Yahoo Finance Resources Connection Inc (RGP) Reports Decline in Q3 Revenue and Earnings, Missing Analyst Estimates
Revenue: Reported at $151.3 million, falling short of the estimated $161.2047 million.
Net Income: Came in at $2.6 million, below the analyst projection of $4.749 million.
Earnings Per Share (EPS): Actual diluted EPS of $0.08, missing the estimated EPS of $0.145.
Gross Margin: Declined to 37.0% compared to 38.3% in the prior year quarter.
Adjusted EBITDA: Decreased to $10.8 million from $16.6 million year-over-year.
On April 3, 2024, Resources Connection Inc (NASDAQ:RGP), a global consulting firm, released its 8-K filing, reporting financial results for the third quarter of fiscal year 2024, which ended on February 24, 2024. The company, known for providing consulting and business initiative support services, saw a decrease in revenue and net income compared to the same quarter in the previous year, as well as a decline in earnings per share.
Resources Connection Inc operates primarily through its subsidiary, Resources Global Professionals, offering a range of services including financial reporting and analysis, strategy development, and program and project management across various sectors. Despite the company's efforts to enhance and expand its consulting capabilities, the reported quarter's results reflect the challenges faced in a "sluggish" client buying environment.
Revenue for the quarter was $151.3 million, a decrease from the $186.8 million reported in the third quarter of fiscal 2023. The company also experienced a 19.6% decline in same-day constant currency revenue, a non-GAAP measure. Gross margin fell to 37.0% from 38.3% in the prior year's quarter, impacted by a higher pay/bill ratio and reduced leverage of indirect cost of services on lower revenue. Selling, general and administrative (SG&A) expenses improved to $49.6 million from $59.4 million, primarily due to a reduction in bonuses and commissions, lower management compensation expense, and a decrease in stock compensation expense.
Net income for the quarter was $2.6 million, or $0.08 per diluted share, compared to $7.0 million, or $0.21 per diluted share, in the same quarter of the previous year. The company's Adjusted EBITDA was $10.8 million, with an Adjusted EBITDA margin of 7.1%, compared to $16.6 million and an 8.9% margin in the prior year quarter. Cash and cash equivalents, along with borrowings available under the senior secured revolving loan facility, totaled $287.4 million, an increase from $278.1 million.
CEO Kate Duchene commented on the quarter's performance, noting the successful launch of a new talent management system in North America and the acquisition of Reference Point, which is expected to be accretive to financial performance. Despite the challenges, she expressed optimism for future growth as clients move forward with transformational work.
In summary, while RGP has shown resilience in managing its expenses and launching new initiatives, the company's financial performance has been affected by the broader economic environment, resulting in revenue and earnings that did not meet analyst expectations. The firm's strategic acquisitions and technology transformations, however, may pave the way for improved performance in future quarters.
For further details on RGP's financial results, including segment performance and a full reconciliation of GAAP to non-GAAP financial measures, analysts and investors are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Resources Connection Inc for further details.
This article first appeared on GuruFocus.
