Consulting firm Resources Connection's Q1 revenue declines 12%

Overview

• Resources Connection fiscal Q1 revenue declines to $120.2 mln from $136.9 mln year-over-year

• Adjusted EBITDA for fiscal Q1 beats analyst expectations

• Net loss for fiscal Q1 narrows to $2.4 mln from $5.7 mln

Outlook

• Company plans to deepen consulting capabilities in CFO Advisory & Digital Transformation

• Resources Connection aims to strengthen its on-demand business for market relevance

• Company focuses on cost structure redesign to improve shareholder returns

Result Drivers

• HIGHER BILL RATES - Co increased average bill rates by 2.2% due to pricing discipline and pursuit of higher-value engagements

• DECREASED BILLABLE HOURS - Billable hours decreased 14.3% due to choppy demand as clients delayed projects amid economic uncertainty

• COST STRUCTURE IMPROVEMENTS - Reduction in SG&A expenses driven by restructuring and lower technology transformation costs

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 1 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the business support services peer group is "buy"

• Wall Street's median 12-month price target for Resources Connection Inc is $7.00, about 30.7% above its October 7 closing price of $4.85

• The stock recently traded at 11 times the next 12-month earnings vs. a P/E of 11 three months ago

Press Release: ID:nBwXmcqja

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