving beyond the pilot stage, with potential expansion into Texas and Northern California [51] Question: Wage environment and inflation impact - The average pay rate has only slightly increased, with the agile talent model allowing for continuous market rate evaluations [53][55] Question: Share buyback opportunities - The company recently bought back $20 million in shares and plans to engage in opportunistic buybacks in the future [59] Question: Tax rate outlook - The effective tax rate of 28% is expected to be a good estimate moving forward, with potential benefits from releasing valuation allowances [64] Question: HUGO platform experience and roles filled - Early roles filled include accounting positions, with a focus on ensuring quality control before broader rollout [68][70]