Resources Connection Inc RECN
Q4 2013 Earnings Call Transcript

Transcript Call Date 07/16/2013

Operator: Good day, ladies and gentlemen, and welcome to the Resources Global Professionals' Fourth Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time. As a reminder, today's conference is being recorded.

I would now like to turn the call over to Kate Duchene, Chief Legal Officer. Please go ahead, ma'am.

Kate Duchene - EVP and Chief Legal Officer: Thank you, operator. Good afternoon, everyone and thank you for participating today. Joining me on this call are Don Murray, our Executive Chairman; Tony Cherbak, Chief Executive Officer; and Nate Franke, our Chief Financial Officer. During this call, we will be providing you with comments on our results for the fourth quarter of fiscal year 2013.

By now you should have a copy of today's press release. If you need a copy and are unable to access via our website, please call (Patricia Marquez) at 714-430-6314, and she'll be happy to fax the copy to you.

Before introducing Tony, I'd like to read an important announcement about certain statements that we may make during this call. Specifically, we may make forward-looking statements; in other words, statements regarding future events or future financial performance of the Company. We wish to caution you that such statements are just predictions and actual events or results may differ materially.

We refer you to our 10-K report for the year ended May 26, 2012, for a discussion of some of the risks, uncertainties, and other factors, such as seasonal and economic conditions that may cause our business, results of operations, and financial condition to differ materially from results of operations and financial conditions expressed or implied by forward-looking statements made during this call.

I'll now turn the call over to Tony Cherbak, Chief Executive Officer.

Tony Cherbak - President and CEO: Thanks Kate. Good afternoon, and welcome to the Resources Global fourth quarter conference call. I'm going to begin by giving you a brief overview of our fourth quarter and year-end operating results.

Total revenue for the fourth quarter was $140.2 million, up 1.6% from our third quarter revenue of $138 million, but down 3.6% from last year’s fourth quarter of $145.5 million. For the year, revenue declined 2.7% to $556.3 million versus $571.8 million in fiscal 2012.

Fourth quarter gross margin was 38.9%, representing a 180 basis point improvement from the third quarter, but a decrease of 130 basis points from the fourth quarter a year ago.

During the fourth quarter, we recorded a charge of approximately $1,150,000 or $0.03 per share to reduce headcount in certain of our European offices. Of the total, approximately $525,000 was recorded in cost of service and $625,000 in SG&A, depending on whether the personnel impact was an employee consultant or front office personnel. The $525,000 charge to cost of services reduced our fourth quarter gross margin by 40 basis points.

During the fourth quarter, our SG&A costs were $42.3 million, which includes the $625,000 of aforementioned severance costs. Excluding this cost, fourth quarter SG&A was $300,000 lower than the comparable quarter a year ago and about the same as our third quarter. Excluding the severance charge, fourth quarter SG&A was slightly better than we anticipated, based primarily on lower compensation-related costs. We remain focused on tightly controlling our SG&A spend while investing for the long-term benefit of the Company.

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