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View All NewsResources Connection revenue rises 6.2%, European business drives growth
Professional staffing provider Resources Connection Inc. (NASD: RECN) reported revenue rose 6.2% in its fiscal second quarter ended Nov. 25, with a lion’s share of the growth coming from Europe.
| (US$ thousands) | Q2 2018 | Q2 2017 | % change | % change constant currency |
| Revenue | $156,738 | $147,558 | 6.2% | 5.3% |
| Gross margin | $59,419 | $56,510 | 5.1% | |
| Gross margin percentage | 37.9% | 38.3% | ||
| Net income | $8,138 | $5,692 | 43.0% |
US revenue rose 1.5% in the second quarter at the Irvine, Calif.-based firm. However, international revenue rose 24.7%, which the company attributed to strength in the UK, Ireland and Sweden.
Looking only at the European portion of revenue, Resources Connection reported an increase of 44.0%, in part due to its acquisition in August of a professional services firm based in Germany called taskforce-Management on Demand AG. Excluding the taskforce acquisition, European revenue rose 20.9%.
The company also said its 40 basis-point decline in gross margin for the quarter was primarily related to the taskforce acquisition.
Resources Connection also noted Asia-Pacific revenue fell year over year.
Resources Connection is implementing strategic initiatives to contain costs and drive revenue growth. The second quarter includes approximately $2.9 million related to severance, acquisition, transformation and integration costs; it incurred charges of approximately $1.5 million related to severance expenses in the year-ago quarter.
In addition, Resources Connection on Dec. 4 closed on its acquisition of Accretive Solutions Inc. — a Chicago-based firm that provides consulting, staffing and outsourcing services — for $19.4 million in cash plus stock.
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“I am pleased with our performance this quarter and the continued progress we have made towards implementing our strategic initiatives,” said President and CEO Kate Duchene. “Our international performance remains strong, and I am especially proud of our eighth successive quarter of revenue growth in Europe. Additionally, our performance in North America is strengthening, and we believe we can experience further growth in our third quarter as our core business continues to grow and we integrate our recent acquisition, Accretive, into RGP.”
Share price and market cap
Shares in Resources Connection rose 0.66% to $15.35 as of noon Eastern time. The company had a market cap of $462.5 million.