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Resources Connection cites cautious spending by clients, revenue slips

October 02 2013

Resources Connection Inc. (NASD: RECN), a provider of finance/accounting, legal and information technology staffing along with other services, reported revenue fell 3.8 percent year over year (3.7 percent on a constant dollar basis) to $131.7 million in its fiscal first quarter ended Aug. 24. The Irvine, Calif.-based company provides services through its Resources Global Professionals subsidiary.

“Our first quarter was challenging due to cautious spending by our clients,” said Tony Cherbak, president and chief executive officer of RGP. “However, we are encouraged to see Q-2 start positively with post Labor Day average weekly revenue over $11 million as some of our clients start larger scale initiatives.”

First-quarter U.S. revenue fell 2.5 percent compared to prior year’s first quarter while international revenue fell 8.1 percent year over year (7.5 percent on a constant dollar basis).

First-quarter gross margin narrowed to 37.7 percent from 39.0 percent in the same quarter last year. The decline in gross margin quarter-over-quarter was primarily attributable to increased healthcare costs and a decline in the bill rate/pay rate ratio.

Resource Connection’s first-quarter net income fell 24.4 percent to $3.7 million from $4.8 million in the year-ago quarter.

Resources Connection Inc. (NASD: RECN)
 
For the fiscal first quarter ended Aug. 24, 2013, compared with the same period in the previous fiscal year.
Revenue: $131.7 million, -3.8 percent
 
Net income: $3.7 million, -24.4 percent

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