On October 4, 2023, Resources Connection Inc (RGP, Financial), a global consulting firm, released its earnings report for the first quarter of fiscal 2024. The company reported a decline in revenue and net income compared to the prior year quarter, amidst a challenging macroeconomic environment. However, the company's financial liquidity showed a significant increase.
Financial Performance
RGP reported a revenue of $170.2 million, a decrease from $204.1 million in the first quarter of fiscal 2023. The company's net income also declined to $3.1 million (net income margin of 1.8%) from $18.1 million (net income margin of 8.9%) in the prior year quarter. The diluted earnings per common share were $0.09, compared to $0.53 in the previous year.
Management Commentary
“Our team produced revenue and profitability that was ahead of expectations, despite the ongoing pressures from the macro-environment and our typical, seasonally impacted first quarter,” said Kate W. Duchene, Chief Executive Officer. “While project extensions have increased, new project wins remain challenged as clients continue to operate with increased conservatism. As we look ahead, we are highly focused on sourcing and closing every revenue opportunity, while remaining vigilant on improving our cost structure to better align with market conditions. We are primed to execute as the market conditions improve. I want to thank our team for your continued passion and commitment to serve our clients and consultants and deliver value to shareholders.”
Financial Highlights
The company's gross margin was 39.4%, compared to 40.9% in the first quarter of fiscal 2023. The reduction in gross margin was due to a higher pay/bill ratio and a decrease in leverage on cost of service as a result of lower topline revenue. The company's available financial liquidity increased to $286.8 million, up from $226.4 million.
Outlook
Despite the challenging macroeconomic environment, RGP remains focused on improving its cost structure and sourcing revenue opportunities. The company is prepared to execute as market conditions improve and continues to serve its clients and consultants while delivering value to shareholders.
