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Resources Connection Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: January 3, 2013 06:06AM

Resources Connection Inc. (RECN) filed Quarterly Report for the period ended 2012-11-24. Resources Connection Inc has a market cap of $494.703 million; its shares were traded at around $12.13 with a P/E ratio of 21.5 and P/S ratio of 0.8. The dividend yield of Resources Connection Inc stocks is 2.1%. Resources Connection Inc had an annual average earning growth of 3.2% over the past 10 years.



Highlight of Business Operations:

Direct Cost of Services. Direct cost of services decreased $4.0 million, or 4.4%, to $86.0 million for the three months ended November 24, 2012 from $90.0 million for the three months ended November 26, 2011. The decrease was partially attributable to the impact of the strengthening U.S. dollar against currencies in countries in which we operate during the most recent quarter as compared to the prior year (the currency fluctuation also contributed to the 4.5% decrease between the two periods in the average pay rate per hour to our consultants). Client reimbursable expenses also declined about 16%. The number of hours worked also decreased 1.0% in the second quarter of fiscal 2013 as compared to the same period of fiscal 2012. The direct cost of services percentage of revenue was 60.9% and 62.1% for the three months ended November 24, 2012 and November 26, 2011, respectively. The improvement in the direct cost of services percentage between the quarters resulted from the current quarter favorable change in the bill rate/pay rate ratio and to a lesser extent the decrease in the amount of zero gross margin client reimbursements.

Selling, General and Administrative Expenses. Selling, general and administrative expenses (“S, G & A”) as a percentage of revenue was 30.0% and 29.7% for the quarters ended November 24, 2012 and November 26, 2011, respectively. S, G & A decreased $700,000, or 1.6%, to $42.3 million for the three months ended November 24, 2012 from $43.0 million for the three months ended November 26, 2011.

Revenue. Revenue decreased $4.9 million, or 1.7%, to $278.1 million for the six months ended November 24, 2012 from $283.0 million for the six months ended November 26, 2011. The number of hours worked in the first six months of fiscal 2013 increased about 0.4% compared with the prior year first six months while average bill rates declined about 1.6%, partially attributable to the impact of unfavorable currency rate changes between the first half of this year and last year. In addition, the revenue decrease in the period is partially attributable to client reimbursement revenue which declined approximately 19% compared with the prior year period.

Direct Cost of Services. Direct cost of services decreased $6.4 million, or 3.6%, to $169.5 million for the six months ended November 24, 2012 from $175.9 million for the six months ended November 26, 2011. The decrease was partially attributable to the impact of the strengthening U.S. dollar against currencies in countries in which we operate during the most recent period as compared to the prior year period (the currency fluctuation also contributed to the 3.1% decrease between the two periods in the average pay rate per hour to our consultants). Client reimbursable expenses also declined about 20%. The decrease in rate per hour was offset by an increase in the number of hours worked of 0.4% in the first half of fiscal 2013 as compared to the same period of fiscal 2012. The direct cost of services percentage of revenue was 60.9% and 62.2% for the six months ended November 24, 2012 and November 26, 2011, respectively. The improvement in the direct cost of services percentage between the two periods resulted from the favorable change in the bill rate/pay rate ratio in the first half of fiscal 2013 and the decrease in the amount of zero gross margin client reimbursements.

Selling, General and Administrative Expenses. S, G & A as a percentage of revenue was 30.3% and 30.2% for the six months ended November 24, 2012 and November 26, 2011, respectively. S, G & A decreased $1.2 million, or 1.4%, to $84.4 million for the six months ended November 24, 2012 from $85.6 million for the six months ended November 26, 2011.

Read the The complete Report



Stocks Discussed: RECN,
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