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View All NewsResources Connection revenue falls 2% in fiscal Q3
Resources Connection Inc. (NASD: RECN) reported revenue fell 2.0% year over year, or 1.2% in constant currency, to $143.8 million in its fiscal third quarter ended Feb. 25.
Third-quarter US revenue fell 3.4% to $116.9 million, primarily impacted by declines in the financial services and energy sectors. International revenue rose 4.5% year over year, or 8.8% in constant currency, to $26.9 million. Revenue increased 4.7% in Europe and 5.0% in the Asia-Pacific region.
Gross margin slipped from the year-ago quarter, which the company attributed to an unfavorable change in the bill rate/pay rate ratio and an increase in costs related to the company’s self-insured medical program.
| (US$ thousands) | Q3 2017 | Q3 2016 | % change | % change constant currency |
| Revenue | $143,844 | $146,779 | -2.0% | -1.2% |
| Gross margin | $52,247 | $54,928 | -4.9% | |
| Gross margin percentage | 36.3% | 37.4% | ||
| Net income | $2,884 | $5,957 | -51.6% |
The company is implementing three strategic initiatives to help improve cost containment and revenue generation. Reducing selling, general and administrative expenses by approximately $7.0 million per year will result in the company taking a charge of approximately $2.0 to $2.5 million in the fourth quarter, related primarily to severance expenses and office consolidations. This will result in a reduction in overhead expenses and head count, and is expected to be completed by the end of the fiscal 2017 fourth quarter. Initiatives also include improving the sales culture and business development process, and redesigning the business model to enhance client offerings.
Irvine, Calif.-based Resources Connection ranks as the sixth-largest US provider of finance/accounting staffing. Its operating subsidiary is Resources Global Professionals.
Quote
“I am pleased with the improving performance that we have seen in Europe and Asia Pacific, but there is more we can do to improve results in our North American practices, where we have been adversely affected by negative trends in our financial services and oil and gas businesses,” said President and CEO Kate Duchene.
Share price and market cap
Shares in Resources Connection fell 12.62% in early afternoon trading today to $14.02 and the company had a market cap of $416.87 million, according to Yahoo.