rgp-20240824

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________________________________________________________________________________

FORM 10-Q

____________________________________________________________________________________________

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 24, 2024

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to______

Commission File Number: 0-32113

____________________________________________________________________________________________

RESOURCES CONNECTION, INC.

(Exact Name of Registrant as Specified in Its Charter)

____________________________________________________________________________________________


Delaware			33-0832424
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

17101 Armstrong Avenue, Irvine, California 92614

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (714) 430-6400

____________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common stock, par value $0.01 per share	RGP	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of September 26, 2024, 33,471,328 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

Table of Contents

RESOURCES CONNECTION, INC.

INDEX


		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets as of August 2 4 , 202 4 and May 2 5 , 202 4	3
	Consolidated Statements of Operations for the Three Months Ended August 24 , 202 4 and August 26, 20 23	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended Aug ust 24 , 202 4 and August 26, 20 2 3	5
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended August 2 4 , 202 4 and Aug ust 26, 202 3	6
	Consolidated Statements of Cash Flows for the Three Months Ended August 2 4 , 202 4 and August 26 , 202 3	7
	Notes to Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	36
ITEM 4.	Controls and Procedures	37

PART II—OTHER INFORMATION
ITEM 1A.	Risk Factors	38
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
ITEM 5.	Other Information	38
ITEM 6.	Exhibits	39
	Signatures	40

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PART I—FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

RESOURCES CONNECTION, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value per share)


	August 24, 2024		May 25, 2024
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	89,625	$	108,892
Trade accounts receivable, net of allowances of $2,640 and $2,755 as of August 24, 2024 and May 25, 2024, respectively	106,469		108,515
Prepaid expenses and other current assets	7,242		6,888
Assets held for sale	-		8,909
Income taxes receivable	8,132		7,551
Total current assets	211,468		240,755
Goodwill	219,965		216,579
Intangible assets, net	23,808		9,573
Property and equipment, net	3,507		3,763
Operating lease right-of-use assets	23,398		11,899
Deferred tax assets	11,798		11,312
Other non-current assets	18,925		17,033
Total assets	$	512,869	$	510,914

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued expenses	$	14,019	$	15,223
Accrued salaries and related obligations	44,302		41,999
Operating lease liabilities, current	5,540		4,735

Other current liabilities	10,728		10,476
Total current liabilities	74,589		72,433
Long-term debt	-		-
Operating lease liabilities, non-current	19,334		8,586
Deferred tax liabilities	9,311		8,680
Other non-current liabilities	2,420		2,452
Total liabilities	105,654		92,151
Commitments and contingencies (see Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; zero shares issued and outstanding	-		-
Common stock, $0.01 par value, 70,000 shares authorized; 36,540 and 36,194 shares issued, and 33,472 and 33,556 shares outstanding as of August 24, 2024 and May 25, 2024, respectively	366		363
Additional paid-in capital	392,885		389,720
Accumulated other comprehensive loss	(16,882)		(17,713)
Retained earnings	78,048		88,595
Treasury stock at cost, 3,068 and 2,638 shares as of August 24, 2024 and May 25, 2024, respectively	(47,202)		(42,202)
Total stockholders’ equity	407,215		418,763
Total liabilities and stockholders’ equity	$	512,869	$	510,914

The accompanying notes are an integral part of these consolidated financial statements.

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RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended
	August 24, 2024		August 26, 2023
Revenue	$	136,935	$	170,169
Direct cost of services	86,948		103,168
Gross profit	49,987		67,001
Selling, general and administrative expenses	48,910		59,932
Goodwill impairment	3,855		-
Amortization expense	1,485		1,314
Depreciation expense	540		877
(Loss) income from operations	(4,803)		4,878
Interest income, net	(148)		(312)
Other income	(2)		(2)
(Loss) income before income tax expense	(4,653)		5,192
Income tax expense	1,054		2,075
Net (loss) income	$	(5,707)	$	3,117

Net (loss) income per common share:
Basic	$	(0.17)	$	0.09
Diluted	$	(0.17)	$	0.09

Weighted-average number of common and common equivalent shares outstanding:
Basic	33,407		33,412
Diluted	33,407		34,010

Cash dividends declared per common share	$	0.14	$	0.14

The accompanying notes are an integral part of these consolidated financial statements.

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RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended
	August 24, 2024		August 26, 2023

Net (loss) income	$	(5,707)	$	3,117
Foreign currency translation adjustment gain, net of tax	831		342
Total comprehensive (loss) income	$	(4,876)	$	3,459

The accompanying notes are an integral part of these consolidated financial statements.

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RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

(Unaudited)


	For the Three Months Ended August 24, 2024
	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders Equity
	Shares	Amount				Shares	Amount
Balances at May 25, 2024	36,194	$	363	$	389,720	2,638	$	(42,202)	$	(17,713)	$	88,595	$	418,763

Stock-based compensation expense	-	-		1,599		-	-		-		-		1,599
Issuance of common stock purchased under Employee Stock Purchase Plan	229	2		2,008		-	-		-		-		2,010
Issuance of restricted stock	5	-		-		-	-		-		-		-
Issuance of common stock upon vesting of restricted stock units, net of shares withheld to cover taxes	112	1		(595)		-	-		-		-		(594)
Cash dividends declared ($0.14 per share)	-	-		-		-	-		-		(4,687)		(4,687)
Dividend equivalents on equity awards	-	-		153		-	-		-		(153)		-
Repurchase of common stock	-	-		-		430	(5,000)				-		(5,000)
Currency translation adjustment	-	-		-		-	-		831		-		831
Net loss for the three months ended August 24, 2024	-	-		-		-	-		-		(5,707)		(5,707)
Balances at August 24, 2024	36,540	$	366	$	392,885	3,068	$	(47,202)	$	(16,882)	$	78,048	$	407,215


	For the Three Months Ended August 26, 2023
	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders Equity
	Shares	Amount				Shares	Amount
Balances at May 27, 2023	35,545	$	355	$	378,657	2,070	$	(34,850)	$	(17,290)	$	87,648	$	414,520
Exercise of stock options	22	1		341		-	-		-		-		342
Stock-based compensation expense	-	-		2,466		-	-		-		-		2,466
Issuance of common stock purchased under Employee Stock Purchase Plan	198	2		2,772		-	-		-		-		2,774
Issuance of restricted stock	-	-		-		(2)	39		-		(39)		-

Cash dividends declared ($0.14 per share)	-	-		-		-	-		-		(4,720)		(4,720)
Dividend equivalents on equity awards	-	-		145		-	-		-		(145)		-

Currency translation adjustment	-	-		-		-	-		342		-		342
Net income for the three months ended August 26, 2023	-	-		-		-	-		-		3,117		3,117
Balances at August 26, 2023	35,765	$	358	$	384,381	2,068	$	(34,811)	$	(16,948)	$	85,861	$	418,841

The accompanying notes are an integral part of these consolidated financial statements.

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RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended
	August 24, 2024		August 26, 2023
Cash flows from operating activities:
Net (loss) income	$	(5,707)	$	3,117
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization expense	2,025		2,191
Stock-based compensation expense	1,561		2,552
Goodwill impairment	3,855		-
(Gain) loss on sale of assets	(3,394)		12
Adjustment to allowances	(60)		179
Deferred income taxes	438		(498)
Other, net	44		44
Changes in operating assets and liabilities, net of acquisition:
Trade accounts receivable	4,278		5,730
Prepaid expenses and other current assets	(193)		(627)
Income taxes	(951)		735
Other assets	(1,879)		(3,029)
Accounts payable and other accrued expenses	(1,285)		1,166
Accrued salaries and related obligations	441		(13,949)
Other liabilities	518		163
Net cash used in operating activities	(309)		(2,214)

Cash flows from investing activities:

Net proceeds from sale of assets	12,309		-
Acquisition of Reference Point, net of cash acquired	(22,967)		-
Investments in property and equipment and internal-use software	(266)		(548)
Net cash used in investing activities	(10,924)		(548)

Cash flows from financing activities:
Proceeds from exercise of stock options	-		350
Proceeds from issuance of common stock under Employee Stock Purchase Plan	2,010		2,774


Repurchase of common stock	(5,000)		-
Payment of cash dividends	(4,695)		(4,681)
Net cash used in financing activities	(7,685)		(1,557)

Effect of exchange rate changes on cash and cash equivalents	(349)		130
Net decrease in cash and cash equivalents	(19,267)		(4,189)
Cash and cash equivalents at beginning of period	108,892		116,784
Cash and cash equivalents at end of period	$	89,625	$	112,595

Supplemental cash flow disclosures
Income taxes paid, net	$	1,343	$	1,620
Interest paid	$	88	$	88
Non-cash investing and financing activities

SEC Form 10-Q filed by Resources Connection Inc.