Resources nection(US:RGP)2020-04-03 01:33Financial Data and Key Metrics Changes - Total revenue for Q3 fiscal '20 was $168.1 million, a 6.4% decrease year-over-year and an 8.9% decrease sequentially [59] - Gross margin for Q3 was 36.5%, down 130 basis points year-over-year and 380 basis points sequentially [60] - Net income for Q3 was $6.9 million or $0.21 per diluted share, up from $5.8 million or $0.18 per diluted share in the prior year quarter [61] Business Line Data and Key Metrics Changes - North America revenue decreased by $8 million or 5.4% year-over-year, with Veracity contributing $5.4 million [63] - Europe’s revenue decreased 13.8% year-over-year, with a $2.4 million decrease due to exit from the Nordics and Belgium markets [67] - Asia-Pacific revenue decreased 4.8% year-over-year, with significant impacts from COVID-19, particularly in China and Hong Kong [68] Market Data and Key Metrics Changes - North America saw a decline in revenue due to holiday impacts, while some markets like San Antonio and Seattle showed improvement [66] - The UK performed strongly compared to the prior year quarter, while Asia-Pacific showed signs of stabilization in China as the spread of COVID-19 slowed [69] Company Strategy and Development Direction - The company is undergoing a restructuring initiative called Project Strength, focusing on streamlining management, eliminating non-essential headcount, and reducing real estate spend [16][18] - The strategic shift towards a more virtual operating model aligns with the development of a human cloud platform expected in fiscal '21 [17] - The company aims to capitalize on macro trends favoring agile workforce strategies and project-oriented approaches [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to adapt to the challenges posed by the COVID-19 pandemic [36][39] - The company anticipates that many transformation initiatives will continue despite the uncertain environment, with a focus on outreach and innovative client support [43] - There is significant uncertainty regarding the impact of COVID-19 on demand and client decisions, with some cancellations and delays already observed [77] Other Important Information - The company expects annual pre-tax savings of $13 million to $15 million from personnel cost reductions and $3 million to $4 million from reduced occupancy costs [81][83] - Cash and cash equivalents at the end of Q3 were $35.9 million, with receivables at $130.9 million [85] - The company has adopted a new stock ticker symbol, RGP, to enhance market clarity [91] Q&A Session Summary Question: What percentage of billable associates are able to work remotely? - Almost 100% of billable consultants are delivering remotely and continue to bill [99] Question: What might be the decremental margins in the fourth quarter? - Management indicated that there would be downward pressure on margins as they aim to preserve revenue and remain flexible for clients, but specific numbers are difficult to predict due to the fluid situation [102] Question: What percentage of revenue is associated with the practices being terminated? - The eight offices being closed represent less than 1% of total revenue [104][106] Question: How is the pipeline and ability to generate new engagements being impacted? - While the pipeline has seen some degradation, it remains higher than the previous year, with specific impacts noted in the Tri-State area due to the pandemic [109] Question: What is the current situation in China regarding business normalization? - Business in Shanghai is reported to be about 80% back to normal, with revenue streams starting to stabilize [116]