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Aug 29, 2020
Resources Connection Q1 2021 Earnings Report
Resources Connection reported a decrease in revenue due to the COVID-19 pandemic but delivered positive operating cash flow by improving cost structure and sustaining gross margins.
Key Takeaways
Resources Connection, Inc. reported a decrease in revenue of 14.4% compared to the prior year, primarily due to the COVID-19 pandemic. However, the company delivered positive operating cash flow and improved its cost structure. Gross margin improved slightly, and SG&A expenses decreased.
Revenue decreased by 14.4% year-over-year to $147.3 million due to the COVID-19 pandemic.
Gross margin improved by 10 basis points to 39.3%.
SG&A expenses decreased by $5.8 million year-over-year to $51.2 million.
Cash provided by operating activities was $18.6 million, compared to cash used in operating activities of $3.0 million in the prior year quarter.
Resources Connection
Resources Connection
Resources Connection Revenue by Geographic Location
Revenue by Geographic Location
Europe & Asia Pacific Revenue
CapyFin.comNorth America Revenue
CapyFin.com Forward Guidance
Company expects to complete the RIF by the end of fiscal 2021, with total employee termination costs ranging from approximately $5.5 million to $6.5 million. Upon completion of the RIF, the Company expects annual pre-tax savings of $6.0 million to $7.0 million in personnel costs. The Company currently expects to complete the majority of the lease and contract terminations by the end of fiscal 2021 and expects to incur cash and non-cash charges related to such exit initiatives of approximately $2.5 million to $3.5 million. Upon completion of the exit initiatives, the Company expects annual pre-tax savings of approximately $1.0 million to $2.0 million in occupancy and other general and administrative costs.
Positive Outlook
- RIF expected to be completed by the end of fiscal 2021.
- Annual pre-tax savings of $6.0 million to $7.0 million in personnel costs expected upon completion of RIF.
- Majority of lease and contract terminations expected to be completed by the end of fiscal 2021.
- Annual pre-tax savings of approximately $1.0 million to $2.0 million in occupancy and other general and administrative costs expected upon completion of exit initiatives.
Challenges Ahead
- Total employee termination costs ranging from approximately $5.5 million to $6.5 million.
- Cash and non-cash charges related to exit initiatives of approximately $2.5 million to $3.5 million.
- Revenue was impacted by the global pandemic.
- Decline in North America revenue was partially offset by the increase in revenue as a result of the Veracity acquisition.
- Company plans to focus on its core markets in Europe and reduce its footprint in its remaining offices.
Revenue & Expenses
Visualization of income flow from segment revenue to net income