Resources Connection Inc. (RECN, Financial) filed Quarterly Report for the period ended 2010-11-27.
Resources Connection Inc. has a market cap of $872.5 million; its shares were traded at around $18.95 with a P/E ratio of 631.7 and P/S ratio of 1.7. The dividend yield of Resources Connection Inc. stocks is 0.9%. Resources Connection Inc. had an annual average earning growth of 2.7% over the past 10 years.RECN is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
On a sequential quarter basis, fiscal 2011 second quarter revenues increased from $123.7 million to $138.5 million and hours improved about 8.9%. The Companys sequential revenue increased in all three practice areas, North America, Europe and Asia Pacific. The increase in hours worked reflects reduced vacation time by our consultants as compared to the summer season during the first quarter, both in the United States as well as internationally. Bill rates also improved about 2.3% between the first quarter and second quarter of fiscal 2011, partly attributable to a higher level of revenue from the Sitrick Brincko Group and our international operations, which traditionally have a higher average bill rate per hour. Although the increase in revenues helped leverage benefit costs for consultants in the second quarter as compared to the first quarter, the number of lower margin international engagements increased in the second quarter compared to the U.S., pay rates per hour increased 4.8% and zero gross margin client reimbursements increased, resulting in an increase in the direct cost of services percentage from 60.2% in the first quarter to 60.5% in the second quarter. The increase in revenues had a favorable impact on leverage, evidenced by the improvement in the ratio of selling, general and administrative expenses (S,G & A) to revenue from 33.0% to 30.8%, for the quarters ended August 28, 2010 and November 27, 2010, respectively.
Direct Cost of Services. Direct cost of services increased $8.6 million, or 11.4%, to $83.8 million for the three months ended November 27, 2010 from $75.2 million for the three months ended November 28, 2009. Direct cost of services increased because the number of hours worked rose 12.4% in the second quarter of fiscal 2011 as compared to the same period of fiscal 2010 and the average pay rate per hour to our consultants was about the same. The direct cost of services as a percentage of revenue (the direct cost of services percentage) was 60.5% and 61.9% for the three months ended November 27, 2010 and November 28, 2009, respectively. The improvement in the direct cost of services percentage between the quarters resulted from the blended impact of higher margin work performed for Sitrick Brincko Group clients and fewer claims under the Companys self-insured healthcare plans, offset by the increase in international operations during the quarter, which traditionally have lower margin work, and an increase in the amount of zero gross margin client reimbursements.
Selling, General and Administrative Expenses. S, G & A as a percentage of revenue was 30.8% and 36.4% for the quarters ended November 27, 2010 and November 28, 2009, respectively. S, G &A decreased $1.5 million, or 3.4%, to $42.7 million for the three months ended November 27, 2010 from $44.2 million for the three months ended November 28, 2009.
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Resources Connection Inc. has a market cap of $872.5 million; its shares were traded at around $18.95 with a P/E ratio of 631.7 and P/S ratio of 1.7. The dividend yield of Resources Connection Inc. stocks is 0.9%. Resources Connection Inc. had an annual average earning growth of 2.7% over the past 10 years.RECN is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Revenue. Revenue increased $17.0 million, or 14.0%, to $138.5 million for the three months ended November 27, 2010 from $121.5 million for the three months ended November 28, 2009. Included in revenue for the three months ended November 27, 2010 was $6.7 million from the operations of Sitrick Brincko Group, acquired November 20, 2009; a negligible amount of revenue from Sitrick Brincko Group was recognized in the second quarter of last year. Excluding the impact of Sitrick Brincko Group, revenue increased 8.7%, quarter over quarter, stemming from revenue increases in the United States and in the Asia Pacific region compared to the second quarter of fiscal 2010. We believe the increase is partially attributable to the improving economic environment and that we have improved the awareness of our service offerings with clients and prospective clients through our completed and on-going engagements in our various service lines.On a sequential quarter basis, fiscal 2011 second quarter revenues increased from $123.7 million to $138.5 million and hours improved about 8.9%. The Companys sequential revenue increased in all three practice areas, North America, Europe and Asia Pacific. The increase in hours worked reflects reduced vacation time by our consultants as compared to the summer season during the first quarter, both in the United States as well as internationally. Bill rates also improved about 2.3% between the first quarter and second quarter of fiscal 2011, partly attributable to a higher level of revenue from the Sitrick Brincko Group and our international operations, which traditionally have a higher average bill rate per hour. Although the increase in revenues helped leverage benefit costs for consultants in the second quarter as compared to the first quarter, the number of lower margin international engagements increased in the second quarter compared to the U.S., pay rates per hour increased 4.8% and zero gross margin client reimbursements increased, resulting in an increase in the direct cost of services percentage from 60.2% in the first quarter to 60.5% in the second quarter. The increase in revenues had a favorable impact on leverage, evidenced by the improvement in the ratio of selling, general and administrative expenses (S,G & A) to revenue from 33.0% to 30.8%, for the quarters ended August 28, 2010 and November 27, 2010, respectively.
Direct Cost of Services. Direct cost of services increased $8.6 million, or 11.4%, to $83.8 million for the three months ended November 27, 2010 from $75.2 million for the three months ended November 28, 2009. Direct cost of services increased because the number of hours worked rose 12.4% in the second quarter of fiscal 2011 as compared to the same period of fiscal 2010 and the average pay rate per hour to our consultants was about the same. The direct cost of services as a percentage of revenue (the direct cost of services percentage) was 60.5% and 61.9% for the three months ended November 27, 2010 and November 28, 2009, respectively. The improvement in the direct cost of services percentage between the quarters resulted from the blended impact of higher margin work performed for Sitrick Brincko Group clients and fewer claims under the Companys self-insured healthcare plans, offset by the increase in international operations during the quarter, which traditionally have lower margin work, and an increase in the amount of zero gross margin client reimbursements.
Selling, General and Administrative Expenses. S, G & A as a percentage of revenue was 30.8% and 36.4% for the quarters ended November 27, 2010 and November 28, 2009, respectively. S, G &A decreased $1.5 million, or 3.4%, to $42.7 million for the three months ended November 27, 2010 from $44.2 million for the three months ended November 28, 2009.
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