10-Q 1 rgp-20240224x10q.htm 10-Q rgp-20240224x10q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 24, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to______ 

Commission File Number: 0-32113

 

RESOURCES CONNECTION, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

33-0832424

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

17101 Armstrong Avenue, Irvine, California 92614

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (714430-6400

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Exchange on Which Registered

Common stock, par value $0.01 per share

RGP

The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of March 28, 2024, 33,807,459 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

   

 

1


RESOURCES CONNECTION, INC.

INDEX

Page

PART I—FINANCIAL INFORMATION

ITEM 1.

Consolidated Financial Statements (Unaudited)

3

Consolidated Balance Sheets as of February 24, 2024 and May 27, 2023

3

Consolidated Statements of Operations for the Three and Nine Months Ended February 24, 2024 and February 25, 2023

4

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended February 24, 2024 and February 25, 2023

5

Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended February 24, 2024 and February 25, 2023

6

Consolidated Statements of Cash Flows for the Nine Months Ended February 24, 2024 and February 25, 2023

8

Notes to Consolidated Financial Statements

9

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

35

ITEM 4.

Controls and Procedures

36

PART II—OTHER INFORMATION

ITEM 1A.

Risk Factors

37

ITEM 5.

Other Information

37

ITEM 6.

Exhibits

38

Signatures

38


2


PART I—FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

RESOURCES CONNECTION, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value per share)

February 24,

May 27,

2024

2023

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

113,836

$

116,784

Trade accounts receivable, net of allowances of $2,976 and $3,283

as of February 24, 2024 and May 27, 2023, respectively

112,111

137,356

Prepaid expenses and other current assets

8,405

5,187

Assets held for sale

8,909

-

Income taxes receivable

8,080

4,739

Total current assets

251,341

264,066

Goodwill

216,955

206,722

Intangible assets, net

10,902

11,521

Property and equipment, net

4,346

15,380

Operating lease right-of-use assets

13,140

15,856

Deferred tax assets

11,030

10,701

Other non-current assets

15,450

7,753

Total assets

$

523,164

$

531,999

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and other accrued expenses

$

17,367

$

14,464

Accrued salaries and related obligations

48,529

64,776

Operating lease liabilities, current

5,538

7,460

Contingent consideration liabilities

1,774

-

Other current liabilities

10,939

10,384

Total current liabilities

84,147

97,084

Long-term debt

-

-

Operating lease liabilities, non-current

9,260

10,274

Deferred tax liabilities

9,567

7,136

Other non-current liabilities

5,330

2,985

Total liabilities

108,304

117,479

Commitments and contingencies (see Note 8 and 13)

 

 

Stockholders’ equity:

Preferred stock, $0.01 par value, 5,000 shares authorized; zero shares

issued and outstanding

-

-

Common stock, $0.01 par value, 70,000 shares authorized; 36,194 and

35,545 shares issued, and 33,808 and 33,475 shares outstanding as of

February 24, 2024 and May 27, 2023, respectively

363

355

Additional paid-in capital

387,933

378,657

Accumulated other comprehensive loss

(17,211)

(17,290)

Retained earnings

82,977

87,648

Treasury stock at cost, 2,386 and 2,070 shares as of February 24, 2024

and May 27, 2023, respectively

(39,202)

(34,850)

Total stockholders’ equity

414,860

414,520

Total liabilities and stockholders’ equity

$

523,164

$

531,999

The accompanying notes are an integral part of these consolidated financial statements.

3


RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

February 24,

February 25,

February 24,

February 25,

2024

2023

2024

2023

Revenue

$

151,307

$

186,777

$

484,603

$

591,194

Direct cost of services

95,299

115,170

298,118

353,770

Gross profit

56,008

71,607

186,485

237,424

Selling, general and administrative expenses

49,589

59,371

162,514

172,335

Goodwill impairment

-

2,955

-

2,955

Amortization expense

1,413

1,275

4,048

3,743

Depreciation expense

745

885

2,432

2,652

Income from operations

4,261

7,121

17,491

55,739

Interest (income) expense, net

(225)

147

(830)

662

Other (income)

(1)

(43)

(6)

(381)

Income before income tax expense (benefit)

4,487

7,017

18,327

55,458

Income tax expense (benefit)

1,937

(2)

7,765

12,867

Net income

$

2,550

$

7,019

$

10,562

$

42,591

Net income per common share:

Basic

$

0.08

$

0.21

$

0.32

$

1.27

Diluted

$

0.08

$

0.21

$

0.31

$

1.24

Weighted-average number of common and

common equivalent shares outstanding:

Basic

33,463

33,466

33,428

33,418

Diluted

33,759

34,149

33,906

34,245

Cash dividends declared per common share

$

0.14

$

0.14

$

0.42

$

0.42

The accompanying notes are an integral part of these consolidated financial statements.


4


RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

February 24,

February 25,

February 24,

February 25,

2024

2023

2024

2023

Net income

$

2,550

$

7,019

$

10,562

$

42,591

Foreign currency translation adjustment (loss) gain, net of tax

(678)

1,124

79

(2,151)

Total comprehensive income

$

1,872

$

8,143

$

10,641

$

40,440

The accompanying notes are an integral part of these consolidated financial statements.


5


RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

(Unaudited)

For the Three Months Ended February 24, 2024

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Treasury Stock

Comprehensive

Retained

Stockholders'

Shares

Amount

Capital

Shares

Amount

Loss

Earnings

Equity

Balances at November 25, 2023

35,929

$

360

$

383,662

2,422

$

(39,811)

$

(16,533)

$

85,926

$

413,604

Exercise of stock options

6

-

68

-

-

-

-

68

Stock-based compensation expense

-

-

1,177

-

-

-

-

1,177

Issuance of common stock purchased under

Employee Stock Purchase Plan

258

3

2,874

-

-

-

-

2,877

Issuance of restricted stock

-

-

-

(36)

609

-

(609)

-

Issuance of common stock upon vesting of

restricted stock units, net of shares withheld

to cover taxes

1

-

(6)

-

-

-

-

(6)

Cash dividends declared ($0.14 per share)

-

-

-

-

-

-

(4,732)

(4,732)

Dividend equivalents on equity awards

-

-

158

-

-

-

(158)

-

Currency translation adjustment

-

-

-

-

-

(678)

-

(678)

Net income for the three months ended

February 24, 2024

-

-

-

-

-

-

2,550

2,550

Balances at February 24, 2024

36,194

$

363

$

387,933

2,386

$

(39,202)

$

(17,211)

$

82,977

$

414,860

For the Nine Months Ended February 24, 2024

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Treasury Stock

Comprehensive

Retained

Stockholders'

Shares

Amount

Capital

Shares

Amount

Loss

Earnings

Equity

Balances at May 27, 2023

35,545

$

355

$

378,657

2,070

$

(34,850)

$

(17,290)

$

87,648

$

414,520

Exercise of stock options

32

1

451

-

-

-

-

452

Stock-based compensation expense

-

-

4,075

-

-

-

-

4,075

Issuance of common stock purchased under

Employee Stock Purchase Plan

456

5

5,646

-

-

-

-

5,651

Issuance of restricted stock

75

1

(1)

(38)