Resources Connection Inc (RECN) SEC Filing 10-K Annual report for the fiscal year ending Saturday, May 28, 2016

Exhibit 99.1

Resources Connection, Inc. Reports Fourth Quarter and Year-End Results for Fiscal 2016

• Company reports quarter-over-quarter revenue increase of 2.5% to $152.5 million; increase for year of 1.3% to $598.5 million
• Earnings per share improve 9.5% to $0.23 for quarter; up 12.5% for year to $0.81
• Adjusted EBITDA* increases 6.2% to $17.8 million for quarter (11.7% of revenue); up 5.1% to $63.6 million for fiscal year (10.6% of revenue)
• Company returns capital to shareholders of $11.8 million in fourth quarter and $42.2 million in fiscal 2016

*Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization and stock-based compensation

IRVINE, Calif.--(BUSINESS WIRE)--July 14, 2016--Resources Connection, Inc. (NASDAQ: RECN) today announced financial results for its fourth fiscal quarter and year ended May 28, 2016. Resources Connection, Inc. (the “Company”) is a multinational professional services firm that provides – through its operating subsidiary, Resources Global Professionals (“RGP”) – consulting and business support services to clients in the areas of accounting; finance; corporate governance, risk and compliance; corporate advisory, strategic communications and restructuring; information management; human capital; supply chain management; and legal and regulatory.

Revenue for the fourth quarter of fiscal 2016 increased 2.5% (2.6% constant currency) to $152.5 million compared to the prior year’s fourth quarter of $148.8 million. Approximately 0.9% of the quarter-over-quarter revenue increase is attributable to the shift of the Memorial Day holiday to the first quarter of fiscal 2017. On a sequential basis, fourth quarter revenue increased 3.9% (3.4% constant currency) compared to $146.8 million in the third quarter of fiscal 2016, which includes the winter holiday season. (Constant currency quarter-over-quarter is computed using the comparable fourth quarter fiscal 2015 conversion rates and sequential quarter is computed using the comparable third quarter fiscal 2016 conversion rates for revenue generated internationally.)

Revenue in the U.S. increased 3.1% quarter-over-quarter and 2.8% sequentially. International revenue was flat quarter-over-quarter (and on a constant currency basis) but increased 9.2% sequentially (6.4% constant currency).

The Company’s net income improved in the fourth quarter of fiscal 2016 to $8.7 million, or $0.23 per diluted share, compared to $8.1 million, or $0.21 per diluted share, in the prior year’s fourth quarter.

“Overall, I am pleased with our fiscal 2016 financial results,” said Tony Cherbak, president and chief executive officer of RGP. “On a constant currency basis, revenue improved 2.9%, gross margin increased to 38.8% and we saw double digit gains in net earnings and earnings per share. While the uncertainty over Brexit will play out during fiscal 2017 and beyond, we will continue to pursue growth opportunities in areas such as implementation of revenue recognition and lease accounting standards, M&A integration and Data Solutions, among others.”

Gross margin was 39.9% in the fourth quarter of fiscal 2016, compared to 38.9% in the prior year quarter. Gross margin in the current quarter improved due to the shift in the paid Memorial Day holiday to the first quarter of fiscal 2017 and decreased health care costs. Sequentially, gross margin improved 250 basis points from 37.4% in the third quarter of fiscal 2016, due primarily to fewer holidays in the U.S. during the fourth quarter and the reduced impact of employer payroll taxes.

Selling, general and administrative expenses for the fourth quarter of fiscal 2016 were $44.4 million (29.1% of revenue) compared to $42.5 million (28.5% of revenue) in the prior year’s fourth quarter and $43.3 million (29.5% of revenue) in the third quarter of fiscal 2016. The quarter-over-quarter increase is primarily from higher marketing and compensation/benefit costs, while the sequential increase is primarily due to higher marketing expenses.