Delivered Positive Operating Cash Flow in an
First Quarter Fiscal 2021 Highlights Compared to Prior Fiscal Year First Quarter:
-
Revenue of
$147.3 million compared to$172.2 million , or down 14.4% -
Gross profit of
$57.9 million compared to$67.5 million - Gross margin improved 10 basis points to 39.3%
-
SG&A of
$51.2 million , an improvement of$5.8 million compared to$57.0 million -
Net income of
$2.3 million compared to$4.9 million -
Diluted earnings per common share of
$0.07 compared to$0.15 -
Adjusted diluted earnings per common share of
$0.14 compared to$0.18 - Adjusted EBITDA margin of 6.9%, consistent with prior year quarter
-
Cash provided by operating activities of
$18.6 million compared to cash used in operating activities of$3.0 million -
Available financial liquidity of
$145.2 million as ofAugust 29, 2020 , up from$126.3 million as ofMay 30, 2020 -
Cash dividend declared of
$0.14 per share, consistent with prior year quarter
Management Commentary
“While revenue was impacted by the global pandemic, we delivered positive operating cash flow in what is normally a cash outflow quarter by improving our cost structure and sustaining gross margins through effective pricing discipline,” said
|
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS (Amounts in thousands, except percentages and per share amounts) |
||||||||||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
Three Months Ended (Note) |
||||||||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
2020 |
|
|
2020 |
|
|
2019 |
||
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
||
|
Revenue |
$ |
147,346 |
|
|
$ |
178,569 |
|
|
$ |
172,225 |
|
Direct cost of services |
|
89,449 |
|
|
|
106,386 |
|
|
|
104,722 |
|
Gross margin |
|
57,897 |
|
|
|
72,183 |
|
|
|
67,503 |
|
Selling, general and administrative expenses |
|
51,154 |
|
|
|
62,035 |
|
|
|
56,978 |
|
Amortization of intangible assets |
|
1,530 |
|
|
|
1,592 |
|
|
|
1,094 |
|
Depreciation expense |
|
1,007 |
|
|
|
1,106 |
|
|
|
1,369 |
|
Operating income |
|
4,206 |
|
|
|
7,450 |
|
|
|
8,062 |
|
Interest expense, net |
|
495 |
|
|
|
535 |
|
|
|
482 |
|
Other income |
|
(530 |
) |
|
|
(100 |
) |
|
|
– |
|
Income before provision for income taxes |
|
4,241 |
|
|
|
7,015 |
|
|
|
7,580 |
|
Provision for income taxes |
|
1,957 |
|
|
|
2,948 |
|
|
|
2,641 |
|
Net income |
$ |
2,284 |
|
|
$ |
4,067 |
|
|
$ |
4,939 |
|
Net income per common share: |
|
|
|
|
|
|
|
|
||
|
Basic |
$ |
0.07 |
|
|
$ |
0.13 |
|
|
$ |
0.16 |
|
Diluted |
$ |
0.07 |
|
|
$ |
0.13 |
|
|
$ |
0.15 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
||
|
Basic |
|
32,183 |
|
|
|
32,086 |
|
|
|
31,788 |
|
Diluted |
|
32,232 |
|
|
|
32,091 |
|
|
|
32,267 |
|
Cash dividends declared per common share |
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
||
|
Revenue by Geography |
|
|
|
|
|
|
|
|
||
|
Revenue |
|
|
|
|
|
|
|
|
||
|
|
$ |
120,614 |
|
|
$ |
148,568 |
|
|
$ |
140,376 |
|
|
|
16,292 |
|
|
|
18,383 |
|
|
|
18,763 |
|
|
|
10,440 |
|
|
|
11,618 |
|
|
|
13,086 |
|
Total revenue |
$ |
147,346 |
|
|
$ |
178,569 |
|
|
$ |
172,225 |
|
|
|
|
|
|
|
|
|
|
||
|
Cash dividend |
|
|
|
|
|
|
|
|
||
|
Per common share declared |
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
Total cash dividends paid |
$ |
4,512 |
|
|
$ |
4,501 |
|
|
$ |
4,106 |
|
Note: The fourth quarter of fiscal 2020 included 14 weeks. Both the first quarter of fiscal 2021 and the first quarter of fiscal 2020 included 13 weeks. |
||||||||||
First Quarter Fiscal 2021
Revenue for the first quarter of fiscal 2021 was
The decline in
On a sequential quarter basis, fiscal 2021 first quarter revenue declined
Gross margin for the first quarter of fiscal 2021 improved 10 basis points to 39.3% compared to the first quarter of fiscal 2020 and declined 110 basis points sequentially. The year-over-year improvement was primarily attributable to lower passthrough revenue from client reimbursement and lower consultant vacation accrual and holiday pay partially driven by the timing of the
SG&A was
The first quarter of fiscal 2021 had a provision for income taxes of
In
With respect to the RIF, the Company has communicated the proposed plan to employees and is in the process of consulting and/or negotiating with impacted employees their departure from the Company in accordance with local laws. The exact amount and timing of payments are subject to a number of variables, including individual negotiations and, in some instances, government approval. The Company currently expects to complete the RIF by the end of fiscal 2021, with total employee termination costs ranging from approximately
Concurrently, the Company has begun taking necessary steps to exit real estate leases and other ancillary contracts in certain European markets, and currently expects to complete the majority of the lease and contract terminations by the end of fiscal 2021. While the exact amount and timing of the expenses and resulting payments are subject to a number of variables, the Company currently expects to incur cash and non-cash charges related to such exit initiatives of approximately
Conference Call Information
RGP will hold a conference call for analysts and investors at
About RGP
RGP is a global consulting firm that enables rapid business outcomes by bringing together the right people to create transformative change. As a human capital partner to our global client base, we support our clients’ needs through both professional staffing and project execution in the areas of transactions, regulations, and transformations. Our pioneering approach to workforce strategy and our agile human capital model quickly align the right resources for the work at hand with speed and efficiency. Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our clients’, consultants’ and partners’ success. Our mission as an employer is to connect our team members to meaningful opportunities that further their career ambitions within the context of a supportive talent community of dedicated professionals. With approximately 3,300 professionals, we annually engage with over 2,400 clients around the world from more than 60 physical practice offices and multiple virtual offices. We are their partner in delivering on the future of work. Headquartered in
The Company is listed on the Nasdaq Global Select Market, the exchange’s highest tier by listing standards. To learn more about RGP, visit: http://www.rgp.com. (RGP-F)
Forward-Looking Statements
Certain statements in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by words such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “remain,” “should” or “will” or the negative of these terms or other comparable terminology. In this press release, such statements include statements regarding the expected impact of the COVID-19 pandemic on our business and operating results and the expected impact of our previously announced operational initiatives, our restructuring activities and our growth and operational plans. Such statements and all phases of the Company’s operations are subject to known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements and those of our industry to differ materially from those expressed or implied by these forward-looking statements. Risks and uncertainties include uncertainties regarding the impact of the COVID-19 pandemic on our business and the economy generally, our ability to successfully execute on our strategic initiatives, our ability to realize the level of benefit that we expect from our restructuring initiatives, our ability to compete effectively in the highly competitive professional services market and to secure new projects from clients, our ability to successfully integrate any acquired companies, seasonality, overall economic conditions and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended
Use of Non-GAAP Financial Measures
The Company utilizes certain financial measures and key performance indicators that are not defined by, or calculated in accordance with, GAAP to assess our financial and operating performance. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of operations; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented. The following non-GAAP measures are presented in this press release:
-
Same day constant currency revenue is adjusted for the following items:
- Currency impact. In order to remove the impact of fluctuations in foreign currency exchange rates, the Company calculates constant currency revenue, which represents the outcome that would have resulted had exchange rates in the current period been the same as those in effect in the comparable prior period.
- Business days impact. In order to remove the fluctuations caused by comparable periods having different number of business days, the Company calculates same day revenue as current period revenue (adjusted for currency impact) divided by the number of business days in the current period, multiplied by the number of business days in the comparable prior period. The number of business days in each respective period is provided in the “Number of Business Days” section of the “Reconciliation of GAAP to Non-GAAP Financial Measures” table below.
- Adjusted EBITDA is calculated as net income before amortization of intangible assets, depreciation expense, interest and income taxes plus stock-based compensation expense, restructuring costs, and plus or minus contingent consideration adjustments.
- Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue.
- Cash tax rate excludes the non-cash tax impact of stock option expirations, non-cash tax impact of valuation allowances on international deferred tax assets, and other non-cash tax items.
- Adjusted provision for income taxes is calculated based on the Company’s cash tax rates, which exclude the non-cash tax impact of stock option expirations, non-cash tax impact of valuation allowances on international deferred tax assets, and other non-cash tax items.
- Beginning in the first quarter of fiscal 2021, adjusted diluted earnings per common share is calculated as diluted earnings per common share, plus the per share impact of stock-based compensation expense and restructuring costs, plus or minus the per share impact of contingent consideration adjustments, and adjusted for the related tax effects of these adjustments. The prior year adjusted diluted earnings per common share has been revised to conform to the current year definition.
We believe the above-mentioned non-GAAP measures, which are used by management to assess the core performance of our Company, provide useful information and additional clarity of our operating results to our investors in their own evaluation of the core performance of our Company and facilitate a comparison of such performance from period to period. These are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for net income or other cash flow data prepared in accordance with GAAP for purposes of analyzing our profitability or liquidity. These measures should be considered in addition to, and not as a substitute for, revenue, net income, earnings per share, cash flows or other measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
||||||||||||||
|
|
Three Months Ended |
|
|
Three Months Ended |
||||||||||
|
Revenue by Geography |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
2020 |
|
|
2020 |
|
|
|
2020 |
|
|
2019 |
||
|
(Amounts in thousands, except number of business days) |
(Unaudited) |
|
|
|
(Unaudited) |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
As reported (GAAP) |
$ |
120,614 |
|
|
$ |
148,568 |
|
|
$ |
120,614 |
|
|
$ |
140,376 |
|
Currency impact |
|
(56 |
) |
|
|
|
|
|
|
192 |
|
|
|
|
|
Business days impact |
|
9,418 |
|
|
|
|
|
|
|
(1,888 |
) |
|
|
|
|
Same day constant currency revenue |
$ |
129,976 |
|
|
|
|
|
|
$ |
118,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
As reported (GAAP) |
$ |
16,292 |
|
|
$ |
18,383 |
|
|
$ |
16,292 |
|
|
$ |
18,763 |
|
Currency impact |
|
(692 |
) |
|
|
|
|
|
|
(386 |
) |
|
|
|
|
Business days impact |
|
604 |
|
|
|
|
|
|
|
(247 |
) |
|
|
|
|
Same day constant currency revenue |
$ |
16,204 |
|
|
|
|
|
|
$ |
15,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
As reported (GAAP) |
$ |
10,440 |
|
|
$ |
11,618 |
|
|
$ |
10,440 |
|
|
$ |
13,086 |
|
Currency impact |
|
(158 |
) |
|
|
|
|
|
|
21 |
|
|
|
|
|
Business days impact |
|
490 |
|
|
|
|
|
|
|
82 |
|
|
|
|
|
Same day constant currency revenue |
$ |
10,772 |
|
|
|
|
|
|
$ |
10,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
As reported (GAAP) |
$ |
147,346 |
|
|
$ |
178,569 |
|
|
$ |
147,346 |
|
|
$ |
172,225 |
|
Currency impact |
|
(906 |
) |
|
|
|
|
|
|
(173 |
) |
|
|
|
|
Business days impact |
|
10,512 |
|
|
|
|
|
|
|
(2,053 |
) |
|
|
|
|
Same day constant currency revenue |
$ |
156,952 |
|
|
|
|
|
|
$ |
145,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Number of Business Days |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
64 |
|
|
|
69 |
|
|
|
64 |
|
|
|
63 |
|
|
|
65 |
|
|
|
67 |
|
|
|
65 |
|
|
|
64 |
|
|
|
63 |
|
|
|
66 |
|
|
|
63 |
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
(1) This represents the number of business days in |
||||||||||||||
|
(2) This represents the number of business days in the country or countries in which the revenues are most concentrated within the geography. |
||||||||||||||
|
|
|
|
|
|
|||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
|||||||
|
(Amounts in thousands, except per share amounts and percentages) |
|||||||
|
|
|
|
|
|
|
||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
|
Adjusted EBITDA |
2020 |
|
2019 |
||||
|
|
(Unaudited) |
||||||
|
Net income |
$ |
2,284 |
|
|
$ |
4,939 |
|
|
Adjustments: |
|
|
|
|
|
||
|
Amortization of intangible assets |
|
1,530 |
|
|
|
1,094 |
|
|
Depreciation expense |
|
1,007 |
|
|
|
1,369 |
|
|
Interest expense |
|
495 |
|
|
|
482 |
|
|
Provision for income taxes |
|
1,957 |
|
|
|
2,641 |
|
|
EBITDA |
|
7,273 |
|
|
|
10,525 |
|
|
Stock-based compensation expense |
|
1,397 |
|
|
|
1,515 |
|
|
Restructuring costs |
|
1,016 |
|
|
|
– |
|
|
Contingent consideration adjustment |
|
530 |
|
|
|
(131 |
) |
|
Adjusted EBITDA |
$ |
10,216 |
|
|
$ |
11,909 |
|
|
Revenue |
$ |
147,346 |
|
|
$ |
172,225 |
|
|
Adjusted EBITDA Margin |
|
6.9 |
% |
|
|
6.9 |
% |
|
|
|
|
|
|
|
||
|
Adjusted Diluted Earnings per Common Share |
|
|
|
|
|
||
|
Diluted earnings per common share, as reported |
$ |
0.07 |
|
|
$ |
0.15 |
|
|
Stock-based compensation expense |
|
0.04 |
|
|
|
0.05 |
|
|
Restructuring costs |
|
0.03 |
|
|
|
– |
|
|
Contingent consideration adjustment |
|
0.02 |
|
|
|
– |
|
|
Income tax impact of adjustments |
|
(0.02 |
) |
|
|
(0.02 |
) |
|
Adjusted diluted earnings per common share |
$ |
0.14 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
||
|
Adjusted Provision for Income Taxes and Cash Tax Rate |
|
|
|
|
|
||
|
Provision for income taxes |
$ |
1,957 |
|
|
$ |
2,641 |
|
|
Effect of non-cash tax items: |
|
|
|
|
|
||
|
Stock option expirations |
|
(149 |
) |
|
|
(43 |
) |
|
Valuation allowance on international deferred tax assets |
|
(388 |
) |
|
|
(333 |
) |
|
Other non-cash tax items |
|
(20 |
) |
|
|
– |
|
|
Adjusted provision for income taxes |
$ |
1,400 |
|
|
$ |
2,265 |
|
|
|
|
|
|
|
|
||
|
Effective tax rate |
|
46 |
% |
|
|
35 |
% |
|
Total effect of non-cash tax items on effective tax rate |
|
(13 |
%) |
|
|
(5 |
%) |
|
Cash tax rate |
|
33 |
% |
|
|
30 |
% |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
SELECTED BALANCE SHEET, CASH FLOW AND OTHER INFORMATION |
|||||||
|
(Amounts in thousands, except consultant headcount and average rates) |
|||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
SELECTED BALANCE SHEET INFORMATION: |
2020 |
|
2020 |
||||
|
|
(Unaudited) |
|
|
|
|||
|
Cash and cash equivalents |
$ |
114,551 |
|
|
$ |
95,624 |
|
|
Accounts receivable, net of allowance for doubtful accounts |
$ |
108,242 |
|
|
$ |
124,986 |
|
|
Total assets |
$ |
529,162 |
|
|
$ |
529,181 |
|
|
Current liabilities |
$ |
88,058 |
|
|
$ |
94,901 |
|
|
Long-term debt |
$ |
88,000 |
|
|
$ |
88,000 |
|
|
Total liabilities |
$ |
219,234 |
|
|
$ |
225,520 |
|
|
Total stockholders’ equity |
$ |
309,928 |
|
|
$ |
303,661 |
|
|
|
|
|
|
|
|
||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
|
SELECTED CASH FLOW INFORMATION: |
2020 |
|
2019 |
||||
|
|
(Unaudited) |
|
|
|
|||
|
Cash flow — operating activities |
$ |
18,586 |
|
|
$ |
(3,038 |
) |
|
Cash flow — investing activities |
$ |
(247 |
) |
|
$ |
(24,822 |
) |
|
Cash flow — financing activities |
$ |
(1,530 |
) |
|
$ |
30,744 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
SELECTED OTHER INFORMATION: |
2020 |
|
2020 |
||||
|
Consultant headcount, end of period |
|
2,444 |
|
|
|
2,495 |
|
|
Average bill rate |
$ |
124 |
|
|
$ |
127 |
|
|
Average pay rate |
$ |
62 |
|
|
$ |
63 |
|
|
Average bill rate (constant currency-Q4 20) |
$ |
123 |
|
|
$ |
— |
|
|
Average pay rate (constant currency-Q4 20) |
$ |
61 |
|
|
$ |
— |
|
|
Common shares outstanding, end of period |
|
32,433 |
|
|
|
32,144 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201007005916/en/
Media Contact:
(US+) 1-310-788-2850
mike_sitrick@sitrick.com
Analyst Contact:
(US+) 1-714-430-6500
jennifer.ryu@rgp.com
Source:
